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Ford Motor Co. v. Versata Software, Inc.

United States District Court, E.D. Michigan, Southern Division

November 10, 2016

VERSATA SOFTWARE, INC. et al. Defendants.



         In this action, Versata Software, Inc., Trilogy Development Group, Inc., and Trilogy, Inc. (collectively “Versata”) allege that Ford Motor Company (“Ford”) infringed Versata's software patents (the “Patents”). Ford denies Versata's allegations and has launched a two-pronged attack on the validity of the Patents. First, in this Court, Ford has asserted as an affirmative defense that the Patents are invalid. Second, on May 9, 2016, Ford filed petitions with the United States Patent and Trademark Office (the “USPTO”) requesting Inter Partes Review of the Patents (the “IPR Petitions”). In the IPR Petitions, Ford asks the USPTO to invalidate the Patents.

         Versata has now moved for a preliminary injunction barring Ford from proceeding with the IPR Petitions (the “Motion”). (See ECF #125.) According to Versata, a 2002 agreement between the parties prohibits Ford from seeking to invalidate the Patents through the IPR Petitions. For the reasons explained below, the Court DENIES the Motion.



         Ford is one of the world's largest automakers. In the late 1990s, Ford licensed from Versata certain automobile configuration software known as the “ACM” software. (See Declaration of Kenneth Ratton at ¶3, ECF #126 at 1, Pg. ID 5764.) In 2001, a dispute arose between Versata and Ford over, among other things, ownership of the ACM software. (See id.) Neither Ford nor Versata filed a lawsuit related to that dispute. Instead, they negotiated a business settlement and entered into a new “Software Subscription Agreement” on January 1, 2002 (the “SSA”). (See Id. at ¶3, ECF #126 at 1-2, Pg. ID 5764-65.) Under the SSA, Versata continued to license the ACM software to Ford. (See Id. at ¶¶ 3-4, ECF #126 at 1-2, Pg. ID 5764-65.)

         In one provision of the SSA, Ford agreed to “provide reasonable assistance [to Versata] in perfecting and protecting [the ACM] software intellectual property” (the “Protection Provision”). (SSA at § 2F, ECF #126-2 at 3, Pg. ID 5769.) Ford re-affirmed this promise in several subsequent amendments to the SSA. (See ECF ## 126-3 - 126-7.)

         In 2004, Ford and Versata entered into another software-related agreement, known as the “Master Subscription and Services Agreement” (the “MSSA”). (See ECF #132-3.) Like the SSA, the MSSA granted Ford a license to use the ACM software. (See id.) The MSSA provided that it “superseded” “all” previous agreements between Ford and Versata “regarding the subject matter hereof.” (ECF #132-3 at ¶13.10, ECF #132-3 at 9, Pg. ID 5977.) The MSSA did not include a provision like the Protection Provision nor did it address that provision in any way.


         In 2014, Ford and Versata were unable to reach an agreement on a renewed license for the ACM software. At around this same time, Ford developed its own automobile configuration software to replace ACM. Versata accused Ford of infringing the Patents in the development of this new software.

         In response, Ford filed this action in which it seeks a declaratory judgment that it did not infringe the Patents. (See Am. Compl. at ¶¶ 61-72, ECF #6 at 13-15, Pg. ID 162-64.) Versata has filed a counterclaim alleging that Ford infringed the Patents, stole Versata's trade secrets, and breached certain agreements, including the MSSA and SSA. (See Am. Counterclaim, ECF #163.) In one of its affirmative defenses to Verasata's infringement counterclaim, Ford asserts that the Patents “are invalid for failure to meet one or more of the requisite requirements and/or conditions for patentability under Title 35 of the United States Code, including without limitation §§ 101, 102, 103, 112 and 116.” (See ECF #68 at 71, Pg. ID 2241; ECF #166 at 82, Pg. ID 8866.)

         On May 9, 2016, Ford filed seven IPR Petitions with the PTAB. (See ECF ## 108-3 - 108-9.) The IPR Petitions ask the PTAB to review the Patents at issue in this case and to declare them invalid. (See id.)

         On July 18, 2016, Versata filed the Motion. (See ECF #125.) Versata argues that the SSA - and, more specifically, the Protection Provision - prohibits Ford from moving forward with the IPR Petitions. (See id.) The Court held a hearing on the Motion on October 4, 2016.


         In the Motion, Versata seeks a preliminary injunction. “A preliminary injunction is an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” LifeScan Scotland, Ltd. v. Shasta Techs., 734 F.3d 1361, 1366 (Fed. Cir. 2013) (internal quotation marks omitted); see also Leary v. Daeschner, 228 F.3d 729, 739 (6th Cir. 2000) (same). “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Id.; see also Leary, 228 F.3d at 736 (same). “These factors, taken individually, are not dispositive; rather, the district court must weigh and measure each factor against the other factors and against the form and magnitude of the relief requested.”, Inc. v., Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001); see also Leary, 228 F.3d at 736 (same).


         Versata has failed to make a clear showing that it is entitled to preliminary injunctive relief.


         As an initial matter, Versata has failed to persuade that the Court that it is likely to ...

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