Will Erich Spangenberg be on the hook for $4 million in attorneys' fees?

I'm looking over dockets for IPLB's annual patent litigation survey—and I'm finding some interesting cases along the way.

Erich Spangenberg and his lawyer David Pridham are at the heart of a massive empire of patent-holding companies named after stars, including Taurus IP, Gemini IP, Caelum IP, Phoenix IP, Orion IP, Constellation IP. At the head of them all is Plutus, named after the Greek god of wealth.

Of all the large networks of patent-holding companies, the Plutus IP group is the most mysterious. Spangenberg doesn't talk to the press. (But John Letzing of Marketwatch wrote a good profile of Plutus IP back in September.)

Now it looks like Spangenberg has suffered a serious blow in Wisconsin. He's at risk of having to pay up to $4 million in attorneys' fees to DaimlerChrysler's legal team from Kilpatrick Stockton LLP.

How did this happen? Well, Chrysler had already paid Spangenberg off—$2.3 million in 2006. That was supposed to get the companies a broadly construed "no-more-lawsuits" agreement. But then Spangenberg shuffled around some patents to different shell companies and sued DaimlerChrysler not once but three more times.

In March 2007, he sued DaimlerChrysler along with Toyota and Mercedes-Benz USA for infringing a software patent on a system of using software to track sales information. DaimlerChrysler sued back for breach of contract, saying that Spangenberg had breached the no-lawsuit settlement agreement.

In March of this year, a Wisconsin jury sided with DaimlerChrysler after a three-day trial. Now U.S. Judge Barbara Crabb, one of two judges in the Western District of Wisconsin, will decide what kind of damages, if any, Spangenberg will have to pay. He's acknowledged having $6 million in the bank account of one of his many shell companies—surely just a small fraction of his fortune.

(Crabb has allowed almost every document filed in the past month in this case to be sealed, turning these proceedings into a de facto secret and closed court. I can't see any justification for this radical action; federal judges are often too loose in allowing lawyers to seal documents in patent cases, but this is by far the worst I've seen.)

Since his setback in Wisconsin, another Spangenberg shell, ST Sales Tech Holdings LLC, has had to drop its E.D. Texas patent suit against DaimlerChrysler and several other car companies. And a Seattle-based automotive sales support company, Cobalt Group, Inc. has sued in Los Angeles to invalidate a Spangenberg patent, naming as defendants not just ST Sales but also Orion IP, Plutus IP Holdings, and Spangenberg personally.

According to a Cobalt Group court filing, Spangenberg called the company's CFO personally, and "inquired about Cobalt's reasons for filing this case and initiated discussions on behalf of himself and the other defendants, including ST Sales, regarding potential dismissal or settlement of this lawsuit. He specifically asked that Cobalt's counsel get in touch with him directly because he was hoping to resolve this matter quickly."

Is this empire starting to crack?

Illustration: "Plutus, Dante and Virgil" from the illustrations to Dante's "Divine Comedy" (1824-27)

 

Comments

[kk]

Is there any way to get a copy of the Plutus IP piece? The link is dead. Thanks.

[Joe Mullin]

Sorry about that, should be fixed now, try again.

[kk]

Awesome. Thank you.