One thing that can make reporting about civil litigation frustrating is that so much of it ends in confidential settlements. Occasionally, though, a ray of light pierces the shroud of secrecy, and it's possible to find out how much money changed hands when a case settles before going to trial. Thanks to an unlikely source—an Iowa ear, nose, and throat doctor currently residing in a federal prison in Wisconsin after being convicted of insurance fraud—we now know how much patent-holding company SP Technologies collected as a result of filing suit against four leading tech companies: $2.17 million.
That information is contained in a motion to intervene filed in July by otolaryngologist Peter Boesen in connection with a pending suit brought by SPT against GPS makers Garmin and TomTom in the Northern District of Illinois. In addition to being a convicted felon, Boesen happens to be the inventor on the patent SPT has asserted in the suit—and in previous suits against Apple, Magellan, and Samsung—as well as a second patent asserted in a suit against LG Electronics.
Boesen, whose sentence requires him to make restitition of $931,000, says in his filing [PDF]
that he wants to get involved in the Garmin suit because he isn't being
adequately represented by Niro Scavone Haller & Niro, the law firm
pursuing the litigation campaign launched by SPT using Boesen's
patents. According to a receipt [PDF]
attached to his filing (p. 23), Boesen's share of the settlements
extracted by SPT is $748,500. But Boesen "has never personally received
any monies from SP Technologies," he writes in his motion, which
appears to have been written on a jailhouse typewriter. He also objects
to getting anything less than the full 40 percent cut to which be
believes he is entitled, since "fees and expenses were not be a factor
in the percentage of gross recoveries paid to aggrieved
party/Petitioner."
Given the prevalence of settlements between large companies and so-called patent trolls like SPT—and how little is known about those settlements—the receipt is a remarkable document, a kind of spreadsheet that shows exactly how much money SP Technologies collected from four large tech companies and how the proceeds were divided up.
Most intriguing is the sum paid by Apple to settle an SPT suit brought over the iPhone in the Eastern District of Texas in 2008: $865,000. Without any motions being filed after the intial complaint or any substantive discovery, a bit more than 30 percent of that amount, $271,817, went to Niro Scavone, which also billed $46,568 in expenses. Nearly $40,000 went to someone identified as "Ward"—most likely Johnny Ward Jr., who served as local counsel to SPT in the case. Of what was left, almost $109,000 went to SP Technologies, then owned by investor Courtney Sherrer, and $311,400 went to Boesen.
Also noteworthy: a full 10 percent of Apple's payout, $86,500, is marked as going to "LG"—an apparent reference to LG Electronics, which, according to the Boesen receipt, paid $834,964.01 to settle a separate SPT suit in 2006. Why would LG be getting a cut of the settlement in a suit to which it was not a party? And was Apple aware that a piece of that settlement might wind up with one of its competitors? Representatives from Apple and LG did not immediately respond to requests for comment.
Other SPT settlements detailed in Boesen's receipt: Samsung paid the patent-holding company $417,500, about half of what LG and Apple forked over, while Magellan paid even less, $50,000. (A possible explanation for Magellan's smaller payout: The market for GPS devices is far smaller than the market for cell phones, greatly reducing the potential exposure from a patent suit.) SPT settled another suit with HTC Corp. in July, but that deal was apparently struck too late for Boesen to include it in his filing.
SPT's Niro Scavone lawyers oppose Boesen's move to intervene in the Garmin case. While he may not be getting money directly, they say, he is getting paid. A letter from Sherrer indicates that the money is going straight to fulfill his restitution obligation.
In addition to being forced to pay the $931,000, Boesen was sentenced to serve 51 months in federal prison after being convicted in 2006 on 82 counts of health care fraud. Prosecutors said he committed a series of fraudulent acts between 2000 and 2002 that bilked Medicare and private insurance companies out of more than $400,000 for procedures he never performed. He is being held in a minimum-security section of the federal penintentiary in Oxford, Wisconsin, and is due to be released in February 2011.
How did an ear, nose, and throat doctor wind up doing business with a patent-holding company? Boesen holds at least 21 patents, most which relate to cell phone technology; the others cover auditory aids. He first joined forces with SPT in 2005, and the initial infringement suit came soon after. In that suit, plaintiffs Boesen and SPT used his 6892082 patent, covering a type of cell phone design, to sue Kyocera, LG, and Sanyo. (SPT owner Sherrer also controls companies that enforce some Scott Harris patents, and her name has come up in this space before.)
But not long after Boesen and SPT teamed up, the authorities began investigating the doctor. That put a crimp in the nascent litigation campaign. When Boesen was indicted in February 2006, Sherrer and her lawyers became concerned that having him as a co-plaintiff was a serious liability. That same month, Boesen sold 19 of his patents to SPT under a contract—also included in his motion to intervene in the Garmin case—that provided for him to get 40 percent of any revenue produced by patent lawsuits and licensing. (Thus far, the Boesen patent that has proven the most profitable for SPT is the 6,784,873 patent, which claims to cover many types of touch-screen keyboards.)
Boesen is upset now because he says Sherrer and Niro knew he was under "severe duress" when they got him to sign the contract selling his patents. Not only was he facing a criminal probe and possible jail time, he says his mother and brother had both been diagnosed with cancer.
In May, Boesen was deposed in connection with the Garmin litigation. During the deposition, he said that the copy of the contract that he received doesn't look like the one he recalls signing, and that it may have even been forged.
Sherrer responded sharply, refusing to address his allegation but saying that "it is apparent... that you are refusing to cooperate in the enforcement of your patents." If true, that would be a violation of the contract his contract with SPT, she added. In a motion opposing Boesen's intervention, SPT lawyer Raymond Niro included an e-mail chain from the attorney who negotiated the contract for Boesen stating the doctor's intention to sign the pact. Sherrer also wrote a letter to Boesen explaining that the proceeds he has reaped from patent enforcement are going towards paying off his restitution tab.
Niro, reached by telephone on Thursday, said Boesen's attempted intervention in the case is more annoying than threatening.
"He’s acting like a jailhouse lawyer," said Niro. "He’s acting like he knows how to practice law. We’re trying to focus on the merits of the case. We got a nice claim construction."
Is Boesen's status as a convicted felon a potential liability for SPT's enforcement campaign? "Of course, it affects your case," Niro said. "You’ve got an empty chair for an inventor." He noted that a co-inventor on the '873 patent who has no connection to Boesen's crimes, Thomas Mann, is participating in the litigation.
Niro described Sherrer as "an investor who invests in patents, and helps inventors," but added that she has sold her interest in the holding company to Altitude Capital, a company that invests in patent lawsuits.
SP Technologies v. Garmin International et al. 08-cv-03248, N.D. Illinois.
Given the prevalence of settlements between large companies and so-called patent trolls like SPT—and how little is known about those settlements—the receipt is a remarkable document, a kind of spreadsheet that shows exactly how much money SP Technologies collected from four large tech companies and how the proceeds were divided up.
Most intriguing is the sum paid by Apple to settle an SPT suit brought over the iPhone in the Eastern District of Texas in 2008: $865,000. Without any motions being filed after the intial complaint or any substantive discovery, a bit more than 30 percent of that amount, $271,817, went to Niro Scavone, which also billed $46,568 in expenses. Nearly $40,000 went to someone identified as "Ward"—most likely Johnny Ward Jr., who served as local counsel to SPT in the case. Of what was left, almost $109,000 went to SP Technologies, then owned by investor Courtney Sherrer, and $311,400 went to Boesen.
Also noteworthy: a full 10 percent of Apple's payout, $86,500, is marked as going to "LG"—an apparent reference to LG Electronics, which, according to the Boesen receipt, paid $834,964.01 to settle a separate SPT suit in 2006. Why would LG be getting a cut of the settlement in a suit to which it was not a party? And was Apple aware that a piece of that settlement might wind up with one of its competitors? Representatives from Apple and LG did not immediately respond to requests for comment.
Other SPT settlements detailed in Boesen's receipt: Samsung paid the patent-holding company $417,500, about half of what LG and Apple forked over, while Magellan paid even less, $50,000. (A possible explanation for Magellan's smaller payout: The market for GPS devices is far smaller than the market for cell phones, greatly reducing the potential exposure from a patent suit.) SPT settled another suit with HTC Corp. in July, but that deal was apparently struck too late for Boesen to include it in his filing.
SPT's Niro Scavone lawyers oppose Boesen's move to intervene in the Garmin case. While he may not be getting money directly, they say, he is getting paid. A letter from Sherrer indicates that the money is going straight to fulfill his restitution obligation.
In addition to being forced to pay the $931,000, Boesen was sentenced to serve 51 months in federal prison after being convicted in 2006 on 82 counts of health care fraud. Prosecutors said he committed a series of fraudulent acts between 2000 and 2002 that bilked Medicare and private insurance companies out of more than $400,000 for procedures he never performed. He is being held in a minimum-security section of the federal penintentiary in Oxford, Wisconsin, and is due to be released in February 2011.
How did an ear, nose, and throat doctor wind up doing business with a patent-holding company? Boesen holds at least 21 patents, most which relate to cell phone technology; the others cover auditory aids. He first joined forces with SPT in 2005, and the initial infringement suit came soon after. In that suit, plaintiffs Boesen and SPT used his 6892082 patent, covering a type of cell phone design, to sue Kyocera, LG, and Sanyo. (SPT owner Sherrer also controls companies that enforce some Scott Harris patents, and her name has come up in this space before.)
But not long after Boesen and SPT teamed up, the authorities began investigating the doctor. That put a crimp in the nascent litigation campaign. When Boesen was indicted in February 2006, Sherrer and her lawyers became concerned that having him as a co-plaintiff was a serious liability. That same month, Boesen sold 19 of his patents to SPT under a contract—also included in his motion to intervene in the Garmin case—that provided for him to get 40 percent of any revenue produced by patent lawsuits and licensing. (Thus far, the Boesen patent that has proven the most profitable for SPT is the 6,784,873 patent, which claims to cover many types of touch-screen keyboards.)
Boesen is upset now because he says Sherrer and Niro knew he was under "severe duress" when they got him to sign the contract selling his patents. Not only was he facing a criminal probe and possible jail time, he says his mother and brother had both been diagnosed with cancer.
In May, Boesen was deposed in connection with the Garmin litigation. During the deposition, he said that the copy of the contract that he received doesn't look like the one he recalls signing, and that it may have even been forged.
Sherrer responded sharply, refusing to address his allegation but saying that "it is apparent... that you are refusing to cooperate in the enforcement of your patents." If true, that would be a violation of the contract his contract with SPT, she added. In a motion opposing Boesen's intervention, SPT lawyer Raymond Niro included an e-mail chain from the attorney who negotiated the contract for Boesen stating the doctor's intention to sign the pact. Sherrer also wrote a letter to Boesen explaining that the proceeds he has reaped from patent enforcement are going towards paying off his restitution tab.
Niro, reached by telephone on Thursday, said Boesen's attempted intervention in the case is more annoying than threatening.
"He’s acting like a jailhouse lawyer," said Niro. "He’s acting like he knows how to practice law. We’re trying to focus on the merits of the case. We got a nice claim construction."
Is Boesen's status as a convicted felon a potential liability for SPT's enforcement campaign? "Of course, it affects your case," Niro said. "You’ve got an empty chair for an inventor." He noted that a co-inventor on the '873 patent who has no connection to Boesen's crimes, Thomas Mann, is participating in the litigation.
Niro described Sherrer as "an investor who invests in patents, and helps inventors," but added that she has sold her interest in the holding company to Altitude Capital, a company that invests in patent lawsuits.
SP Technologies v. Garmin International et al. 08-cv-03248, N.D. Illinois.
Documents:
- Peter Boesen's Motion to Intervene [PDF]
- Receipt of payments to Boesen [PDF]
- Declaration of Courtney Sherrer describing SPT [PDF]
- SPT response to Boesen's Motion [PDF]
- Press release on Boesen conviction from U.S. Attorney [PDF]
This makes me look forward to watching the progression of the Nokia/Apple suit. Does Nokia just hope to pay a few bills, or (as I've heard from one source) is Nokia trying to head off patent litigation against itself by Apple, whose patents Nokia has purportedly infringed?
http://www.GeneralPatent.com
Posted by: Gena777 | October 25, 2009 at 03:31 PM
Great post. I will have to bookmark your site for later reading.
Posted by: seattle injury lawyer | October 30, 2009 at 06:49 AM
It is unbelievable to get this kind of privacy revealed to public in Japan where everything is virtually kept secret for protection of privacy while public is supposed to be basically entitled to knowing IP litigation. You know Japan does not practically allow public to get a copy of complaint filed in the court. You have to file a freedom of information petition to access to a complaint!
Is SPT going to seek protection soon, so that the Boesen's motion may be protected?
Posted by: Y. Peter Fujii | October 31, 2009 at 12:01 AM
Peter, thanks for the comment. This is a highly unusual case, since there's a party trying to intervene while incarcerated; I wouldn't want to venture a guess as to what the next step is.
Your comment about Japan is very interesting, and news to me. Puts my own complaints about over-sealing of U.S. cases into perspective!
Posted by: Joe Mullin | November 02, 2009 at 03:31 PM