The Prior Art

Is Intellectual Ventures revving up its lawsuit machine? Will we know when it does?

Today's Recorder has a story revealing that patent-holding giant Intellectual Ventures appears to be connected to a patent lawsuit recently filed in Chicago against Kodak and CDW Corp. Picture Frame Innovations, LLC v. Eastman Kodak Company et al., 09-cv-04888, N.D. Illinois. Intellectual Ventures was founded by former Microsoft CTO Nathan Myhrvold (pictured at right).

The Recorder reports that patent number 7,107,605, covering a digital picture frame, was originally filed by a small software company, but ended up being asserted by a small patent-holding company, Ez4media.

Since then, the patent has been moved through a holding company affiliated with Intellectual Ventures and then into Picture Frame Innovations, a shell company owned by James Beauregard Parker. Parker's company filed suit against Kodak and CDW on August 10. TPA readers may know Parker as someone who owns other holding companies, including some—such as BarTex Research and Illinois Computer Research—that have asserted Scott Harris patents.

An earlier Ez4media lawsuit against Apple, now settled, was briefly noted by TPA in January. (See bullet point midway down that post.) Both Ez4media and Picture Frame Innovations are represented by the Niro Scavone law firm.

Ray Niro says "IV is not involved in any way, shape, or form" in the Picture Frame Innovations lawsuit, but neither he nor IV will answer the key question: whether the patent-holding company has any financial interest in the litigation.

Troll Tracker update: Frenkel told the truth, says Cisco

On Friday, Cisco Systems unsealed its motion for summary judgment in the Albritton v. Cisco Systems defamation lawsuit, one of two libel lawsuits suits filed against ex-Troll Tracker blogger Rick Frenkel and his then-employer, Cisco.

There's a lot of information here, but the takeaway point is this: Cisco says Frenkel's articles were accurate. And in the United States, of course, you're allowed to publish true information, even if it hurts someone. What Albritton said was defamatory was either true (the docket was altered), or fell into the categories of opinion and rhetoric (words like "conspiracy") or just wasn't about him, says Cisco's lawyer, Charles Babcock of Jackson Walker.

Cisco also argues that Albritton's reputation wasn't injured at all by Frenkel's two articles, which involve a changed filing date in the ESN v. Cisco Systems lawsuit. As for co-defendants John Noh and Mallun Yen, the company  says they had no role writing, reviewing, editing, or publishing Frenkel's articles.

Sealed documents in patent lawsuits: how much is too much?

Recently my fellow patent bloggers at PA Tracer wrote about the process of filing under seal in the Eastern District of Texas. They asked myself and ED Tex blogger Michael Smith to respond. I sent Kyle Fleming some of my own thoughts on sealed records which he posted earlier this week. I am cross-posting my response below.

Michael Smith, who writes the ED Tex Weblog, shared some more venue-specific thoughts about the E.D. Texas rules on sealing records. Also see R. David Donoghue, who writes the Chicago IP Litigation Blog; he argues that at least in the Northern District of Illinois, "judges largely get it right."

Desperately Seeking Sunshine in Litigation

I've complained before about the overzealous sealing of documents in federal courts. Last week, U.S. District Judge James Ware helped Facebook keep potentially embarrassing facts out of public sight: he shut reporters out entirely and held a secret hearing. Facebook's lawyer, Orrick, Herrington & Sutcliffe partner Neil Chatterjee, has now sealed 234 documents on behalf of his client, according to CNET blogger Declan McCullagh.

Obviously, litigants don't want true trade secrets thrust into the public—especially defendants who "didn't start it"—but what kind of legal standard do these mass sealings meet?

Recently, I learned about a bill that would start to address this issue — the Sunshine in Litigation Act of 2007, sponsored by Senator Herb Kohl, D-WI.

While playing news catch-up, I saw a note on the Intellectual Property Owners Association website that the group voted earlier this month to oppose it. Don't know exactly why that stance was taken now, since it looks like there's been no movement on the bill since hearings were held in March 2007.

From Kohl's introductory speech on the bill, February 2007:

Surely, there are appropriate uses for such orders, like protecting trade secrets and other truly confidential company information. This legislation makes sure such information is protected. But, protective orders are certainly not supposed to be used for the sole purpose of hiding damaging information from the public to protect a company's reputation or profit margin.

Senator Kohl's main concern is about the secrecy of settlements in product liability cases; but his sentiment about limiting the scope of protective orders sounds like an idea that would "read on" patent lawsuits.

Tomorrow, Judge Ware's calendar includes a motion by CNET to unseal filings and transcripts in the Facebook case. Unfortunately I don't think I'll make it down to San Jose to hear that one but it will be interesting to see what comes out of it.
 

Spangenberg must pay $3.8 million in legal fees

Earlier this month I wrote about how Erich Spangenberg could be on the hook for $4 million in attorneys' fees to car companies that he repeatedly sued for patent infringement. He will indeed have to pay. There's a story on Law.com today.

We learn that Orion IP—perhaps the most active of Spangenberg's many patent-holding companies—has raked in $72.3 million over a few years, forcing about 100 companies into settlements by claiming various aspects of their websites infringe the handful of software patents he bought.

Judge Barbara Crabb's order will surely put a chill on patent-holders who thought that the Western District of Wisconsin might become the new E.D. Texas. The lawyers that took down Spangenberg's empire are from Kilpatrick Stockton; this is a huge victory for them.

I have more to add on this case, which reveals some of the inner workings of this mysterious business.

But first, and I'm speaking solely on my own behalf here, it's incredibly dismaying that Judge Crabb has allowed nearly every document filed in the case since trial to be filed under seal. This lawsuit is, in one sense, about online shopping technology. That affects everyone in this country. For three months now Crabb has operated a secret, closed court; I've read through hundreds of patent dockets and I've never seen anything like it. This should stop. I don't know if it's legal, but I know it ain't right.

 

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)

 

Keker & Van Nest wants to get away from client with cybersex patent rights; won't say why

Keker & Van Nest has an inconvenient client.

After Immersion Corp. won an $82 million judgment against Sony Computer Entertainment America Inc. for infringement of its patent on "haptic" (vibrating) joystick technology, a mysteriously named company—Internet Services, LLC—sued Immersion, hiring Keker & Van Nest attorneys Mark Lemley and Daralyn Durie in an attempt to cut itself a piece of patent victory pie.

Internet Services, LLC (ISLLC) appears to be a patent holding company. (at least, I can't tell what they make.) Although they must do something, because they did pay $1.7 million to Immersion in royalties, according to a declaration filed last week by company president Layne Britton. 

Britton's company had an exclusive license with Immersion to market its vibrating technology for the adult gaming market. And Immersion wanted to outsource its patent lawsuits in the adult game market to ISLLC because "in some cases it might be bad publicity for Immersion to enforce its IP rights against some companies in ISLLC's exclusive field of use," according to Britton. That field of use had something to do with "teledildonics," a term I confess to being unfamiliar with until yesterday.

From Britton's declaration:

While negotiating ISLLC's license with Immersion, I met with Richard Abramson (then Immersion's head in-house lawyer) and Louis Rosenberg (Immersion's founder, Chairman and CEO and President) in Richard Ambramson's office at Immersion on multiple occasions. At one particular meeting, Messrs. Ambramson and Rosenberg discussed a concept called teledildonics. In explaining the concept of a teledildonic device, Mr. Abramson brought up the website www.teledildonics.com on his computer monitor and showed it to me and Mr. Rosenberg. Mr. Rosenberg then took apart a vibrating mouse that Immersion had developed for and sold in the retail market, pulled out its chip and motor, and explained to me that these two items cold (sic) be put into almost any form factor, including a teledildonic device. Messrs. Abramson and Rosenberg said that a teledildonic device would infringe Immersion's IP within ISLLC's exclusive field of use, and that ISLLC, not Immersion, could sue such infringing device makers. They further explained that because it might in some cases be bad publicity for Immersion to enforce its IP rights against some companies in ISLLC's exclusive field of use, Immersion wanted ISLLC to have enforcement rights within that field. And Messrs. Abramson and Rosenberg noted that it might only make sense for ISLLC to try to enforce its rights if the potential damages were high because ISLLC alone would have to bear the cost of such a suit.

Really, you can't make this stuff up. Now Lemley and company want off the case, but won't say why (who wouldn't want to enforce a patent on teledildonics? I don't get it.) But his client won't let him off the hook. In fact, ISLLC hired new attorneys just to argue against Lemley's motion to withdraw. Hey, when you've got the best, why settle for less, right? They're up against an Irell & Manella team led by Morgan Chu, after all.

(Interesting aside: Chu was assisted in the Immersion v. Sony lawsuit by Patent Troll Tracker blogger Rick Frenkel, who was then an associate at Irell & Manella.)

There is a suggestion in one brief that the reason for withdrawal may be related to a conflict with ISLLC "advisor" Greg Piccionelli, a Los Angeles lawyer. <Download PDF brief> Hard to know much more than that, since Judge Claudia Wilken has been all too obliging in allowing KVN lawyers to file all the documents relating to their withdrawal motion under seal. (Immersion successfully moved the case from state to federal court.)

Yesterday, Lemley was in Judge Wilken's courtroom in Oakland, making his case to withdraw. There have been three mediations, Lemley said; his client walked out on the last negotiation. Now KVN would even "be willing to waive our considerable fees until today to expedite the transfer."

Any takers?

Update: The patents are actually on "user interfaces," so they cover more than just joysticks. See U.S. Patent No. 5,889,672, entitled "Tactiley responsive user interface device and method therefor," and the even sexier U.S. Patent No. 6,275,213, "Tactile Feedback Man-Machine Interface Device."

Update #2: Keker & Van Nest's request to withdraw was denied without prejudice on May 2; ISLLC's claims were tossed out on summary judgment on May 16.

Update #3: In the original post I identified the president of ISLLC as Leslie Layne Britton. According to court documents, it's just Layne Britton.