The Prior Art

Of Patent Trolls and Trademark Champions: A Tale of Two Spangenbergs

Audrey Spangenberg sees her story as a straightforward David versus Goliath saga: as CEO of a small, struggling software business, she resents search giant Google selling ads that are triggered by users typing her company's trademarked name, Firepond, into the Google search box.

"I was sitting around this one day, and I thought, I'm going to Google 'Firepond' and see what comes up," said Spangenberg. "I was blown away to see that one of the competitors was using my trademark as an ad word."

After consulting a team of lawyers, she filed a lawsuit against Google on Monday that she hopes will become the first class action trademark claim against the company's practice of selling ads on trademarked keywords, a practice she hopes to stop.

Spangenberg says her suit isn't about money, it's about respect for intellectual property. "I'm very troubled at Google's continued disregard for the trademarks of others," she says. "Unless we're a huge company like Google, our property isn't valuable?" That’s how Spangenberg framed the issue in an interview with IP Law & Business on Friday—and the way she framed it yesterday, when she told The New York Times that Google's policies made her "furious."

But that version misses the byzantine backstory to this suit: Spangenberg and her husband Erich already sit atop a sizable fortune, won through intellectual property litigation. Since 2004, the Spangenbergs have moved patents purchased from various sources—including Firepond—through a complex network of shell companies set up in the small town of Marshall, Texas. In the last five years, these companies have filed dozens of patent lawsuits against hundreds of companies, most of them in Marshall or neighboring towns in the Eastern District of Texas, a venue considered friendly to patent plaintiffs—the same venue for the new class-action trademark suit.

ClearChannel will pay out $90 million in E.D. Tex patent loss

In April, ClearChannel lost $66 million when an E.D. Texas jury found it guilty of infringing a patent held by holding company Grantley Patent Holdings. Now, the judge in the case has tacked on $16.5 million and interest payments, for a total of almost $90 million.

There have been five big plaintiffs' victories in East Texas already this year; the smallest one was $21 million. My colleague Nate Raymond at The American Lawyer has a good roundup of those decisions here.

The trial was with Judge Clark in the Lufkin division. Grantley Patent Holdings was represented by Minneapolis-based Robins, Kaplan, Miller & Ciresi LLP, led by partner Ron Schutz (pictured). ClearChannel was represented by Andrews Kurth. Notably, ClearChannel doesn't appear to have hired any Eastern District counsel. (Grantley had help from Beaumont-based Germer Getz.) This appears to be the only patent case Grantley has filed, so far.

Via Patently-O.

Schutz tells me that the inventors are the plaintiffs in interest; Billy Shane Fox and a business partner own Grantley Patent Holdings, and they control the company that supports their MaxaGrid product. The company is in decline now with two employees, but once had a contract with Clear Channel, which used many of its products for scheduling radio advertisements.

During closing arguments, Clear Channel's counsel, had the hometown advantage, noting that he was born & raised in nearby Marshall, according to Schutz; but that didn't overcome Schutz, who had his own story to tell about being born on a farm in Minnesota and how he was the first person in his family to get a college degree.

On the way out, "A guy comes up to me and says, well, Mr. Schutz, I think you out humbled them," says the lawyer. Schutz is featured in this week's National Law Journal "Winning" supplement: Mom's Advice Wins.

Grantley Patent Holding Ltd. v. Clear Channel Communications, Inc. 06-cv-00259-RC, E.D. Texas.