The Prior Art

Patent Litigation Weekly: RPX Fattens Up On Saxon Innovations Patent Portfolio

A novel International Trade Commission case that expanded the limits of what the agency would consider a "domestic industry" has ended with the holding-company plaintiff that initiated that suit, Saxon Innovations, selling the lion's share of its patents to patent-defense aggregator RPX Corporation.

Under the deal, RPX acquires all but ten of Saxon's 180 patents, which originated with chipmaker AMD Corporation, for an undisclosed sum. The remaining 10 patents go to a patent-enforcement company called Norman IP Holding, which is managed by the same people who managed Saxon. Saxon has ended its innovative ITC litigation against Palm Inc., Nokia, Panasonic, Samsung, HTC, and Research in Motion, as well as two related federal lawsuits in the Eastern District of Texas.

Saxon is owned by Altitude Capital Partners, a New York private equity firm that invests in patent litigation. In a statement announcing the RPX deal, Altitude's managing partner, Rob Kramer, said he is proud of the profits Saxon's litigation has produced for the investment firm and especially proud that it was a Saxon suit that persuaded the ITC—the federal agency tasked with protecting the U.S. market from unfair trade practices—that a holding company with two full-time employees is indeed a "domestic industry" worthy of protection.

“I want to especially thank Saxon Chief Executive Officer, Bill Marino, for conceiving of and executing the novel approach of demonstrating domestic industry in the International Trade Commission,” Kramer said. “His entire management team and all of our strategic partners made great contributions to accelerate our realization of such outstanding returns."

Patent Litigation Weekly: Inventor from ESN v. Cisco and Troll Tracker Lawsuits Arrested on Weapons Charges

The inventor who holds the patent that was at the heart of two libel lawsuits against "Patent Troll Tracker" blogger Rick Frenkel and Cisco Systems was arrested last week, after police found an illegal stockpile of firearms, ammunition, and grenades in his home in Manchester, Massachusetts, about 30 miles from Boston. Gregory Girard, named inventor on U.S. Patent No. 7,283,519, believed he was readying himself for "Armageddon," according to police. In addition to having around 20 firearms, Girard was stockpiling food and medicine, camouflage, and body armor, and had built an indoor shooting range in the attic of his condominium, according to accounts of the arrest in the Gloucester Daily Times and the Boston Globe. Girard had a license for the guns, but his explosives, double-edged knives, and habit of shooting indoors are all illegal.

Last Wednesday, a Massachusetts superior court judge deemed Girard too dangerous to be released and ordered him held until his probable cause hearing on March 15. According to police reports, Girard recently told his wife: "It's fine to shoot people in the head because traitors deserve it," and "Don't talk to people, shoot them instead." (His wife reported concerns about his increasingly paranoid behavior to authorities the day before he was arrested.) For Girard, those "traitors" may have included most members of Congress; news blog TPM Muckraker notes that Girard has been an active poster in far-right Internet forums for the past month.

In 2007, Girard's patent was the basis of an infringement suit that his holding company, ESN, filed against Cisco Systems. For ESN, it was a hugely important suit; one of ESN's lawyers later testified that his client was seeking "potentially hundreds of millions of dollars" from an East Texas patent win against Cisco.

Patent Litigation Weekly: A Closer Look at a New Patent Study

Two years after Richard Frenkel—at the time an in-house Cisco Systems, Inc., lawyer and now of counsel at Wilson Sonsini Goodrich & Rosati—outed himself as the until-then-anonymous author of the controversial patent litigation blog, the Patent Troll Tracker saga appears to be over.

In January, a libel suit filed by East Texas lawyer T. John “Johnny” Ward, Jr. against Cisco over the contents of an October 2007 Troll Tracker post was settled under confidential terms. Frenkel—dismissed as a defendant in the case last August at Ward's request—has declined to comment on either Ward's suit or a second, related defamation claim filed against him and Cisco by East Texas lawyer Eric Albritton. (That suit settled in September after a week-long trial; see earlier coverage on The Prior Art here, here, and here.)

While it’s clear now that at least a few high-level Cisco employees knew the Troll Tracker’s identity, company lawyers say no one there besides Frenkel contributed to the blog. Still, because Cisco is helping to lead the lobbying charge in favor of reforming the nation's patent laws—with a particular focus on lowering litigation payouts to non-practicing entities (a.k.a. NPEs, or "patent trolls")—those who advocate for small patent holders sensed a Frenkel-Cisco conspiracy.

Putting aside the conspiracy theories aside and drama—two lawyers with a high profile in the Eastern District of Texas's lucrative patent litigation scene suing Cisco and one of its in-house lawyers for libel and defamation—it seems like an opportune time to take a broad look at the big issue at the heart of the Troll Tracker tale: that the huge piles of money at stake in patent litigation has created an independent class of IP professionals? As it happens, a PricewaterhouseCoopers study released in January on just that topic has some answers.

"Patent trolling" has its rewards.

Tech-sector executives and lawyers say privately—and an informed review of court dockets confirms—that so-called trolls aren't just surviving, they're thriving. The essential NPE tactic—suing a broad swath of companies for patent infringement, then settling with each defendant for less than the cost of fighting such a suit—is now an established business model. It's so solid, in fact, that patent-holders are starting to delve into previously untouched economic sectors, suing small retailers and even photographers.

Patent Litigation Weekly: Shutter Closing on Massive Photo-Sharing Patent Suit

FotoMedia is a patent-holding company that claims just about every photo-sharing website you can imagine infringes its three patents. Its lawsuits, covered by TPA last May and June, are notable not just for the audacity of the claims they make, but also because they target dozens of small- and medium-sized software companies that provide various types of photo-sharing services over the Internet.

In previous stories about the FotoMedia suits, TPA detailed the litigation’s effect on San Francisco-based Fotki.com, which has about 25 employees, and the three-man, Texas-based software company FotoTime.

As the new year starts, some of the FotoMedia defendants are breathing a sigh of relief—and the rest may be doing the same soon. That's because reexamination requests filed with the United States Patent and Trademark Office by Yahoo Inc. appear to have knocked out nearly all the patent claims at issue. FotoMedia's lawyers at McKool Smith have reacted to that development by offering to either stay the suits or have them dismissed without prejudice (leaving FotoMedia able refile the claims at a later date.)

Patent Litigation Weekly: So What Do E.D. Texas Jurors Really Think?

This week: The Prior Art returns after its winter blogging break. As Microsoft gets set to scrap software found to infringe a Canadian company's software, The Prior Art discusses the case with three of the eight jurors whose verdict helped put the software giant in this predicament.

As of Monday—thanks to a permanent injunction issued in August by Judge Leonard Davis of the Eastern District of Texas and upheld last month by the Federal Circuit Court of Appeals—Microsoft Inc. must stop selling any version of Microsoft Word 2007 or Microsoft Office 2007 that includes a custom XML editor found to infringe a patent held by a small Canadian software company called i4i, Inc.

It’s not every day that such a well-known product has to be modified—or possibly removed from store shelves—because of a patent dispute. Indeed, the U.S. Supreme Court made getting such an injunction in a patent case extremely difficult with its landmark eBay v. MercExchange ruling in 2006.

Microsoft isn’t giving up the court fight over the patent at issue just yet. On Friday, the company’s legal team, led by Matthew Powers of Weil, Gotshal & Manges, filed a petition with the Federal Circuit asking for a rehearing en banc. Powers didn't return calls for this story. Earlier coverage on i4i's trial win, post-trial action, and Federal Circuit win is available from the AmLaw Litigation Daily.

Patent Litigation Weekly: How to win $25 million in a patent suit—and end up with a whole lot less

This week: DeepNines collected $25 million when it won an infringement suit against anti-virus software giant McAfee Inc. in the Eastern District of Texas two years ago. But after paying off its Fish & Richardson lawyers and outside investors at Altitude Capital Partners, the small network-security company wound up with less than $800,000 of the $25 million. And now DeepNines is being sued by Altitude, which wants millions more than it's already gotten. A revealing look at how a leading player in the lawsuit-investment trade does business.

Third-party financing of lawsuits—often described as a new and growing phenomenon—has been much in the news lately. But outside investors have been making multimillion dollar bets on patent lawsuits for years. One of the field's leading players is Altitude Capital Partners, founded by investment bankers Robert Kramer and Warren Hurwitz. Altitude, which has been investing in patent lawsuits since at least 2006, boasts of having more than $250 million to spend on such litigation.

Last week, The Prior Art reported on one patent-holding company Altitude has invested in. This week, we offer the story of another Altitude investment—one that resulted in an acrimonious lawsuit between parties that used to be on the same side.

Patent Litigation Weekly: Foley Tries Turning Tables on Spangenberg

This week, the man behind a notorious network of patent-holding companies finds himself in an unaccustomed spot: on the defense.

When it comes to litigation, Erich Spangenberg, well known for running a network of patent-holding companies, is usually a plaintiff. Now, though, he's on the other side of a lawsuit, having been named as a third-party defendant in a dispute between patent-holding company DataTern and its former lawyers at Foley & Lardner.

DataTern—a spinoff of an operating company, Firestar Software—made news last year when it settled a closely watched East Texas patent infringement suit against open source software leader Red Hat Inc. The settlement was considered novel because of the protection it offered to Red Hat's developer community. At the time, the parties kept financial terms of the settlement confidential; it has since been revealed that $4.2 million changed hands. (See Red Hat's press release on this settlement; analysis of the agreement at Groklaw; IPLB profile of Red Hat lawyer Richard Fontana.)

Foley & Lardner, which represented DataTern in the suit, claims it is still owed more than $1.5 million in fees for its work on the case. But rather than paying up, DataTern filed suit against Foley in January, essentially saying the firm did such poor work on the matter that it should be the one doing the paying. With the litigation now heating up, Foley has named Spangenberg, his wife, Audrey, and several related companies as defendants in a third-party complaint filed on October 1.

U.S. Senate committee passes bill against "pay for delay" drug settlements — more in October/November IPLB

The Judiciary Committee of the U.S. Senate passed a bill today that would ban "reverse-payment settlements," which are settlements that end patent litigation between branded and generic drug companies in which the branded company pays money to the generic. The Federal Trade Commission, which calls the agreements "pay for delay" settlements, has been fighting against these settlements for a decade now, but hasn't been doing well in court. Three separate appeals courts have ruled that different reverse-payment schemes are, in fact, legal. Both generic and branded pharmaceutical companies, and lawyers who work for them, have defended the settlements; but the FTC says consumers are losing out on billions of dollars in potential savings.

It's a development that makes the cover story in the October/November issue of IP Law & Business, recently mailed to subscribers, particularly relevant. 

The story looks at the history of how reverse-payment settlements developed, and focuses on what this controversy says about the different views on patent rights held by courts, federal antitrust enforcers, and the drug industry.

It's a hot topic for the drug industry, but the underlying question could affect all patent owners: Are patents truly "property" rights, or merely an option to litigate?

It's available now on IPLB.com: "One Man's Drug War." 

 

Patent Litigation Weekly: Eolas in Texas, Triune Star fee award, and Guardian Media saga moves to appeals court

For Eolas, a Texas address, Dallas lawyers, and Plano targets.

Eolas Technology, a company built on a patent that originated at the University of California, has gone Texan. Eolas—having settled a previous infringement suit against Microsoft after winning a jury verdict of more than $500 million—this week asserted its 5,838,906 patent in a suit filed against 23 companies, including large banks, technology companies, and retailers. The goal, obviously, is to amass a new fortune via the patent wielded against Microsoft, as well its flashier child-patent, No. 7,599,985. The common thread connecting the targeted companies: they all employ browser plug-ins and “AJAX” technologies that have been used in some form on the Web for more than a decade.

Despite that, Eolas attorney Mike McKool of McKool Smith is confident the '906 patent will hold up in the current litigation. Speaking with The Am Law Litigation Daily, McKool emphasized that the patent has already been tested three times in PTO reexaminations. (It’s worth noting, of course, that none of the present defendants were around for those hearings.)

As for Eolas itself, the patent-holding company has evolved since it was last heard from. It had just one employee—Dr. Mike Doyle, who lives in the Chicago area—when it sued Microsoft, and its payroll doesn’t appear to have grown much since then. The Eolas website, however, claims the company now does research and development in addition to enforcing patents, though the links its research accomplishments are mostly brief descriptions of patents or patent applications.

Troll Tracker defamation case settles before going to jury

After four days of testimony, the "Troll Tracker" defamation lawsuit ended in a confidential settlement the day before the East Texas jury hearing it was set to begin deliberations. 

Plaintiff Eric Albritton and defendants Cisco Systems and Rick Frenkel, a former Cisco lawyer who blogged anonymously as the Patent Troll Tracker, settled the case Monday night, shortly after Judge Richard Schell ruled that the jurors would have to find "actual malice" on the part of Frenkel and Cisco in order for Albritton to win the punitive damages he was seeking from the tech giant. 

None of the lawyers involved in the case would comment on the settlement Monday. Cisco issued a statement Tuesday morning in which it said the dispute between the parties "has been resolved to their mutual satisfaction, and Rick Frenkel and Cisco apologize for the statements of Rick Frenkel on the Troll Tracker blog regarding Eric M. Albritton." Frenkel is now of counsel at the Silicon Valley law firm Wilson Sonsini Goodrich & Rosati.

Johnny Ward and Eric Albritton on Troll Tracker blog: "Let's get this shut down."

Plaintiffs T. John "Johnny" Ward Jr. and Eric Albritton took the stand in the closing days of this week’s closely watched Troll Tracker defamation trial, with Albritton tearfully telling the jury that two posts published by blogger—and ex-Cisco Systems lawyer—Rick Frenkel in October 2007 had "hurt" and "humiliated" him, while Ward described his strong and straightforward response to the offending posts as: "Let's get this shut down."

Ward took legal action the following month, seeking to depose Google officials to determine the identity of the then-anonymous patent blogger. Once Frenkel was identified as the Patent Troll Tracker several months later, both Ward and Albritton sued Frenkel and Cisco for defamation.

Ward and Albritton say Frenkel's posts, about changing a date on official court documents, were defamatory because they accused the two Texas lawyers of committing a crime.  Lawyers for Frenkel and Cisco maintain that the posts contain no such accusations, and are a mix of true facts and legally protected opinion.

Rick Frenkel takes the stand in Troll Tracker defamation lawsuit

Former patent blogger Rick Frenkel took the stand in the federal courthouse in Tyler, Texas, on Wednesday, and apologized for referring to the Eastern District of Texas as a "Banana Republic" in a post he published as the "Patent Troll Tracker." But Frenkel insisted his blogging about a patent infringement suit against his then-employer, Cisco Systems, was not defamatory.

"You know, I think I was outraged over a situation ... and I used words that were strong," said Frenkel. "But I sure didn't mean to hurt anyone by it." Frenkel apologized for using the phrase, and noted that he took it off the blog after 24 hours. In October of 2007, about 500 people per day were accessing the Troll Tracker blog, he added.

At issue in the case are two particular Troll Tracker posts, dated Oct. 17 and 18, 2007. Plaintiff Eric Albritton claims the posts accused him of a crime by alleging that he "conspired" with a courthouse clerk in the plaintiffs-friendly Eastern District of Texas to change a critical date on a docket in an infringement suit he filed against Cisco. For his part, Frenkel says he was outraged that the change was made without a motion being filed.

Troll Tracker defamation case goes to trial -- opening statements heard

A hot, muggy, Southern rainstorm came down in short squalls in Tyler, Texas, Monday morning, drenching the city’s central square just as jury selection got underway in the Patent Troll Tracker defamation case, being argued in the federal courthouse here.

The Prior Art blog is reporting from the trial over the next several days.

We’ve covered the background and development of Albritton v. Cisco Systems, a case brought by lawyer and east Texas patent litigation player Eric Albritton against Rick Frenkel and his former employer Cisco Systems, alleging that in the course of Frenkel's brief and anonymous blogging career, he libeled Albritton.

(Earlier TPA coverage of Albritton v. Cisco and Ward v. Cisco: Troll Tracker sued, 3/11/20008; Judge Ward's Son may have pursued Troll Tracker for months, 3/12/2008; Frenkel, Cisco to fight defamation suits in East Texas, 5/27/2008; Troll Tracker blogger Rick Frenkel moves to Wilson Sonsini, 8/4/2008; Troll Tracker defamation update, 11/7/2008; Cisco says Frenkel told the truth, 12/9/2008.)

More recently, sibling publication Texas Lawyer just published an overview of the facts of the case here.

Patent Litigation Weekly: Stanford Researcher Loses at PTO, Still Fights On

In the April/May issue of IP Law & Business, we reported on the plight of Bob Shafer, a Stanford University scientist embroiled in a dispute with Luxembourg-based Advanced Biological Laboratories, S.A. (ABL). ABL claimed it owned two patents that were being infringed by the world-renowned HIV-drug resistance database Shafer created, HIVdb.

To recap quickly: After ABL sent Stanford claim charts and a letter asserting its patent rights, Stanford sued to invalidate the patents. That case settled, with Stanford agreeing to post a notice on the database stating that users of HIVdb might infringe ABL's patents.

ABL subsequently sued Stanford, saying the university had violated the settlement terms; the company also sued Shafer for defamation, based largely on comments he posted on his website, harmfulpatents.org. Shafer, tapping his own savings, hired attorneys at Day Casebeer to file reexams on the two ABL patents. (Day Casebeer has since been purchased by Howrey LLP.)

ABL's counterclaims against both Stanford and Shafer individually have now been settled. And it certainly appears that Chalom Sayada, the French doctor who is ABL’s CEO, has concerns about how the litigation makes him look to HIV researchers. The joint settlement statement reads, in part:

Patent Litigation Weekly: Juniper’s Novel Defense Tactic Attracts Unlikely Allies

Peter Shipley is a Bay Area hacker and patent-holder who sues technology companies under the corporate name Enhanced Security Research, LLC. In 2007, ESR sued Juniper Networks in district court in California for patent infringement. Juniper struck back in February with a novel false-marking lawsuit, which The Prior Art reported on in June.

Juniper's argument, readers may recall, is that every time a browser loads Shipley's web page, an “offense” is committed because his mention of two patents he holds, Nos. 6,119,236 and 6,304,975, constitutes false marking. False marking occurs when a product is marked with the number of a patent that doesn't really cover it.

Shipley's attorneys at Townsend and Townsend and Crew and Robins, Kaplan, Miller & Ciresi argue that their client is simply posting his patent numbers as part of an online resume, not as a way of trying to sell or market a product. For that reason, they say, he can’t be accused of false marking.

Juniper’s line of attack against Shipley has now attracted an ally: the Public Patent Foundation, which has asked for permission to file an amicus brief on Juniper’s behalf.

PubPat's bid to jump into the case coincides with its ambitious plans for a false-marking litigation campaign, assisted by David Garrod, public interest lawyer by day and patent enforcer by night. (Garrod owns a patent and has sent East Texas love letters to a large chunk of the Internet, and two smaller companies. Garrod and PubPat founder Dan Ravicher are co-authors on the brief.)