PublishedApril 28, 2014

A Bad Week For Patent Trolls

The courts have not been kind to patent trolls lately. There were recent big decisions affecting Intellectual Ventures, MPHJ, and Rockstar.

IV’s Patents Not So Great, Says Judge

As you may remember, Intellectual Ventures sued a bunch of banks for patent infringement because that’s where the money was. Well, the first case, against Capital One, is over already. Turns out “the best quality patents in the industry” are the junk we thought they were. The judge found that the two patents left in the case were invalid because they were not patentable subject matter. The judge observed that

[E]ach patent consists of nothing more that the entry of data into a computer database, the breakdown and organization of that entered data according to some criteria, disclosed in the ’137 patent, but not in the ’382 patent, and the transmission of information derived from that entered data to a computer user, all through the use of conventional computer components, such as a database and processors, operating in a conventional manner.

Definitely a less-than-impressive start for IV in its cases against the banks.

MPHJ Fails to Make a Federal Case

Perhaps the most notorious patent troll, MPHJ, is fighting the Vermont Attorney General’s suit for violating Vermont’s consumer protection laws. MPHJ’s first move was to try to remove the case to federal court. Swing and a miss! The judge in the federal case granted Vermont’s motion to remand the case back to state court.

Basically, the judge rejected MPHJ’s arguments that the case involved issues of patent law, which would mean that the case could only be in federal court. The AG was only accusing MPHJ of violating consumer protection laws by sending out fraudulent letters with empty threats to sue, so it makes no difference if the patents are valid or invalid, or if scanners actually infringe them.

MPHJ will now get to fight in a local Vermont court, which isn’t likely to sympathize with MPHJ’s business model of shaking down small businesses and non-profits. I wouldn’t be surprised to see a settlement that required MPHJ to stay out of Vermont happen soon.

Rockstar’s Texas Two-Step Falls Flat

Rockstar is a consortium created using the Nortel patent portfolio, and its purpose is to find infringing companies and obtain licenses. Apple is the majority shareholder, so it seems unlikely to be a coincidence that Android manufacturers were Rockstar’s first targets.

Google filed a declaratory judgment action against Rockstar in the Northern District of California in order to defend its customers. Rockstar then tried to move the case to the Eastern District of Texas, and that motion was just denied. The judge found that Rockstar’s empty office in Plano, Texas was just a sham created to tie the case to the Eastern District of Texas. More importantly, the judge appeared to be persuaded by Google’s argument that Apple was behind the whole scheme of attacking Google customers. Rockstar’s CEO admitted that he reports progress to Apple, and the judge observed that Rockstar’s “litigation strategy of suing Google’s customers in the [Eastern District of Texas] actions is consistent with Apple’s particular business interests.”

And so the case will stay on Google’s home turf.

Matt Levy

Previously, Matt was patent counsel at the Computer & Communications Industry Association

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