Patent Risk Digest

March 2018

A monthly update on market activity, legal developments, and policy related to patent litigation
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RPX Market Sector Update: E-Commerce and Software

As of January 31, 2018, there were more than 670 active defendants in ongoing patent troll campaigns in the E-Commerce and Software market sector, with one plaintiff alone bringing over 50 defendants into new litigation. Read on for new litigation highlights, information about a notable decision, and the details of a multi-million dollar settlement—all within the E-Commerce and Software market sector.

Website Slideshow Presentations at Issue in Take Two over Former Adaptive Avenue Patent

On January 12, Lawson Innovations LLC filed suit against Southern Newspapers over a patent broadly related to the use of “slide show format” presentations on the web. At issue is the publisher’s use of carousels to cycle through stories on various local newspaper websites.

Sisvel Targets Recommendation Engines in First Litigation Campaign of 2018

Sisvel International S.A., through Italian subsidiary S.I.Sv.El. Societa’ Italiana Per Lo Sviluppo Dell’Elettronica S.p.A., initiated a new campaign in January, asserting for the first time patents received from Philips in December 2016. The defendants are Rakuten (Rakuten Kobo), Rhapsody, and Spotify, each of which is accused of infringing at least two of five former Philips patents through the provision of media recommendation features that factor in user preferences.

Express Mobile Continues to Add Defendants in Delaware

Express Mobile, Inc. added five new cases in January to the litigation campaign that it began back in April 2015, suing Domani Studios and SG Hosting over their use of webpage authoring tools provided by Drupal, X Commerce (d/b/a Magento), and Automattic (i.e., WordPress); Manifest over its use of WordPress and Drupal; WPEngine, over WordPress; and Rockfish Interactive, over tools provided by Drupal and Shopify.

Number of PersonalWeb Lawsuits Filed in January Tops 50

After filing over 35 new cases in early January, PersonalWeb Technologies, L.L.C. added almost a dozen more suits to the litigation campaign during the second half of the month. The latest defendants include Gartner (Capterra), IAC (Match Group), Karma Mobility, LiveChat, and WeddingWire, each sued in the District of Delaware. The complaints seek past damages for the alleged infringement of five expired patents generally related to “methods for identifying data items in a data processing system”, with infringement allegations focused on the manner in which the defendants’ websites distribute and serve web content in light of what content has been updated.

Chat Engine Campaign Sees Second Wave Filed, This One in Southern District of New York

Epic IP LLC began asserting a single online chatting patent in January, hitting six companies during the month: AutoNation, Backblaze, Blue Jeans Network, Fareportal, JAND, and Sharp. The complaints accuse all six defendants of infringement through provision of live chat mechanisms on their websites. Epic IP is an apparent affiliate of patent monetization firm IP Edge LLC.

Finjan Discloses a Fifth Multi-Million Dollar Settlement in 2017

On January 18, Finjan Holdings, Inc. and FireEye announced that they had entered into confidential patent license agreements, resolving litigation between the companies. According to Finjan’s December 29 press release, FireEye has agreed to pay Finjan a “one-time net settlement amount of approximately $12.5 million payable in cash”. Finjan reported a total of five multi-million settlements in 2017, including with Avast ($8M), Avira ($4.9M), Sophos ($17M), and Veracode ($2M). The previous year, it disclosed settlements with Proofpoint ($10.9M) and F5 Networks ($4M). Additional details are available on RPX Insight.

Finjan Signs Deal with Symantec for Up to $110M

Finjan Holdings, Inc. announced on March 1 that it had entered into an agreement with Symantec and its Blue Coat Systems subsidiary that resolves all pending claims between the parties. According to an SEC filing by Finjan, Symantec will pay $65M for a patent license, paying additional license fees of up to $45M upon Symantec’s acquisition of certain entities within four years from the agreement’s effective date. This deal follows a year in which Finjan disclosed having signed five multi-million dollar settlements in its anti-malware campaign.

Finjan began its sole litigation campaign in 2006 and has asserted various combinations of over 20 patents against providers of anti-malware and security software, services, and appliances. It disclosed signing a total of five multi-million settlements in 2017, with Avast ($8M), Avira ($4.9M), FireEye ($12.5M), Sophos ($17M), and Veracode ($2M).

Early 2018 Sees the Formation of a Crop of New Patent Trolls

Two of last year's most prolific patent litigators—Monument Patent Holdings, LLC and IP Valuation Partners LLC—collectively formed at least nine new patent trolls in Texas in January; several appear to already be gearing up for new litigation campaigns.

Monument Patent Holdings was among the top five patent assertion entities in 2017, bringing over 90 defendants into new litigation during the year, and it is showing no signs of slowing down. During the month of January alone, it formed at least four new affiliates, all in Texas: Liberty Peak Ventures, LLC (created to monetize a large portfolio of former Amex patents); Principle Packaging LLC (which kicked off a campaign in late February, asserting a former Del Monte patent); Vista Peak Ventures LLC (which received a portfolio of over 1,200 LCD patents from NEC in mid-February); and Sovereign Peak Ventures, LLC (the purpose of which remains to be seen).

January also saw IP Valuation Partners LLC (d/b/a IPVal), the fifth most active patent assertion entity last year, also form five new affiliates in Texas: Caladan IP Holdings LLC; Chapterhouse LLC; Errol LLC; Flectere LLC; and Phaleron LLC. IPVal initiated over 15 new litigation campaigns in 2017 alone and has filed seven cases so far this year, including in a new campaign targeting access points.

RPX’s Patent Quality Initiative

The passing of the America Invents Act in 2011 introduced new means of challenging patent validity, including the inter partes review (IPR). This administrative process can be an effective way to challenge patent validity outside of the court room. It also provides a cost-effective way to address irrational price expectations in the patent market.

RPX files IPRs against low-quality patents with the aim of deterring or stopping infringement lawsuits that we believe are frivolous and wasteful. The logic for doing so is simple: If we can invalidate patents that do not claim real inventions, we can reduce the time spent on fighting assertions and litigations, as well as the billions of dollars spent on unnecessary legal fees and settlements.

RPX has filed 51 petitions for IPR as of February 2018, challenging more than 30 total patents across over 20 litigation campaigns. RPX is among the top petitioners before the Patent Trial and Appeal Board, with a merits-based institution rate of roughly 96% as of the publication date of this report.

RPX IPRs have effectively resolved a number of large litigation campaigns, including the following:

Rothschild Connected Devices Innovations, LLC

Rothschild Connected Devices Innovations LLC (RCDI) kicked off its litigation campaign in February 2015 with the filing of 19 cases asserting a patent generally related to remotely customizing a consumer product based on user preferences. In July 2017, the PTAB invalidated eight claims of RCDI’s patent in an IPR filed by RPX, finding the claims to be invalid over prior art. By the time that decision came down, the campaign had hit more than 60 consumer product manufacturers operating in sectors including automotive, energy, and home automation. RCDI has not filed any new lawsuits since March 2017.

RCDI is controlled by prolific inventor Leigh M. Rothschild, who has been among the most frequent patent plaintiffs in litigation over the last several years, including in 2017.

Digital Audio Encoding LLC

In the summer and fall of 2016, Digital Audio Encoding Systems LLC (DAE) sued 29 companies over a single patent related to digital streaming media. The lawsuits targeted makers and retailers of Android smartphones, tablets, wearables, and other devices that were pre-installed with Google Play Music, as well as companies that use WebEx collaboration products and network carriers. The campaign defendants included a variety of companies, including mobile device and software manufacturers, retailers, and banks.

In early November 2016, RPX filed multiple petitions for IPR against DAE, with one of those petitions pointing to a previously undetected defect in DAE’s asserted patent. After RPX filed its petitions, DAE quickly dropped all of its remaining district court cases. The following month, it disclaimed all claims of the patent and effectively rendered the patent unenforceable, specifically referencing the argument raised by RPX as the reason. Additional details about RPX’s IPRs against DAE are available in this case study.

DAE has not filed any new litigation since July 2016.