Patent Risk Digest – June 2017

More Risk for Mobile Device Manufacturers

Hybrid Audio LLC at least tripled the size of its litigation campaign in the past month over a single patent related to processing audio information—with more than 50 defendants now named in lawsuits. Manufacturers of laptops, tablets, smartphones, and other devices using the MP3 standard continue to be targeted. The asserted patent has survived re-examination as well as a petition for inter partes review, or IPR—a request for review of its validity.

Also pointing to heightened risk for companies that make or sell mobile devices, or that use technologies related to mobile devices in services they provide, are a number of recent patent purchases. Records show a number of mobile communications and device patents being acquired by entities for probable assertion. Some of the latest examples include:

Coding Technologies, LLC acquired a family of seven patents and one application generally related to a system and a method for providing mobile services using a code pattern.
Delaware entity Cria, Inc. acquired over 100 assets including patents originating from Nokia. The Nokia patents generally concern a communication unit with a device for preventing loss or theft, including mobile telephone handsets and portable computers.
Ox Mobile Technologies LLC acquired four wireless communications patents along with other foreign patent assets.
Spectrum Patents, Inc., a Texas-based plaintiff owned by patent attorney Brian Yates, picked up five mobile communication patents.

CRM Software Persists as Litigation Magnet

Makers and providers of CRM (customer relationship management) software and cloud storage and file sharing solutions continue to be popular targets for patent infringement litigation. We reported in February that plaintiffs have taken particular interest in SaaS (software-as-a-service); months later, the litigation continues—with Mozly Tech LLC recently suing more companies in its CRM and contact management software campaign. The newest defendants include a telecom business and an information services provider as well as companies focused predominantly on software as a service.

From the beginning of 2017 through the middle of June, hundreds of defendants have been named in SaaS-related infringement lawsuits brought by some of the most prolific plaintiffs in patent litigation. Many of those cases are fairly sophisticated or complex—potentially more expensive and difficult to defend. During the first half of this year alone, looking just at suits targeting the CRM sector, a sampling of the accused technologies and products in those cases includes:

Server/cloud based video monitoring
Payment security
Virtual cloud computing environments
Software licensing and delivery
CRM and contact management software
CRM systems with interactive, real-time call tracking
Electronic commerce systems
Instant messaging with conference calling
Business-to-business E-commerce
Financial management systems
Digital watermarking
Network-based customer service

These complex campaigns have broad applicability to a large number of service providers.

Web Tech Suits Put Any Company with Online Services at Risk

Website technology presents a lot of patent infringement litigation risk—in large part because there are so many patents covering website functionality, and so many companies across just about every sector use their websites to conduct business. Most recently, Caddo Systems, Inc. in May sued a number of telecom companies in the latest wave of its litigation targeting a commonly used hierarchical menu navigation technology. It’s the latest activity by Caddo and exclusive licensee 511 Technologies, Inc. in a campaign that began litigation in August 2016.

Also in May, Guyzar LLC filed another half dozen cases in its ongoing litigation over login technology, bringing its defendant count to more than 70. The suits accuse companies of infringing a patent generally related “to using a separate certification server to authenticate a first server without revealing confidential information about the user.”

These two campaigns alone have targeted a wide range of businesses, among them:

Airlines
Engineering software providers
Internet service providers
Energy companies
Online dating app
SaaS provider
Digital magazine newsstand
Mainstream apparel and consumer product retailers

Has a New Court Decision Changed Patent Litigation Risk—Or Not?

In May, the Supreme Court issued its opinion in TC Heartland v. Kraft Food Brands, a case involving rules for where patent cases can be litigated. This decision could have a significant impact on where patent cases are filed. But will it change the risk that companies face for getting sued for patent infringement?

The short answer is that TC Heartland won’t put an end to patent litigation, although it will alter the landscape. Here’s a closer look at the decision and what it means:

Context

For over 20 years, plaintiffs could file patent lawsuits in almost any federal district court where the defendant had even minimal business contact (e.g., marketing or selling the accused product). Given the nationwide reach of most businesses, this allowed plaintiffs to “venue shop”, or bring cases in courts they considered to be more favorable. Thus, a disproportionately high number of patent infringement cases have been filed in the US District Court for the Eastern District of Texas—a venue popular among plaintiffs due to the perception that its speedy system and propensity for trial put extra pressure on defendants to settle.

Decision

TC Heartland limited the options for venue. Now, patent cases must be brought either where the defendant has “committed acts of infringement” and has a “regular and established place of business”—or where it is incorporated (assuming it is a US corporation).

Impact

TC Heartland will move some patent cases out of Texas, but probably not all of them.
However, it will also make corporate centers like Delaware or the Northern District of California the more natural choices for patent litigation.
There is also some question about what a “regular and established place of business” means. Companies with offices in multiple states, especially nationwide retailers, may still face litigation in locations far from their headquarters—at least until courts have wrestled with what this option means.
Questions remain, also, about where companies with a predominantly online presence can be sued for patent infringement.
In addition, TC Heartland only affected US corporations. The rules for non-US corporations and LLCs or proprietorships are somewhat uncertain.

The bottom line: TC Heartland is a significant change, but it will take some time for the effects to become clear. And, notwithstanding the change, patent litigation goes on. RPX has been tracking litigation activity since the decision, finding that some plaintiffs already are seeking alternative venues to Texas—in some cases proactively seeking to transfer matters to other venues—while other plaintiffs are arguing they should get to stay.

Contact Us

Contact patentriskdigest@rpxcorp.com to request more detailed information on patent litigation risk in your sector, as it applies to your particular business or clients.