Patent Filings Roundup: Western District Waters Tested; IP Edge Runs from Disclosure in Delaware

Jul 10, 2023

Twenty-three inter partes reviews (IPRs) and no post grant reviews were filed this week; plaintiffs filed an average-ish 79 new district court patent filings, though many were associated with older campaigns. The Daedalus Prime subsidiary asserting Intel patents has filed suits against Samsung and TSMC; Volkswagen filed a number of IPRs against Fortress-backed Neo Wireless. There were, again, no discretionary denials at the Patent Trial and Appeal Board (PTAB), though certainly merits-based denials continue apace; many challenges against Magnetar entity Scramoge have been instituted; and Red Hat filed a declaratory judgment action for non-infringement against litigation-funded Valtrus [Centerbridge Capital, run by Key Patent Innovations] on patents not yet asserted in district court, just as Google began challenging a different set of patents asserted against just them. TikTok also filed IPRs against asserted patents owned by the funded Advanced Coding Technologies—which appears to be related to Leigh Rothschild’s Patent Asset Management, per corporate records; and Raymond Anthony Joao, in keeping with tradition, has sued yet another oddly sympathetic plaintiff via one of his subsidiaries, Alvao Digital LLC—FC Dallas Soccer LLC—on two patents, and separately against local Dallas primary care physicians (Nextcare Primary Care Texas PLLC) in Greatgigz Solutions LLC.

Other Western District Waters Tested, Tentatively: NPE ALD Social LLC [IPValuation Partners], one of two IPValuation Partners entities monetizing a handful of patents acquired from Comtech Telecommunications, has filed six cases in the Western District (WD), skipping Waco and heading to Judge Fred Biery’s court in San Antonio for all six. Biery has had just a handful of cases in the past decade—few past five years, until recently; but the San Antonio court and docket he helps oversee is massive. This now puts him in the top five for Western District judges for patent cases (with Bassfield IP and some other ancillary orders in a handful of other cases), with Judge Albright (obviously) leading the charge and Judge Yeakel of Austin a distant second; Judges Gillman and Pittman being the others. Most other WD Judges have either never or so seldom had a patent case as to render us all unable to make even educated guesses as to how they will handle them. The ALD stands for Aggregate Location Dynometer and the accused products are all various emergency notification services offered by defendants AT&T, Alert Media, Alphabet, Apple, Deutsche Telekom (T-Mobile), and Verkada.

The other subsidiary monetizing Comtech patents is Artax, LLC; it’s unclear whether they’re related or have financial or managerial support in common. Artax, for their part, sued GPS company TomTom at the end of last month.

What is clear, though, from recent filings, is that beyond a few outliers, few are willing to experiment in the short-term with an uncertain assignment scheme. It seems abundantly clear (if it wasn’t already) that a whole class of entities effectively banked on being able to select Judge Albright over any other member of the federal judiciary.

IP Edge Entities Run into (and then from) Delaware Disclosure: Clear the country, NPEs who have long preferred Delaware—I’m speaking primarily of the 500-600 cases filed annually by subsidiaries associated with IP Edge—have had to contend with Chief Judge Connolly’s new standing/finance disclosure order, and they haven’t fared well to date. IP Edge’s common practice—to recruit an LLC “owner”, generally a Texas individual of questionable relation to the patents or monetization effort, often a paralegal or, occasionally, a family member of lawyers involved in enforcement—has raised questions from defendants and Judge Connolly himself.

IP Edge entities often run like clockwork through certain preferred firms and run on shoestring budgets—and historically, despite filing literally thousands of complaints in its ten years of life (and representing, most years, upwards of 15% of all patent filings), IP Edge cases statistically never go to trial, and more than 90% of them settle within six months prior to Markman, with the vast majority settling even before an answer is due from the defendants.

IP Edge itself is run by three principals with ties to former Eric Spangenberg-run IPNav—the self-declared “King of the Patent Trolls”—and works, according to their public profiles and website, to help secure financing and representation and manage a vast array of LLC subsidiaries asserting patents. Recently, whether by design or necessity, the principals themselves—normally involved only in licensing discussions and not in any of the official documentation—have been appearing as counsel in IPRs and occasionally in district court. They appear to favor Delaware as, having no apparent intent to go to trial, a longer time-to-trial benefits their file-and-settle model by creating a longer window in which to engage in largely expense-free settlement negotiations.

In Delaware, they have maintained since Chief Judge Connolly’s order that there are no third-party investors or interested parties, with the disclosed owners generally being any of these unrelated individuals mentioned earlier and listed on the LLC formation documents. On September 12, Chief Judge Connolly ordered the principals to appear in person at evidentiary hearings to answer to those disclosures (a similar order issued in cases related to Dynamic IP Deals (DynaIP) cases. After that order, the IP Edge entities quickly filed voluntary dismissals, thus evading the hearing and any immediate reckoning with their disclosures.

Unrelatedly, The Life is Good apparel company filed a declaratory judgment against Hitel, another IP Edge subsidiary, in Massachusetts this week (with some accompanying press), accusing the entity of “ bad-faith threats to assert frivolous patent infringement claims” against their website under Massachusetts’ local unfair and deceptive practices laws. In that complaint, the company notes that “Hitel’s sole managing member is Annette Rathgeber, who also works for a company called IP Edge LLC (“IP Edge”). IP Edge purports to be Hitel’s licensing advisor.” It details an assertion letter and repeated communications threatening litigation, and notes that Hitel alone has brought more than 30 suits against similarly situated retail companies.

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