Due to my focus on litigation between large operating companies, I rarely find the time to look at disputes involving smaller players and, particularly, non-practicing entities (NPEs). But a friendly patent litigator (whose firm is, to the best of my knowledge, not involved with any of the lawsuits I cover) sent me a publicly-accessible court filing that caught my interest because it relates to a legal issue of increasing importance in big-company disputes: the question of standing (the right to sue) after patent transfers.
This year, the ITC threw out five patents that Google had formally assigned to HTC, which immediately assert them against Apple, the reason for the dismissal being that Google retained some substantial rights in those patents, including the apparently unfettered right to grant sublicenses.
Four other patents that were (sort of) transferred under the same agreement are still at issue in a case HTC brought against Apple in Delaware. That district court will soon decide on Apple's motion to dismiss those patents and, as a result, an entire federal lawsuit.
Interestingly, the same Google that engaged in this kind of dubious dealing with HTC appears to advocate a very high standard for standing when it's on the receiving end of litigation. The filing I mentioned above is an October 26, 2012 motion to dismiss a lawsuit brought by recently-founded NPE Suffolk Technologies, LLC against Google and AOL in the Eastern District of Virginia in June. The two patents-in-suit, U.S. Patent No. 6,334,132 on a "method and apparatus for creating a customized summary of text by selection of sub-sections thereof ranked by comparison to target data items" and U.S. Patent No. 6,081,835 on an "Internet server and method of controlling an [I]nternet server", used to belong to British Telecom (BT), which set off a chain of transfers involving, among other entities, a BT subsidiary, a patent monetization firm named IPValue (with which BT has been working closely since 2001), and ultimately the current owner and plaintiff, Suffolk, which according to the joint Google-AOL motion "came into being, and acquired its rights in the asserted patents, as part of IPValue's program of generating revenue for British Telecom". A 2001 press release stated that "[t]he new venture hopes to generate revenues of $100m per annum within six years by licensing BT's extensive array of patents in areas such as telecommunications, multimedia and wireless".
Google was already approached about those patents, by BT and IPValue, in 2008, prior to all these transfers. Google now speculates that "[w]hen those discussions did not go as it had hoped, British Telecom--apparently unwilling to participate in any potentially ensuing litigation and related document preservation and discovery obligations--transferred the asserted patents to its subsidiary BT Newgate LLC via intermediary companies". This claim has a plausibility problem: BT is also suing Google directly -- over six other patents in a litigation it brought in December 2011. BT must have had other reasons, such as limited bandwidth in its litigation department, for partnering with Suffolk. One of those possible reasons is that it's difficult to assert large numbers of patents in U.S. courts, which generally consolidate cases across districts and pressure plaintiffs to narrow their cases. Apple's enforcement efforts against HTC -- with 32 patents-in-suit waiting for adjudication in federal court -- is a good example.
Google alleges that "[b]y reserving numerous substantial rights for itself, [...] British Telecom has made it such that Suffolk does not have standing to maintain this suit". This is precisely what Apple argued in the ITC investigation of HTC's second complaint and is still arguing in federal court in Delaware.
Just like Apple felt that the whole purpose of the Google-HTC patent deal was just for HTC to sue Apple on Google's behalf, Google now says that "even a cursory review of the contractual arrangements shows that what Suffolk has it at best a mere 'hunting license' to act as British Telecom's agent in licensing". According to Google, British Telecom "may want to use Suffolk as a convenient shell entity".
Google mostly argues with U.S. case law on standing, but it also says, more generally, that "in any case these arrangements [between BT and Suffolk] also violate public policy", essentially arguing that this is not in line with the goals and principles of patent law.
The motion is heavily redacted and provides even less information about the alleged deficiencies of the BT-Suffolk deal than the non-redacted parts of the Apple-HTC standing dispute revealed. Maybe Google is right and BT retained one or more of the substantial rights that Suffolk would need to have in order to sue. If so, the pot is calling the kettle black.
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