Thursday, November 21, 2019

Apple joins Intel in suing Softbank-owned Fortress for anticompetitive patent abuse through web of trollish subsidiaries

Last month, Intel brought an antitrust ocmplaint in the Northern District of California over Softbank-owned Fortress Investment's patent aggregation, obfuscation, and litigation tactics. Fortress's web of hyperaggressive patent assertion entities includes a huge and growing number of legal entities, some of whom have such names as Uniloc (which sued Apple 25 times and Google even 35 times), VLSI, DSS, Inventergy (which threatened an alleged infringer with an "IP bloodbath"), IXI, Seven Networks, and KIP CR (the CR in that name stands for "crossroads").

The good news for the trolls is that Intel withdrew its complaint. The bad news for them--but excellent news for product-focused companies who feel that enough is enough--is that the complaint came back with a vengeance as Intel and Apple made a joint filing yesterday as Reuters's Stephen Nellis was first to report (this post continues below the document):

19-11-20 Intel-Apple Antitr... by Florian Mueller on Scribd

In terms of the claims and prayers for relief, what's changed is mostly that Apple alleges FRAND violations. Uniloc is mostly or exclusively asserting--against Apple--standard-essential patents (SEPs) that previously belonged to Philips. (I've just recently become aware of a Philips patent licensing tactic in the LED segment that raises some very serious questions as well.)

The new complaint states some numbers I hadn't seen in the original one. For an example, there are estimates that tens of billions of dollars have been invested in patent litigation, and "the largest litigation investor reported having investments of $2.8 billion in 2019."

The amounts that some Fortress trolls are seeking from Apple are shocking. For an example, "VLSI claims up to $7.1 billion in connection with eight patents in the California Action and multiple billions of dollars in damages in the Delaware I Action." And that's just a small and limited part of the overall litigation activity by Fortress-controlled companies against Apple. Another group of Fortress entities, Uniloc, is seeking damages from Apple in the range of $2.6 billion to %5.1 billion from only 4 (!) of the 25 aforementioned Uniloc v. Apple cases as you can see on pages 30 and 31 of the complaint. According to Apple, "Uniloc "simply adopted the amounts that Apple sought from Samsung in litigation for Apple's patents." What Apple means is what Uniloc wants on a per-unit basis. I've criticized Apple very strongly for some of its damages claims against Samsung, but even if one agreed with what Apple wanted from Samsung at the time, it just wouldn't make sense to copy and paste an amount when it's about completely unrelated patents.

The fact that Apple has thrown its weight behind the case--in addition to Intel, which took the initiative last month--has several effects:

  • Intel's complaint already mentioned the cases against Apple, but having the target of dozens of the relevant cases directly involved raises the profile of the problem.

  • While most Silicon Valley jurors will likely have heard of Intel, Apple is more of a household brand.

  • It would presumably have been difficult for Intel to make some of the FRAND breach arguments that Apple, as a target of SEP assertions by Softbank, has brought in the joint complaint.

  • With both Intel and Apple based on the outskirts of San Jose, it should be easiser this time to keep the case in San Jose (where the complaint was filed) rather than having it reassigned within the district to San Francisco.

Now I only wish Google--another target of dozens of Fortress-funded patent lawsuits--could also join so the industry presents a united front to those industrialized patent trolls. But even if Google elected to stay on the sidelines, the combination of Intel and Apple will put Fortress and--by extension--Softbank under serious pressure.

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