Authored by D. Brian Kacedon, Jameson Q. Ma, and John C. Paul
Patent litigation plays an increasingly important role in business strategies. The increasing threat of litigation has lead to the formation of companies known as "defensive patent-aggregators." These defensive patent-aggregators will typically acquire patents on behalf of their customers or members to keep them out of the hands of entities who are likely to bring suit, thereby potentially reducing the litigation costs and risks to their members. For this reason, these services may seek out patents that create potential risks and notify their members of acquisition opportunities. As these services are relatively new, however, the consequences, if any, of participating in such services have not been fully explored.
A recent case, SoftView LLC v. Apple Inc., 10-389-LPS (D. Del. July 26, 2012),1 addressed one potential unintended consequence of such activities. Specifically, in the case, the court addressed whether a defendant's association with a defensive patent-aggregation service could plausibly serve as evidence of pre-suit knowledge of an allegedly infringed patent for purposes of establishing a claim of willful infringement with the possibility of treble damages.
SoftView alleged infringement of one of its patents related to the scalable display of Internet content on mobile devices, initially filing suit against Apple and AT&T Mobility LLC in May 2010. During the course of litigation, a second patent issued, directed to similar subject matter as the other patent. SoftView then filed amended complaints, further alleging infringement of the newly issued patent, adding new defendants to the litigation, and alleging willful infringement against all defendants.
For some of the defendants, SoftView alleged that the defendants acquired pre-suit knowledge of SoftView's first patent as a result of their corporate membership in RPX Corporation, a defensive patent-aggregation service with which SoftView had previously discussed the possibility of licensing the SoftView patent family. SoftView further alleged that these defendants acquired pre-suit knowledge of the newly issued patent through their relationship with RPX.
These defendants moved to dismiss SoftView's willful-infringement allegation for failure to state a claim, arguing that SoftView had not plausibly alleged the defendants' pre-suit knowledge of the patents.
The SoftView Decision
The court concluded that SoftView plausibly alleged pre-suit knowledge of both its patents in its amended complaint. Specifically, SoftView alleged that (1) the various defendants have been members of the RPX service; (2) RPX provides its member companies with regular updates about patents that might be of concern to them; and (3) SoftView disclosed its patents and explained how and why they are infringed to RPX during negotiations in May 2009. Although the various defendants joined RPX at different times—with some joining before and others joining after the commencement of litigation against them—the court did not view these differences as material to its analysis. The court found that RPX, given its business model, would have informed both existing and potential clients of the SoftView patents.
SoftView further claimed, and the court agreed, that because the purpose of RPX was to obtain patent rights for its members, it was likely that RPX would have identified the SoftView patents to its member companies. Similarly, the court agreed that RPX would not have pursued purchase of the SoftView patents if they were not of interest to its members, and that RPX presumably determines what is of interest to its members by communicating with them.
While one patent issued during the pendency of the litigation, the court determined that it was plausible that the defendants would have monitored the status of the SoftView patent family once a member of that family had been identified by RPX as a potential threat that might be asserted against them.
Because the court agreed with SoftView's position that the defendants' relationship with RPX provides a plausible basis for alleging pre-suit knowledge of both of SoftView's patents, the court denied the defendants' motions to dismiss SoftView's willful-infringement allegation for lack of pre-suit knowledge.
Strategy and Conclusion
This opinion illustrates that association with a defensive patent-aggregation service may be enough to support a finding of a pre-suit knowledge of patents. Note here, however, that the court did not decide the issue of whether the defendants had pre-suit knowledge; rather, it simply denied the defendants' motion to dismiss for lack of pre-suit knowledge. Thus, the court did not hold that membership in a patent-aggregation service alone would ultimately be sufficient to establish a claim of willful infringement. Nevertheless, entities that are members or prospective members of defensive patent-aggregation services may want to consider the effect their participation could have on a court's determination of willfulness in future litigations.
1The SoftView decision may be found here.
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