Because so many SEP-related issues have arisen over the past year, we will periodically revisit some of the more noteworthy occurrences with a brief post. In this post, we explore recent and ongoing patent assertion activities of Innovatio IP Ventures, LLC.
On February 28, 2011, Broadcom Corporation assigned 31 U.S. patents to a company named Innovatio IP Ventures, LLC. After acquiring these patents, Innovatio then sent letters to thousands of entities – including restaurants, coffee shops, hotels, grocery stores – alleging infringement of these patents, which Innovatio claimed to be essential to the 802.11 Wi-Fi standard. Innovatio sought royalties from these entities, reportedly seeking $2500-3000 from each outlet for a license to the patents. When negotiations broke down, Innovatio also filed lawsuits against dozens of these entities, claiming they infringed the patents through their respective use of products that comply with the 802.11 standard.
Innovatio’s licensing activities, along with activities by prior owners of the patents, have complicated its infringement suits. For example, Broadcom – along with Norand and Intermec, two additional prior owners of some of Innovatio’s patents – submitted letters of assurance to the IEEE, promising to license patents essential to the 802.11 standard either on RAND terms or on a royalty-free basis. Broadcom, which is one of the leading Wi-Fi chip manufacturers, apparently granted patent licenses to a number of other chip manufacturers that may cover the Innovatio patents. To this end, several of the makers of Wi-Fi equipment used by Innovatio’s targets – Motorola Solutions, Cisco Systems, and NETGEAR – have stepped into the breach and fired their own complaint against Innovatio.
The Wi-Fi equipment makers’ complaint filed in In re Innovatio IP Ventures, LLC Patent Litigation, No. 1:11-cv-09308 (N.D. Ill.), is wide-ranging and accuses Innovatio of engaging in several improprieties through its licensing activities. They claim that Innovatio has “engaged in a nationwide pattern and scheme” to extort money from over 8,000 entities through improper licensing demands. For example, the plaintiffs allege the following:
- Innovatio has failed to disclose that existing license agreements between Innovatio and other entities, including Broadcom, exhaust Innovatio’s patent rights;
- Innovatio has repeatedly disregarded and breached RAND licensing obligations in demands made to licensing targets;
- Innovatio has demanded payments for patents that are either not used by their licensing targets or for patents that have expired; and
- Innovatio has failed to offer licenses on RAND terms to equipment manufacturers such as Cisco, Motorola, and NETGEAR, and has even threatened immediate harm if their targets seek indemnity from the targets’ equipment suppliers.
The claims filed by the Wi-Fi equipment makers against Innovatio based on these factual allegations include those for breach of contract, unfair competition, and intentional interference with prospective economic advantage, among others. The equipment makers even included claims for violations of civil conspiracy and civil RICO statutes – claims that are rarely brought in patent infringement disputes. On November 13, 2012, Innovatio filed a motion to dismiss these claims, and this motion is currently pending before the N.D. Ill. court. The court’s ruling bears watching, particularly with respect to the civil conspiracy and RICO statutes, which may become another weapon used against so-called non-practicing patent assertion companies – especially if the claims survive the motion to dismiss.