Earlier this week, we provided an update on the multitude of WiFi-related infringement lawsuits brought by non-practicing entity Innovative Wireless Solutions LLC against various hotels and restaurants in Texas, noting that IWS had dismissed these suits (albeit without prejudice). We had discussed that this was a decidedly “un-Innovatio-like” turn in the cases — but yesterday brought a development that makes this series of disputes much more like the ones in the Northern District of Illinois involving Innovatio: Cisco Systems Inc., a supplier of WiFi equipment for many of the hotels accused of infringement, got involved. And Just like it did with Innovatio, Cisco here filed a declaratory judgment action against IWS, seeking declarations of invalidity and non-infringement as to IWS’s three asserted patents.
[UPDATE] In addition to Cisco, Hewlett-Packard has also filed a declaratory judgment action against IWS. The link is below, and more details on that complaint are at the bottom of this post — including information about a potential license defense. [/UPDATE]
[SECOND UPDATE] On Friday, June 14, Ruckus Wireless, another WiFi equipment supplier, also filed a declaratory judgment complaint against IWS. This complaint is very similar to the one filed by Cisco. [/SECOND UPDATE]
Cisco’s complaint, filed in the Western District of Texas (where Rackspace has chosen to take on noted NPE Parallel Iron in another DJ action), includes some particularly harsh words for IWS — Cisco calls IWS part of “the most recently recurring plague on this country’s patent system” and accusing IWS of filing strike suits against end users of WiFi equipment (i.e., hotels) for the mere purpose of obtaining settlement amounts to which they are not entitled.
According to Cisco, “IWS is pursuing a litigation strategy of suing retail purchasers, as opposed to the actual manufacturers of the standard compliant Wi-Fi products (e.g., Cisco), in order to leverage the cost of litigation against targets that do not have the resources, inclination or technical knowledge about the products or standards necessary to defend against IWS’s allegations.” Cisco alleges that IWS is doing so in order to extract settlements “that bear no reasonable relation to the value” of the patents — a not-so-subtle echoing of Chief Judge Rader’s own preferred “alternative definition of a troll” — “a party that attempts to enforce a patent far beyond its actual value” (see p. 17). Cisco even cites with approval Judge Rader’s recent New York Times op-ed, arguing that IWS’s litigation and patent assertion tactics are precisely the sort that should be disfavored.
Cisco acknowledges that IWS has dismissed all of its current infringement suits, but states that it believes IWS is intent on re-filing once it corrects certain “procedural deficiencies.” Based on indemnity demands it has been receiving from its customers (and expects to receive in the future), Cisco now wants to step in, asserting there is an Article III case or controversy under the Federal Circuit’s Arris v. British Telecomms. decision. As of now, Cisco is only seeking declaratory judgments of invalidity and non-infringement; there are no allegations about standard-essential patent-related misuse, such as violation of RAND obligations. But then again, Cisco’s RAND & unfair competition accusations against Innovatio were asserted in an amended complaint, after more facts about Innovatio’s activities came to light during discovery. We’ll have to see what happens as this litigation proceeds.
[UPDATE] As noted above, HP filed its own declaratory judgment complaint against IWS, stating that many of its customers have been sued. While HP’s complaint doesn’t include a lot of loaded language about non-practicing entities, it does include an interesting nugget of its own — a license defense. HP claims that Northern Telecom Ltd. (later Nortel Networks), who was the original owner of IWS’s patents, granted a license to HP in 1994 that covers the asserted patents. Therefore, HP is seeking not just a DJ for invalidity and non-infringement, but also a declaration that its customers are licensed and that IWS’s patent rights are exhausted. [/UPDATE]