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Troll Wars

By Troll Tracker

Some interesting developments in the Global Patent Holdings litigation going on in Nevada (against Zappos) and Florida (against Boca Resort). The long sad story is below, but for those with a short attention span, here is the abbreviated version: Essentially, Global Patent Holdings, hurting that Boca Resort called it a patent troll, said "oh yeah, GPH is really an 80-year-old and a 70-year-old in a wheelchair - who you callin' troll, son of Enron?" Meanwhile, at the same time in Nevada, GPH told the court that it, not the inventors, owned the rights to the patents. Boca Resort replied by saying, "Hey Niro, you started it - you were the one who wrote the article saying you're a patent troll anyway. And by the way, if the inventors have a stake, then where's the real party in interest? Dismiss this case, your honor!"

Or something like that. Not sure I would have used the T-word in the first place in a pleading, but you have to admit - Boca Resort is trying the "raw and fresh" approach.

So what's so interesting about this, other than the playground insults being tossed about? Well, if you remember, Global Patent Holdings filed an amended complaint in Florida to better plead joint infringement. I reported on it a couple of weeks ago, and also suggested that Boca Resort file a motion to strike impertinent material.

What I missed at the time was that GPH also filed an opposition to Boca's initial motion to dismiss, and in it, suggested that Global Patent Holdings consisted of the 70 and 80-year-old inventors, confined to their wheelchairs and destitution. If you don't believe me, read it for yourself here - see pp 1-2 & 12. GPH also cited the Judge Folsom decision in EDTX preventing ICON Health & Fitness from calling Paul Hickman a patent troll at trial over his Cybergym holding company, and a stipulation in a NDCA case where the parties stipulated not to call Rambus a patent troll.

But that's interesting, about the inventors being part of GPH, or otherwise having an interest in the case, because in the Zappos case, in its motion to transfer from Nevada to Illinois, GPH submitted a declaration of Anthony O. Brown, stating under oath that GPH owned the patents fully and exclusively. See here, on page 2. So which is it, do the inventors of the GPH patent have an interest in the litigation or not?

Also, in the GPH Zappos Exhibits, notice on page 8 the royalty schedule being offered: from $50,000 for a company of annual revenue of $10M to $50M, up to $15M for a company of $51.2B annual revenue or more. The GPH letter to the Boca Resort demanded $800K for the right for Boca to post JPEG or other compressed images on its website, so GPH must have figured out the Boca Resort's revenue.

Anyway, Boca Resort must have listened to me, because it also filed a motion to strike the GPH Amended Complaint as being impertinent - like I suggested! Boca suggests that Niro injected the "patent troll" term into the debate by authoring a law review article, declaring that he is the original patent troll. The motion to strike is "because the [amended complaint of GPH] (1) invades the privacy of individuals who are in no way involved in the suit and is misued by Plaintiff in an offensive and insensitive manner, or (2) disparages Boca Resort's ultimate owner, also a non-party, on matters that are irrelevant to Boca Resort, its business, or the subject matter of the suit."

Boca Resort also filed a renewed motion to dismiss the new complaint, explained here. Evidently, GPH's infringement contentions sent in its pre-filing letters differ greatly from its amended complaint. It's an interesting theory - not sure it can happen "on the pleadings," or whether the court will allow discovery before treating it as a summary judgment motion.

Fun to watch things heat up. I think GPH is now forced into a corner to either submit declarations of the inventors that they have a financial stake in the litigation, or barring that, it seems to be an admission that their amended complaint was much ado about nothing, and should be stricken. GPH's right next move is to file a second amended complaint, removing the references to the inventors, and avoid having to reveal that information. Whether GPH's amended complaint survives Boca's renewed motion to dismiss the amended complaint: that's another thing. I think the complaint survives.

Venable is representing Boca Resort; Parsons Behle & Latimer (of Salt Lake City, Utah) is representing Zappos; and Niro Scavone appears for the 70-year-old woman in the wheelchair, the 80-year old destitute inventor, and some company run by Anthony O. Brown that must be proud to be sharing all that licensing revenue with these inventors. They must be getting as much as the Niro firm's contingency, right?

On an unrelated note, LexisNexis now has a Patent Law Center, and they named this blog one of their "Top Blogs," along with 7 others. That Top Blogs list also led me to two great foreign blogs I have now added to my blogroll: IP Dragon out of China, and IP Kat out of the UK. Thanks for the honor, LexisNexis.

TT

(By the way, this entire post was due to a reader tip. My email inbox exploded over the weekend with suggestions for new posts. I appreciate the input. I actually had all my posts prepared for the week, and had to shift things around.)

Full post as published by Patent Troll Tracker on February 19, 2008 (boomark / email).