Famed Patent Troll Smacked Down Over 'Anonymous' Threat Letter

from the you-don't-hang-a-gun-over-the-mantle-unless-you-plan-to-use-it dept

We’ve written about famed patent troll Erich Spangenberg and the variety of shell companies under his control a few times in the past. He’s the guy who a court told to pay $4 million for shuffling patents around among shell companies and suing the same company twice with the same patent, despite a settlement the first time that precluded future suits. Spangenberg is also famous for his motto, “sue first, ask questions later,” in part because he wants his lawsuits to take place in Eastern Texas.

Apparently, he doesn’t always sue first, but can’t resist being sneaky anyway. On behalf of an anonymous “client,” he (under the guise of his company IP Nav) sent a letter to Renaissance Learning, asking them to enter into totally secret negotiations over possible patent infringement. He refused to name the client or the patents, but wanted Renaissance to sign a gag agreement that they would never talk about anything that came out of the discussion. Renaissance, instead, went to its local court, in Wisconsin, and got a subpoena asking Spangenberg to identify the patent and the patent holder, for the purpose of getting a declaratory judgment that it did not infringe the anonymous patent holder’s unknown patent.

Spangenberg, perhaps regretting not following his “sue first” mantra, filed a motion to quash in Eastern Texas, arguing that the Wisconsin court had no jurisdiction (despite Renaissance being in Wisconsin). The court leaned towards agreeing with Spangenberg, saying he had raised “substantial questions” about the jurisdiction, but that it was an issue for the Wisconsin court to discuss. In response, the Wisconsin court looked at the issue and issued a pretty damning order about Spangenberg’s threat letter being enough to file for a declaratory judgment. While it notes that Spangenberg may have been careful to avoid making a direct threat (necessary for declaratory judgment), the intent is clear… and the court uses Julius Caesar and Anton Chekov to make the point:

Some might look at the silky wording of IP Nav’s letter to Renaissance and see a close question; this court, however, sees an unmistakable and intentional warning shot across the bow. The actual message is pellucid to any patent litigator, so that IP Nav’s use of apophasis is disingenuous and unavailing. Remember Mark Antony’s funeral oration in Julius Caesar? That’s how an experienced business executive or lawyer would view IP Nav’s assertions that “we are focused on addressing these issues without the need for costly and protracted litigation” and “our client’s preferred approach is to conclude licensing discussions without resorting to litigation. We hope you share this objective.” The implied “or else!” oozes from this letter like lye from lutefisk. To paraphrase an observation attributed to Anton Chekhov, you don’t hang a gun over the mantle in Act I unless someone is going to fire it in Act III.

Doe enlisted IP Nav?a specialist in “monetizing” patents for its clients?to communicate with Renaissance on its behalf. The fact that such correspondence was sent anonymously through a hired gun proud of its “aggressive pursuit of patent infringers” reasonably would invoke “a different reaction than would a meet-and-discuss inquiry by a competitor, presumably with intellectual property of its own to place on the bargaining table.” Hewlett-Packard Co., 587 F.3d at 1362. The letter makes clear that Doe or IP Nav already has gone to the expense of analyzing Renaissance’s products and has concluded that there was a “basis for . . . infringement claims against [Renaissance’s] products or services.” Further, IP Nav’s refusal to identify its client or the patents at issue, along with the unnecessarily tight ten-day response deadline, reasonably can be viewed as components of a strategy to preclude Renaissance from obtaining the facts it needed to file a declaratory judgment action; from this approach one also could reasonably infer that Doe already was prepared to litigate if necessary and intended to retain for itself the choices of when and where to file its lawsuit if Renaissance would not play ball. Then there is demand for a one-sided forbearance agreement that required that Renaissance not file suit but imposed no reciprocal obligation on Doe. All of this reasonably implies that Doe intends to enforce a patent and that a real controversy exists.

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Companies: ip nav, renaissance learning

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Comments on “Famed Patent Troll Smacked Down Over 'Anonymous' Threat Letter”

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36 Comments
Anonymous Coward says:

Re: Chekhov??

Ding. The court’s ruling is amusing, but certainly won’t stand up to any appeal. It’s a judge attempting to imply intent when the law pretty much requires an overt statement of intent.

It’s a fail, but because it slaps down a “patent troll” I am not shocked to see Mike run it and act like it’s the best ruling ever.

Mike says:

Two edged sword

I don’t see this as more likely a “bad” outcome than a good one. Sure, the defendant in this case might get to keep jurisdiction (pending an appeal) in their own state, but the signal to would-be plaintiffs is to simply sue first.

Under the standard expressed here, there is essentially no way for a patent owner to avoid a declaratory judgment action. There was not patent identified. No patent owner identified. No infringement identified. Nothing.

Remember, people license all kinds of technologies for all kinds of reasons. What if the patent wasn’t one the defendant was actually, actively infringing, but merely one that would be useful.

Seems like a good outcome on the facts of this particular case, but a bad one, generally. Such is the law.

DannyB (profile) says:

Re: Two edged sword

The reason the troll didn’t sue first is because that is more expensive than simple direct extortion. The lawsuit is not the means of collecting; the lawsuit is the implied consequences of not paying the protection money.

The other reason the lawsuit is undesirable is that then the victim, or mark, can obtain discovery and get to know a good deal about the crooks behind the extortion racket. The cockroaches do not want a bright light shined upon them, thus better to avoid enabling the victim to be able to obtain discovery.

A real patent owner with a real infringement claim can easily avoid a declaratory judgement like this. You approach the alleged infringer in good faith. Identify who you are, what products or services you believe infringe, and what patents and claims you believe are infringed. No need for a confidentiality about what patents and claims are infringed because the substance of patents is supposed to be public knowledge and the goods and services of the alleged infringer certainly are public knowledge if its wares are offered to the public. It might be reasonable to obtain confidentiality about how much money is paid. But this good faith reasonable approach is not what patent trolls do.

The Devil's Coachman (profile) says:

Sounds like that troll needs a major beat-down!

Sometimes, after a number of bones are fractured, and some major organs damaged, people like this troll can learn a lesson. And, it’s a lot cheaper than going through the “legal process” that passes for justice in East Texas, where it seems judges can be bought for a bottle of really good Bordeaux and a hooker, or so it appears. But, I think this idiot is incapable of learning anything as long as he still thinks extortion can be profitable.

Overcast (profile) says:

I did notice on their site, that they are using both the trademarked names ‘windows’ and ‘macintosh’ without any reference to the copyright holders or even noting they are trademarked – is that legal? 😉

“In order to receive Notices electronically, you must have a personal computer with a modem connected to a communications source (telephone, wireless or broadband), and a Windows-based operating system with an Internet browser or a Macintosh-based operating system with an Internet browser. You will need a printer attached to your personal computer to print any Notices. All contracts completed electronically will be deemed for all legal purposes to be in writing and legally enforceable as a signed writing.”

http://ipnav.com/terms-conditions

But you are 100% right – they say any dispute with them *has* to be settled in ‘Marshall, TX’ – do they pay a judge there?

“Choice of Law and Location for Resolving Disputes

You agree that the laws of the State of Texas govern this contract and any claim or dispute that you may have against IPNav or its related companies or subsidiaries, without regard to Texas conflict of laws rules. You further agree that any disputes or claims that you may have against us will be resolved by a court located in Marshall, Texas.”

And no asshat, I don’t agree. It’s a public site, so shove it and put it under a login if you want anyone to be forced to agree to your terms.

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