X.Commerce, Inc. v. Express Mobile, Inc. DC

Last week, a Delaware jury returned a $40M verdict against Shopify in favor of Express Mobile, Inc. (XMO). Shopify filed the case in March 2019, seeking declaratory judgments of noninfringement of four patents (a fifth patent later added by amended pleading). In September 2021, District Judge Richard G. Andrews granted Shopify summary judgment of noninfringement of two of those patents (termed the “Web Design” patents), while claims related to the remaining three (the “Web Component” patents) proceeded to trial. This trial likely garnered significant interest from the other defendants still in this campaign, begun in 2015, and from past XMO employees and lawyers who, according to emails discovered in the case, considered selling XMO itself for $15M prior to the start of the campaign—as well as from XMO’s funder.

The Federal Circuit has ordered District Judge Alan D. Albright to transfer several more cases out of his courtroom, reversing prior denials of motions to transfer for convenience. These latest decisions build on a growing number of writs of mandamus that cement a clear appellate position: a district court abuses its discretion when it denies a defendant transfer to a more convenient forum, based on the other applicable factors, because “court congestion”—i.e., the West Texas court’s ability and willingness to set a relatively aggressive case schedule—is viewed to weigh against transfer, however heavily.

Having filed nine patent cases in September of this year, Express Mobile, Inc. has added another round, bringing the total number of the plaintiff’s 2020 lawsuits to 16. The new defendants are Adobe (X.Commerce (d/b/a Magento)) (3:20-cv-08297), Amazon (3:20-cv-08339), Booking Holdings (3:20-cv-08491), Pinterest (3:20-cv-08335), Salesforce (3:20-cv-08461), SAP (3:20-cv-08492), and Verizon (Oath) (3:20-cv-08321), all sued in the Northern District of California. Five patents, generally related to a browser-based tool for building webpages or to the creation of device-independent mobile apps that use web services, are asserted across these complaints, filed in a campaign that has now seen over 95 defendants hit since it began back in April 2015.

A recent privilege log ruling from Delaware District Judge Richard G. Andrews provides a rare, public glimpse into the pre-suit phase of an NPE’s monetization strategy. That December 3 order details how a now-prolific litigant spent over two years—starting at least in “early 2013, and probably by some time in 2011 or 2012”—gearing up for a litigation campaign launched in 2015. The plaintiff, per the court, had “multiple outside lawyers, most of whose roles are not entirely clear” and as having “various non-lawyer employees, directors, and consultants, who seemed to spend quite a bit of time drafting claim charts relating to potential infringement by dozens (if not hundreds) of companies”. Noting that the connection of the latter group “to the work of any of the lawyers is, for the most part, obscure”, Judge Andrews proceeded to require the disclosure of 11 of 13 disputed documents in a memorandum order that provides some guidance as to how the documents generated by such pre-suit activity might be handled, later, in the discovery phase of litigation.

In response to recent motions for convenience transfers out of Delaware, District Judges Richard G. Andrews and Colm F. Connolly both acknowledged that a plaintiff’s choice of forum should be given “paramount consideration”. However, from there, the two appear to diverge about what “paramount consideration” means when the plaintiff does not have a physical presence in Delaware, but is only incorporated in the state, as is frequently the case.

In June 2020, in a Delaware declaratory judgment action brought by Shopify, District Judge Richard G. Andrews handed down an order construing several disputed claim terms from the five patents at issue in Express Mobile, Inc.’s web-building campaign. The order is one of several to construe claim terms from Express Mobile’s patents, following opinions from the Eastern District of Texas (in February 2018) and the Northern District of California (that September). The patent holder has now filed a wave of new cases for the sixth year in a row, suing Alphabet (Google) (6:20-cv-00804), Atlassian (6:20-cv-00805), Dropbox (6:20-cv-00806), eBay (6:20-cv-00802), Expedia (6:20-cv-00801), Facebook (6:20-cv-00803), HubSpot (1:20-cv-01162), Microsoft (3:20-cv-06152), and Squarespace (1:20-cv-01163) over the provision of web-based platforms and related apps and software.

Express Mobile, Inc. has filed a slew of new cases in its litigation campaign, which has been targeting web authoring tools since April 2015. The complaints have been filed in either the District of Delaware or the Northern District of California, alleging infringement by nearly two dozen companies over their use of Drupal, Joomla, Magento, and/or WordPress. A Markman hearing in a declaratory judgment action, filed by X.Commerce (d/b/a Magento) in the Northern District of California, was held in May 2018. The court sought post-hearing briefing on previously construed or agreed-upon terms, in response to which the parties submitted the constructions of the Eastern District of Texas in a February 2018 order from a case consolidated across multiple defendants there. District Judge Richard Seeborg has yet to issue a claim construction ruling.

Express Mobile, Inc. has added five new cases to the litigation campaign that it began back in April 2015. In Delaware complaints, the NPE sued Domani Studios (1:18-cv-00102) and SG Hosting (1:18-cv-00104) over their use of webpage authoring tools provided by Drupal, X Commerce (d/b/a Magento), and Automattic (i.e., WordPress); Manifest (1:18-cv-00103), over its use of WordPress and Drupal; WPEngine (1:18-cv-00106), over WordPress; and Rockfish Interactive (1:18-cv-00105), over tools provided by Drupal and Shopify. This latest wave of suits continues Express Mobile’s shift to the new forum after conceding a venue challenge to cases filed earlier in the Eastern District of Texas.

After conceding a venue challenge in the Eastern District of Texas post-TC Heartland, Express Mobile, Inc. is trying something new. The NPE filed eight new suits on June 9, all in Delaware, suing Brainvire Infotech, ePages, Mobikasa, Webflow, and others over two website generation patents (6,546,397; 7,594,168). (Defendant AppGyver is also sued over a third patent, 9,471,287, generally related to software for mobile devices.) The defendants are accused of infringement through various website building tools (including WordPress) and e-commerce platforms (e.g. Magento’s Enterprise Edition).

Express Mobile, Inc. has filed a second suit against Alpine Consulting (1:17-cv-03815), this time in the Northern District of Illinois, after conceding a venue challenge by that defendant in the Eastern District of Texas. On May 8, Alpine filed a Rule 12 motion to dismiss in the Texas case against it due to improper venue, alleging that it does not “reside” in the Eastern District under the first half of the patent venue statute (28 U.S.C. Section 1400(b)). Two weeks later, on May 22, the US Supreme Court issued its decision in TC Heartland, returning a key portion of the patent venue statue, one that allows infringement suits to be brought where a defendant corporation “resides”, to its prior interpretation: such a defendant “resides” only in its state of incorporation. Later that day, Express Mobile notified the district court that it would not oppose Alpine’s motion (which alleges improper venue even under the previous, broader standard) in light of TC Heartland. As in the Texas case, Alpine is again alleged to infringe two website generation patents (6,546,397; 7,594,168) through its use of an e-commerce platform provided by X Commerce (d/b/a Magento).

X Commerce (d/b/a Magento) has filed a Northern District of California complaint against Express Mobile, Inc. (3:17-cv-02605), seeking a declaratory judgment of non-infringement and invalidity of the two patents (6,546,397; 7,594,168) already asserted in the NPE’s campaign. The patents generally relate to website generation. Magento alleges a justiciable controversy based on Express Mobile’s earlier cases against thirteen of Magento’s “solution partners”, as well as several other companies (Alibaba, BigCommerce, Volusion, WaveMaker, WEBS) that also provide website development tools, all in the Eastern District of Texas.