2BCOM, LLC v. FCA US LLC et al

2BCom, LLC, an NPE that has targeted automakers as well as networking companies with litigation over former Toshiba patents, has received yet more patents from the Japanese conglomerate. The recent assignment, executed earlier this month, could signal a plan to “refresh” a campaign that saw a string of dismissals in late 2020.

Toshiba to 2BCom

According to USPTO records, 2BCom—which describes itself as an “IP licensing company specializing in wireless technologies, including Wi-Fi and Bluetooth”—received a family of five US patents from Toshiba on March 10. The patents generally relate to “a notification method in a communication system of notifying specific multifunctionality information between terminal stations”, with each family member issuing between 2007 and 2019 and sharing earliest estimated priority in March 2002.

The assignment agreement filed with the USPTO makes reference to a November 2019 patent licensing agreement, through which Toshiba transferred rights to 27 US patents to 2BCom, including eight that have been at issue in the NPE’s sole campaign to date. Additional information about the patents-in-campaign, as well as an assertion grid, is available on RPX Insight here.

2BCom opened up that campaign in 2020 with a January suit against Fiat Chrysler Automobiles (Chrysler, FCA US), adding cases against BMW, D-Link, Kia Motors, and TP Link the following April. Also in April 2020, Amazon asked the Central District of California for a declaratory judgment of noninfringement of several 2BCom patents.

Across its campaign, 2BCom has primarily trained its infringement allegations on vehicle infotainment systems, focusing in particular on external device connectivity and information display, as well as Wi-Fi routers. The case against TP-Link targeted Wi-Fi routers and also certain Bluetooth music receivers.

All of 2BCom’s 2020 affirmative actions were dismissed with prejudice in the fourth quarter of last year, as was Amazon’s DJ action, all following relatively uneventful litigation. As of the publication date of this report, the NPE has one active case, filed against NETGEAR in January 2021; NETGEAR has yet to answer or otherwise respond to 2BCom’s complaint.

Operating company patents as a driver of NPE litigation

As extensively reported by RPX, the sale of operating company patents to NPEs remained a significant driver of litigation throughout 2020. Perhaps due to economic pressure related to the COVID-19 recession, 2021 has already seen a number of such transactions.

Last month, chip maker NEWRACOM joined the growing ranks of operating companies to divest patents to NPEs. According to USPTO records, the California-based fabless company—formed in 2014 by a group of over 20 individuals from the Electronics and Telecommunications Research Institute (ETRI)—assigned hundreds of homegrown US patent assets, as well as a number of counterparts in Asia and Europe, to an Acacia Research Corporation subsidiary. See “Acacia Acquires a Large Portfolio from an IoT-Enabled Wireless Chip Maker” (March 2021) for more details.

Meanwhile, in February, Scramoge Technology Limited—an Irish NPE linked by public records to the hedge fund Magnetar Capital—received over 120 US patent assets from LG Innotek. For a look at the ongoing campaigns of Scramoge’s various sister NPEs, see “Two Well-Heeled NPEs, Both Holding Large OpCo Portfolios, Open Up March with Fresh Suits” (March 2021).

Future Link Systems, LLC closed 2020 by filing its first affirmative patent suit to date—hitting AMD over patents received from NXP Semiconductors—and it started 2021 by acquiring more patents from NXP. With hundreds of US patent assets, Future Link Systems, an NPE associated with IPValue Management (d/b/a IPValue) (itself owned by private equity firm Vector Capital), may be gearing up to file more litigation. See here for RPX coverage.

USPTO records also reflect the recent movement of a large portfolio of patents from HP Enterprise to Ocean Tomo (OT Patent Escrow LLC) to Valtrus Innovations Limited, an NPE that Irish corporate records tie to the individuals behind Fundamental Innovation Systems International LLC (FISI) (which is backed by the private equity firm Centerbridge Capital). More well-funded litigation from this team, again over former operating company patents, looks likely in 2021.

Current economic conditions have also played a part in litigation finance’s explosive growth. With interest rates exceedingly low and the markets volatile, wealthy investors—including hedge funds and private equity firms—are seeking out alternative asset classes, including litigation finance, as a source of high returns that are uncorrelated with global equity and fixed income investments. These investors are reportedly flooding the litigation finance industry with capital, and in turn, making nonrecourse funding more available for litigants—including patent plaintiffs.

The IP market flush with former operating company patents, and with third-party funding increasingly widespread, the economic risk of NPE litigation may be the same as it was when filings were at peak levels—or, as discussed here, even higher.

2BCom LLC has followed up its first lawsuit, filed against Fiat Chrysler Automobiles (FCA US, Chrysler) in the Eastern District of Michigan, with three additional cases, this time filed in the Central District of California, also accusing D-Link (8:20-cv-00686), Kia Motors (8:20-cv-00676), and TP-Link (8:20-cv-00708) of infringing patents from among those received from Toshiba last fall. Kia Motors is alleged to infringe four of those patents through the provision of the Kia UVO smartphone app over features related to hybrid/electric battery monitoring and certain infotainment systems installed in Kia-branded vehicles, “including the Kia Bluetooth system”, which is allegedly sold “in all models of Kia vehicles” and is targeted over various Bluetooth pairing and connectivity features. D-Link is accused of infringing four patents through certain Wi-Fi routers, with various features related to beamforming and QoS (Quality of Service) at issue; while TP-Link is alleged to infringe five patents through Wi-Fi routers offering similar features, as well as through certain Bluetooth music receivers.

The plaintiff was formed in Delaware on September 30, 2019. 2BCom indicates on its public website that it is “an IP licensing company specializing in wireless technologies, including Wi-Fi and Bluetooth” with a portfolio that includes “patents from the United States, Europe and Asia”. John Nix is identified as the president of “2BCom Wireless Technologies”. He is described as a “telecommunications and internet entrepreneur” and as “an inventor of approximately 50 patents and approximately 25 additional pending U.S. and international patent applications”.

A search of USPTO records does identify multiple US patents naming Nix (as John A. Nix) as an inventor, several of which are now held by Nix in his individual capacity; by his IP development company M2M and IoT Technologies, LLC (formed in Illinois in April 2017); by NPE Network-1 Technologies, Inc., which acquired a group of Nix patents from M2M and IoT Technologies in late 2017 (see details here); and by several operating companies, including Coca-Cola (for which Nix reports having worked as an engineer from 1992-1995), Google, Huawei, and Microsoft. Nix identifies himself as having been the founder and CEO of Vobal Technologies, LLC, a provider of GSM and VoIP services to commercial shipping companies, since January 2009. Vobal once held patents on which Nix is a named inventor, subsequently assigning them to Nix. Other Nix patents appear still to be held by Nix’s prior company, Go2Call Software.

2BCom began filing litigation this past January, hitting Fiat Chrysler’s infotainment systems over a subset of the 27 patents it received from Toshiba in November 2019: 6,831,444 (generally related to a battery-powered communication device that can display remaining battery charge or provide a notification when remaining power reaches a specified level); 6,885,643 (to transferring data between “communicating entities” on a wireless network); 6,928,166 (to authenticating a wireless communications request from a device based on “authentication information” comprising a “PIN code and a unique ID”); 7,127,210 (to a wireless unit that can be paired with, i.e., “is connectable to”, a first and a second device and that only connects to one of the devices at a time); and 7,184,707 (to establishing and disconnecting connections between a “communication device” and “a target communication terminal”).

The ‘444, ‘166, ‘210, and ‘707 patents are asserted against analogous Kia systems (and related smartphone apps), with the ‘643 and ‘166 patents also at issue against D-Link, together with two additional former Toshiba patents: 7,039,445 (generally related to connecting devices in a determined “range”); and 7,460,477 (to wirelessly transmitting data from one device to another). The ‘643, ‘166, ‘445, ‘210, and ‘477 patents are at issue against TP-Link.

Fiat Chrysler has been granted an extension of the deadline to respond to the complaint filed against it to May 20, 2020. In its new cases, 2BCom discloses no nonparties having an interest in the outcome of the litigation. A one-page assessment of this campaign can be downloaded from RPX Insight here. 4/7, Kia, 4/8, D-Link, 4/10, TP-Link, Central District of California.