Solas OLED Ltd. v. LG Electronics Inc. et al
- Filed: 09/15/2020
- Closed: 02/18/2021
- Latest Docket Entry: 02/18/2021
March 11, 2021
Since last July, RPX has highlighted a growing web of Irish NPEs linked to Magnetar Capital—a hedge fund with $12.3B in assets under management—that have acquired and increasingly asserted former operating company patents. One of those NPEs has just taken a case to trial: on March 8, an Eastern District of Texas jury returned a partial infringement verdict for plaintiff Solas OLED Limited, finding that Samsung infringed two display patents through the provision of certain smartphones. Solas OLED was awarded a combined $62.7M in damages. However, the jury also concluded that the asserted claims from a third patent are invalid. The patent trial appears to be the first before District Judge Rodney Gilstrap since the expiration of his November order halting all such trials due to COVID-19.
March 5, 2021
Signs abound that wealthy investors are doubling down on patent litigation. Take for example the new suits recently filed by two NPEs holding large portfolios of former operating company patents, each backed by a private equity firm or hedge fund. As a recent RPX analysis shows, the economic risk posed by these types of NPEs is significant—and may be increasing.
Fundamental Innovation Systems International
Backed by the private equity firm Centerbridge Partners and asserting former BlackBerry patents
Formed in Delaware in 2015, Fundamental Innovation Systems International LLC (FISI) has filed roughly 20 suits since late 2016, hitting Apple, Aukey, BBK Electronics (One Plus), BLU Products, Hon Hai Precision Industry (Belkin), Huawei, Jasco Products, Lenovo, LG Electronics, Samsung, TCL (TCT Mobile), Yulu Computer (Coolpad) and ZTE—and now, Anker Innovations (Fantasia Trading) and Cyber Power Systems.
As in its previous suits, FISI’s March 5 complaints against Fantasia Trading (1:21-cv-00339) and Cyber Power (1:21-cv-00340) assert former BlackBerry patents, this time with infringement allegations focused on the defendants’ provision of USB charging adapters (including wall chargers, car chargers, desktop chargers, and power banks). (Earlier suits have targeted a range of USB charging devices and/or Chromebooks, laptops, smartphones, and tablets, etc., that include such devices.)
FISI acquired its 18 patents-in-campaign from BlackBerry in a November 2015 transaction that included over 55 US assets as well as foreign counterparts in Australia, Europe, and Asia. The terms of that acquisition were not made public at the time, but filings in subsequent lawsuits between IP consulting firm Ocean Tomo, LLC and former Ocean Tomo executive Michael Friedman revealed that the assignment resulted from a multi-million dollar deal between BlackBerry and Centerbridge Partners, a private equity firm with an estimated $1.15B in assets under management. Details concerning that deal are available here.
FISI initially engaged TnT IP LLC—a patent monetization firm managed by Craig Thompson and Ozer Teitelbaum, both former senior IP executives at Alcatel-Lucent—to license its portfolio. However, in 2018 (amid Samsung’s settlement with FISI), IAM Magazine reported that the firm had been replaced by three former senior executives at IPVALUE Management, Kapu Kumar, Paul Seaman, and Paul Riley. (Indeed, Texas public records now identify each of Kumar, Seaman, and Riley as a “governing person” of FISI, along with Eugene Davis, of Livingston, New Jersey.) In April of 2019, Kumar, Seaman, and Riley co-founded New Jersey-based JASPAR – IP Consultants, an apparent patent monetization consultancy. According to IAM, John Desmarais, who partnered with IPVALUE on monetizing the Round Rock Research portfolio, introduced Centerbridge Partners to the JASPAR team.
Also according to IAM, this same team (and again with backing from Centerbridge) last year acquired over “1,400 worldwide patent assets from lighting business Osram” and has since moved the portfolio from one Irish entity (Key Patent Innovations Limited) to another (Pictiva Display International Limited).
Furthermore, USPTO records reflect the recent movement of a large portfolio of patents from HP Enterprise (HPE) to Ocean Tomo (OT Patent Escrow LLC) to Valtrus Innovations Limited, another NPE that Irish corporate records tie to the same group of individuals. More well-funded litigation from this team, again over former operating company patents, looks likely in store for 2021.
Solas OLED Limited
Backed by the hedge fund Magnetar Capital, and litigating patents received from Casio, Microchip Technology (Atmel), or the University of Stuttgart
Formed in Ireland in March 2016, Solas OLED Limited has been waging a multi-front litigation campaign since April 2019, suing its nine total targets Alphabet (Google), Apple, BOE Technology Group, Dell, HP, Lenovo (Motorola Mobility), LG Electronics, Samsung, and Sony in district court with some also targeted in actions brought before the International Trade Commission.
Its first trial underway as of the publication date of this article*, against Samsung in the Eastern District of Texas (2:19-cv-00152), Solas OLED has filed a third suit against Samsung (Samsung Display), asserting in a February 26 complaint a former Casio patent and targeting OLED display modules incorporated in certain Apple products (e.g., iPhones and Mac Books) (6:21-cv-00185).
*Since this article’s publication, a verdict has been handed down in Solas OLED’s trial against Samsung. For RPX coverage, see “Texas Jury Returns $62.7M Infringement Verdict in Solas OLED Trial Against Samsung” (March 2021).
Solas OLED is backed by Magnetar Capital, a hedge fund with approximately $12.3B in assets under management, and the NPE’s managers have ties to a growing web of Irish NPEs litigating former operating company patents, including Arigna Technology Limited (asserting a former Mitsubishi patent), Data Scape Limited (litigating patents originating with Sony), Neodrón Limited (asserting patents received from Microchip or subsidiary Atmel) and Sonraí Memory Limited (litigating patents originating with HPE). For a closer look at these NPEs’ corporate ties, campaigns, and patents-in-suit, start with “More Hedge Fund-Backed Irish NPEs Launch US Litigation” (February 2021).
Meanwhile, yet more litigation from this group of Irish NPEs appears on the horizon; as recently reported by RPX, sister NPE Scramoge Technology Limited received over 120 US patent assets from LG Innotek last month.
The increasingly popular trifecta of operating company patents, nonrecourse funding, and more due diligence
The sale of patents by operating companies fueled yet more NPE litigation in 2020—a trend that may accelerate as more businesses turn to their patent portfolios for revenue due to economic pressure caused by the pandemic. Current economic conditions have also played a part in litigation finance’s explosive growth.
Litigation funding is typically provided on a nonrecourse basis, with the funder collecting a return on its investment only in the event of a successful outcome. If a funded plaintiff fails to recover in litigation, that plaintiff is generally not obligated to repay the funds advanced for the litigation.
Given that a nonrecourse funding arrangement comes with the risk of a total loss for the investor, litigation funders are spending substantial time and effort evaluating patents for assertion. As litigation finance continues to permeate the patent space, the quality of the assets asserted by third-party funded NPEs appear to reflect a high level of due diligence and portfolio selection.
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 even higher. See “What 15 Years of US Patent Litigation Data Reveal About the IP Market” (January 2021), and this RPX Community webinar, for more details.
November 25, 2020
The COVID-19 pandemic has forced courts to rethink many aspects of the patent litigation process. While a number of district judges have moved hearings and other procedures online, the nation’s top patent venues effectively suspended jury trials through most of the summer—until District Judge Rodney Gilstrap of the Eastern District of Texas resumed patent trials in August after local infection rates began to fall. However, as the pandemic moves further into its second wave, Judge Gilstrap has now taken the notable step of halting all jury trials before him after a coronavirus outbreak during a trial under another judge in the Eastern District. Judge Gilstrap stated that he was doing so “reluctantly” but asserted that he had no alternative—arguing that the face-to-face aspect of in-person trials is essential for due process.
Judge Gilstrap held the August patent trial mentioned above, the nation’s first since the start of the pandemic, in litigation between several subsidiaries of PanOptis Holdings, LLC and Apple (2:19-cv-00066), following the expiration of the last district-wide jury trial continuance on May 31. The trial went forward after a debate over whether it could be conducted safely, with Apple arguing that the trial should be pushed back due to the risk posed by the pandemic to the parties and surrounding community—citing data showing uncontrolled community spread and the high risk of at least one attendee’s infection with the novel coronavirus. Yet Judge Gilstrap—who had recently made general public comments that local conditions did not favor further restrictions at that time—denied Apple’s motion, rejecting the company’s arguments that public health concerns outweighed the rights of the parties to resolve their dispute. While he acknowledged the “conundrum of first impression” that he faced in making this determination, Judge Gilstrap argued that ultimately, “the best way out is always through” (quoting the poet Robert Frost). Judge Gilstrap has subsequently stated, in his November 20 order, that the trial had been conducted “safely and with no known incident”.
By November, though, the COVID-19 pandemic had taken a dark turn, with dramatically spiking infection rates and hospitalizations leading some states to reimpose public health restrictions that had been loosened in the preceding months. The pandemic’s second wave then spilled into the courtroom: on November 9, on the sixth day of trial in a breach of contract suit between ResMan and Kayra Property Management, Judge Mazzant halted the trial after a juror tested positive. The number of confirmed infections then swelled to 15 people, according to the court clerk, including multiple jurors, members of the plaintiff’s and the defendant’s legal team, and court staff—despite the imposition of certain safety measures taken to prevent the spread of coronavirus, including daily temperature checks, the installation of physical barriers in the courtroom, and social distancing requirements. On November 17, Judge Mazzant declared a mistrial in that case.
Meanwhile, the coronavirus also began to affect litigation before Judge Gilstrap. On the same day as the aforementioned breach of contract mistrial, the parties in a patent case—plaintiffs Infernal Technology, LLC and Terminal Reality Inc., and defendant Sony (2:19-cv-00248)—jointly notified the court that one of the plaintiff’s attorneys had tested positive, and that the attorney had been in physical contact with two other members of the plaintiff’s legal team. Shortly afterward, on November 19, Sony filed an opposed motion to postponethe trial then scheduled for December 4 to March 2021, citing high overall infection rates and “substantial” increases within the Eastern District of Texas in particular. That motion came one day after a motion filed by Samsung in litigation filed by Irish NPE Solas OLED Limited (2:19-cv-00152), requesting the continuation of a trial also scheduled for early December.
On November 20, Judge Gilstrap issued a wider order, affecting all cases before him with trials scheduled from December through February, continuing all in-person jury trials—granting continuances where requested and otherwise doing so sua sponte. Judge Gilstrap’s order cited the growing severity of the pandemic, noting that while he had safely conducted trials as recently as November, “we now face a dangerously rising rate of increase in COVID-19 cases and swelling hospitalizations in this district and across the country”. The order noted that the court had come “to this result reluctantly—especially considering the huge earlier efforts undertaken to resume in-person jury trials”, but stated that continuing jury trials is a necessary step given public health concerns within the Marshall Division and the importance of holding such trials in person.
“While some motion practice may be adequately addressed via virtual proceedings”, continued Judge Gilstrap, “the Court believes that the fair adjudication of the rights of the parties, as envisioned by the Framers and embodied in the Sixth and Seventh Amendments, requires jury trials to be conducted in-person”. Judge Gilstrap emphasized the importance of face-to-face trials, stating that “[j]ury trials are innately human experiences” in which “[m]ore is often communicated in a courtroom non-verbally than verbally”. “This Court is persuaded that the remote, sterile, and disjointed reality of virtual proceedings cannot at present replicate the totality of human experience embodied in and required by our Sixth and Seventh Amendments”.
More broadly, the discretion granted to Texas judges in all but the Northern District of Texas—which has continued jury trials scheduled through December in nearly all cases, with no room for discretion—has resulted in uneven responses, across districts, to rising infection rates. As noted above, the Eastern District gives judges such discretion, though some have also issued sweeping continuances—like Judge Mazzant, who has pushed back all trials scheduled before him in December. The Southern District also allows divisions to approach jury trials differently according to local circumstances. Additionally, on November 18, Western District of Texas Chief Judge Orlando Garcia issued a district-wide order continuing all civil and criminal jury trials set to begin through December 31. However, as in previous orders, he has given judges within the district the discretion to hold jury trials anyway if they determine it can be done safely.
One notable result of this policy is that District Judge Alan D. Albright of the Waco Division—who has seen a surge of patent litigation since his confirmation in late 2018, pushing the Western District to the top of the patent venue rankings earlier this year—has not issued an across-the-board continuance. Rather, a recent ruling in a consolidated case between VLSI Technology LLC and Intel (1:19-cv-00977) suggests that he may adopt more of a wait-and-see approach.
On November 20, Judge Albright issued a ruling on the location of a January trial to be held in one of the joined cases that had been transferred to the Austin Division but remained on his docket. Since the Austin courthouse has been closed indefinitely due to COVID-19, Judge Albright was faced with the choice to either delay the case until that courthouse reopens or hold the trial in Waco and avoid further delays. Judge Albright far and above favored the latter approach, citing in part the need to proactively manage the “backlog of trials” created by the pandemic, as well as the notion that trials should not be delayed because each US patent has an expiration date. (Note, however, that the oldest patent at issue in that case appears to expire in 2027.) While the issue at hand did not require Judge Albright to weigh public health concerns directly, he has placed similar emphasis on efficiency and speedy dispute resolution in other circumstances, including convenience transfers.
For more on the jury trial restrictions recently imposed by other top patent venues, see RPX’s third-quarter review.
October 1, 2020
The mid-pandemic trial between Irish NPE Solas OLED Limited and Samsung, set to start Monday, October 5 before District Judge Rodney Gilstrap in the Eastern District of Texas, has been postponed. Last week, Samsung filed an unopposed motion to continue the trial because one of its “key expert witnesses, located in West Virginia, is unavailable to travel to Texas to testify live at trial. He is also unable to sit for a remote trial deposition by video”. Judge Gilstrap ordered the case “removed from the October trial docket”, with a subsequent order to calendar the trial “at a later date”. The next day, the court did issue an order, not setting trial but ruling on a host of the parties’ motions in limine and dispositive motions.
September 20, 2020
As Irish NPE Solas OLED Limited and Samsung make final preparations for an October 5, 2020 trial before District Judge Rodney Gilstrap in the Eastern District of Texas, Solas OLED has filed a new round of suits in the same campaign. One of those cases hits Samsung (2:20-cv-00307) with a second East Texas complaint, while three of them hit prior defendants Apple (6:20-cv-00840) and Dell (6:20-cv-00841) as well as LG Display, LG Electronics (LGE), and Sony (sued together in the same action, 6:20-cv-00839) with one suit each, all filed in the Western District of Texas, where a new defendant has been added to the campaign, Lenovo (Motorola Mobility) (6:20-cv-00842). In litigation filed starting in April 2019, Solas OLED continues to target display panels used in a wide variety of devices.