VoiceAge’s Fortress Partnership Spawns New Campaign as Related Acacia Litigation Continues
- October 17, 2019
Category: Top InsightMarket Sector: Mobile Communications and Devices
Yet another set of patents originating with VoiceAge Corporation has now been asserted in NPE litigation, this time in partnership with Fortress Investment Group LLC. In December 2018, VoiceAge announced a “strategic transaction” with Fortress under which the investment firm would license VoiceAge’s portfolio related to the Enhanced Voice Services (EVS) wideband audio codec—with that portfolio assigned to Fortress “affiliate” VoiceAge EVS, LLC. That entity has now asserted five of those patents in litigation, accusing HMD Global (1:19-cv-01945) of infringement through the provision of Nokia-branded smartphones supporting EVS and alleging that the patents-in-suit are essential to that standard. VoiceAge has stated that its transaction with Fortress is designed to “advance . . . [VoiceAge’s] strategic objective of diversifying revenues from [its] IP assets”. This deal follows another partnership between VoiceAge and publicly traded Acacia Research Corporation that appears to have started in 2014, leading to the launch of a litigation campaign that year through Acacia subsidiary Saint Lawrence Communications LLC. That campaign remains active after being revived in August 2018 by licensee EVS Codec Technologies, LLC, with Saint Lawrence later dragged back into the campaign over a standing dispute.
VoiceAge EVS’s lawsuit against HMD identifies 16 Nokia smartphones that allegedly infringe the five patents-in-suit (7,693,710; 8,401,843; 8,825,475; 8,990,073; 9,852,741), calling out the Nokia 6.1 in the complaint itself and providing the full list in an appendix. The complaint alleges direct infringement by virtue of the accused devices’ support of EVS, further asserting claims of induced infringement stemming from HMD purportedly instructing its customers that its smartphones are EVS-compatible. The plaintiff also pleads that the asserted patents are essential to the EVS standard, stating that they have each been declared essential to “one or more of 3GPP’s organizational partners” and that they have each been “independently evaluated by the International Patent Evaluation Consortium (‘IPEC’) and determined to be essential to the EVS Standard”.
VoiceAge EVS also alleges that HMD’s infringement has been willful, asserting that the defendant knew of the patents’ existence and their essentiality due to its knowledge of 3GPP and the applicable, publicly available essentiality databases, as well as due to an August 2019 letter sent to HMD’s general counsel in which the NPE offered to provide licensing terms, described their alleged essentiality, and directed the company to the VoiceAge EVS website. Another letter was purportedly sent in September, and the defendant is alleged not to have responded to either. The complaint cites the plaintiff’s obligation to license the patents under fair, reasonable, and non-discriminatory (FRAND) terms just once, by including its pleadings related to essentiality under the heading “NOTICE AND COMPLIANCE WITH FRAND OBLIGATIONS”.
The plaintiff’s website provides a detailed list of the purportedly FRAND terms under which it is prepared to license its patents, with different rates described for seven categories or subcategories of products (numbered as follows according to the website): (1) “individual consumer device[s]”, which “exclud[es] Handsets and exclud[es] Wi-Fi Devices, [and is] limited to one application with a maximum of 6 Realtime Channels allowed” and includes devices like IP phones; (2) “professional content applications”, which “covers infrastructure products which have no channel or session capability and [for which] the transcoding is always done ‘off-line’”; (3)(a) “downloaded software applications”, comprised of non-telephony software applications downloaded by a user and not preinstalled; (3)(b) “downloaded VoIP applications”, comprised of VoIP applications that are also individually downloaded and not preinstalled; (4) “telecom and multimedia infrastructure”, which includes devices for which “Realtime Channels can be counted” such as “base stations, base station controllers, radio network controllers, switching centers, gateways and servers”; (5) “licensed products enabling 3rd party applications for [individual] consumer devices”, excluding applications that are not “Personal Computer Decoder [sic] or Handsets or Wi-Fi Devices”; and (6) “handsets and Wi-Fi devices”. For that last category, two options are provided: a running royalty or a prepaid fee per licensed product. All of the licensing terms for the above categories break the rates down for licenses covering decoders, encoders, or codecs (which encompass decoders and encoders).
USPTO records indicate that VoiceAge EVS acquired the five patents-in-suit from VoiceAge along with 13 other assets on December 5, 2018, five days before the company announced its deal with Fortress, but the assignment was not recorded until August 2019. The patents each form a family of one and issued between April 2010 and December 2017.
VoiceAge EVS was formed in Delaware on November 27, 2018 and was registered to do business in California on March 26, 2019, disclosing a Newport Beach address. California incorporation records indicate that the entity’s manager or member is CF VoiceAge Holdings LLC, an entity of uncertain formation that lists the same address as Fortress’s New York office. (The “CF” prefix is shared by other entities known to be Fortress subsidiaries, including some other active plaintiffs, e.g., CF Dynamic Advances LLC and CF Traverse LLC.) VoiceAge EVS has also filed a disclosure in its infringement suit in which it describes itself as a “wholly owned subsidiary” of CF VoiceAge Holdings. Signing for VoiceAge EVS at formation was Courtney Quish, a director in Fortress’s IP group. Quish was also listed as the NPE’s CEO until June 6, 2019, when an updated filing listed its CEO as David Rosmann.
Rosmann lists his role as CEO of VoiceAge EVS on his LinkedIn profile as of the publication date of this article, describing the NPE as a Fortress “portfolio company”. Among other positions, he also lists a prior role as president of IPNav, from July 2010 to October 2011; and another as an executive vice president at Acacia subsidiary Acacia Research Group LLC, from October 2011 to February 2016. During his time at Acacia, Rosmann appears to have been involved in the Saint Lawrence campaign, which has also targeted mobile devices supporting wide-band audio (including those supporting EVS and a predecessor codec), delivering part of an Acacia analyst investor presentation in 2014 in which he gave an overview of the campaign (archived here). Additionally, a stipulation filed in the litigation brought by Saint Lawrence and EVS Codec Technologies against LG Electronics (LGE) indicates that Rosmann was deposed in Saint Lawrence’s earlier case against LGE and in another suit against ZTE.
Since its start in 2014, the Saint Lawrence campaign has hit more than a dozen defendants, with those hit before EVS Codec joined the campaign including Apple, AT&T (AT&T Mobility), HTC, Sony, and Verizon (Cellco Partnership (d/b/a Verizon Wireless)). In early 2018, Apple and Saint Lawrence reached an apparent settlement, leading to the dismissal of parallel infringement proceedings in both the US and Germany. Also dismissed was a December 2016 Apple lawsuit that had alleged violations of federal antitrust and state unfair competition laws and asserted breach of contract claims against VoiceAge, Acacia, Saint Lawrence and its German counterpart, and fellow Acacia subsidiaries Cellular Communications Equipment LLC and Cellular Communications Equipment GmbH, along with publicly traded Conversant Intellectual Property Management, Inc. and its subsidiary Conversant Wireless Licensing S.à.r.l. (then known as Core Wireless Licensing S.à.r.l.). Apple’s complaint had alleged that Acacia and its named subsidiaries conspired with VoiceAge “in an anticompetitive scheme to transfer hundreds of patents declared essential to cellular industry standards (SEPs) from VoiceAge to Acacia and then circumvent VoiceAge’s promises to license its patents on [FRAND] terms”. HTC previously targeted those same licensing practices in a 2015 declaratory judgment action of its own against Saint Lawrence (2:15-cv-00351) that was also resolved through settlement.
In August 2018, shortly after the dismissal of the last of the original Saint Lawrence cases (against AT&T), the campaign was revived with suits filed by EVS Codec against LGE (which was previously sued by Saint Lawrence and disclosed a settlement in December 2015) along with Huawei and ZTE. That November, LGE filed a motion to dismiss the original EVS Codec complaint for lack of standing, arguing that the agreement granting rights to EVS Codec (as purportedly conveying “the exclusive right to license products practicing the EVS Standard”) was limited to a field of use and insufficient to confer proper standing to sue, further contesting the sufficiency of EVS Codec’s pleading on the subject of standing.
That same day, LGE filed an action against Saint Lawrence in the Southern District of New York (1:18-cv-11082), a choice of venue allegedly required by a forum selection clause in the parties’ 2015 settlement agreement, asserting in its complaint that “Saint Lawrence had breached the Agreement by authorizing [EVS Codec] to sue LG based on infringement allegations barred by the Agreement’s covenant not to sue, by failing to bind [EVS Codec] to [Saint Lawrence]’s obligations under the Agreement, and by breaching [Saint Lawrence]’s warranty not to grant any licenses or other rights that would interfere with LG’s rights under the Agreement” (as summarized by LGE in a filing in the other case).
EVS Codec then amended its complaint in its infringement suit to address the standing issue, after which LGE moved to dismiss that amended complaint, arguing that the entire case was precluded by the parties’ settlement agreement. The plaintiff then filed a second amended complaint adding Saint Lawrence as a coplaintiff. In August 2019, the case was transferred from the Eastern District of Texas to the Southern District of New York. The following month, District Judge Denise Cote stayed that case pending the outcome of LGE’s declaratory judgment action; the court has not yet ruled on LGE’s renewed motion to dismiss in that stayed action. Summary judgment motions from both parties are pending in the declaratory judgment suit as of the date of this article. Litigation proceeds in EVS Codec’s suit against ZTE, while its case against Huawei was dismissed without prejudice by joint stipulation in July 2019.
Meanwhile, the assertion of VoiceAge patents has apparently also spread to China. In June 2019, IAM reported that Texas NPE Advanced Codec Technologies, LLC (ACT) has asserted six Chinese patents owned by Saint Lawrence against Oppo, TCL, Vivo, and Xiaomi in courts in Nanjing and Shanghai. That plaintiff is managed by attorney David Sewell, who is also the manager of EVS Codec. Additionally, recent US litigation cofiled by Saint Lawrence and EVS Codec against OnePlus has identified prior licensing discussions between ACT and Oppo (a OnePlus affiliate) as allegedly providing notice to OnePlus. See here for more details on that litigation, which was filed in February 2019.
Additional background on the Saint Lawrence/EVS Codec campaign, including LGE’s motions to dismiss and a March 2017 verdict against Lenovo (Motorola Mobility), can be found here.
Finally, as previously reported by RPX, Acacia appears to be undergoing a rebirth—and a return to more frequent litigation—after a comprehensive leadership change triggered by activist investors last year. The once-prolific NPE recently launched its first new campaign in over four years; for more information, see “For Patents to Assert in Its First New Campaign in Years, Acacia Returns to Familiar Well” (September 2019).