Early 2020 Sees High-Profile OpCo Litigation, Despite 2019 Tilt Toward NPE Plaintiffs

January 12, 2020

NPEs accounted for roughly 56% of the defendants added to patent cases in the fourth quarter of 2019 (with just over 500 defendants added), while operating companies added approximately 44% (just over 400). This breakdown extends to four the number of quarters in which NPEs added more defendants than operating company plaintiffs. To see how the numbers added up for the year as a whole, see RPX’s latest blog post. Nevertheless, the first few days of 2020 have seen a trio of significant new operating company disputes.

Sonos Hits Google

Sonos has added a Central District of California case (2:20-cv-00169) and a companion ITC complaint against Alphabet (Google) (337-TA-3428) to its litigation of patents generally related to various aspects of playing media content across multiple devices over a network. The plaintiff targets various products that support multi-room audio, including Chromecast, Google Home, and Nest hardware; Google apps related to media and home automation; and Google devices preinstalled with those apps. Sonos’s district court complaint alleges that Google has unjustly enriched itself by selling its allegedly infringing products at a loss, further pleading that it put Google on notice of infringement as early as August 2016.

The asserted network media playback patents more specifically describe the setup of such a system and related network connections (10,439,896), adding a playback device (9,219,959), synchronizing playback (9,195,258), adding and synchronizing a playback device (10,209,953), and adjusting volume levels (8,588,949). The ‘896 patent issued as the most recent member of a nine-patent family with an earliest estimated priority date in June 2004, while the ‘953 patent belongs to 69-patent family with an earliest estimated priority date in July 2003 and with issue dates ranging from August 2007 through October 2019. Those two patents are asserted only against Google (both in the ITC complaint, and only the ‘896 patent in the district court complaint), while the other three patents were also at issue in an October 2014 case filed in the District of Delaware against DEI Holdings (Denon), now closed, and in the active suit that Sonos filed against Lenbrook in the Central District of California in June 2019.

The ‘949 and ‘258 patents belong to the same family as the ‘953 patent, while the ‘959 patent issued in a 22-member family with grant dates ranging from December 2011 through November 2019 and with an earliest estimated priority date in September 2006. Prosecution of multiple related applications continues before the USPTO. The cases against Denon and Lenbrook have seen multiple other Sonos patents asserted; during posttrial briefing in its case, Denon notified the court of a final rejection of another member of the 69-patent family (9,213,357) at issue there.

That litigation produced a December 2017 jury verdict in Sonos’s favor, finding that Denon infringed claims from three patents, including claim 1 of the ‘949 patent and claims 17, 21, and 24 of the ‘258 patent. The jury also found that Denon had failed to prove any of the infringed claims invalid and that its infringement was willful, awarding to Sonos an amount just shy of $2M in damages. In follow-on briefing, and before the court addressed any enhancement of the award in light of a willfulness finding, the parties joint moved for dismissal with prejudice, citing a May 17, 2018 “Confidential Patent Covenant Agreement” ending their dispute. Denon and Sonos are the only defendants, targeted in separate Delaware suits, within a litigation campaign brought by inventor-controlled Implicit, LLC over content synchronization patents; that campaign was halted to await the outcome of inter partes review proceedings for the two patents there in suit; Implicit filed November 2019 appeals of final written Patent Trial and Appeal Board decisions invalidating all challenged claims from both patents.

Lenbrook has answered Sonos’s complaint in the Central District of California, where Sonos has identified private equity firm KKR & Co. Inc. (an investor in Sonos) as a nonparty having an interest in the outcome of the litigation. 1/7, Central District of California and ITC.

Voxer Hits Facebook

Voxer (presumably as exclusive licensee) and its wholly-owned subsidiary Voxer IP (as patent owner) have sued Facebook and Instagram (6:20-cv-00011) in the Western District of Texas, alleging infringement of five patents through the provision of Facebook Live and Instagram Live. The patents generally relate to various aspects of video communications. Voxer pleads that the development work for the patents grew out of the 2003 combat experience in the Kunar Province of Afghanistan of its founder, former CEO, current board chairman, and named inventor, Thomas E. (“Tom”) Katis.

Voxer’s asserted patents variously relate to streaming media (8,180,030), real-time video messaging (9,634,969), time-delayed or near-real-time communications (10,109,028), video communications with one or more recipients (10,142,270), and video communications with variable quality that may be viewed in real-time or as time-shifted content (10,511,557). The ‘030, ‘969, ‘270, and ‘557 patents belong to a 74-member family with issue dates ranging from July 2010 through mid-December 2019 (the ‘557 patent). Katis is named as an inventor on members of this family (which has an earliest estimated priority date in June 2007), with prosecution of multiple related applications continuing before the USPTO. The ‘028 patent issued in October 2018; it has one family member, which issued in October 2019, and both name only Matthew J. (“Matt”) Ranney as an inventor. The family has an estimated priority date in April 2014, based on the filing of a provisional application. Ranney identifies himself as having been Voxer’s founder and CTO through September 2014, at which point he joined Uber (and continues in that employment).

In its complaint, Voxer recounts that Katis reenlisted with the US Army in the wake of the September 11, 2001 terrorist attacks, and after his combat unit “was ambushed in Kunar Province in 2003, Mr. Katis coordinated medevac, tactical reinforcements, and close air support under enemy fire. He completed his mission but experienced the shortcomings of existing communications systems”. In the following years, Katis founded Voxer (f/k/a Rebelvox) with Ranney, allegedly developing “new technologies” that “enabled transmission of voice and video communications with the immediacy of live communication and the reliability and convenience of messaging. The technologies allowed transmission and reception under poor and varying network conditions and regardless of recipient availability”.

Pleading willful infringement, Voxer describes a series of meetings with Facebook starting in 2012 at which a “potential collaboration”, including a possible license to Voxer’s patents, was discussed. Those talks did not lead to an agreement, after which Voxer alleges that Facebook identified it as a competitor and revoked its access to parts of the Facebook platform. Voxer pleads that it met again with Facebook in 2016, after the launch of Facebook Live, a discussion in which possible infringement was discussed.

This case against Facebook and Instagram appears to be Voxer’s first as a plaintiff. It has been a defendant in prior litigation, brought by NPEs. Notably, Voxer subsidiary VoxerNet was accused by IPVX Patent Holdings, Inc. (and before it in the same litigation by Klausner Technologies Inc.) of infringing a single patent generally related to a “telephone answering device”. Summary judgment of noninfringement (by Voxer’s app, “a push-to-talk walkie talkie software application”) was granted in July 2014 (in conjunction with a claim construction order handed down on the same day), and attorney fees of over $800K were awarded in the case. IPVX subsequently filed an appeal that was voluntarily dismissed before briefs were filed. IPVX’s campaign, which hit nearly 100 defendants, ended with the dismissal of the NPE’s appeal. 1/7, Western District of Texas.

Masimo Hits Apple

Masimo (as patent owner) and Cercacor Laboratories (presumably as exclusive licensee) have sued Apple (8:20-cv-00048), alleging infringement of ten patents, generally related to “noninvasive” physiological measurement and patient monitoring, as well as trade secret misappropriation of related technologies. The plaintiffs also ask the court to correct the inventorship of multiple patents issuing to Apple and to declare that certain Apple patents and patent applications belong to the plaintiffs instead. The dispute arises primarily from a 2014 employment relationship between Apple and Marcelo Lamego, a former Masimo/Cercacor executive. Lamego, and his new venture True Wearables, are already defendants in a separate case, filed in November 2018, alleging patent infringement (as well as other claims). At issue in the new Apple complaint are Watch Series 4 and 5, particularly those devices’ heart rate sensors.

The patents-in-suit span several families, including one patent (6,771,994) issuing in August 2004 (with estimated priority date in June 1999) and five patents (10,258,265; 10,258,266; 10,292,628; 10,299,708; 10,376,190; 10,376,191) from a family of 19 having issue dates ranging from December 2009 (for a related design patent) to August 2019 (with an estimated priority date in July 2008), as well as patents from two other families, one (8,457,703; 10,433,776) with five members issuing between February 2004 and October 2019 and the other (10,470,695) with two members issuing just this past November.

Patents in the asserted 19-member family name as an inventor Lamego, described in the new complaint as “the former Chief Technical Officer of Cercacor and a former Research Scientist at Masimo”. The plaintiffs allege that Apple contacted Masimo in 2013 about potential technology integration but that after “what seemed to Masimo to have been productive meetings, Apple quickly began trying to hire Masimo employees, including engineers and key management” and, namely, Lamego. “Shortly after joining Apple in January 2014”, pleads Masimo, “Lamego pursued on behalf of Apple numerous patent applications on technologies he was intimately involved in at Plaintiffs Cercacor and Masimo, and with which he had no prior experience or knowledge”.

In both the Apple complaint and the complaint against Lamego and True Wearables, the plaintiffs recount their former relationship with Lamego, allegedly grooming him for executive positions and exposing him to the company’s “most guarded secrets” under a series of confidentiality agreements. In the latter complaint, filed in the Central District of California in November 2018, breach of contract, breach of fiduciary duty, misappropriation of trade secrets (under both federal and California law), and infringement of multiple different, but related, Masimo patents are all pleaded. The employment relationship between Lamego and Apple appears to have ended after roughly six months, Lamego subsequently forming True Wearables. Masimo and Cercacor seek multiple remedies, including an injunction against the sale of True Wearables’s sale of infringing products, including of Oxxiom, a wearable pulse oximeter.

Masimo is no stranger to litigation, having appeared as both a plaintiff and a defendant in multiple instances over the past two decades. It first asserted members of the patent families now at issue against Apple and True Wearables in a 2009 complaint against Philips—litigation that spawned three separate Delaware cases, all before District Judge Leonard P. Stark and that resulted in an October jury verdict of patent infringement in Masimo’s favor. That dispute allegedly also arose out of an initial cooperation that turned contentious. The jury awarded Masimo nearly $467M in damages for infringement of two patents. While the court handled posttrial motions in the wake of that verdict, heard equitable issues itself (i.e., inequitable conduct, antitrust, and patent misuse defenses), and prepared the patent infringement claims lodged in the subsequent two complaints for trials of their own, Masimo and Philips settled their set of disputes. Press releases from the companies announced a new cooperation, as well as a reported cash payment of $300M from Philips to Masimo.

Masimo is also litigating other families of patents, separate by prosecution but of similar general subject matter, in a June 2019 case filed against Hon Hai and Sotera Wireless in the Southern District of California. At issue are, again, patient monitoring equipment, there in the medical context. Hon Hai has filed a motion to dismiss, alleging pleading inadequacies—in particular, contending that “Masimo has pleaded no facts to support its claim that Hon Hai is responsible for Sotera’s alleged infringement. The Complaint contains only bare allegations that Hon Hai controls Sotera and Sotera’s management team”. 1/9, Central District of California.