More Hedge Fund-Backed Irish NPEs Launch US Litigation

February 26, 2021

Last July, RPX flagged public records indicating that a growing web of Irish NPEs with ties to Magnetar Capital—a hedge fund with $12.3B in assets under management—were acquiring patents from major operating companies. This past month saw two of those NPEs—Arigna Technology Limited and Sonraí Memory Limited—launch their first campaigns, wielding former HP Enterprise (HPE), Mitsubishi, or Microchip (Atmel) patents in suits targeting automakers and device makers. Meanwhile, USPTO records indicate that yet more well-funded Irish NPEs are waiting in the wings—some with former operating company portfolios already in hand.

Litigation filed by Arigna Technology Limited…

Formed in late 2019, Arigna Technology waited well over a year to file its first suit, hitting BMW, Daimler (Mercedes-Benz), Nissan, Tesla, Toyota, and Volkswagen in a February 18 complaint filed in the Eastern District of Texas (2:21-cv-00054). The defendants are accused of infringement through provision of vehicles that incorporate the NXP MR2001 radar transceiver. A single patent, generally related to a “voltage-controlled oscillator”, is asserted.

Arigna received that patent directly from Mitsubishi in a February 2020 assignment involving over 30 US patents. The NPE has also since received a portfolio of nine US patents, all developed by Microchip (or subsidiary Atmel), from sister NPE Sonraí Memory, suggesting that at least one additional campaign may be in Arigna’s litigation hopper.

…and Sonraí Memory Limited…

Also formed in 2019, Sonraí Memory kicked off its first campaign with a February 2 suit against Oracle in the Western District of Texas (6:21-cv-00116), accusing the defendant of infringing a single patent, developed by HP (before the company split into HPE and HP Inc.), through provision of “servers including Oracle SPARC processors”, including “T8 servers comprising M8 SPARC processors”. The asserted patent is broadly directed to transferring a portion of data in uncompressed form on a first memory bus and another portion in compressed form on a second memory bus.

The start of a second campaign followed shortly thereafter, with Sonraí suing each of Google (6:21-cv-00167), LG Electronics (LGE) (6:21-cv-00168), and Samsung (6:21-cv-00169) on February 23, all in the Western District of Texas, over the provision of certain smartphones that “contain[] . . . at least one Hexagon DSP” and that include “SanDisk/Toshiba 64L 3D NAND flash chips”. Two patents are asserted against each defendant: one originating with Atmel generally related to a memory system that includes a “charge pump circuit for generating a charge pump voltage having minimal voltage ripples”; the other originating with HP and generally related to a system with a single-die, multiprocessor chip that runs multiple operating systems.

In April of last year, HPE assigned 17 US patents to Sonraí Memory; the transacted assets generally related to a range of technologies, including system firmware, memory systems, and microprocessors. Those assets joined other patents, assigned in early February 2020 by Microchip (and subsidiaries Atmel and Microsemi) to Sonraí Memory and broadly concerning memory devices, various circuit elements, chip configurations, and die fabrication, among other related subject matter.

…with more litigation on the horizon

Irish corporate records identify James Prusko, a senior portfolio manager at Magnetar Capital, as a director of Arigna and Sonraí Memory. Prusko serves in the same capacity for at least five additional Irish NPEs, three of which (Data Scape Limited, Neodrón Limited, and Solas OLED Limited) have ongoing litigation campaigns and two of which (Arís Technologies Limited and Scramoge Technology Limited) have yet to file litigation.

While currently available USPTO records do not yet reflect any patent assignments to Arís Technologies, earlier this month, Scramoge Technology received over 120 US patent assets from LG Innotek.

Each of the NPEs listed above identifies as directors Ciaran O’Gara, Sean O’Sullivan, and attorneys Gerald Padian and Richard G. Tashjian. Padian and Tashjian are well known for their formation of Realtime Data LLC (RTD) and its parent Realtime Data Compression Systems, Inc., both New York entities. RTD began a litigation campaign in 2008 that has sprawled across the intervening decade, through various district courts and more than one trial. An entry point for background concerning RTD’s campaign can be found here.

Corporate records also identify O’Gara, O’Sullivan, and Padian as directors of Atlantic IP Services Limited, an entity formed in Ireland in September 2019; Atlantic IP Services, LLC, an entity formed in New York in February 2019, is identified in public records as holding shares in what appears to be its Irish counterpart. On its website, Atlantic IP Services describes itself as a Dublin-based firm “focused on patent monetization, from patent review, selection, drafting, valuation and acquisition financing, to all phases of licensing from market studies, teardowns, negotiations and, when necessary, litigation”.

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.

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.