Tessera Files More Litigation Following Another Slide in Revenue

November 11, 2016

Publicly traded NPE Tessera Technologies, Inc. has filed two new district court suits against Broadcom subsidiary Avago. On November 8, Tessera, Inc. and Invensas Corporation sued the company over two semiconductor patents not previously seen in litigation (6,573,609; 6,972,480) (1:16-cv-01034). That same day, Invensas filed a second complaint against Avago (1:16-cv-01033), this time asserting a pair of patents (6,133,136; 6,849,946) that are currently at issue in a litigation campaign involving Broadcom, Arista, ASUS, Comcast, HTC, NETGEAR, and others. Just as Tessera’s last wave of litigation, filed in May of this year, followed a disappointing financial quarter (see here), the NPE’s latest filings came a week after Tessera announced a decline in its third quarter revenue.

The ‘609 patent issued in June 2003 to Tessera, has an estimated priority date in November 1997, and generally relates to electronic packaging. The ‘480 patent, which generally concerns semiconductor packaging, issued in December 2005 to Shellcase Ltd. (an Israeli semiconductor company) and has an estimated priority date in June 2003. Shellcase assigned the patent to Tessera in March 2006. Avago is accused of directly infringing the patents through provision of various semiconductor devices, including FBAR filters and front-end modules.

On May 23, 2016, Tessera asserted the ‘136 and ‘946 patents (as well as a third patent, 6,856,007) in a complaint against Broadcom in the District of Delaware (1:16-cv-00379), alleging infringement through semiconductor devices including PCI-E mini cards, Wi-Fi transceivers, and Ethernet switches. Also on May 23, Tessera filed a complaint with the International Trade Commission (ITC) (337-TA-3150), seeking cease-and-desist orders against Avago, Arista, ARRIS, ASUS, Broadcom, Comcast, HTC, NETGEAR, Pace, and Technicolor and accusing the companies of directly infringing the ‘136, ‘946, and ‘007 patents. All respondents in the ITC investigation have now answered Tessera’s complaint, and the NPE has filed a motion to amend to add a recently issued certificate of correction to the ‘136 patent, changing “capping layer” to “layer of isolation” in the claims. Tessera’s district court litigation against Broadcom has been stayed pending the ITC investigation.

The ‘136 patent issued in October 2000 to IBM, which assigned the patent to Tessera in June 2009, and the ‘946 patent issued in February 2005 to Cypress Semiconductor, which transferred the patent to Tessera in March 2014. Broadcom filed a petition in October 2016 for inter partes review challenging claims 16-20 and 22 of the ‘946 patent (IPR2017-00107), which is pending before the Patent Trial and Appeal Board as of the date of this article. RPX has published a prior art search report concerning both the ‘136 and ‘946 patents, a copy of which can be accessed here.

The accused products in Tessera’s November 8 complaint asserting the ‘136 and ‘946 patents, which names as defendants Broadcom subsidiaries Emulex, LSI, and PLX Technology along with Avago, include chips, controllers, and switches.

A week before Tessera’s latest filings, the NPE announced its Q3 2016 earnings. Revenue fell 7.4%, at $62.4M compared to $67.4M in the same quarter last year. Net income for the quarter totaled $23M, down from $32M in Q3 2015, and cash, cash equivalents, and short-term investments were $396.3M as of September 30, 2016. Tessera reported that its higher year-over-year litigation expenses were offset by an insurance settlement of $5M received during the third quarter. 11/8, District of Delaware.