Fortress Takes Control of 740 Telecommunications Patents from Inventergy

May 4, 2017

Following a restructuring agreement signed in the fourth quarter of last year, publicly traded NPE Inventergy Global, Inc. says it has given Fortress Investment Group LLC sole discretion over the monetization of nearly 750 telecommunications patents. The announcement follows Inventergy’s launch in February of a new campaign targeting mobile telecommunications patents—its first litigation in just over a year.

On December 29, 2016, Inventergy filed an 8-K disclosing amendments made earlier that month to its October 2014 agreement with Fortress, giving Fortress sole discretion over the monetization of certain of Inventergy’s patents, excluding “future acquired patents related to Inventergy Innovations, LLC”. The amendments appear to have changed the revenue sharing arrangement between the two companies, giving Fortress 70% and Inventergy 30% after other obligations have been fulfilled.

In its May 1 press release, Inventergy stated that it has assigned 740 telecommunications patents to a special purpose entity named INVT SPE LLC, which it says will be managed and controlled by an affiliate of Fortress (identified in an earlier press release as DBD Credit Funding LLC). According to Inventergy, Fortress now “has sole discretion to make any and all decisions relating to the patents and related monetization activities, including the right to license, sell or sue unauthorized users of the patents”.

USPTO records do not currently show any patent assignments to INVT SPE; however, a record of a December 2016 security agreement between Inventergy and DBD, involving over 150 assets, including patents originating with Huawei, Nokia, and Panasonic, is viewable on RPX Insight.

In February of this year, Inventergy filed its first litigation in nearly twelve months, suing Apple (1:17-cv-00196) and HTC (1:17-cv-00200) over patents that it received from Panasonic in 2013. The defendants are accused of infringement through the manufacture and sale of mobile phones and tablets that use the mandatory portions of various mobile communications standards. The patents-in-suit (6,466,563; 6,611,676; 6,760,590; 7,206,587; 7,760,815; 7,764,711; 7,848,439) generally relate to multiple aspects of mobile telecommunications: the ‘563, ‘711, and ‘439 patents to CDMA (“Code Division Multiple Access”) transmissions; the ‘590 and ‘587 patents to cellular base stations; and the ‘676 and ‘815 patents to radio communications transmissions. Inventergy alleges that the practice of the mandatory portions of certain standards necessarily infringes, for the ‘563 patent, use of the mandatory portions of the HSPA standard; for the ‘676 patent, of the WCDMA/HSPA standard; for the ‘590 patent, ‘439, and ‘711 patents, the LTE standard; for the ‘587 patent, the UMTS standard; and for the ‘815 patent, the EGPRS standard. The asserted patents, which do not appear to have been litigated prior to Inventergy’s new campaign, are among approximately 500 that Inventergy received from Panasonic in an assignment dated December 20, 2013.

Inventergy’s suits against Apple and HTC are the NPE’s only active cases; they are currently in the early stages of litigation.

Inventergy saw a decline in revenue in 2016, totaling $1.8M compared to $4.8M in fiscal 2015. The NPE has attributed the year-over-year decrease to a one-time patent transaction that comprised $4M of its 2015 revenue. According to a press release, that June 2015 deal, which was with an undisclosed third party, involved two patent families “relevant to the mobile communications infrastructure and mobile handset market segments” and representing “3.3% of the 60 patent families, and 5.4% of the total patent assets originally acquired by Inventergy from Panasonic”. In that same press release, Inventergy stated that it owned “a total of nearly 760 patents grouped into 116 world-wide patent families acquired from industry leaders Panasonic, Nokia, and Huawei”.

Inventergy ended 2016 with a net loss of $7.7M, down from $11.7M in the prior year, and cash and cash equivalents of $1.5M. As of the date of this article’s publication, Inventergy’s stock was trading at $0.23 a share.

Inventergy’s restructuring agreement with Fortress comes as a number of other publicly traded NPEs have announced that they intend to diversify their activities, moving beyond patent assertion alone. See “Amid Announcement of a New Growth Strategy, Questions Remain About WiLAN’s Threat to Operating Companies” and “Finjan Forms Product Partnership with Security Company Avira Following $4.9M License Agreement” (April 2017).