After the case was underway, FireStar apparently tired of the patent litigation game. The company was reluctant to make engineers available for deposition because, Foley’s brief states, they “were focused on product development rather than the Red Hat case and as a result were not sufficiently responsive.” By December 2007, the bankers at Amphion had agreed to take the suit off FireStar’s hands by creating DataTern, a shell company solely focused on patent enforcement that acquired the patent in early 2008. (Amphion also agreed to compensate FireStar for employee time spent on the litigation.) At about the same time, DataTern stopped paying Foley’s bills, and turned to IP Nav and its lawyers to press the suit.
Those lawyers—Texas solo Dan Perez and Michigan-based Patrick Anderson, both of whom frequently work for Spangenberg and his patent companies—quickly hammered out the $4.2 million settlement. The figure, Foley notes, was lower the total litigation budget it had agreed to with FireStar. If the plaintiffs were willing to settle for so little, Foley lawyers Michael Lockerby and Greg Neppl write, a deal could have been struck “without the expenditure of much in the way of legal fees.”
Overall, Foley’s complaint against Spangenberg portrays the firm as representing an operating entity in the Red Hat matter. That scenario, the firm argues, only turned into something with the typical markings of “patent troll” suit—keeping litigation costs low and ultimately settling for a figure in line with those costs—because of a major change of strategy by the patent-holders.
Spangenberg says that if Foley has qualms about handling litigation that morphs into a patent-troll suit, it simply shouldn’t take on such cases. And, he notes, they can cause lots of conflicts with existing corporate clients. Like most big firms, he says, Foley is “ill-suited to do work for an NPE [non-practicing entity].”
One final note: Open-source software advocates may not know that Spangenberg considers himself a Red Hat fan. He considers the settlement between the company and DataTern “one of the coolest licenses ever,” because it covers Red Hat’s community members. Red Hat and Spangenberg might seem like strange bedfellows considering that Red Hat has asked the Supreme Court to use the Bilski case to wipe out software patents—the form of IP that Spangenberg has used to build his sizable fortune.
Spangenberg sees no irony in that. Red Hat, he says, is “not only a true believer, they’re a true doer. I have never fought with Red Hat, and in the future I don’t intend to.”
- Datatern, Inc. et al v. Foley & Lardner LLP. 09-cv-00038, E.D. Texas.
Documents from the case:
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