RPX Attacks 'Nonsensical' Antitrust Suit over Patent Licensing Campaign

As we’ve written before, RPX Corporation occupies a special niche in the patent world. In exchange for membership fees, it licenses thousands of patents to more than 100 tech companies that often face licensing demands and infringement claims by so-called non-practicing entities, or “patent trolls.” One of those NPEs, Cascades Ventures Inc., picked a court fight with RPX in March, alleging in an antitrust complaint that RPX and a few of its most prominent members conspired to rebuff Cascades’ efforts to ink patent licensing deals.

RPX and its lawyers at Latham & Watkins took aim at Cascades’ novel allegations in a motion to dismiss filed on Monday, calling the complaint “nonsensical.” One of the five RPX members named in the complaint, Dell Inc., also moved to dismiss the case on Monday. Dell is represented by Winston & Strawn.

As we previously reported, , Cascades is owned by former Jenner & Block partner Anthony Brown, who unabashedly pioneered “troll” litigation in the 1990s. Cascades has been asserting roughly 35 patents it acquired from Boris Babaian, a former Intel Corporation fellow who’s credited with helping invent the supercomputer. That campaign hit a snag when five major smartphone manufacturers in the RPX coalition–Dell, HTC Corporation, LG Electronics Inc., Motorola Mobility Inc., and Samsung Electronics Co. Ltd.–refused to take licensing deals. Cascades brought it’s antitrust case in U.S. District Court in San Francisco, alleging that RPX and the tech companies conspired to boycott its patents in violation of state and federal antitrust laws. (Cascades is represented by Niro, Haller & Niro and Davis Wright Tremaine.)

The defense lawyers now say Cascades’ arguments defy logic. “[B]ecause RPX’s members had already paid their full subscription fees, the allegation that those members conspired to get RPX to terminate negotiations with Cascades makes absolutely no sense,” the Latham lawyers wrote in Monday’s dismissal motion. “Had RPX entered into a transaction with Cascades, its member would have obtained licenses–at no extra cost–to patents that many of them had been accused of (and in some instances sued by Cascades for allegedly) infringing. Cascades’ allegation. . .is akin to saying that an insured would urge his insurer not to pay for a covered, costly event.”

That’s a strong argument, but it ignores how much bad blood there is in the patent world. Many tech companies pride themselves on refusing to settle NPE suits, even if it would be cheaper to do so. So it’s not hard to believe that tech companies would go out of their way to punish a perceived “troll.” We hope the case goes forward just so we can find what went on behind the scenes.

Brown declined to comment for this story. In an interview with the Litigation Daily two weeks ago, he described Cascades’ approach to obtaining and asserting patents. Rather than snatch up as many patents as possible, Cascades selectively acquires patents directly from respected inventors, Brown said. “We’re a boutique, not a factory,” he said. “I meet the inventors and make sure they are people I trust.”

Latham partner Alfred Pfeiffer Jr., who represents RPX, did not return a call seeking comment.

This article originally appeared in The Recorder.