Famed Patent Troll Smacked Down Over 'Anonymous' Threat Letter

from the you-don't-hang-a-gun-over-the-mantle-unless-you-plan-to-use-it dept

Wed, Dec 7th 2011 11:56pm — Mike Masnick

We've written about famed patent troll Erich Spangenberg and the variety of shell companies under his control a few times in the past. He's the guy who a court told to pay $4 million for shuffling patents around among shell companies and suing the same company twice with the same patent, despite a settlement the first time that precluded future suits. Spangenberg is also famous for his motto, "sue first, ask questions later," in part because he wants his lawsuits to take place in Eastern Texas.

Apparently, he doesn't always sue first, but can't resist being sneaky anyway. On behalf of an anonymous "client," he (under the guise of his company IP Nav) sent a letter to Renaissance Learning, asking them to enter into totally secret negotiations over possible patent infringement. He refused to name the client or the patents, but wanted Renaissance to sign a gag agreement that they would never talk about anything that came out of the discussion. Renaissance, instead, went to its local court, in Wisconsin, and got a subpoena asking Spangenberg to identify the patent and the patent holder, for the purpose of getting a declaratory judgment that it did not infringe the anonymous patent holder's unknown patent.

Spangenberg, perhaps regretting not following his "sue first" mantra, filed a motion to quash in Eastern Texas, arguing that the Wisconsin court had no jurisdiction (despite Renaissance being in Wisconsin). The court leaned towards agreeing with Spangenberg, saying he had raised "substantial questions" about the jurisdiction, but that it was an issue for the Wisconsin court to discuss. In response, the Wisconsin court looked at the issue and issued a pretty damning order about Spangenberg's threat letter being enough to file for a declaratory judgment. While it notes that Spangenberg may have been careful to avoid making a direct threat (necessary for declaratory judgment), the intent is clear... and the court uses Julius Caesar and Anton Chekov to make the point:

Some might look at the silky wording of IP Nav's letter to Renaissance and see a close question; this court, however, sees an unmistakable and intentional warning shot across the bow. The actual message is pellucid to any patent litigator, so that IP Nav's use of apophasis is disingenuous and unavailing. Remember Mark Antony's funeral oration in Julius Caesar? That's how an experienced business executive or lawyer would view IP Nav's assertions that "we are focused on addressing these issues without the need for costly and protracted litigation" and "our client's preferred approach is to conclude licensing discussions without resorting to litigation. We hope you share this objective." The implied "or else!" oozes from this letter like lye from lutefisk. To paraphrase an observation attributed to Anton Chekhov, you don't hang a gun over the mantle in Act I unless someone is going to fire it in Act III.

Doe enlisted IP Nav�a specialist in "monetizing" patents for its clients�to communicate with Renaissance on its behalf. The fact that such correspondence was sent anonymously through a hired gun proud of its "aggressive pursuit of patent infringers" reasonably would invoke "a different reaction than would a meet-and-discuss inquiry by a competitor, presumably with intellectual property of its own to place on the bargaining table." Hewlett-Packard Co., 587 F.3d at 1362. The letter makes clear that Doe or IP Nav already has gone to the expense of analyzing Renaissance's products and has concluded that there was a "basis for . . . infringement claims against [Renaissance's] products or services." Further, IP Nav's refusal to identify its client or the patents at issue, along with the unnecessarily tight ten-day response deadline, reasonably can be viewed as components of a strategy to preclude Renaissance from obtaining the facts it needed to file a declaratory judgment action; from this approach one also could reasonably infer that Doe already was prepared to litigate if necessary and intended to retain for itself the choices of when and where to file its lawsuit if Renaissance would not play ball. Then there is demand for a one-sided forbearance agreement that required that Renaissance not file suit but imposed no reciprocal obligation on Doe. All of this reasonably implies that Doe intends to enforce a patent and that a real controversy exists.

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Filed Under: erich spangenberg, lawsuits, patents, threats
Companies: ip nav, renaissance learning

36 Comments

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Mr Big Content, 8 Dec 2011 @ 1:35am

Chekhov??
Now this court is quoting from "Star Trek" to try to justify theft of valuable Intellectual Property?

That judgement isn't going to last ten seconds when it gets to appeal...
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A Guy (profile), 8 Dec 2011 @ 1:36am

So, is the lesson sue right away or don't send veiled threats right away?

It sounds like a rare good outcome, but it doesn't do much to solve the problem of patent trolls.
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Anonymous Coward, 8 Dec 2011 @ 2:03am

Re:
Maybe he could just get rolled over by giant tomatoes.

http://vimeo.com/31139395
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Killercool (profile), 8 Dec 2011 @ 3:52am

Re: Chekhov??
Let me google Chekhov for you...
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AJ (profile), 8 Dec 2011 @ 4:02am

Re: Re: Chekhov??
I mashed the funny button so hard i think i broke it....
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Anonymous Coward, 8 Dec 2011 @ 4:07am

Re: Chekhov??
Ding. The court's ruling is amusing, but certainly won't stand up to any appeal. It's a judge attempting to imply intent when the law pretty much requires an overt statement of intent.

It's a fail, but because it slaps down a "patent troll" I am not shocked to see Mike run it and act like it's the best ruling ever.
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The eejit (profile), 8 Dec 2011 @ 4:14am

Re: Re: Chekhov??
The company he was suing on the behalf of "anonymously" was his: I think that's pretty good indicator of intent, don't you?
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Anonymous Coward, 8 Dec 2011 @ 4:54am

Re: Re: Re: Chekhov??
It's nice, but the law requires stated intent, not implied.
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IronM@sk, 8 Dec 2011 @ 5:10am

Re: Re: Chekhov??
Wow dude, you really suck at the internet. Not only did you spectacularly fail the sarcasm test, but that was a gross misuse of LMGTFY.
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Jeff, 8 Dec 2011 @ 5:17am

Re: Chekhov??
I am guessing the Wisconsin judge watches less TV than you do, Anton Chekov is one of the most famous Russian writers ever, not the pilot of the starship Enterprise.
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abc gum, 8 Dec 2011 @ 5:20am

Re: Re: Re: Re: Chekhov??
Wow, you're serious - lol.
How much innuendo is required to get you arrested when suggesting that a bank secretly hand over the cash?
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Willton, 8 Dec 2011 @ 5:31am

Re: Re: Re: Re: Chekhov??
It's nice, but the law requires stated intent, not implied.

Citation please? I don't remember a SCOTUS or CAFC decision stating such.
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Gern, 8 Dec 2011 @ 5:34am

Re: Chekhov??
Not Pavel, Anton. The author.
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Killercool (profile), 8 Dec 2011 @ 5:41am

Re: Re: Re: Chekhov??
Oh, I really, really hope so.

Unfortunately, Mr Big Content is, I suspect, like OOTB. By which I mean, he actually believes the dreck he spews.
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Anonymous Coward, 8 Dec 2011 @ 5:56am

Re: Re: Re: Re: Re: Chekhov??
Read the story - no direct threat, no declaratory judgement!
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Mike, 8 Dec 2011 @ 6:14am

Two edged sword
I don't see this as more likely a "bad" outcome than a good one. Sure, the defendant in this case might get to keep jurisdiction (pending an appeal) in their own state, but the signal to would-be plaintiffs is to simply sue first.

Under the standard expressed here, there is essentially no way for a patent owner to avoid a declaratory judgment action. There was not patent identified. No patent owner identified. No infringement identified. Nothing.

Remember, people license all kinds of technologies for all kinds of reasons. What if the patent wasn't one the defendant was actually, actively infringing, but merely one that would be useful.

Seems like a good outcome on the facts of this particular case, but a bad one, generally. Such is the law.
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Anonymous Coward, 8 Dec 2011 @ 6:21am

Re: Re: Re: Re: Chekhov??
Mr. Big Content is a pro troll in for the LuLz.

ps: This is not a joke.
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DannyB (profile), 8 Dec 2011 @ 6:28am

Re: Two edged sword
The reason the troll didn't sue first is because that is more expensive than simple direct extortion. The lawsuit is not the means of collecting; the lawsuit is the implied consequences of not paying the protection money.

The other reason the lawsuit is undesirable is that then the victim, or mark, can obtain discovery and get to know a good deal about the crooks behind the extortion racket. The cockroaches do not want a bright light shined upon them, thus better to avoid enabling the victim to be able to obtain discovery.

A real patent owner with a real infringement claim can easily avoid a declaratory judgement like this. You approach the alleged infringer in good faith. Identify who you are, what products or services you believe infringe, and what patents and claims you believe are infringed. No need for a confidentiality about what patents and claims are infringed because the substance of patents is supposed to be public knowledge and the goods and services of the alleged infringer certainly are public knowledge if its wares are offered to the public. It might be reasonable to obtain confidentiality about how much money is paid. But this good faith reasonable approach is not what patent trolls do.
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The eejit (profile), 8 Dec 2011 @ 6:29am

Re: Re: Re: Re: Re: Re: Chekhov??
no direct threat

"Enter into secret non-disclosable negotiations or I'll sue!"

...And that's not a threat, how, precisely?
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Trails (profile), 8 Dec 2011 @ 6:39am

Mike just missed the chekov quote in his citation.
"This letter, like a nuclear wessel, could explode at any moment"
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Anonymous Coward, 8 Dec 2011 @ 6:40am

Re: Re: Re: Re: Re: Chekhov??
I believe you will not find any citation to the point raised. The question is not what the writer intended, but rather what did the recipient reasonably believe?

Given the prior actions by the writer in matters such at this, counsel for the recipient did precisely what I would have recommended.
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The Devil's Coachman (profile), 8 Dec 2011 @ 7:02am

Sounds like that troll needs a major beat-down!
Sometimes, after a number of bones are fractured, and some major organs damaged, people like this troll can learn a lesson. And, it's a lot cheaper than going through the "legal process" that passes for justice in East Texas, where it seems judges can be bought for a bottle of really good Bordeaux and a hooker, or so it appears. But, I think this idiot is incapable of learning anything as long as he still thinks extortion can be profitable.
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Overcast (profile), 8 Dec 2011 @ 7:04am

Some people have brains and can innovate, others have to legislate.
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Overcast (profile), 8 Dec 2011 @ 7:13am

I did notice on their site, that they are using both the trademarked names 'windows' and 'macintosh' without any reference to the copyright holders or even noting they are trademarked - is that legal? ;)

"In order to receive Notices electronically, you must have a personal computer with a modem connected to a communications source (telephone, wireless or broadband), and a Windows-based operating system with an Internet browser or a Macintosh-based operating system with an Internet browser. You will need a printer attached to your personal computer to print any Notices. All contracts completed electronically will be deemed for all legal purposes to be in writing and legally enforceable as a signed writing."

http://ipnav.com/terms-conditions

But you are 100% right - they say any dispute with them *has* to be settled in 'Marshall, TX' - do they pay a judge there?

"Choice of Law and Location for Resolving Disputes

You agree that the laws of the State of Texas govern this contract and any claim or dispute that you may have against IPNav or its related companies or subsidiaries, without regard to Texas conflict of laws rules. You further agree that any disputes or claims that you may have against us will be resolved by a court located in Marshall, Texas."

And no asshat, I don't agree. It's a public site, so shove it and put it under a login if you want anyone to be forced to agree to your terms.
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Overcast (profile), 8 Dec 2011 @ 7:17am

"State of Texas govern this contract"

hahah, I'm sorry - so many grammatical errors on his page - all you would have to do is patent 'grammatical errors' and you could sue this clown into oblivion.

Psst* that should be 'governs'.
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Overcast (profile), 8 Dec 2011 @ 7:19am

Ooops, I'm wrong on that one in context, oh well - maybe I'm dense before coffee, but at least I'm not suing people for no reason.
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iBelieve, 8 Dec 2011 @ 8:28am

Attempted Extortion
That was the first thing that came to mind. If there is a controversy, let it be proven in a court of law, a courtroom that is without a reputation for smearing reasonable justice acrossed its floors.
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iBelieve, 8 Dec 2011 @ 8:37am

Re: Re: Re: Re: Re: Re: Re: Chekhov?? Laughing now
Enter into a secret negotiation or I'll have to take off my slippers and its going to get dirty.. if I have to get dress for this. >:-D
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iBelieve, 8 Dec 2011 @ 8:43am

Re: Re: Re: Re: Re: Chekhov??
Intent is Intent (subjective to a court's interpretation and judgement) you don't like it, try to appeal. Keep pouring your money into the legal system.. its a feast, a feeding frenzy. Snark, snark, gobble. Fart.
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David (profile), 8 Dec 2011 @ 11:13am

Words words words
You gotta love the court's use of big words like hippopotamus:

pellucid
apophasis
lutefisk

Even Techdirt's spell-checker doesn't like the last two!

Fun stuff.
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Lance Murray, 8 Dec 2011 @ 11:45am

Re: Re: Chekhov??
Nice. Well done. I'm entertained. How the f did you do that?
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Trails (profile), 8 Dec 2011 @ 4:02pm

Re: Words words words
Techdirt has a spellchecker? Are you sure it's not your browser's spellchecker?
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David (profile), 8 Dec 2011 @ 5:04pm

Re: Re: Words words words
Good point -- just put it down to a brain fart! I guess I was so impressed by the big words I wasn't thinking...
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The Groove Tiger (profile), 8 Dec 2011 @ 6:18pm

Re: Chekhov??
You mean this?

Chekov's Gun
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Steven, 16 Dec 2011 @ 9:03pm

Re: Chekhov??
You're an idiot. Anton Chekhov was a doctor and author who lived in the 1800's.

I take it back. You are whatever is dumber than an idiot.
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mark, 5 Dec 2013 @ 12:46pm

Re: Chekhov??
You're thinking of Pavel Chekhov. Anton Chekhov was a russian physician and author. You really need to know what you're talking about before you make sweeping statements like "won't last 10 seconds on appeal".
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