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

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.

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