Cascades Ventures Inc.–a descendant of the “original patent troll”–may have reached the end of its campaign against the self-described troll-fighter RPX Corporation and a quintet of tech companies that allegedly orchestrated an illegal boycott of Cascades’s patents.
In a 24-page decision issued on Thursday, U.S. District Judge Yvonne Gonzalez Rogers in Oakland, Calif., dismissed an antirust complaint Cascades brought against RPX, which licenses patents to companies for defensive purposes. Cascades accused RPX of illegally conspiring with five of its members–Dell Inc., HTC Corporation, LG Electronics Inc., Motorola Mobility Inc., and Samsung Electronics Co.–to make it impossible for Cascades to license its patents at a fair price.
Cascades is owned by Anthony Brown and represented by Ray Niro of Niro Haller & Niro. Legend has it that the duo’s work inspired the term “patent troll” more than a decade ago, as IP Law & Business explained here.
After rising to prominence in the 1990s as the head of TechSearch LLC, one of the first non-practicing entities, Brown debuted Cascades in 2010. Rather than snatch up as many patents as possible, Brown says he wants to focus on helping underdog inventors strike licensing deals with large companies. “We’re a boutique, not a factory,” he told us in May 2012. “I meet the inventors and make sure they are people I trust.” (Sister publication Corporate Counsel published a feature on Brown’s approach in September 2012.)
In 2011, Cascades demanded that several smartphone manufacturers license a patent portfolio it acquired from Boris Babaian, a Russian engineer credited with helping invent the supercomputer. RPX initially offered to pay $9 million to license the Babaian patents, so that it could in turn make the patents available to its members, who pay an annual fee to access RPX’s patent pool. RPX allegedly retracted that offer after at least one of its members refused to back the deal. In the months that followed, Cascades said it wasn’t able to make fair licensing deals with RPX members.
Cascades hired Niro to bring an antitrust complaint against RPX and the five gadget-makers in March 2012. The complaint alleged that “the individual manufacturing defendants all agreed among themselves and with RPX not to negotiate independently with Cascades and to present a unified, concerted effort to oppose licensing and enforcement of the Cascades patents, with the objective of causing Cascades to abandon its efforts, accept a below-market-value by RPX or go out of business by virtue of the expense of litigation.”
Defense lawyers at Latham & Watkins (for RPX) and Winston & Strawn (for Dell) moved to dismiss last May. One of their many arguments was that the scheme alleged by Cascades is economically irrational. The tech defendants had already paid their full subscription fees, so blocking a deal with Cascades would be akin to an insured urging his insurer not to pay for a covered, costly event, they reasoned.
Judge Gonzalez Rogers seemed skeptical of Cascades’ claims at an oral argument in July (and she pretty much called the company the dreaded t-word.) In Thursday’s decision, the judge put that skepticism to paper. “All of the harm alleged–lost royalties, depressed market value for the patents, litigation expenses, loss of business growth–drives from Cascades’ inability to license its patents,” she wrote. “However Cascades has provided insufficient facts from which to plausibly infer that the reason it suffered this harm is due to a conspiracy in a particular market, rather than due to individual business disputes between independent actors.” The dismissal is without prejudice, so Cascades may try to beef up its complaint and refile.
“It’s fair to say we disagree with the ruling. We do think the complaint adequately states a claim,” Brown told us. “We’re considering our options, including amending the complaint our amending or appealing.”
A spokesperson for RPX declined to comment.
