A Texas-based company that has filed 46 patent-infringement lawsuits over the past three years filed four such lawsuits in California in April, raising concerns about an expansion of intellectual-property litigation against retailers.
In mid-April, Linfo IP filed the lawsuits against MVMT Watches Inc. and other retailers in federal courts, including three lawsuits in the Central District of California, arguing that the defendants violated patents related to online interactive product review pages. Linfo is a non-practicing entity, meaning it has acquired certain patent rights but does not sell products related to the patent.
MVMT Watches did not respond to a request for comment, but Jonathan Stroud, general counsel for United Patents, said such patent-infringement lawsuits are part of a growing trend, with non-practicing entities now bringing the majority of such U.S. patent lawsuits.
“Linfo is a subsidiary or associate of a company called DynaIP, or Dynamic IP Deals LLC, that files hundreds of suits a year through different subsidiaries," Stroud told the Southern California Record, adding that DynaIP controls dozens of different entities.
The lawsuit filed against MVMT Watches seeks damages related to lost profits or a reasonable royalty, attorneys’ fees, expenses and costs, a permanent injunction and an award of treble damages, or triple the compensatory damages.
The website CourtListener shows that Linfo initially concentrated its patent actions in Texas courts but only recently branched out to courts in California, New York and Colorado. The defendants include large retailers such as Walmart and Big Lots.
Mike Lemon, vice president of legal affairs for the National Retail Federation (NFR), said retailers are often the victims in such litigation.
“Patent trolls have targeted retailers in recent years, using broad claims on bad patents to force settlements,” Lemon said in an email to the Record. “Retailers often employ commonplace technology to manage internal systems and improve customer experience. Often these technologies are licensed from third-party vendors.”
Patents that are wrongly granted can be employed to intimidate retailers into paying to settle non-meritorious cases, he said.
“The settlement demands are often less than $100,000, while a trial in district court can easily cost 10 times as much,” Lemon said. “This leverage makes a bad patent a valuable investment; and investment firms, both domestic and foreign, have taken note. By funding litigation, they are able to extract settlements far beyond their investment.”
The role of third-party litigation funders has surfaced specifically in patent-infringement cases filed by Linfo. A Houston lawyer who often represents the company, William Ramey, recently sought to pull out of dozens of patent cases as a result of nonpayment, according to Bloomberg Law. These cases were linked to a litigation funder called AiPi Inc., which was involved in a fee dispute with Ramey, according to Bloomberg.
Litigation funding agreements have been tied to excessive litigation and have drawn criticism for a lack of transparency about the activities of monied interests that may be driving patent litigation and other types of lawsuits.
“If courts were to adopt rules requiring the disclosure of funding, we could see the full scope of the problem,” Lemon said. “Until then, NRF continues to urge Congress and the Patent and Trademark Office to prioritize patent quality and to make post-grant review as robust as possible.”