Innovatio IP Ventures Dodges RICO Bullet, Puts WI-FI Users, Coffee Shops and Hotels in Its Patent Infringement Crosshairs

Innovatio IP Ventures Dodges RICO Bullet, Puts WI-FI Users, Coffee Shops and Hotels in Its Patent Infringement Crosshairs

Hotels, coffee shops, restaurants, supermarkets, and other commercial users of wireless internet - it might be time to take cover.  A federal judge recently rejected several legal claims filed by Cisco, Motorola and Netgear, paving the way for the continued enforcement of Innovatio IP Ventures' wireless network patents.

Last week, Innovatio obtained the dismissal of alleged RICO violations and claims asserting conspiracy, interference with prospective economic advantage and unclean hands. A breach of contract claim escaped Innovatio's motion to dismiss. Motorola Solutions, Inc. v. In re Innovatio IP Ventures, LLC (In re Innovatio IP Ventures, LLC Patent Litig.), 2013 U.S. Dist. LEXIS 15968 (N.D. Ill. Feb. 4, 2013) [enhanced version available to lexis.com subscribers].

Innovatio alleges that by making wireless internet available to customers or using it to manage internal processes, wireless network users, such as coffee shops, restaurants and hotels, infringe 17 patents acquired from Broadcom.

Innovatio, which uses pre-suit demand letters as part of its licensing and enforcement activity, was found to be protected by the Noerr-Pennington doctrine. The Noerr-Pennington doctrine, which derives from the First Amendment's speech and petitioning clauses, was extended by the court to protect pre-suit communications from state and federal claims. 

"[The] allegations, taken as true, do not establish that Innovatio's licensing campaign alleging infringement of the Innovatio Patents is a sham," the court said. "Accordingly, Innovatio's campaign is protected petitioning activity under the First Amendment and Noerr-Pennington."

Plaintiffs unsuccessfully argued that because the patents were subject to a variety of licenses, Innovatio's infringement claims were a sham and made in bad faith.

"Innovatio ... had a reasonable expectation that at least some of the products that any given Target used were not covered by any licenses," the court said. "It follows that Innovatio's enforcement efforts were not a sham at the time Innovatio commenced those efforts ...."

Plaintiffs also pointed to Innovatio's purported misrepresentations about:

  • the number of locations that Innovatio had licensed under the patents;
  • the value of the licenses;
  • the number of patents that had been held to be valid in court or reexamination proceedings; and
  • that the inventors on the patents are "fathers" of Wi-Fi.

These general statements did not make Innovatio's licensing campaign a sham because they were all peripheral to the question of infringement.

"A misrepresentation," the court said, "can render an adjudicative proceeding a sham under Noerr-Pennington only if the misrepresentation is material enough to 'actually alter[] the outcome of the proceeding.'" 

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