Mimesis Law
11 December 2017

Texas Jury Swats Away ContentGuard Patent Attack on Apple

Nov. 23, 2015 (Mimesis Law) — In many ways, patent holders and investors in companies that assert patents have looked at the Eastern District of Texas as the last redoubt — an Alamo of sorts. Especially in this age of Alice and IPR’s, where the degree of difficulty for a non-practicing entity looking to assert patents is at an all-time high. Pendrell, which has amassed a large (>1000) portfolio of patents, did not make things easier for itself by trying to take on two of the most aggressive and sophisticated patent defendants out there, Google and Apple. In its first attempt, back in 2014, Pendrell asserted a group of Digital Rights Management patents against Google and Samsung, but lost on infringement before a jury. The stock tanked as a result.

In light of the earlier loss, investors were very keen to see a better result against Apple. Same five patents, same locale — but a different jury, and different accused functionality, iTunes and iBooks. In addition, the early word on the prior loss against Google was that ContentGuard’s attorney struggled with Google’s technical expert; a more experienced team was handling key aspects of the case against Apple. Unfortunately for Pendrell investors, the result was the same against Apple, with the jury returning a verdict of non-infringement. As expected, the stock was halted pending the verdict, with the after-hours share price reaction looking bad for Pendrell.

More generally, the inability of a patent owner with pedigreed patents to win in the Eastern District of Texas is yet another example of the difficulties faced by patent assertion companies today. There is no doubt that Pendrell had a full and fair opportunity to assert these patents, but it was unable to convince either jury that it was entitled to any recovery. Another setback for investors in Pendrell, and yet another indication that patent owners are running out of favorable places to bring patent cases in the United States. Yes, there are more patent owners trying to bring cases in Europe, but that strategy remains untested — and there is no guarantee that it will pay off. But desperate times call for desperate measures, so crossing the Atlantic to assert patents is the new strategy of choice.

PCO

 

Disclosures and Disclaimers:

Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material. Questions or comments can be directed to me at gaston@markmanadvisors.com. All suggestions are welcome.

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