Patent Filings Roundup: Traxcell Patents Ordered into Receivership Amidst Failure to Pay, Multiple Motions to Dismiss; Litigation Funder Tells Delaware Court Work-Product Protection Applies

There was a slight uptick in district court filings last week after a slow January and February, with 43 new patent filings, including a design patent battle involving tumblers and multiple filings indicating an association with high-volume plaintiffs such as Jeffrey Gross and Leigh Rothschild. It was a busy week at the Patent Trial and Appeal Board (PTAB), with over 32 new challenges last week, with only one procedural denial on an institution decision—but that was not based on discretionary denial, which remains often briefed but rarely successful for the time being. Of course, the big news this week was that the Federal Circuit has revived an Administrative Procedure Act (APA) challenge to the Fintiv decision on discretionary denial itself as arbitrary agency action that skirted proper procedure and had an outsized impact on a broad swath of cases.

Judge Gilstrap Awards Default and Receivership of NPE Campaign Patents for Failure to Pay: My first reaction to all of this was, “Wow; I did not know you could do that.” But it makes sense; in a long-running case fraught with an earlier sanctions ruling, plentiful allegations of misconduct, an appealed and confirmed exceptional fee award, and now a failure to pay—all amidst further poorly researched filings and ongoing suits counsel inexplicably refuses to dismiss (or even respond to) under serious threat of further sanctions—it appears that Judge Gilstrap has taken the extraordinary action of turning over the patent assets themselves to one of the defendants, Verizon, after appointing a receivership and finding that all assets owned by Traxcell Technologies, LLC must be turned over. See Order Requiring Turnover and Appointing Reciever, Verizon Wireless Personal Comm’s v. Traxcell Techs, Case 6:20-cv-01175-ADA ECF 212 (Mar 3, 2023). It’s unclear from the record if any action was taken to comply. Note that, AFTER this order was released, plaintiff’s counsel had still not withdrawn from cases pending in the Western District, provoking multiple disparate motions in those pending cases, including motions to dismiss for failure to prosecute, for failure to state a claim, and others. See, e.g., Defendant Lyft’s Motion to Dismiss Traxcell’s Amended Complaint for Failure to Prosecute, Traxcell Techs. v. Lyft, No. 6:22-cv-00689-ADA, ECF 19 (Mar. 8, 2023) (detailing nonresponsiveness in face of Rule 11 sanctions and failure to even respond to counsel over months). It’s a little unclear from a jumble of case records, but it appears counsel for plaintiff failed to appear before the court’s appointed deadline there and is unresponsive.

CAFC Says APA-Fintiv Challenge May Go Forward: In a precedential opinion, the Federal Circuit reversed-in-part a district court decision dismissing Apple’s administrative law challenge to the Fintiv factors. Applying its decision with the Director’s new guidelines in mind, the panel affirmed the dismissal of claims challenging Fintiv on the basis of the statutory bar date or as arbitrary and capricious, but revived claims arguing that the USPTO had not followed formal notice-and-comment rulemaking requirements under the APA. Although discretionary denials have been dwindling, this case is notable since Director Vidal recently instructed panels to fully address Factors 1–5 before reaching the “compelling merits” question in a sua sponte review in IPR2022-01242.

Notably, the decision also spent a fair amount of time establishing appellate standing for the challengers, noting that the parties in the process of numerous challenges had, with a bare assertion not supported by additional evidence, demonstrated—and the Court took judicial notice of this fact—that it was threatened concrete harm by the change in the Board’s rule.

Delaware Judge Williams Considers Work-Product Protection Request from Litigation Funder: In a letter to the Delaware Court, plaintiff Torchlight Technologies, apparently funded through Curiam Capital and brokered via Palladium IP, urged that attorney work-product protection applies to documents related to corporate formation and analysis, including parts of their assignment agreements, some of which are attached to the letter. The order is a fascinating dive into the world of litigation funded entities, complex corporate structure, and some of the thorny legal issues such arrangements present. See Letter to Judge Williams, Torchlight Technologies LLC v. Daimler AG et al, No. 22- 751-GBW, ECF 107 (Mar. 14, 2023).

Acacia’s R2 Portfolio Rears Its Head Again: R2 Solutions LLC, a long-owned portfolio of former Yahoo patents, has been hit by some challenges after slowly ramping up enforcement actions last year, in a sure sign that full-throated, broad licensing attempts are underway. The challenges come from American Airlines and Hilton, suggesting that the assertion profile is casting a wide net and engagement is consistent and serious.

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