I previously covered the case of Cascades Computer Innovation LLC v. RPX Corp., (N.D. Cal.) (Gonzalez Rogers, J.). As I wrote in connection with the court’s refusal to dismiss the plaintiff’s amended complaint in December 2013:
Cascades is a non-practicing entity (“NPE”), accused by the defendants of being a “patent troll.” It holds the rights to a portfolio of patents relating to technology that optimizes the use of the Android mobile phone/tablet operating system. Dell, HTC, LG, Motorola Mobility, and Samsung (the manufacturing defendants) sell mobile devices, including those employing the Android operating system. Together, they allegedly sell more than 95% of all Android devices in the United States.
Cascades alleged that the manufacturing defendants, along with RPX, engaged in a group boycott to not license Cascades’ patents. RPX is a defensive patent aggregator – an “anti-troll” – formed to protect its members from NPEs. It frequently acts as an intermediary for its members for purposes of acquiring patents and negotiating licenses on behalf of its members.
In a nutshell, Cascades alleged that the manufacturing defendants, through or with RPX, refused to negotiate separately with Cascades for patent licenses, or at least refused to negotiate independently in a “serious” manner with Cascades, and that the defendants agreed not to license Cascades’ patents. Allegedly, the object of the conspiracy was to force Cascades to abandon its efforts to license and enforce its patents, accept a below market-value offer from RPX, or go out of business by virtue of expensive litigation. In this manner, defendants would allegedly obtain a monopsony position.
The court stayed the case pending resolution of a claim of infringement regarding the primary patent at issue. Many defendants settled those claims, but Samsung went to trial and ultimately prevailed, receiving a jury verdict of non-infringement.
On February 23, 2016, the Court dismissed the remaining antitrust claims (on a motion for judgment on the pleadings). The court wrote that failure to license an invalid patent cannot serve as the basis for a cognizable antitrust injury.
Plaintiff alternatively argued that it suffered antitrust injury in connection with the other patents in the portfolio, but the court viewed any such purported injury as de minimis. Moreover,
only Samsung is alleged to have infringed any of the other patents. However, the complaint never specifies which other patent Samsung purportedly infringed. Only in its opposition brief does plaintiff finally claim that Samsung purportedly infringed the ‘130 Patent. As described above, the market power assertions are premised on a combination of the manufacturing defendants’ shares. Plaintiff does not contend that Samsung’s share alone—17 percent of Android-based phones, a subset of a larger smartphone market and an even larger cellular phone market—is sufficient to undergird its theory. It is also not plausible, in light of the application of the collateral estoppel doctrine regarding non-infringement, that plaintiff’s failure to license the ‘130 Patent was an antitrust injury where only Samsung is alleged to have infringed the patent. In such circumstances, the complaint does not provide a convincing motive for the other alleged participants to conspire against plaintiff or allege sufficient market power by Samsung individually.
Even if plaintiff could establish antitrust standing, the motion would be granted for plaintiff’s failure to state any viable federal antitrust claim. The Court previously articulated the elements of these federal antitrust claims in connection with its order denying defendants’ motions to dismiss. After supplementing the picture with the patent jury’s finding of non-infringement of the “primary” ‘750 Patent, the FAC utterly fails to satisfy the elements necessary to state federal antitrust claims. Indeed, if the complaint were amended to insert the word “non-infringed” before each of its more than seventy references to the ‘750 Patent, then the lack of plausibility would shine through acutely.
2016 U.S. Dist. LEXIS 22727 (cit. omit.). The court also wrote that it was not inclined to maintain supplemental jurisdiction over state law antitrust and unfair competition claims.
Because the decision turns on a finding of non-infringement, it is not clear to what it extent it presages future dismissals of antitrust claims against defensive patent aggregators.