Celerity IP, LLC and Innovative Sonic Limited have filed a second Eastern District of Texas complaint against LG Electronics (LGE) (2:24-cv-00132). In the first, the plaintiff pair asserted five wireless communications patents, adding another five to the litigation through the new suit, filed by new counsel Winstead PC. The basics are also in flux as to the litigation filed by Celerity IP—in a trio of suits cofiled with Innovative Sonic and in a second trio with ASUS Technology Licensing Inc. (ATL, an ASUSTek subsidiary)—against AT&T (AT&T Mobility), Deutsche Telekom (T-Mobile), and Verizon (Verizon Wireless). More patents have been added there, through amended complaints, and third parties Ericsson and Nokia have filed sealed, opposed motions to intervene.
This litigation began with the June 2023 suit against LGE, filed by Mintz Levin Cohn Ferris Glovsky and Popeo PC. Much earlier, in November 2021, litigation finance firm GLS Capital announced that its subsidiary, Celerity IP—characterized as an IP management company and led by patent monetization veterans Chad Hilyard and Tim Berghuis—"entered into agreements to be the exclusive agent for the licensing and enforcement of two separate portfolios of standard essential patents" originating with ASUSTek and currently owned by ASUS and Innovative Sonic.
In that first suit, Celerity IP and Innovative Sonic plead willfulness, contending that the latter disclosed each of the asserted patents (7,664,059; 8,223,708; 8,804,756; 9,124,558; 9,979,514) pursuant to an applicable European Telecommunications Standards Institute (ETSI) Intellectual Property Rights (IPR) Policy. LGE is alleged to have been aware of the asserted patents (declared essential to certain ETSI standards) because it is an active member of that standard-setting organization. The plaintiffs further allege that LGE cited at least the '708, '059, and '756 patents during the prosecution of its own patent portfolio and that LG has been on notice of the patents through communications between VIA Licensing Corporation—Innovative Sonic having joined VIA's LTE licensing pool—and LGE as early as August 2018 (the communications apparently concerning foreign counterparts of the patents now asserted against LGE).
Celerity IP was formed in Texas in May 2021, there naming Centreville SPV, LLC (a Delaware entity formed in April 2021) as its manager. On its website, it has characterized itself as "an intellectual property management firm specializing in the development, licensing and monetization of standards essential patent (SEP) portfolios with market significance". Hilyard and Berghuis are described as having "played key roles in the negotiation and execution of billions in patent license agreements". The website lists Celerity IP's current partners as ASUS and Innovative Sonic.
Hilyard previously served as Chief Legal Officer at Hilco IP Merchant Banking, General Counsel for PanOptis LLC and Unwired Planet LLC, and Chief Intellectual Property Counsel at Rockstar Consortium. Berghuis was previously Chief Licensing Officer at InterDigital, Inc. In a press release announcing Celerity IP's creation, GLS Capital described the managed portfolios as including "over 300 patent families containing thousands of patents essential to the 3G, 4G and 5G cellular standards", adding that "many of the families have been independently reviewed and accepted to the cellular SEP licensing pools run by Via and Avanci".
Bloomberg reported at the time that ASUS and Innovative Sonic—the latter described as a trust developed in 2006 to hold patent assets—would "continue to own the patent portfolio while Celerity pursues the licensing and enforcement campaign". GLS's founder, Adam Gill, told Bloomberg that this deal was "the first of its kind to be announced publicly by a funder" and suggested that the partnership signaled a "broader acceptance" and continuing maturation of the litigation finance market.
Innovative Sonic pleads that it was formed under the laws of the Republic of Mauritius, business records of which date that formation to October 20, 2010; however, in litigation filed in September 2010 in the Eastern District of Texas by Innovative Sonic alone against Research In Motion (RIM, now BlackBerry), the plaintiff filed motions for protective orders first to block the noticed deposition of its chairwoman and sole shareholder Su-Heui Liu and later to cut off continued discovery regarding Innovative Sonic's standing to sue over the patents there asserted. Associated papers refer to the plaintiff's formation in the British Virgin Islands—and currently available USPTO assignment records indicate that Innovative Sonic began receiving patents in October 2006 (years before its apparent creation as a Mauritian entity) and that it continued receiving patents, via more than 80 recorded transactions, through September 2015.
Northern District of Texas Judge Ed Kinkeade (the case against RIM having been earlier transferred to his district) denied both motions for protective orders. Although many of the documents filed in connection with the motions remain under seal, it appears that RIM contended that Innovative Sonic lacked standing to sue because the assignment of the asserted patents from ASUSTek to Innovative Sonic involved an alleged "trust relationship" with a "reversionary interest" that may, alone or together, have vested equitable title in the patents with ASUSTek, rather than with Innovative Sonic. The plaintiff's witness list identifies Liu as a potential witness at trial as "the Chairwoman of Innovative Sonic" who may "testify regarding the assignments of the patents in suit from ASUSTek to Innovative Sonic". That list also identifies as potential witnesses Michael Shih, "the husband of the Chairwoman of Innovative Sonic", and Jonney Shih, the chairman of ASUSTek, both then and now (and CEO through 2007), each to testify regarding the same subject matter.
That earlier litigation concerned three patents (6,925,183; 7,436,795; RE40,077) moved from an ASUSTek subsidiary to Innovative Sonic in separate transactions dated in the 2006-2007 timeframe. The case proceeded through 11 days of trial before the parties settled, ending the litigation. Innovative Sonic still appears to hold the '795 and '077 patents, but it assigned the '183 patent to L2 Mobile Technologies LLC, a Longhorn IP LLC plaintiff, together with more than a dozen other assets, in January 2017 (including three reissues of the '183 patent, dated in 2019, 2020, and 2023). L2 Mobile has been litigating this received portfolio in both China and the US, domestically hitting Alphabet (Google) and Ford in separate 2021 cases (both now closed), TCL in 2022 (open), and OnePlus in 2023 (also open). Targeted in the mobile device maker cases has been the provision of "smartphones that comply with the 3G or with both the 3G and 4G wireless communications standards".
Last November, LGE answered the first complaint filed by Celerity IP and Innovative Sonic. Then, in mid-January, Winstead PC attorneys entered a slew of appearances. The plaintiffs filed an unopposed motion to change their lead counsel from Mintz Levin to Winstead, indicating that Mintz Levin would soon be withdrawing. The court granted the motion. Some discovery table-setting has since occurred, including notices of separate subpoenas to MediaTek and Qualcomm.
In the second complaint against LGE, also assigned to Chief Judge Rodney Gilstrap, Celerity IP and Innovative Sonic assert five different patents (8,411,626; 8,472,628; 8,559,962; 8,565,128; 8,855,095), characterized as "commercially essential to various 3GPP standards, including 4G/LTE and 5G" and as "generally relate[d] to various functional operations of 4G- and/or 5G-compliant devices that allow the devices to operate within a 4G and/or 5G network and allow users to communicate over 4G and/or 5G networks". The plaintiffs point to notice letters dating back to 2018 and target "cellular devices that are 4G/LTE- and/or 5G-compliant".
Next up, in September 2023, Celerity IP and ATL hit Samsung in the Eastern District of Texas. There, the pair assert one patent (10,187,878) that issued to ASUS in March 2017 with an estimated priority date in April 2016. ATL received the patent from another ASUS subsidiary (ASUSTek Computer Suzhou Company Limited) in a September 2023 assignment. Targeted is the provision of devices (e.g., smartphones, tablets, and smart watches) that are compliant with 4G and/or 5G networking standards. Irell & Manella LLP provides plaintiff representation in that case; Samsung's deadline to respond to the complaint has been pushed out to March 4, 2024.
October 2023 saw Celerity IP and ATL file a trio of cases, one against each of AT&T Mobility, T-Mobile, and Verizon Wireless. Originally asserted is a single wireless communications patent (10,951,359), and targeted is the provision of the wireless carrier's respective telecommunications networks and related 4G/5G wireless services. In amended complaints filed in early January 2024, the plaintiffs expand the number of asserted patents to four (10,148,402; 10,798,754; 10,887,868). The defendants have answered and filed counterclaims, naming ASUSTek as a third-party counterclaim defendant. In their affirmative defense of failure to name an indispensable party, the defendants plead that:
Plaintiffs' claims should be dismissed for their failure to join an indispensable party, including at least ASUS. The [asserted] patent was assigned from ASUS to ATL for $1.00 "and other good and valuable consideration." On information and belief, the transfer price was set to $1.00 because the assignment agreements also included a provision wherein ASUS would share in the revenue from any recovery Plaintiffs obtain in this case, making ASUS a real party in interest retaining substantial rights and thus an indispensable party that must be joined.
Celerity IP and Innovative Sonic make similar characterizations as to the wireless communications patent (9,237,489) that they assert in a second trio of October 2023 suits against the same three defendants. Irell & Manella LLP and Parker, Bunt, & Ainsworth, P.C. represent the plaintiffs in all six suits, which have now been consolidated before Judge Gilstrap for pretrial purposes. Throughout, the plaintiffs seek a declaratory judgment that its actions in connection with their negotiations toward a fair, reasonable, and nondiscriminatory (FRAND) license with the defendants were "conducted by the Plaintiffs in good faith, complied with ETSI IPR Policy, and were consistent with competition law requirements"—and that the defendants' actions were not.
The defendants contest this characterization, repleading their own versions of the prefiling communications in connection with their counterclaims. There, they plead that:
Counterclaim Defendants failed to negotiate in good faith towards a FRAND license to their portfolio of allegedly essential patents and/or the Asserted Patent. For example, Celerity and ATL filed this lawsuit seeking "all equitable relief," which may include an injunction, before making a FRAND offer (or any offer) to their allegedly essential patents and/or the Asserted Patent. Counterclaim Defendants also failed to provide AT&T with the information it requested, failed to permit AT&T to involve its vendors in the discussions, and instead insisted on a superfluous NDA without establishing the presence of any confidential information.
As noted, on February 16, 2024, Ericsson and Nokia have filed sealed motions to intervene, motions that the plaintiff pairs apparently oppose. Thus, it will likely be weeks, if not months, before the parties in these suits are set. The new case against LGE has yet to be assigned to a judge but seems destined for Judge Gilstrap's courtroom as well.
For additional coverage of GLS Capital's activities in the patent space, see "Litigation Funders Announce a Secondary Market Transaction Involving 15 IP Investments" (December 2024). 2/23, LGE, Eastern District of Texas.
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