United States: How Sports Tech Companies Can Fight Back Against Patent Trolls

Sports technology companies have become the latest in a long line of targets for patent trolls or "non-practicing entities" (NPEs). We previously discussed the world of these trolls in 2016. But there is hope for real companies to fight back against those trolls. Two main strategies present opportunities other than settling. One is an Inter Partes  Review that attempts to invalidate a patent, the other is uniting with other defendants in a joint defense group.

NPEs own patents, but do not produce anything that implements the inventions protected by those patents. Instead, NPEs monetize their patents by asserting patent infringement against companies that do produce goods and services related to that intellectual property. In most instances, NPEs sue or threaten to sue companies, but back off if their targets pay a fee.

In May 2016, Tellus Fit LLC asserted a patent covering a GPS-enabled exercise wristwatch against 13 defendants, including Adidas and Fitbit, in the Eastern District of Texas. With the recent surge in smartwatch and fitness tracker development, Tellus easily found patent assertion targets, such as Fitbit's Surge fitness watch.

A year later, Tellus Fit LLC had voluntarily sought dismissal of all 13 cases, and the court had granted all of Tellus' motions to dismiss. This suggests that Tellus and the defendants reached an agreement to settle their disputes. That would follow the typical NPE practice of seeking a quick monetary return and settlement well before cases reach trial.

These lawsuits follow a typical pattern. An NPE that asserts its patents often makes meticulous calculations to determine how much money defendants are willing to spend in order to defend a lawsuit, and price their settlement offer just below that threshold. This incentivizes defendants to settle, because the costs of litigation outweigh the costs of settlement.

Inter Partes Review

Another NPE, Sportbrain, has asserted a single patent against more than 100 defendants over the last five years. But Sportbrain recently had that same patent invalidated by the Patent Trial and Appeal Board (PTAB) at the U.S. Patent and Trademark Office (USPTO) in a proceeding called an Inter Partes  Review (IPR).

Many of Sportbrain's defendants operate in the sporting goods industry, including Oakley, Catapult Sports, Whoop, and New Balance Athletics. The patent that Sportbrain had asserted relates to a pedometer, or a method for tracking a person's steps, comparing those statistics to those of other users, and presenting feedback to the person. Like typical patent troll cases, many of the products targeted by Sportbrain did not directly relate to pedometers. And most of these lawsuits were dismissed.

But unlike in the Tellus example, a court handling one of the Sportbrain cases granted a stay, awaiting the outcome of an IPR. Even still, in October 2017, the same month during which oral arguments were held in the IPR, Sportbrain initiated lawsuits against 19 new defendants. Ultimately, the PTAB found Sportbrain's patent invalid.

The Sportbrain case illustrates how IPR proceedings can form a powerful and efficient tool for defendants. They serve as a unique means for parties to challenge the validity of a patent. In an IPR, the petitioner, or patent challenger, argues that the court should invalidate a granted patent based on references that precede the filing of the patent at issue. The PTAB will then issue a decision listing which parts of the patent may be contested during trial. Assuming the parties do not settle after that decision, they will proceed to a trial in front of a panel of three PTAB judges, and that panel will determine which portions of the patent, if any, are invalid.

IPRs have many aspects that can favor those challenging patents. First, they (currently) use a broader claim construction standard than regular district court proceedings. This means a PTAB panel is more likely to interpret any claims in a favorable light for invalidity purposes. Second, the PTAB applies a lower burden of proof in IPRs. The petitioner only has to prove its case by a "preponderance of the evidence" standard, a noticeably lower burden than the standard of "clear and convincing evidence" that district courts follow. Last, unlike in district court proceedings, patents are not presumed valid before the PTAB.

The USPTO receives a significant number of IPR requests every month, as many defendants use these proceedings to invalidate NPE patents before a related district court case concludes. If a party files an IPR petition at the early stages of a district court litigation, the court will often stay, or pause, its case until the IPR concludes.

Collective Action Problems and Joint Defense Groups

Despite the promise of IPRs, they often do not appeal to defendants who are influenced by collective action problems. In these situations, a large number of individuals may have a common interest, that interest is spread among the individuals.

Working alone, most entities would rather pay a licensing fee than face the costs required to litigate against an NPE. Together, all of these entities would likely have the resources and willingness to do that, because spreading the litigation costs across a large group reduces the burden on each entity. But patent trolls take advantage of this situation by asserting their patents against individual entities one by one. Individual defendants settle, fearing the potential of enormous costs.

However, when an NPE sues multiple companies who have become co-defendants in the same case, those defendants can form a joint defense group (JDG). In a JDG, the law firms representing each defendant band together, enabling them to share information and strategies. In some cases, co-defendants even hire the same law firm to represent them. Not only can this save defendants money, but it can also help them coordinate their defense, potentially increasing the chances of having a positive outcome from the lawsuit. Legally, members of a JDG benefit from a "common interest privilege," which allows them to share information without waiving attorney-client privileges or risk being forced to provide privately-shared documents. Like IPRs, JDGs are another tool that defendants can use to challenge patent troll lawsuits, but they have their own potential drawbacks, too.

Current U.S. Patent and Trademark Office rules state that parties who request an IPR and those closely connected to them cannot raise new, related issues in a subsequent IPR. Joint defense group members sometimes have the concern that if another member initiates an Inter Partes Review and fails to reach a favorable result, this will prevent other members from requesting IPRs of their own. While USPTO guidance is that JDG membership will not, by itself, prevent a party from requesting an IPR after another member has filed its own, members may want to carefully consider how being part of a collective action may affect their own legal strategy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
23 Oct 2018, Webinar, Washington, DC, United States

How do trademark and advertising trends impact your company? Join a discussion on the latest trends in the food and beverage industry in the United States and Europe.

24 Oct 2018, Other, Washington, DC, United States

Join the usual suspects from Finnegan as they take you through a detailed discussion of patent prosecution strategies from drafting to grant.

25 Oct 2018, Seminar, Melbourne, Australia

Finnegan is a Gold sponsor of IAM Magazine’s IPBC Australasia. The program will take place at the Sofitel Hotel in Melbourne, Australia.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions