Power Integrations has attempted to turn the tables on Waverly Licensing LLC, suing the patent holder—together with Array IP LLC, IP Edge LLC, and MAVEXAR LLC—in a new Delaware complaint ( 1:22-cv-01554) roughly one month after Waverly Licensing affirmatively sued Power Integrations in the Western District of Texas. There, on the day of its Delaware complaint, Power Integrations filed a motion to dismiss for improper venue. Other Waverly Licensing cases have already been assigned to Delaware Chief Judge Colm F. Connolly; thus, the new action has been as well. Power Integrations seeks a judgment of noninfringement of Waverly's asserted patent, which is generally related to charging a device if using an "authorized charger", with its complaint drawing upon connections with and between the other declaratory judgment (DJ) defendants based on the recent "Series of Extraordinary Events" developing before Judge Connolly.
Waverly Licensing has been asserting one of the patents (10,938,246) that IP Edge received, via Array IP, in a portfolio of 17 from Golba LLC in July 2021 (with background coverage here). It is not the only plaintiff associated with IP Edge to litigate patents from that portfolio. Creekview IP LLC actually got things started in November of last year, launching a device charging campaign over one of those patents, suing five defendants, two in the District of Delaware. This past March, Waverly joined the campaign, asserting the '246 patent in seven separate complaints, six of them filed in Delaware. Those Delaware cases have, as noted, become embroiled in the dispute over whether Creekview IP and Waverly have been forthcoming in their disclosures to Judge Connolly. Deeper coverage of how these campaigns fit into that context is provided at "Plaintiffs Challenging Heightened Disclosure Requirements May Have Some Cleaning Up to Do" (December 2022).
The challenge mentioned in that title involves two petitions for writs of mandamus from the Federal Circuit, one filed by each of Creekside IP and Waverly, attacking Judge Connolly's authority to post a pair of April 2022 standing orders that now require disclosure of comprehensive party ownership information, as well as the presence of certain third-party litigation funding, for cases assigned to his courtroom. Judge Connolly has recently held evidentiary hearings concerning compliance with those orders, prompting Creekview IP and Waverly to file their petitions. Up-to-date coverage of those events can be found here.
The "cleaning up" mentioned in that title involves disclosures in various courts around the country from plaintiffs linked to IP Edge that appear to form a pattern of omission (see here and here as well). Through Judge Connolly's evidentiary hearings, it has been confirmed that the founders of IP Edge have constructed a business model, at least for part of the Texas monetization firm's prolific monetization efforts, by which individuals with no prior, cognizable connection to patent monetization take ownership of patents, the assertion of which another Texas entity (called MAVEXAR LLC) manages as their "consulting agent"—all for a small percentage of any monetization proceeds paid back to those individuals. MAVEXAR was formed in Texas in January 2013 by IP Edge principals Gautham (Gau) Bodepudi, Sanjay Pant, and Lillian Woung. It is one of a small minority of IP Edge-associated LLCs to name the three Texas attorneys directly as managing members.
However, plaintiffs tied to IP Edge have been inconsistent at best in identifying MAVEXAR, its principals, or the individuals acting as managing members for those plaintiffs in connection with the requirements of local rules in various districts around the country. Waverly Licensing was formed this past March in Texas, naming Son Nguyen as its managing member; the entity has since characterized Nguyen as its sole owner. In a Northern District of Illinois case, Waverly disclosed Nguyen as its sole owner as well, while in late November, Garteiser Honea, PLLC, as counsel for Waverly there, filed a certification of interested parties in a Central District of California case against Aukey that lists only the parties—as well as Garteiser Honea (as "Counsel for Waverly"). No mention is made of Nguyen. Two days later, however, an "amended" notice was filed, adding MAVEXAR to the list (but still without mentioning Nguyen). MAVEXAR is described as "Consulting Agent for Plaintiff". Curiously, in connection with a case that Garteiser Honea filed for Waverly against IOGEAR in the same district this past October, the certification already lodged with the court has yet to be amended to include MAVEXAR.
Against this backdrop, and citing RPX intelligence, Power Integrations pleads in its new DJ complaint that the defendants (defined collectively) "have engaged in a broad and aggressive campaign to harass and threaten many companies, including Power Integrations, with assertions of patent infringement liability", noting that Array IP (the original recipient of the asserted portfolio from Golba) and Waverly Licensing share an address that is "actually a Staples store" in Frisco, Texas, with "the specific box number that defendant Waverly occasionally lists in its court filings as its 'principal place of business'" corresponding to "an open shelf" in that Staples location.
The complaint recounts connections between Array IP and Waverly back to IP Edge itself: "In the initial assignment from Golba, LLC [sic] to Array IP LLC, Array IP LLC's principal also identified her e-mail address as firstname.lastname@example.org. On information and belief, the same person whose e-mail address was listed in the PTO records as the contact for defendant Array IP LLC, Ms. Linh Deitz, is the office manager at defendant IP Edge LLC" (internal citations, one to a LinkedIn profile, omitted). Power Integrations places these connections in the context of revelations from Judge Connolly's recent evidentiary hearings, pleading on information and belief that "Mavexar LLC and IP Edge control litigation on behalf of entities affiliated with IP Edge, with the named plaintiff LLCs and their sole members having no input or control over the litigation and receiving only a token percentage of any settlement revenue. As such, on information and belief, the true owners of the [']246 patent-in-suit and the rights to sue are IP Edge and/or its affiliates, including Mavexar LLC and Array IP LLC – not Waverly Licensing".
Power Integrations characterizes this IP Edge approach to patent monetization as a wider "scheme for enforcing patents with the assistance of Mavexar LLC through its affiliates incorporated via Texas LLCs formed with unwitting sole members". Per the DJ plaintiff, "[g]iven that the structure of IP Edge and Mavexar's enforcement entities via sole, sham members effectively 'judgment proofs' the real parties in interest, and that IP Edge is using these sole member LLCs in an attempt to insulate itself from any liability for the frivolous assertion of patents and to hide the true parties behind the litigation while effectively controlling the litigation through Mavexar, IP Edge is a real party in interest in this litigation and is properly a named defendant in this DJ action, along with its intermediaries Array IP and Mavexar".
Power Integrations is, of course, not the first IP Edge target to use the declaratory judgment strategy. Litigation in the Locket IP LLC campaign (over patents that IP Edge received in a large divestiture from Technicolor SA) actually began with a pair of early 2022 complaints seeking declaratory judgments, one from the District of Hawaii and the other from the Northern District of California. While Locket IP has since filed affirmative cases as well, typically in either the Eastern or Western District of Texas, the campaign has seen an inordinately high number of declaratory judgment complaints filed, typically in California—seven more of them to date, the most recent of which was filed by Employ (Jobvite) in the Central District there (noting that one of the Texas cases hit its customer, Office Depot). For additional intelligence on the conduct of the Locket IP campaign, see here.
Meanwhile, in its motion to dismiss the Western District of Texas case against it, Power Integrations argues that venue is not proper in that district because it is incorporated in Delaware, has a principal place of business in San Jose, California, and has "no 'regular and established place of business' in" the Western District of Texas. Power Integrations notes that it filed its DJ complaint in Delaware, where Judge Connolly "is presiding over related litigation filed by Plaintiff and related entities on the same patent and other related patents" while also "addressing the misleading nature of these entities, which all appear to have been created as shells to hide the real party in interest". District Judge Robert L. Pitman has yet to rule, while only threshold ministerial matters populate the new Delaware docket, including assignment to Judge Connolly.
Originally published 11 December 2022
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