Entropic Communications, LLC has filed separate Eastern District of Texas cases against Ubee Interactive (2:24-cv-00911) and Vantiva (f/k/a Technicolor) (2:24-cv-00912), targeting the provision of cable modems and gateways, with Vantiva further targeted over television set-top boxes, that "include or are based on the Broadcom BCM3390, BCM33843, or BCM3384 [systems-on-chip (SoCs)]". The new cases have been assigned to District Judge Robert W. Schroeder III, but Chief Judge Rodney Gilstrap presided over the earlier litigation in this district from Entropic, against Charter Communications. There, most recently, briefing has completed in an appeal that the Electronic Frontier Foundation (EFF) filed after the district court denial of its motion to intervene, following settlement, to seek the unsealing of the parties' briefing (and evidence) regarding "a nationally important, precedent-setting case-dispositive defense".
Entropic asserts against Vantiva six patents (8,223,775; 8,792,008; 9,825,826; 11,381,866; 11,399,206; 11,785,275), broadly directed to various aspects of cable or networking technology, with only the '775 patent in suit against Ubee. (Note that the complaint against Vantiva incorrectly identifies the '866 patent as "11,318,866".) Each of these patents is familiar to this litigation, begun in March 2022 with a separate East Texas cases filed against AT&T (DirecTV) and DISH Network, both of which were transferred to the Central District of California. Since then, Entropic has filed additional cases against both of these defendants, as well as against Charter, Comcast, and Cox Communications. Before these new suits, litigation against all defendants but Charter proceeded in the Central District of California.
The case against Charter was dismissed with prejudice in December 2023. Earlier this year, EFF sought to intervene in the case, after the parties settled, because a "key issue" in the suit appeared to be "the relevance of the industry-leading Data Over Cable Service Interface Specification (DOCSIS) cable data transmission standard", characterized as "a cornerstone of cable internet in the United States". EFF argued that "Charter's license defense based on DOCSIS may implicate a core legal question in patent law: when is a particular patent 'essential' to a technical standard and thus encumbered by licensing commitments?"
Entropic filed a motion for summary judgment on this defense, Magistrate Judge Roy S. Payne docketed a report and recommendation (granting it in part and denying it in part), Judge Gilstrap adopted that recommendation, and the parties then settled. EFF takes issue with the fact that the original motion for summary judgment was filed under seal, without Entropic having sought permission from the court to do so, which led to the parties filing all of the briefing under seal, later public versions marked by heavy redactions. Only through Judge Payne's recommendation (docketed without redactions) did the public learn "that the two key issues [in the motion] are (1) what the DOCSIS License means by 'Licensed Technology' as a matter of contract interpretation and (2) whether Charter has plausibly shown any of the patents at issue fall within the meaning of 'Licensed Technology'".
Judge Gilstrap denied EFF's motion to intervene. The court ruled that EFF's length of delay (four to five months) "weighs against timeliness", explaining that because "EFF repeatedly characterized the DOCSIS license defense as a 'key issue in this case'" and because "common sense indicates that EFF would have known by the time the motion was fully briefed (October 11, 2023) at the latest that the documents were sealed without accompanying motions to seal", its later motion to intervene was not timely filed. As to prejudice introduced by allowing EFF to intervene, the court agreed with Charter that "allowing EFF to intervene would be prejudicial to the parties because the case team has already disbanded, and the parties would have to revisit confidentiality issues they reasonably believed were settled" and that EFF would suffer "little" prejudice by the motion's denial. Judge Gilstrap also batted away EFF's argument that the original motion for summary judgment had been improperly filed under seal.
Operation of the alleged DOCSIS license is center stage in the Central District of California, which requires litigants to file a certificate of interested parties. In a first certificate, filed in February 2023, Entropic identified only itself and its parent entity, Entropic Holdings, LLC, as parties having a pecuniary interest in the outcome (beyond the named defendants). However, in April 2023, Entropic filed a separate disclosure, certifying that the list is longer. Included there, beyond itself and its parent, are FIG LLC (d/b/a Fortress Investment Group LLC) (formed in Delaware in 1998); MaxLinear, Inc.; and MaxLinear Communications LLC. The certification explains FIG's placement on the list by stating that "FIG LLC (d/b/a Fortress Investment Group) and/or its wholly-owned subsidiaries are investment advisors to private investment funds that own Entropic Holdings LLC, and may have an interest in the outcome of the action". The MaxLinear entities are included because each is "the prior assignee of one or more of the patents in suit, and has an interest in the outcome of the action".
In its various complaints, the plaintiff has characterized Entropic Communications Inc. (ECI) as its predecessor-in-interest "as to the patents-in-suit". MaxLinear acquired ECI in 2015. Per the plaintiff, MaxLinear transferred to it "a portfolio of intellectual property representing the Entropic and MaxLinear innovation in the cable and satellite services markets" in 2021. USPTO assignment records confirm that in March of that year, publicly traded operating company MaxLinear (via MaxLinear Communications, LLC, itself f/k/a Entropic Communications, LLC) did move hundreds of US patents, as well as foreign counterparts in Asia, Europe, and elsewhere, to Entropic Communications, the current plaintiff. A smaller assignment between the same parties, of just six US patents, followed in July 2021. As noted, the patents either stem from MaxLinear itself or from ECI, the acquisition price of which reporting placed at $245M.
Entropic Communications describes itself in its various complaints as a Delaware entity with an office in Plano, Texas. Both Entropic Communications and its disclosed parent Entropic Holdings were formed in Delaware on March 29, 2021, a couple of days before the first transfer of patents from MaxLinear. In those agreements, Entropic Communications is described as a Delaware entity with a New York City address—that of Fortress. On July 26, 2021, plaintiff Entropic Communications registered to conduct business in Texas; public records identify three Fortress employees as the NPE's managing members, along with Jeffrey Risher, and provide a Plano, Texas address for each individual. Whether Risher is the same Jeffrey Risher who currently serves as the General Counsel of FreeWire and formerly served on the IP litigation teams of Apple and Tesla is unclear.
In the Central District of California, Entropic's standing to sue over its received portfolio was challenged, and the MaxLinear entities were named as counterclaim defendants (with respect to "breach of contract against MaxLinear, tortious interference with contract against Entropic, and unjust enrichment against MaxLinear"), all centering around an alleged DOCSIS license, conferred by MaxLinear's participation in the group establishing those standards. Cox explains its version of events in one of its briefs:
...the DOCSIS standards underlying Cox's unjust enrichment claim were developed by CableLabs, a Colorado headquartered nonprofit. CableLabs is a "leading innovation and R&D lab for the cable industry." CableLabs was formed by, among others, cable companies like Cox that operate multiple cable systems, and evaluates new technologies and develops common specifications for interoperability, such as the DOCSIS standard, to help drive the sale of cable equipment and reduce costs for cable operators like Cox and its customers. Cox helped found CableLabs to "develop[] common specifications for interoperability to help drive the scale of cable equipment and reduce costs for cable operators like Cox and their customers," and DOCSIS was developed by CableLabs, Cox and its vendors for Cox and other operator's benefit.
To protect entities implementing or using essential DOCSIS technology, CableLabs created a patent pool via the DOCSIS License that creates a royalty-free pool for intellectual property rights essential to practicing the DOCSIS standard. Companies that have signed a DOCSIS license agreement include not only MaxLinear, but multiple of Cox's vendors of cable equipment. By purchasing such equipment, Cox received implied licenses or the right to practice such equipment royalty free by virtue of patent exhaustion. As a DOCSIS Licensor, MaxLinear provided royalty-free licenses to any patents essential to compliance with DOCSIS.
(Internal record citations omitted.) In May 2024, a special master appointed to sort through various issues concerning the parties' pleadings returned a report and recommendation (public version available here) that largely endorsed the various proposed amendments and pleaded counterclaims.
Comcast also based its motion to dismiss (principally for lack of subject matter jurisdiction) the Entropic complaints against it on a covenant not to sue Comcast within an August 2020 vendor services agreement (VSA) between MaxLinear and Comcast. Last November, Judge Holcomb granted that motion, ruling that Entropic took the patents from MaxLinear subject to that covenant not to sue but that the covenant includes an exemption for willful infringement, which Entropic had not pleaded. The court dismissed the complaints against Comcast as they then existed but granted Entropic leave to amend to plead willful infringement, which Entropic did, further moving to supplement its second amended complaint. Another round of motion practice followed, concerning the sufficiency of the amended pleadings (which are based on conduct occurring after the filing of the original complaint) and whether to permit the supplement. The special master has yet to rule.
Meanwhile, the litigation turned to more conventional matters, Judge Holcomb handing down a claim construction order resolving disputes over terms from the two patents remaining in suit (7,130,576; 7,542,715). (A third patent (8,792,008) was dropped along the way.) Most notably, the court ruled that "selected [and extracted] transponder channel[s]" could not be construed, rendering claims 16-17, 21, 30, and 41-42 of the '576 patent indefinite. Thereafter, in September, the defendants (AT&T/DirecTV and DISH) moved to stay the case pending resolution of an ex parte reexam (EPR) of the '715 patent based on an obvious-type double patenting theory whereby its earlier family member (the '576 patent) becomes prior art to its remaining claims. In mid-October, Judge Holcomb deemed this motion, fully briefed, suitable for resolution without a hearing; an order has yet to issue.
Likewise, the court has fully briefed a motion to stay the cases against Comcast based principally on a set of inter partes review (IPRs) of several of the patents that remain in suit from the original 20 asserted against Comcast. Per the motion, 16 of those 20 patents "have already been, or are likely to be, invalidated by this Court or the USPTO: the Court invalidated or tentatively invalidated seven patents under 35 U.S.C. § 101, the USPTO instituted IPR of six additional patents, and institution decisions are expected on three others by October 11, 2024". Pressing forward with respect to only the remaining four patents (across multiple cases) would, according to Comcast, "waste judicial resources and the parties' time . . . particularly so because, as the Court has already found, the Court has no subject-matter jurisdiction over non-willful patent-infringement claims against Comcast until the expiration of a covenant not to sue in August 2025". That month is the effective date for MaxLinear's notice of termination of the VSA, provided in early 2023. The court has taken the motion under submission; no ruling has issued.
Entopic's family tree—a plaintiff LLC owned by another LLC in turn owned by funds for which a Fortress company acts as an investment advisor—echoes that of VLSI Technology LLC, which has been litigating former NXP Semiconductors patents against Intel in high-profile cases in three venues: the Western District of Texas, where multiple jury verdicts in cases before District Judge Alan D. Albright contained eye-popping damages awards that were later undercut by PTAB invalidations of the infringed claims, as well as by Federal Circuit review; the District of Delaware, where a dismissal ended an intense inquiry under April 2022 standing orders posted by Chief Judge Colm F. Connolly into the corporate ownership and control of VLSI; and the Northern District of California, where District Judge Beth Labson Freeman characterized Intel's attempt to use local rules to force more detailed corporate disclosures from VLSI as a "search for judicial conflicts" that "has attenuated beyond any reasonable application of the law".
Before the Delaware dismissal, Judge Connolly's standing orders prompted VLSI to file, initially under seal, a declaration of its CEO, Michael Stolarski (a Chicago-area IP attorney who on social media reports having practiced at various law firms as well serving as "Vice President Director of IP Licensing" at Motorola) describing himself as running VLSI "on a day-to-day basis" and reporting to VLSI's board (comprised of Stolarski and two Fortress executives, Eran Zur and Ami Patel Shah). Stolarski confirmed that VLSI is a subsidiary of CF VLSI Holdings LLC and identified ten entities (each a Delaware limited liability company or Delaware limited partnership) that he says "own" CF VLSI Holdings: the majority owner FCOF IV UST LLC and minority owners FTS SIP Investments II LLC, FCO MA LSS LP, FCO MA IV UB Securities LLC, FCO MA II UB Securities LLC, FCO MA SC II Investments LLC, FCO MA Centre Street LP, FCO MA ML Investments II LLC, FCO MA MI LP, and FGOY II Investments LLC.
According to Stolarski, FCOF IV (internally referred to as "FCO IV")—the majority owner—"is wholly owned by a closed end investment fund family comprised of six individual funds, with combined total net assets of approximately $1.8 billion as of June 30, 2022, all of which are managed by affiliates of Fortress Investment Group". Stolarski added that "the ultimate owners of FCO IV are hundreds of outside investors that are composed of pension and retirement funds, sovereign wealth funds, foundations, high net worth individuals, endowments and other institutional investors, each of which individually owns less than a 10% indirect interest" in CF VLSI Holdings. Further, Stolarski declared having been "informed by representatives of Fortress" that the nine minority owners of CF VLSI Holdings, listed above, "are investment funds that are managed by Fortress on behalf of outside institutional investors, each of which individually owns less than a 10% interest" in CF VLSI Holdings.
In an August 1, 2022 order, Judge Connolly characterized these disclosures as "clearly inadequate to meet the requirements of the Rule 7.1 Disclosure Order", specifically calling out Stolarski's failure to identify the six individual funds that comprise the closed end investment fund family that owns FCO IV (i.e., the majority owner of CF VLSI Holdings). He also pointed out that Stolarski "says that the remaining six LLCs and three partnerships 'are investment funds,' but he does not identify the funds or their legal status". As noted, however, a dismissal ended this case, which Judge Connolly had stayed as he considered what to do about VLSI's contention that it had already disclosed everything that it knew about its own ownership.
DISH asked Judge Holcomb to go further than Judge Freeman did in the Northern District. There, Intel asked that VLSI be forced to disclose additional corporate details, partly under the local rule requiring parties to file a certification identifying all parties having a financial interest in the outcome of the litigation. Intel justified its request based on the reasoning for that local rule—to assist the court in assessing conflicts and potential recusal—as well as to mount a license defense (allegedly springing from Fortress's 2020 acquisition of Finjan, Inc. in light of a 2012 settlement agreement between Intel and Finjan) and to challenge the credibility of VLSI's witnesses.
In March 2023, Magistrate Judge Nathaniel Cousins denied Intel's motion, from which ruling Intel sought relief from Judge Freeman. The court denied that relief in a May order that was later unsealed. In it, Judge Freeman expressed skepticism that the real motivation for Intel's request for the information concerning control of VLSI was to assist the court in assessing judicial conflicts, spending most of the order dispensing with the court's need for that help. Along the way, however, Judge Freeman obliquely addresses Judge Connolly's heightened disclosure requirements. She notes that in the reply in support of its motion, Intel argues that "further disclosures are required because the funds are limited partnerships and limited liability companies". To support its argument based on the use of these corporate forms, Intel points to "a court in the District of Delaware [that] 'has entered a standing order that requires disclosure of ownership in LPs and LLCs until individuals or corporations that hold financial interest in any litigation are revealed'".
Judge Freeman found this citation to Judge Connolly's approach "unpersuasive": "As an initial matter, the disclosure requirements Intel identifies go beyond those required in this District. Moreover, Intel's alternative argument is not grounded in any requirement in Section 455 [the relevant conflicts statute]. Intel identifies, and the Court is aware of, no case holding that Section 455 requires disclosure of every owner of an LP or LLC as a matter of law no matter how attenuated the ownership interest is in a party in a case".
Against this backdrop, in August 2023, Judge Holcomb granted DISH's motion for an updated certificate of interested parties, but did so only in part, ordering: to "the extent that any investment fund owns more than 10% of Entropic Holdings LLC, Entropic shall identify such fund and its proportional ownership interest; to the extent that any individual investor owns more than 10% of Entropic Holdings LLC, Entropic shall likewise identify such individual investor and his or her proportional ownership interest; and to the extent that no investment fund or individual investor owns more than 10% of Entropic Holdings LLC, Entropic shall so indicate. Entropic is also DIRECTED promptly to file a Supplemental Notice of Interested Parties if and when any required information changes".
On the September 8, 2023 deadline, Entropic disclosed that FIP UST LP (50%) and FCOF V UST LLC (33%) are "investment fund entities" that directly own the percentage of Entropic Holdings indicated. It also disclosed that Fortress Intellectual Property Opportunities Fund I (A) LP (19%), Fortress Intellectual Property Opportunities Fund I (B) L.P. (13%), Fortress Intellectual Property Opportunities Fund I (C) L.P. (18%), Fortress Credit Opportunities Fund (A) L.P. (11%), and Fortress Credit Opportunities Fund (G) L.P. (16%) are "investment fund entities" that indirectly own the percentage of Entropic Holdings indicated. Finally, the plaintiff disclosed that L3 Investment Holdings LP is an "investor entity, which indirectly owns approximately 11% of Entropic Holdings LLC".
Formed in 2007, New York-based Fortress Investment Group is a global investment manager reporting $48B of assets under management as of June 30, 2024. At the close of 2017, Japanese conglomerate SoftBank completed an acquisition of Fortress for $3.3B. In May of this year, Fortress and Mubadala Investment Company announced that they completed the acquisition, on undisclosed terms through Mubadala Capital, "of the 90.01% of the equity of Fortress that was held by SoftBank". According to a joint press release, Mubadala now owns 68 percent of Fortress's equity, while Fortress management owns 32 percent, the latter "in a class of equity entitling Fortress management to appoint a majority of seats on the board".
Currently available USPTO records indicate that Fortress holds—through entities in which it has invested and over which many defendants have contended that Fortress exercises control—more than 2,800 US patent assets of disparate origin and subject matter, only a small subset of which are currently in litigation. A significant portion of Fortress's US patent assets appear to have been developed at global technology companies, including 3COM (acquired by HP before the company split into the current HP Inc. and HP Enterprise), Huawei, IBM, Freescale Semiconductor (and successor NXP), Panasonic, and Philips.
Goldman Ismail Tomaselli Brennan & Baum LLP (presumably as lead counsel) and Miller Fair Henry, PLLC (presumably as local counsel) appear on the signature blocks of the new complaints. In the prior cases, K&L Gates had been leading Entropic's representation. In February 2024, a spate of attorneys from Goldman Ismail entered appearances in at least some of Entropic's prior suits. 11/11, Eastern District of Texas.
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