Cisco Systems v. Innovatio IP Ventures, 12-CV-427 et al. Slip Op. (N.D. Ill. Feb. 4, 2013)(Holderman)
After Innovatio filed numerous suits against commercial and quasi-commercial users of Wi-Fi for allegedly infringing seventeen patents, three of the most prolific manufacturers of Wi-Fi products (Cisco, Motorola, and Netgear) filed suit in the Northern District alleging, among other things, violations of the RICO Act, unfair competition, intentional interference with prospective advantage, and unclean hands. The manufacturers also alleged that Innovatio, which received its patents from former IEEE member Norand, was required to license its patents on RAND (reasonable and non-discriminatory) terms, and brought actions for breach of contract and promissory estoppel. Finally, the manufacturers brought counts attempting to invalidate Innovatio’s patents.
Judge Holderman completely eliminated the manufacturer’s offensive case – the RICO, unfair competition, intentional interference with prospective advantage, and unclean hands claims were completely wiped out by the Noerr-Pennington doctrine. However, Judge Holderman also held that the manufacturers contract claims could proceed. If the manufacturers are able to prevail on any of their contract claim, Innovatio will be likely be left with minimal damages claims against the three manufacturers (instead of the millions of customers of the manufacturers), who will likely still attempt to invalidate the patents-in-suit.
Finally, it should be noted that this was an exceptionally brave and risky move by the manufacturers who brought this suit. If they should lose, they will likely have waived any defense they might have had against claims for indemnification by their customers. Given estimates of between 100,000 and 1,000,000 commercial and quasi-commercial hotspots in the United States, and Innovatio’s claimed license fees of $2500 per location, the manufacturers could have assumed up to $2.5 B in liability.