Patent troll Oasis under attack on two fronts in Texas megacase

By Alison Frankel
September 16, 2011

This summer, thanks to NPR’s This American Life, a patent holding company called Oasis Research became one of the most famous patent trolls in the land. The brilliant radio segment, When Patents Attack! (also available as a Planet Money print story), homed in on a sweeping patent for “an online back-up system,” which Oasis acquired from Intellectual Ventures in July 2010 and proceeded to assert in an Eastern District of Texas case against a dozen tech defendants. When NPR’s reporters tried to find out who or what Oasis is, they struck out. No one answered the door at Oasis’s deserted “office” in Marshall, Texas, and the company’s lead lawyer, John Desmarais of Desmarais LLP, politely declined to answer NPR’s questions when the reporters tracked him down at a tech IP conference. (He also declined, via e-mail, to answer mine for this story.)

But even as NPR exposed the troll, Oasis was winning key rulings in the East Texas case, which featured EMC, AT&T, and, among lots of other defendants. In May, federal magistrate Amos Mazzant recommended that Judge Michael Schneider deny the defendants’ motions to sever Oasis’s claims. In July, the judge adopted the magistrate’s recommendations. In August, Oasis’s Desmarais lawyers filed an amended complaint, asserting infringement of four patents in more than 100 claims against 12 defendants.

The defendants fought back on two fronts. EMC filed a petition at the U.S. Court of Appeals for the Federal Circuit, asking the appellate court to reverse Judge Schneider’s ruling on the question of joinder. “The district court committed clear error,” EMC’s petition said, “by allowing [Oasis] to join many unrelated companies in a single infringement action based merely on an allegation that the companies each independently offer the same type of service. In doing so, the district court endorses an increasingly common practice of nonpracticing entities who file patent infringement suits in the Eastern District of Texas. Their newest tactic is to sue a large number of unrelated and geographically dispersed defendants, accuse them of infringing the same patent without regard to service or product differences, resist severance, and then oppose transfer of the action to a different forum.”

At the same time, the defendants also asked Judge Schneider to rein in Oasis’s “shotgun” claims. “Plaintiff’s assertion of [between] 88 [and] 121 patent claims under the circumstances of this case is unreasonable, and requires a remedy by the court,” the defendants said in a motion to limit claims to a mere 20.

This week, the Oasis defendants got some good news on both fronts. In the East Texas case, the magistrate cut back the number of claims Oasis can assert. As Docket Report was the first to report, Magistrate Mazzant restricted Oasis to 31 claims across the four patents in the case. He didn’t cut the case down as much as the defendants had asked and said Oasis could later ask to add claims, but the ruling makes the defense more manageable.

More significantly, a coalition of tech industry giants filed an amicus brief at the Federal Circuit, supporting EMC’s arguments against multidefendant troll litigation. (The amicus brief was first reported by The Wall Street Journal.) “This case is only one in a cresting wave of patent-infringement lawsuits over the last few years in which plaintiffs have sought to join in one action numerous unrelated defendants, all of whom sell different products accused of infringing the same patent,” said the brief, filed by Gibson, Dunn & Crutcher. “This case presents an excellent vehicle for this court to put a permanent end to this abuse of joinder.”

As the amicus brief goes on the recount, the new patent reform bill attempts to address the exact kind of sprawling, multidefendant filing Oasis engaged in. But the new law comes too late to help the Oasis defendants-and all of the other defendants named in a rush of troll suits filed in East Texas in the last week, as the patent reform bill awaited President Barack Obama’s signature. EMC alone has been named in three new multidefendant cases since the new law passed.

“Although the new bill, which is expected to be signed into law, should correct joinder abuse going forward, it does not apply to any action filed before it becomes law,” the amicus brief said. “Thus, there is a compelling need for [the Federal Circuit] to address the issue raised in the mandamus petition because it affects numerous pending cases-many filed on the eve of the new statute’s enactment-that involve egregious misjoinders of scores of unrelated defendants.”

Will the Federal Circuit bite? I’ll let you know.

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