Internet entrepreneur Kevin O’Connor’s company has filed a Federal Racketeering Influenced and Corrupt Organizations Act (RICO) lawsuit against the individuals and companies that allegedly conspired to extort licensing fees through baseless patent-infringement lawsuits against his startup, FindTheBest.com, and some 20 other purported “victims.”FindTheBest.com v. Lumen View Tech. LLC, No. 13-6521 (U.S. Dist. Ct., S.D.N.Y., filed September 16, 2013).

According to the complaint, the individual defendants co-invented a patent titled “System and Method for Facilitating Bilateral and Multilateral Decision-Making” that creates an optimal meeting point for two or more individuals, who have provided and ranked their preferences online. They then allegedly licensed the patent to a company formed for the purpose of filing lawsuits against alleged infringers to extort payments for licenses to the patent. They allegedly formed a series of other companies, also non-practicing or “shell” entities, that “are undercapitalized, do not operate any legitimate business, and do not have any actual offices . . . [and thus] avoid numerous burdens of litigation—e.g., the disruption to business and the expense of compiling discovery responses—which they inflict on their victims.” The plaintiff claims that the lawsuits are baseless and are filed without “any meaningful pre-filing investigation,” and asserts that itsonline process actually involves non-infringing unilateral decision-making, in which one individual provides preferences.

The complaint outlines how the defendants attempt to intimidate their “victims,” including threats that full-scale litigation will involve a demand for burdensome discovery—electronically stored information, both accessible and inaccessible, from the preceding six years, as well as personal data and information unrelated to the suit—and possible targeting of the plaintiff’s customers. The plaintiff further outlines telephone conversations that revealed how little the defendants or their counsel understood the technology it used for its Website service. Following a conversation with one of the individual defendants, the plaintiff claims that defendant Lumen View Technology’s lawyer contacted its lawyer “and stated that [the plaintiff’s] CEO called [one individual defendant] a ‘patent troll.’ According to Lumen’s attorney, calling someone a ‘patent troll’ constituted a ‘hate crime’ under ‘Ninth Circuit precedent’” and would be reported to the court absent an apology, financial compensation and settlement of the patentinfringement litigation by payment of a licensing fee.

Alleging RICO violations, extortion, mail fraud, conspiracy, abuse of process, and unfair or fraudulent business acts under California law, the plaintiff seeks general, restitutionary and treble damages; interest; attorney’s fees; costs; and injunctive relief. According to news sources, O’Connor, who made his fortune as the co-founder of a business sold to Google for $3.1 billion, has reportedly pledged $1 million of his personal fortune to defend his company. An Illinois court reportedly dismissed similar racketeering claims against another non-practicing entity in February of this year. See arstechnica.com, September 16, 2013; Law360 and The Washington Post, September 17, 2013.