A federal court in California has denied a motion to dismiss litigation involving a patent assertion entity claiming that the defendant violates its patent by making and selling infringing network security products; the court intends to revisit some of the issues raised at a later date in light of demonstrated litigation misconduct on the plaintiff’s part. Network Prot. Scis., LLC v. Fortinet, Inc., No. 12-1106 (U.S. Dist. Ct., N.D. Cal., order entered August 20, 2013).
At issue was whether the plaintiff had standing when the suit was originally filed in Texas against several purported infringers. According to the court, that determination will depend on whether the plaintiff’s action in filing a lawsuit to enforce the patent constituted an acceptance of the assignment agreement under Texas law, a matter to be decided at trial. The plaintiff did not, apparently, sign the agreement until some 22 days after suit was filed, and the signature allegedly accepting the assignment was that of a real estate broker who subleased to the plaintiff a one-room office in Texas with no windows, file cabinets, phone, chairs, or employees, and denied serving as the plaintiff’s “director of business development” or being a company employee.
The court also refused to dismiss the litigation as a sanction for significant misconduct, indicating that it would reconsider the matter at trial and might impose attorney’s fees on the plaintiff, “if the abuse continues.” Among other matters the plaintiff imposed a “bone-crushing” prior-artsearch burden on the defendant by asserting more than 50 claims, had an attorney not licensed in the jurisdiction appear on its behalf in three depositions, manufactured jurisdiction in Texas via a sham office, repeatedly made misleading statements to the defendant and court “[t]o create the impression that [it] is something other than a patent troll,” attempted to conceal evidence through discovery stonewalling and obfuscation, gamed interrogatory responses, resisted service of a deposition subpoena on its own alleged director and then attempted to delay the deposition.