Lexington Technology Group (LTG), an intellectual property management firm, announced on Monday that its wholly owned subsidiary, Bascom Research, filed a patent infringement lawsuit against Salesforce.com in the Northern District of California.
Bascom Research is a software development company focused on building solutions for the management of complex and distributed data in healthcare and other fields. The company owns patents that relate to social networking and aspects of enterprise networking. In 2012, Bascom Research brought claims for patent infringement against five defendants. To date, Bascom Research has entered into a settlement agreements with two of the five original defendants in the litigation for effective royalty rates of 4% and 5% of infringing use. In addition to the newly-filed case against Salesforce.com, Bascom remains in litigation with Facebook, Inc., LinkedIn Corp, and Novell Corp in the Northern District of California. A Markman hearing for the cases against Facebook, Inc., LinkedIn Corp, and Novell Corp is scheduled to be heard on October 2nd, 2013.
The patents Bascom alleges that Salesforce.com infringes are: (1) U.S. Patent No. 7,111,232 (“the ‘232 Patent”), entitled Method and system for making document objects available to users of a network; (2) U.S. Patent No. 7,139,974 (“the ‘974 Patent”), entitled Framework For Managing Document Objects Stored On A Network; and (3) U.S. Patent No. 7,158,971 (“the ‘971 Patent”), entitled Method For Searching Document Objects On A Network.
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These patents stem from the same patent family and relate to a system, method and apparatus for providing many beneficial improvements in searching, identifying and publishing information over computer networks. For example, the patented invention permits a user of a computer network or the Internet to establish relationships between document objects located on the network or the Internet. Those relationships may comprise link relationships and link references and are maintained in one or more link directories.
The complaint filed may strike the novice as rather non-specific, but the complaint has a lot more detail that what one normally sees in some of the truly dubious litigations started that are nothing more than a shake-down. Unfortunately, the Federal Rules of Civil Procedure still authorize the filing of a naked complaint in patent infringement cases. See Form 18 of the FRCP. Complaints filed using the patent infringement complaint form do little more than list the patents and then say the patent is infringed. Patents, however, cannot be infringed. Patents are made up of a multiplicity of patent claims and if there is infringement it would be of one or more patent claims. Moreover, the dubious complaints do nothing to provide the defendant with any useful information about what the patent owner believes constitutes infringement. The Bascom complaint is different, although I would still like to see greater detail. Nevertheless, the complaint does contain some specific assertions.
For example, the complaint explains that “Salesforce.com’s Chatter product directly infringes the ‘232 patent.” The complaint also goes on to provide a Chatter overview link that is attached as an Exhibit.
In a more detailed allegation relating to the ‘232 patent, Bascom explains that it believes that Salesforce.com is liable for indirect infringement as the result of encouraging users and developers to infringe. The complaint explains in part:
Defendant knew or was willfully blind to the fact that it was inducing infringement by practicing in conjunction with others, including users and developers, one or more method claims of the ‘232 Patent. Defendant knowingly and actively aided and abetted the direct infringement of the ‘232 Patent by instructing and encouraging its users and developers to use the Salesforce.com Web site.
The complaint contains identical allegations of infringement as those set forth above with respect to both the ‘974 patent and the ‘971 patent.
I would still like to see more factual allegations in a patent infringement complaint, which I think would go a long way to rooting out those that are the bane of the patent litigation system and those that are legitimate grievances. Still, this complaint does seem to come closer to meeting the requirements announced for adequate pleadings by the United States Supreme Court than do the most most dubious cases.
Over the past several years the United States Supreme Court has said is required in both Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). Both cases require far more than what Form 18 authorizes as an acceptable patent infringement complaint, and require specific factual assertions to put the defendant on notice as to the claims being faced.
While I would like to see more than the bare minimum to initiate a patent infringement lawsuit, Chief Judge Rader of the Federal Circuit said at an open forum at the 2013 AUTM conference that he is more inclined to want real, tangible and specific factual assertions at some point early on in the case, perhaps 3 to 6 months after filing. In response to my question about requiring more meat in complaints Chief Judge Rader explained that requiring detailed information, such as claim charts, within a few months after filing a complaint is “probably a little easier to justify. To ask somebody to make all of their allegations at the outset is a little against our system. And I don’t think we have to go that far to achieve the goal that you’re seeking.” Indeed, several months into a case would be fine with me, and Chief Rader is right, that would be far more in keeping with traditional notions about what is required to institute a action while still giving the defendant adequate notice.
In any event, Bascom is seeking entry of judgment that the defendant has and continues to infringe and has and continues to induce infringement of the three patents. The plaintiff is also seeking both preliminary and permanent injunctions, as well as an award of damages to fully compensate for the damages proved at trial. Also requested is an accounting of all infringing sales and revenues, as well as a finding that the case is exceptional and supports awarding attorneys fees to the plaintiff.
Now we wait to see what unfolds during this case, and perhaps even more importantly what happens during the claims construction phase in the ongoing litigation with Facebook, LinkedIn and Novell. However, if that case against Facebook, LinkedIn and Novell are any indication of what to expect, this case against Salesforce.com is not at all a typical troll case initiated to provoke a quick, cheap settlement.
Editorial Note: On June 20, 2013, LTG was acquired by Document Security Systems, Inc. (NYSE MKT: DSS), a leader in anti-counterfeit and authentication technologies. LTG will be a wholly-owned subsidiary of DSS following completion of the merger, which is anticipated to close on or about July 1st, 2013.