Cable industry sues Apple-backed patent troll over “illegal conspiracy”

Mushroom cloud

The patent wars engulfing the tech industry have taken a new twist as five cable companies filed a lawsuit to stop Rockstar, a consortium owned by Google competitors that bought up 4,000 old patents in 2012 and began suing a wide variety of device makers.

According to a complaint filed Friday in Delaware federal court by Charter Communications and others, the consortium is engaging in an illegal conspiracy by plotting to move standards-essential patents through a series of shell companies in order to avoid obligations that require Rockstar to license the patents on fair and reasonable terms.

The new complaint, which will provide more grist for critics of America’s dysfunctional patent system, comes weeks after Google filed a lawsuit of its own to protect Android handset makers from Rockstar’s sprawling lawsuit campaign. The lawsuits (and related threats) are based on patents issued long ago to bankrupt network provider Nortel and were bought at auction for $4.5 billion by a group composed of Apple, Microsoft and others.

Today, a group of veteran engineers in Ottawa, where the rump of Nortel is based, spend their time not inventing anything, but instead taking apart devices looking for lawsuit opportunities; the lawsuit proceeds are presumably divided between Apple, which reportedly put $2.6 billion into Rockstar, and the four other owners.

As for the patents themselves, many are nearly two decades old. US Patent 5471474, for instance, is from 1995 and describes a “communications highway network system for the interactive communication of digital and analog information that incorporates LAN, MAN, and CATV technology.”

According to the cable companies, Nortel contributed patents to a standards pool called CableLabs in 1998. Such patent pools are common in many industries and allow companies to develop technology along common protocols while, if needed, licensing the standards at a reasonable rate.

The cable companies, however, claim that Rockstar refuses to even discuss licensing terms and is demanding royalties without even disclosing which patents it is asserting; they also claim that Rockstar had been forcing its targets into non-disclosure agreements that forbid them from discussing the lawsuits with other companies.

The end result, claim the companies, is that Rockstar’s passing the patents to various other shell companies (including Constellation, Bockstar and Spherix) will lead to an endless series of lawsuits:

Rockstar also intimidated accused infringers by suggesting that failure to take a license to Rockstar’s entire portfolio would place a cloud of uncertainty over their business and would, ultimately, result in those parties being subjected to an endless cycle of patent enforcement through serial litigation

This suggestion that Rockstar is planning to chop up the old Nortel portfolio into small pieces in order to create a patent lawsuit merry-go-around is supported by a recent Bloomberg report.

In response to Rockstar’s activities, the cable companies are asking the court to punish it for organizing an illegal conspiracy and to say misuse of the patents should forbid Rockstar from asserting them in the first place. They also want the court to declare that the patents are subject to so-called FRAND terms, and that Rockstar should pay for breach of contract.

The lawsuit was filed by Charter Communications and four other smaller cable providers. The larger cable companies are already tied up in battles of their with Rockstar, including TimeWarnerCable which was sued by Rockstar in December.

Here’s the complaint, which was spotted by Bloomberg, with some of the relevant bits underlined (apologies, I earlier embedded the wrong complaint.. thanks to Robert in the comments for flagging):

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