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Summary:

A shell company backed by Apple that owns thousands of old Nortel patents has been employing controversial tactics to wring money from the patents, many of which date from the 1990’s. The cable industry just launched a counter-attack.

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photo: Shutterstock / Sergej Khakimullin

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):

<p  style=” margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;”>   <a title=”View Cable Co&amp;#x27;s v Rockstar on Scribd” href=”http://www.scribd.com/doc/201562144/Cable-Co-s-v-Rockstar”  style=”text-decoration: underline;” >Cable Co&amp;#x27;s v Rockstar</a></p>

  1. Prasad Tiruvalluri Tuesday, January 21, 2014

    Let us see how that idiot FOSSPATENTS is going to spin this for his masters..

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    1. Nothing to spin Apple is winning all the big battles in and out of court, without Moonshots.

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  2. I’m no fan of cable companies, including my own Charter mentioned above, but I hope they win this one and win it big. Abuse of patent law is killing innovation.

    Or I guess I should say, abuse of our already abusive patent laws, since much of the problem lies with the USPTO itself, along with a Congress that’s been laggardly at fixing it.

    Our copyright laws are also in a mess. They have been left essentially unchanged since the late 1970s when computer meant mainframe and there was no Internet. That’s a bit like finding out that traffic laws in the 1930s still assumed people were riding about in horse and buggies.

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    1. Yeah, nobody invents anything anymore.

      There’s nothing new under the sun.

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  3. You’re referencing the original Google vs Rockstar lawsuit, not the Cable companies vs Rockstar. That one is found at http://ia600801.us.archive.org/30/items/gov.uscourts.ded.54035/gov.uscourts.ded.54035.1.0.pdf

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    1. thanks for flagging that Robert.. I embedded the wrong document.. that’s now fixed

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

    The headline would NEVER be “Microsoft-backed patent troll” here at Microsoft-GigaOm.

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    1. hmm, Jeff how about mentioning that other Rockstar members include BlackBerry, Ericsson, and Sony as well as Microsoft and Apple?

      Why do you mention Apple in the title and sub-head and 4 other times in the body of the article but only mention Microsoft once and the other members not at all?

      You also neglect to mention that Google’s wholly-owned subsidiary Motorola has been engaged in a global campaign against Apple, Microsoft and others trying to extort huge licensing fees by abusing Standards Essential (SEP) Patents which are supposed to be licensed on Fair, Reasonable And Non-Discriminatory (FRAND) terms over the past few years.

      In recent times Motorola’s suits have been thrown out of court and had both the EU and the US Justice dept investigating this abuse of FRAND SEP patents, but Rockstar is perhaps an understandable response to this attempted weaponisation of SEP patents by Motorola, Nokia, Samsung and others.

      I’m not a big fan of the patent wars, but come on, a bit of balanced journalism please.

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      1. Rocwurst, thanks for the comment. I reflected on this issue, and ultimately decided it was fair to include “Apple-backed” in the headline. Here’s why:

        While Rockstar is owned by multiple companies, Apple is the majority owner so presumably calls the shots.

        You’re right that Apple et al are hardly the only ones who appear to abuse FRAND patents. Indeed, Google’s FRAND shenanigans with Motorola led to them paying Microsoft an unprecedented form of damages last year. But it didn’t seem essential to go into all the back and forth in the story, especially as Google didn’t do what Apple is doing here: arming multiple troll shell companies.

        I don’t like the patent wars AT ALL but try to be balanced insofar as I will call out anyone who is exacerbating them.

        Finally, unlike a certain blogging German non-lawyer, I don’t take money from the companies I report upon.

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  5. Where does one look up the ownership info of Rockstar? Link please. I am interested in verifying the claim that Apple is the largest shareholder of Rockstar.

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