Web Company Deploys RICO Act Against 'Patent Troll'
An Internet company’s racketeering case presents an unusual weapon against a so-called patent "troll."
A research website company filed FindTheBest.com Inc. v. Lumen View Technology LLCon Monday in the Southern District of New York. The lawsuit accuses Lumen and five related businesses and individuals of creating shell companies to extort money from legitimate businesses that aren’t infringing its patent.
The case is a response to a patent infringement complaint that Lumen filed against FindTheBest.com in May in the same district. Lumen alleged infringement of a patent for a system and method for matching two or more parties’ preferences.
FindTheBest.com’s website offers data-based comparisons on a wide range of search topics, including cars and ski resorts. FindTheBest.com claims its website is based on unilateral matching to preferences each consumer inputs.
The company said Lumen filed its patent case, then sent a letter threatening to use the litigation process to disrupt FindTheBest.com’s business and to boost its expenses unless it paid an $85,000 licensing fee. According to FindTheBest.com, the letter threatened "all motion practice as well as protracted discovery" if the company choose to go to court instead of paying.
Lumen also offered a "one-day only offer" to settle the case for $55,000 the day before FindTheBest.com’s answer was due.
During these discussions, a Lumen attorney called a FindTheBest.com lawyer to say that its chief executive committed a "hate crime" by calling the Lumen patent’s co-inventor Eileen Shapiro a "patent troll," according to its complaint. The term is applied to parties that use patents to compel licensing deals but offer no products or services with the technology.
The lawyer threatened to contact U.S. District Judge Denise Cote in New York and seek criminal charges unless FindTheBest.com met several conditions. These included an apology from the chief executive, payment of the licensing fee to settle the case, and financial compensation to Lumen’s attorney and Shapiro.
FindTheBest.com called these threats unfounded and in bad faith.
Aside from racketeering, FindTheBest.com’s claims include conspiracy to violate the federal Racketeering Influenced and Corrupt Organizations Act; civil conspiracy; extortion; abuse of process; and violation of the California Business & Professions Code.
The additional defendants are co-inventor Steven Mintz; Dalton Sentry; DecisionSorter; Hillcrest Group Inc.; and Does 1 through 50, unknown individuals and entities who the complaint says used shell companies to hide their identity.
"Ultimately the client decided that it wanted to fight back against what it saw as an injustice," said FindTheBest.com’s lead lawyer Joe Leventhal of The Leventhal Law Firm in San Diego.
Although only a few parties have filed racketeering cases against trolls and none successfully, Leventhal said, the "hate crime" threat "will be a compelling fact that is consistent with the RICO statute," if Lumen files a dismissal motion.
"To me, that was a clear case of extortion that goes outside the patent claims they were alleging. It’s part of the pattern and practice for these RICO defendants to try to extort money," he said.
Lumen’s lawyer in the May case, Damian Wasserbauer, a counsel at Aeton Law Partners in Middletown, Conn., said the racketeering claim is "frivolous and doesn't apply for a number of reasons that will be addressed in court."
Concerning the hate-crime exchange, Wasserbauer said, "I categorically deny the suggestion that I did something improper to settle the case." He added that there’s nothing unusual about Lumen’s pending patent case against FindTheBest.com. "It’s a basic patent infringement case that is grounded on proper legal and technical analysis.