Summerland-based FindTheBest has won what a federal judge called a “frivolous” and “objectively unreasonable” patent lawsuit against it and will recoup its costs from its opponent.
Last summer, Delaware-based Lumen View Technology sued FindTheBest over a patent on matching user preference data. That patent was invalidated late last year, and Judge Denise Cote ruled on May 30 that Lumen View’s case was so flawed that FindTheBest was entitled to recover its defense costs. In normal patent cases, both sides pay their own costs.
“No reasonable litigant could have expected success on the merits in Lumen’s patent infringement lawsuit against [FindTheBest] … .And the most basic pre-suit investigation would have revealed this fact,” Judge Cote wrote. “Lumen’s motivation in this litigation was to extract a nuisance settlement from [FindTheBest] on the theory that [FindTheBest] would rather pay an unjustified license fee than bear the costs of the threatened expensive litigation.”
Lumen View is what’s known as a non-practicing entity — what is called a “patent troll” by intellectual property reform advocates — whose main business is litigating patents it holds. FindTheBest, started by DoubleClick founder Kevin O’Connor, is a site that lets consumers make data-based comparisons between competing products and services.
Judge Cote determined that the Lumen View complaint met the “exceptional case” standard in patent law, under which a judge can decide to let the defendant recover its costs because the case is frivolous.
“In regards to Judge Cote saying this is a ‘prototypical exceptional case,’ I couldn’t have said it better myself,” O’Connor said in an emailed statement. “A little over a year ago, we were sent a demand letter. Since then, we’ve had to waste countless hours and resources on defending ourselves against frivolous litigation.”
The FindTheBest case was exceptional because O’Connor, who was a major shareholder when his previous company sold to Google for more than $3 billion in 2007, committed $1 million to fighting the suit because he “couldn’t get over the injustice of it all.”
“Businesses shouldn’t have to deal with this,” O’Connor said in his emailed statement. “A shell company should not be able to send a boilerplate demand letter, alleging infringement on a patent that is invalidated when challenged in court. Let companies focus on innovating and creating American jobs.”
In response to Lumen View’s lawsuit, FindTheBest filed its own complaint under the Racketeering Influenced Corrupt Organization Act against the Delaware firm, the inventors listed on the patent, and a number of companies allegedly connected to them. In that suit, FindTheBest alleged that the inventors use a string of shell companies to “extort” licensee fees from vulnerable companies without doing any due diligence to determine whether the targets may have actually violated the patents.
Judge Cote granted Lumen View’s motion to dismiss the RICO case. FindTheBest has filed an appeal of that decision.