I saw this case come in just now, and thought it was worth a post. Today, Power Integrations, Inc. brought an action against Waverly Licensing LLC, Mavexar LLC, Array IP LLC, and IP Edge LLC, alleging that those companies had engaged in a harassment campaign against Power Integrations over alleged patent infringement, and seeking a declaratory judgment of non-infringement.
According to the complaint, Waverly Licensing, LLC—by itself—sued Power Integrations late last month in the Western District of Texas. That case is still pending, according to the docket, and is assigned to Judge Robert Pitman (not Judge Albright). The answer deadline is set for January.
Now, Power Integrations brought a DJ action here in Delaware against Waverly Licensing, LLC plus the three other entities. The complaint relies heavily on the information the public learned in the Mavexar hearings this month to argue that Mavexar and IP Edge are the real parties in interest behind the assertion of the patent:
17. On information and belief, and according to testimony given in open court in Delaware earlier this month during hearings in front of Chief Judge Connolly, defendants Mavexar LLC and IP Edge control litigation on behalf of entities affiliated with IP Edge, with the named plaintiff LLCs and their sole members having no input or control over the litigation and receiving only a token percentage of any settlement revenue. As such, on information and belief, the true owners of the ’246 patent-in-suit and the rights to sue are IP Edge and/or its affiliates, including Mavexar LLC and Array IP LLC – not Waverly Licensing.
18. IP Edge’s scheme for enforcing patents with the assistance of Mavexar LLC through its affiliates incorporated via Texas LLCs formed with unwitting sole members includes not only defendant Waverly Licensing, but also Creekview, Nimitz Licensing LLC, and many of the other 200+ patent enforcement entities affiliated with IP Edge who are involved in the 4,000+ lawsuits filed by IP Edge-affiliated entities since the founding of IP Edge in 2015. See https://insight.rpxcorp.com/entity/1034412-ip-edge-llc. Given that the structure of IP Edge and Mavexar’s enforcement entities via sole, sham members effectively “judgment proofs” the real parties in interest, and that IP Edge is using these sole member LLCs in an attempt to insulate itself from any liability for the frivolous assertion of patents and to hide the true parties behind the litigation while effectively controlling the litigation through Mavexar, IP Edge is a real party in interest in this litigation and is properly a named defendant in this DJ action, along with its intermediaries Array IP and Mavexar.
The complaint also picked up on another aspect of the Mavexar hearings—the idea that listing a mailbox address as a "suite" address and principal place of business could potentially have fraud implications:
Waverly Licensing LLC lists in the Waverly-PI complaint as its principal place of business (3333 Preston Road, Suite 300, Frisco, Texas 75034). (Id.) However, that address is actually a Staples store . . . Moreover, the specific box number that defendant Waverly occasionally lists in its court filings as its “principal place of business” within that “suite” is an open shelf . . . .
It looks like they did some sleuthing here. The complaint goes so far as to include a picture of the shelf.
A One-Two Punch
It's smart for Power Integrations to try to rope in IP Edge and Mavexar, entities that are much more likely to have recoverable funds in the event of sanctions. Plus, having the other entities involved drives up costs for the other side even absent sanctions.
Further, by filing here, they were able to mark the case as related to the other Waverly actions pending before Chief Judge Connolly, and this case should get assigned to him as well. He is certainly the judge they'd want in this circumstance.
You may be thinking that filing in Delaware is risky, given that a first suit was already filed in W.D. Texas (I know I was, before I updated this post). The first-filed rule would normally mean that the earlier suit takes precedence.
But the docket in the W.D. Texas action now shows that just after filing the complaint, they filed a motion to dismiss on TC Heartland grounds, alleging that they have no regular and established place of business in W.D. Texas. They also argue that the case belongs here, where the Court is already "addressing the misleading nature of these entities."
If it all works out for them, the Court in Texas will dismiss the action on venue grounds, and they'll have no first-filed-rule issue. Good thinking!
[UPDATE 2022-11-30: I edited this post now that they've now filed a motion to dismiss in W.D. Texas. Before the motion, I wondered how they would resolve the first-filed issue.]
If you enjoyed this post, consider subscribing to receive free e-mail updates about new posts.
