Complaint Filed, Elevengear LLC v. Eclipse IP, LLC, Case No. 3:15-cv-02278-WHA
When a patent owner comes to the table, one possible response is to raise the stakes. That's the path that Elevengear LLC chose when it filed for declaratory judgment of non-infringement and invalidity directed at Eclipse IP, LLC's entire patent portfolio. History suggests that, when you're dealing with Eclipse, a company that has initiated more than 100 patent infringement actions over the years, aggressive litigation might be the right play.
Responding to Eclipse's history of filing suits, Elevengear's complaint notes: "A key part of Eclipse's business model is sending letters, emails, and making telephone calls threatening patent litigation and following through on that threat." This dispute began the same way: In March, Elevengear received a letter from Eclipse asserting infringement by "electronic messaging features of [Elevengear's] online ordering system." Eclipse demanded that Elevengear pay $45,000 by April 17. When the deadline passed, Eclipse sued on three patents in the District of New Jersey.
But, Elevengear alleges, that's not the whole story. Last year, Judge Wu in the Central District of California invalidated claims from multiple Eclipse patents on section 101 grounds. According to Elevengear, those claims are identical or similar to the ones Eclipse asserted in its demand letter. The invalidated claims are also similar to claims in two Eclipse patents that just issued, likely due to the fact that the Patent Office was never told about Judge Wu's order. (The Electronic Freedom Foundation ("EFF"), which monitors the issuance of patents it deems potentially deleterious to the public's use of the Internet, noted this problem, too, when it dubbed one of the new Eclipse patents "April's stupid patent of the month.") In its declaratory judgment complaint, Elevengear argues that in the New Jersey action "Eclipse intentionally asserted less than the patents it offered to license so as not to risk the Court invalidating the Eclipse Patent Portfolio." To counter this tactic, Elevengear's complaint puts 24 of Eclipse's patents at issue, and it includes an inequitable conduct claim based on Eclipse's failure to provide Judge Wu's order to the Patent Office.
Despite being a prolific filer of infringement suits, there is evidence that Eclipse will fold when it meets resistance. In 2013, Eclipse sued a number of UPS and FedEx customers, only to grant them all a covenant not to sue after UPS and FedEx filed separate declaratory judgment actions. (Our sister blog noted how this inspired Judge Wu to consolidate and temporarily stay Eclipse's actions in his court.) And in March 2014, Eclipse walked away from a suit against Overstock.com, who has a policy of not settling with patent trolls.
Against the backdrop of Eclipse's litigation history, it will be interesting to see if Elevengear's fight ends the broader battle against Eclipse.
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