Cloud IPQ: Enhancing Your Cloud IpQ®

Since 2013, Charles C. Freeny III, Bryan E. Freeny, and James P. Freeny (“the Freenys”) have filed more than 50 patent infringement cases, all in the Eastern District of Texas, against a variety of technology companies who utilize the power and convenience of cloud-based technology to optimize and implement their services. Although the Freenys (in various combinations) are the inventors of the patents they are asserting and therefore may not appropriately be labeled a Patent Assertion Entity (“PAE”), the Freenys still fall under the patent troll umbrella as a Non-Practicing Entity (“NPE”).

The Freenys filed suit in the Eastern District of Texas on March 9, 2017, asserting five patents against Xerox Corporation and four of those same five patents against Oki Data Americas, Inc., both leaders in the workplace solutions and multifunction printer space whose devices support Google Cloud Print™ and AirPrint® for Apple iOS platforms. In the same wave of lawsuits, the Freenys also filed complaints alleging infringement of these patents against Ricoh USA, Konica Minolta Business Solutions, Lexmark International, and Brother International. The court consolidated these cases for all pretrial issues except venue on June 29, 2017.

The patents asserted by the Freenys in these lawsuits involve Multiple Integrated Machine Systems (“MIMS”) that incorporate into a single housing unit various digital hardware and software machine elements – each capable of performing a specific and limited set of tasks – to create a single machine system capable of performing all of the functions of each individual digital machine. In the case against Xerox, the Freenys targeted 31 of Xerox’s WorkCentre® and ColorQube® document processing and image reproduction machines, along with Xerox’s wireless adapter units, and specifically called out the capability of the accused Xerox products to operate with cloud services and cloud-based repositories. The Freenys also targeted five of Oki’s multifunction printers and pointed to support for cloud/mobile solutions such as Google Cloud Print™, AirPrint® for Apple iOS, and OKI Mobile Print app for Android®.

Relying on TC Heartland, Oki filed a motion to dismiss for improper venue on May 22, 2017, arguing it is neither incorporated under nor has its place of business in Texas. Before the court ruled on Oki’s motion to dismiss for improper venue, both Oki and the Freenys filed a joint stipulation to dismiss without prejudice (and without a Notice of Settlement), which the court granted on September 13, 2017. Unlike Oki, Xerox chose not to file any Rule 12(b) motions, but rather responded to the Freenys’ amended complaint with an answer on June 13, 2017. The Xerox litigation is still pending, as is the case against Brother. And in an interesting twist, Xerox filed a third-party complaint against Lantronix, Inc. seeking an order compelling Lantronix to indemnify, defend and hold harmless Xerox against claims of patent infringement made by the Freeneys as to the accused wireless adapters supplied to Xerox by Lantronix.

The undisclosed, stipulated dismissal resulting from the Freenys’ lawsuit with Oki is not an uncommon outcome, and indeed is likely the ideal outcome for NPEs and PAEs alike – a fruitful result for the NPE without the expense or hassle of trial. While the Freenys have recently targeted companies in the cloud printing space, such as Xerox and Oki, they have also asserted the same family of patents against other defendants who occupy the wireless speaker, mobile device, fitness and navigation wristband, and general consumer electronics spaces such as Bose, Samsung, Motorola, Garmin, Fitbit, Walt Disney, and Belkin. Like Xerox and Oki, these other defendants manufacture and/or use electronic devices capable of connecting to multiple other devices to perform a multitude of tasks, and each utilize cloud technology. Of particular interest, however, similar to the outcome in the Oki litigation, 91% of all lawsuits filed against these additional defendants in district court resulted in likely settlements – with the Freenys voluntarily dismissing nine of their suits, and in 34 other suits both parties entered into joint stipulated dismissals. The breadth of the Freeny litigation serves as a prime example of what appears to be the NPEs ever-growing expansion of overly broad patent assertions into the cloud computing space against a wide array of technology companies that utilize the convenience of The Cloud.