Richard Lloyd

Last week INVT SPE, the vehicle established by Fortress to monetise the portfolio previously owned by the NPE Inventergy, filed an infringement suit against ZTE in district court in New Jersey. The case is the third that INVT has filed since it took control of the assets earlier this year — the other two were filed against Apple and HTC back in May.

The ZTE suit involves seven patents that originated with Panasonic and relate to wireless technology. A monetisation vehicle looking to litigate to recoup money on its patents is par for the course but it’s notable that Fortress has chosen to turn to the courts relatively quickly after seizing control of the IP.

While Inventergy was relatively reluctant to litigate - with its CEO Joe Beyers placing more of an emphasis on soft licensing - Fortress has shown no such reluctance; and in going after Apple and ZTE in particular has targeted two of the giants of the mobile space. Alleged infringers by now should be getting the message loud and clear.

District court actions are all too familiar to the trio in Fortress’s crosshairs and when it comes to most NPEs they have been able to swat them away through smart litigation tactics and a deluge of challenges at the Patent Trial and Appeal Board (PTAB). What’s more, for those entities like Inventergy that are public, the greater transparency of being a listed company means that potential licensees can easily see how much cash is on hand to wage a litigation battle.

The PIPCO model is not entirely dead — the success of the likes of InterDigital, Rambus and Finjan show that it can still work for a select few — but it’s clear that most licensing businesses in the future will remain private.   

The Inventergy patents are not the only PIPCO assets that Fortress is in the process of monetising. Last month it took control of a portfolio from Marathon Patent Group, which like Inventergy had agreed a debt finance deal with Fortress only to run into trouble meeting the terms of the loans as it struggled to license its assets. If the spate of cases from INVT SPE are any indication, it surely won’t be too long before Fortress starts to assert the Marathon assets, too.

All of which might go to prove that potential licensees like Apple and ZTE may come to regret not having done a deal with Inventergy and Marathon while they had the chance. If patent monetisation has become the sport of kings, then few in the market are better positioned than the IP finance group at Fortress. It has far deeper pockets than most NPEs and with the likes of Eran Zur and Joseph Kessler leading the team, it has deep knowledge of how to play hardball to secure returns.

To what extent Fortress’s new owners Softbank are content to see the IP group aggressively target parts of the tech sector remains to be seen, but for the time being the market has a new and particularly potent NPE on its hands.