Richard Lloyd

A few years ago Soverain Software was in and out of the patent headlines thanks to its knock down, drag out infringement fight with consumer electronics retailer Newegg.

In a story familiar to readers of this blog, Soverain was held out as a bad boy of the tech world for seeking to assert its IP through the courts - with opponents and critics in the press insisting that it was not a product company but a “patent troll”. Representative Bob Goodlatte even cited the company during a Congressional hearing on patent reform in October 2013 as a supposed example of one using low quality assets to launch abusive lawsuits.

Chicago-headquartered Soverain had originally filed a suit against Newegg and a group of other retailers in the Eastern District of Texas in 2007. All the defendants settled except for Newegg, whose chief lawyer Lee Cheng had regularly made clear his disdain for companies he deemed to be “trolls”. Last year he left Newegg to join guitar manufacturer Gibson Brands as COO.

Soverain triumphed at district court but in a controversial decision, which the company claimed was riddled with irregularities, the Court of Appeals for the Federal Circuit (CAFC) overturned the lower court’s findings, ruling the patents in question to be invalid.

With the Supreme Court’s decision not to grant cert to Soverain’s appeal in early 2014, that appeared to be that for the company and its assertion campaign. Except this week Soverain’s patents were back in court as a new, Texas-based entity called Soverain IP filed suit against Microsoft and Apple, alleging that the Windows giant infringes on six patents while the iPhone creator infringes on four.

The grants in question originated with Open Market, an early internet-focused tech business and the developer of Transact, a platform that Soverain’s court filings claims “offered a full suite of software technologies including content management, authorisation protocols and customer relationship management”. Soverain Software acquired that platform and the relevant patents in 2003.

One of the patents — no. 5,708,780 — which was granted in 1998, has been litigated before and appears to be one of the online shopping-related grants that led to Soverain securing a $40 million settlement from Amazon in 2005. Notably, in its court filings this week, Soverain cites Enfish v Microsoft, one of several 2016 Federal Circuit decisions which are seen as providing key guidelines over the patentability of software, to back up its claim that the patent does not cover an abstract idea and is therefore valid.

According to a search of the USPTO assignment database these patents were part of a package of assets that were transferred last October from Soverain Software to the new IP entity. In its court filings, Soverain claims that it “is the owner by assignment and exclusive licensee to 24 issued United States patents, multiple pending patent applications and numerous foreign patent assets”.

According to an examination of the Texas Secretary of State’s corporate database the LLC registration for Soverain IP was filed in September 2016 and its manager is listed as Stephen C McArthur, a lawyer who runs his own firm in Los Angeles. According to its home page The McArthur Law Firm offers “sophisticated legal counsel specialising in the intersection of law and videogames”.

The filings against Apple and Microsoft appear, therefore, to be somewhat outside of the firm’s usual purview, but in going after two tech giants that are among the most adept at fighting off infringement lawsuits Soverain IP has made it intentions very clear.