Patent Troll Drops Suit and Talks Settlement
SAN FRANCISCO (CN) - Facing the likely humiliation of a jury trial presided over by the skeptical and tech-savvy U.S. District Judge William Alsup, Network Protection Sciences has agreed to drop its patent lawsuit against Fortinet.
Alsup made it clear early on that he was not sympathetic to the patent troll. In August, Alsup spent the better part of a ruling on a motion to dismiss quoting op-ed by Federal Circuit Chief Judge Randall Rader on rampant abusive patent litigation.
In 2010, NPS sued Fortinet in Texas federal court for infringing on its network security products. The case was moved to the Northern District of California in March 2012. Alsup noted NPS has been involved in "at least a dozen patent lawsuits against at least 40 defendants."
Alsup also slammed NPS founders Rakesh Ramde and Wilfred Lam for trying to create the impression that it "is something other than a patent troll" by making misleading statements to Fortinet and the court.
"NPS has repeatedly represented to the court that it has a single employee, Gregory Cuke, its 'director of business development.' The record, however, shows that this individual has no actual involvement with NPS's day-to-day business, even assuming that any such business takes place," Alsup wrote.
"Although Cuke agrees he has performed a few token hours of work for NPS, he denies being its 'director of business development,' denies having any knowledge of what NPS's day-to-day business is, and denies being an NPS employee," the judge said. "Aside from his alleged employment, Cuke is simply NPS's landlord: Cuke is a real estate broker for commercial properties in east Texas and runs a company that subleases a one-room office to NPS.
Alsup noted that while NPS has repeatedly represented that it is headquartered in Suite 302 at 3301 West Marshall Avenue in Longview, Texas, Cuke has said this "headquarters" office is nothing more than "a tiny, windowless, file-cabinet room, without a phone or even chairs.
"There are no on-site employees. The rent for the office space is $325 per month; NPS subleases the space for $100 per month from another entity owned by Ramde and Lam that appears to share the same address. The office contains a single computer which Cuke has never seen turned on," the judge said.
"NPS manufactured venue in Texas via a sham," Alsup concluded. "Ramde and Lam rented a windowless file-cabinet room with no employees in Texas and held it out as an ongoing business concern to the Texas judge. They also held out Cuke as its 'director of business development' but this too was a sham, a contrivance to manufacture venue in the Eastern District of Texas."
Alsup scheduled the trial for Oct. 1, with jury selection beginning Sept. 30. Just before the trial was set to begin, he issued an order for dismissal with prejudice. The case was then referred to a magistrate judge for settlement talks.
Attorneys for both NPS and Fortinet declined to comment.