United States: QPRC Acquires More Patents from IV as One Campaign Revives and Another Approaches Trial

Recent SEC filings suggest ever shakier financial ground for Quest Patent Research Corporation (QPRC), as the publicly traded NPE approaches trial in one of its open campaigns, litigated by subsidiary Semcon IP Inc.; revives a second campaign, litigated by subsidiary Mariner IC Inc.; and discloses the acquisition of yet another group of patents from Intellectual Ventures LLC (IV) by a third subsidiary, CXT Systems, Inc. The new defendants targeted by Mariner IC are Acer, ASUS, Bose, Schneider Electronics, and Sharp. The patents asserted generally relate to anchoring a semiconductor die to prevent cracking, with the accused products across the campaign being chips made from certain semiconductor dies, as well as products that contain such chips. Meanwhile, Semcon IP faces jury selection on April 2 in the Eastern District of Texas in cases filed against MediaTek, STMicro, and ZTE over separate patents, also acquired from IV.

Each of the cases filed against the prior defendants in Mariner IC's campaign—Funai and Panasonic, LG Electronics, MediaTek, TI, and Toshiba—has been dismissed with prejudice, most recently in July 2017. Mariner IC's two patents-in-suit (5,650,666; 5,846,874) form a family of two issuing to Cypress Semiconductor in 1997 and 1998, respectively. Cypress asserted them both in a March 2001 case against Philips before selling them off roughly a decade later. IV transferred them to QPRC in an October 2015 assignment of ten patents, which the parent farmed out the next day: those two patents, termed in SEC filings the "anchor structure portfolio", to Mariner IC; five patents, described as the "power management/bus control portfolio" to Semcon IP; and three patents, characterized as the "diode on chip portfolio" to yet another new subsidiary IC Kinetics Inc. Each of these subsidiaries was created in Texas on October 7, 2015.

While IC Kinetics has not asserted the patents that it holds in litigation, Semcon IP has, launching an April 2016 campaign, contemporaneous with Mariner IC's, against Huawei, MediaTek, STMicro, TI, and ZTE. The suits against Huawei (in late February 2018) and TI (in early January 2018) have each been dismissed with prejudice after earlier filed documents indicated settlements. The Eastern District of Texas is in receipt of multiple dispositive motions from the parties and is preparing for jury selection to begin at the beginning of April. In its campaign, Semcon IP has asserted all of its five patents, four of which comprise a single family (7,100,061; 7,596,708; 8,566,627; 8,806,247) generally related to managing processor power consumption with clock frequency generators and power management logic located on chip and one of which (5,978,876) generally relates to controlling buses used for subsystem communications.

With the first four patents, Semcon IP's complaints target products that are chips or have chips that incorporate ARM processors that use DVFS (Dynamic Voltage and Frequency Scaling) for power management, including the ARM Cortex-A5, Cortex-A7, or Cortex-A9 processors. Those four patents issued to Transmeta, a fabless semiconductor company that ceased operations in 2009, at which time IV acquired its intellectual property. Press releases from Transmeta prior to its demise identify companies that purportedly licensed portions of its patent portfolio, including Fujitsu, Intel, NEC, NVIDIA, and Sony, Intel having taken a license to the portfolio as part of a settlement to end litigation that Transmeta brought against the chipmaker in October 2006. (Only the '061 patent was among those asserted against Intel in that case.) The fifth Semcon IP patent (5,978,876) issued to Play, a failed operating company that developed video production products and was succeeded by Global Streams, which subsequently unloaded the '876 patent along with five others in August 2008. Semcon IP accuses STMicro (and TI) of infringing the '876 patent through the manufacture and sale of chips and microcontrollers that include a DMA controller to provide prioritized channels for direct memory access.

In recent SEC filings, QPRC has indicated that CXT Systems entered into a July 2017 agreement with two IV subsidiaries (Intellectual Ventures 34, LLC and Intellectual Ventures 37, LLC) to acquire "all right, title, and interest in a portfolio of fourteen United States patents, five foreign patents and six related applications" of unknown subject matter. QPRC indicates that CXT is to share 50% of any net proceeds from asserting the patents received back to IV, with CXT having paid IV $25K at closing and CXT required to pay at least $100K, $375K, and $975K within ten days of August 31, 2018; 2019; and 2020, respectively (from the proceeds as of those dates or otherwise). CXT received the $25K paid to IV as a loan from NPE United Wireless Holdings Inc.

Prior loans from United Wireless funded QPRC's purchase of the original ten patents from IV that the NPE dealt out to Mariner IC, Semcon IP, and IC Kinetics. A July 8, 2015 agreement, as subsequently amended, provided for the transfer of the ten patents for $3M, with $1M to be paid up front, which QPRC indicated would be taken from a $1.25M loan from United Wireless. The balance of the $3M was due in two installments, the first half to be paid one year after and the second half, two years after closing. QPRC granted IV an interest in the patents as security for those later payments, with that security interest being senior to the security interest that QPRC granted to United Wireless in the proceeds derived from the assertion of the ten patents. QPRC has had to amend its certificate of incorporation to issue more shares of stock, deepening its relationship (marked by indebtedness) to United Wireless over time.

QPRC reported $575K in patent licensing fees during the third quarter of 2017, with an annual report (10-K) due to be filed in early April, which could update those financials to account for the fourth quarter.

For more information on the Mariner IC campaign, including a downloadable one page assessment, visit RPX Insight.

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