This past July, Staton Techiya, LLC filed a pair of Delaware cases against Samsung (Harman International Industries, Harman-Kardon) targeting the provision of automobile audio systems and earbuds (including those offered by AKG and JBL). In its accompanying corporate disclosure statement, the plaintiff indicated that "it does not have a parent corporation and there is no publicly held corporation owning ten percent or more ownership interest in Techiya". Then, on August 2, the case was assigned to Chief Judge Colm F. Connolly, in whose courtroom April 2022 standing orders impose heightened disclosure requirements on certain litigants. In response, Staton Techiya filed new statements on August 24—one supplementing that prior simple corporate disclosure (to list well over 100 "partners") and the other identifying a single source of third-party litigation funding.
Overview of Staton Techiya's Expanding Litigation Against Samsung
Across the three cases that Staton Techiya has filed against Samsung in the Eastern District of Texas, between November 2021 and July 2023, and the two cases filed in Delaware this past July as well, the NPE has asserted more than two dozen patents from a portfolio of more than 250 assets that it began receiving in June 2017. The patents name as inventors individuals who worked together at Techiya (f/k/a Personics Labs) beginning around the 2006-2007 timeframe.
Private equity investment firm Staton Capital advertises its investment in Techiya, describing the company as having "developed hands-free, error-free communication through its patented micro-balloon SmartBud earpiece technology" and as owning "150 granted and pending patents which support its technology and will deliver a revolutionary communication interface". Based in Delray Beach, Florida, Staton Capital was founded in 2003 by Daniel C. Staton and Maria Belodimas Staton, touting investments in a wide variety of ventures, from minor league baseball teams to Broadway musicals.
Staton Techiya itself was formed in Delaware the same month of the first transfer of patent assets, June 2017, providing in the complaints against Samsung as its address that of a Delray Beach property connected with the Statons. The Personics/Techiya portfolio movement began with the transfer of over 100 US assets from Personics Holdings to DM Staton Family Limited Partnership, the latter a Wyoming vehicle (formed in August 2014) having the Statons as general partners. Steve Goldstein, the CEO and founder with Techiya (as Personics Labs), signed for Personics Holdings; and Daniel Staton, for DM Staton. Within a few days, that portfolio was moved from DM Staton to the newly created Staton Techiya.
Over the following years, Staton Techiya's holdings, at least based on currently available USPTO assignment records, have expanded beyond 220 issued patents, some via continued prosecution and others through additional assignments from either DM Staton, the named inventors, or other enterprises associated with one or more of them (e.g., Fluent Audio). The original litigation against Samsung involved a coplaintiff, Synergy IP Corporation, then identified as the exclusive licensee of the patents asserted, but events during litigation led to the apparent termination of that arrangement earlier this year. For more details concerning the problematic prior involvement of Synergy IP (and its former Samsung employee founders), and litigation up to this point, see RPX's coverage at "Staton Techiya—Alone This Time—Files a Third Complaint Against Samsung" (July 2023) as recently updated here.
Staton Techiya's Statement Regarding Third-Party Litigation Funding
One of Judge Connolly's April 2022 standing orders reads, in pertinent part, as follows:
...[W]here a party has made arrangements to receive from a person or entity that is not a party (a "Third-Party Funder") funding for some or all of the party's attorney fees and/or expenses to litigate this action on a non-recourse basis in exchange for (1) a financial interest that is contingent upon the results of the litigation or (2) a non-monetary result that is not in the nature of a personal loan, bank loan, or insurance:
- The identity, address, and, if a legal entity, place of formation of the Third-Party Funder(s);
- Whether any Third-Party Funder's approval is necessary for litigation or settlement decisions in the action, and if the answer is in the affirmative, the nature of the terms and conditions relating to that approval; and
- A brief description of the nature of the financial interest of the Third-Party Funder(s).
The required information must be disclosed via a statement filed within 30 days of an initial pleading or transfer to Delaware, including the removal of a state action. Further, per the standing order,
[p]arties may seek additional discovery of the terms of a party's arrangement with any Third-Party Funder upon a showing that the Third-Party Funder has authority to make material litigation decisions or settlement decisions, the interests of any funded parties or the class (if applicable) are not being promoted or protected by the arrangement, conflicts of interest exist as a result of the arrangement, or other such good cause exists.
Staton Techiya filed a statement identifying PurpleVine IP Operating (Shenzen) CO., LTD. as a "'Third-Party Funder' (as defined in the Order)" with which it has "made arrangements whereby Plaintiff is to receive funding for its attorneys' fees and expenses to litigate this action on a non-recourse basis in exchange for a financial interest that is contingent upon the results of the litigation that is not in the nature of a personal loan, bank loan, or insurance". Per Staton Techiya, "PurpleVine IP's approval is not necessary for litigation or settlement decisions in this action", and it "has no authority to make litigation decisions or settlement decisions". The plaintiff further represents that it "does not believe there is any conflict of interest as a result of its arrangement with PurpleVine IP".
According to Staton Techiya's statement, PurpleVine IP "is a company organized under the laws of the People's Republic of China. Its address is 29/F, Block C, China Resources Land Building, No. 9668, Shennan Avenue, Nanshan District, Shenzhen, China. PurpleVine IP is incorporated as a limited liability company; it is owned by its shareholders. Its place of formation was Qianhai District, Shenzhen City, Guangdong Province, China".
Of note here is IAM's interview with Wen Ming, described as "a vice president at TCL-linked patent consultancy PurpleVine IP, which is taking on a lot of the company's patent prosecution work as well as managing litigation and other cross-border matters". IAM indicates that PurpleVine IP is "led by TCL general counsel Victor Yang" and that it "offers IP services to other Chinese tech companies".
Staton Techiya's Supplemental Corporate Disclosure
Among Judge Connolly's April 2022 standing orders is also one requiring parties that are "nongovernmental joint ventures, limited liability corporations, partnerships or limited liability partnerships" to include in disclosure statements "the name of every owner, member and partner of the party, proceeding up the chain of ownership until the name of every individual and corporation with a direct or indirect interest in the party has been identified". While some litigants have taken the position that their status as a limited liability company exempts them from this rule, Staton Techiya provided a supplemental disclosure.
In it, Staton Techiya lists 19 "partners": (a) Brian Firestone; (b) Carrie T. Schulman 2014 Irrevocable Trust; (c) William Holtzman; (d) Julia Shepard Waite; (e) Lydia H. Shepard; (f) Mathew Kennedy; (g) Alex Prodoehl; (h) Sharona and David Kay; (i) Henry Shatkin; (j) Joel A. Stone; (k) Arlene S. Chew; (l) David A. Baum Revocable Trust; (m) John Keady; (n) John Usher; (o) Yasmin Seyal; (p) DM Tech Kids Family Limited; (q) North Node Ventures, LLC; (r) Kesef Investments, LLC; and (s) Personics Holdings, LLC.
Staton Techiya then identifies four "partners of DM Tech Kids Family Limited": Daniela, Arianna, George, and John Staton. It identifies five "partners of North Node Ventures, LLC": William Sheppard, Shannon Kennedy, Lydia Sheppard, Alex Podoehl, and Matt Kennedy. Staton Techiya identifies two "partners of Kesef Investments, LLC": Michael Solomon and Marc Abramowitz. Finally, it identifies 116 individuals or entities that are "partners of Personics Holdings, LLC":
(a) Adam Locker Revocable Living Trust (b) Adrianus Houtsma (c) Alan J. Freint Trust (d) Alan Mitchell MD & Beth Mitchell (e) Alberto D. Fernandez MD (f) Alex Prodoehl (g) Antonio M. Vega (h) Arlene Chew IRA (i) Armando Leonetti (j) Arnold S. Mikelberg & Judith P Mikelberg (k) Benjamin J. Genet Revocable Trust dated 2/15/05 (l) Brandon Jerry (m) Brian E. Dougherty MD (n) Brian Firestone (o) Brian J. Fligor (p) Brian Lee (q) Bruce S. MD & Harriet S. Zaret (r) Bruce Shapiro (s) Carl Drucker & Debra Drucker (t) Carrie T. Schulman (u) Daniel & Miriam Morse (v) David & Cristine Jassir (w) David Baum (x) David Shapiro (y) David Schulman (z) Dianne McRae (aa) Donald C. Shepard III (bb) Donald M. Marks First Amended & Restated Trust dated 9/1/10 (cc) Donald Tescher, Trustee for benefit of Carly Rose Menocal Trust Dated 12/22/09 (dd) Donald Tescher, Trustee for benefit of Connor James Marshall Norris Trust Dated 12/22/09 (ee) Donald Tescher, Trustee for benefit of Emma Rayne Sachs Trust Dated 12/22/09 (ff) Donald Tescher, Trustee for benefit of Hayden Vann Marshall Norris Trust Dated 12/22/09 (gg) Donald Tescher, Trustee for benefit of Lyla Hope Sachs Trust Dated 12/22/09 (hh) Donald Tescher, Trustee for benefit of Mark A. Sachs Trust Dated 12/22/09 (ii) Donald Tescher, Trustee for benefit of Maya Eden Sachs Trust Dated 12/22/09 (jj) Donald Tescher, Trustee for benefit of Raimundo Ryan Menocal Trust Dated 12/22/09 (kk) Donald Tescher, Trustee for benefit of Samuel Nathan Jackman Trust Dated 12/22/09 (ll) Donald Tescher, Trustee for benefit of Stefanie I. Sachs Trust Dated 12/22/09 (mm) Doreen & William Brown (nn) Doreen and William Brown (oo) Dorit Z. Genet Revocable Trusted dated 2/15/05 (pp) Elizabeth Hyman (qq) Ellen B. Livingston (rr) Emilex Family LLLP (ss) Entrust Group Inc FBO Stacey Packer IRA (tt) Felipe J. Martinez MD & Ana Martinez (uu) Frank Gary Kronberg (vv) Frank J. MD & Suzanne F. Pearl (ww) Gerald M. Holland (xx) Goldstein Family Investments, LP (yy) Halpern Family Trust (zz) Harold Landa (aaa) Henry Shatkin (bbb) Holly Atkinson (ccc) Horacio P. & Judit A. Groisman (ddd) Howard Goldman and Barbara Goldman (eee) Howard Pleet (fff) Irene A. Epstein and Merrill H. Epstein (ggg) Jeffrey A. Jackman 2009 Gift Trust (hhh) Jeffrey A. Jackman Family Trust Dated12/28/95, Donald Tescher Trustee (iii) Joel A. Stone (jjj) John G. Casali (kkk) John Hunter (lll) Jonathan & Dianne Cooper (mmm) Jordan Cohen (nnn) Joseph Markham Cronin (ooo) Joshua & Ruth Light (ppp) JRJS Hallandale Venture Corporation (qqq) Julia Shepard Waite (rrr) Lawrence Grobman & Gale Grobman (sss) Lenbrook Corp. (ttt) Laser Business Solutions LLC (uuu) Lydia Hills Shepard (vvv) Mark Cohen (www) Mark Clements (xxx) Martin I Halpern Revocable Trust (yyy) Matt Kennedy (zzz) Mayur & Smita Maniar (aaaa) Michael and Georgia Gottlieb (bbbb) Michael Owens, MD (cccc) Michael Schiffman (dddd) Moises Mitrani MD (eeee) Monica Hope Goldstein Trust #1 (ffff) Morris Kravecas (gggg) Norman Matthews (Estate of) (hhhh) Paul M. Pessis (iiii) Peter Livingston (jjjj) Philip Baratz (kkkk) Richard Zisook (llll) Robert Case (mmmm) Roberto J. Lang (nnnn) Ronald L. Blankstein. MD (oooo) S. Sylvia Shepard (pppp) Samuel Jerry (qqqq) Saul Kravecas (rrrr) Sharona and David Kay (ssss) SMG Malbec Holdings, LLC (tttt) 190 Building Partnership (uuuu) Stacey B. Schulman Irrevocable Trust (vvvv) Stacey Citrin (wwww) Stephen Jackman (xxxx) Steven Mark Fletcher (yyyy) Steven W. Goldstein as Trustee of the Steven W. Goldstein Revocable Trust dated 6/28/08 (zzzz)Stewart P & Lila Newman (aaaaa) The William S Holtzman & Sylvia Shepard Joint Revocable Living Trust 12/09/02 (bbbbb)Thomas Hazlett (ccccc) Todd & Lori Kupferman (ddddd)Todd Schulman Irrevocable Trust (eeeee) Todd Thibodeaux (fffff) TWS Family, LLC (ggggg) Warren Struhl (hhhhh)Wendi M. Jackman Norris 2009 Gift Trust (iiiii) Wendi M. Jackman Norris Irrevocable Family Trust dated 12/28/95 (jjjjj) William A. Shepard (kkkkk)William A. Shepard and Shannon Kennedy (lllll) William Holtzman.
Buried in the list above are multiple additional (non-trust) entities for which Judge Connolly's standing order would require further disclosure. Staton Techiya represents that it is "endeavoring to locate the names of every owner and member of 190 Building Partnership; Emilex Family LLLP; Goldstein Family Investments, LP; Laser Business Solutions LLC; SMG Malbec Holdings, LLC; and TWS Family, LLC. and will supplement its disclosures when that information becomes available".
In other words, the difference between the transparency required before other District of Delaware judges and the transparency required in Judge Connolly's courtroom is dramatic.
Original publication date: September 16, 2023
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