Pragmatus AV, LLC v. Facebook, Inc.

Filing 13

Memorandum in Support re 12 MOTION to Transfer Case Pursuant to 28 U.S.C. § 1404(a) filed by Facebook, Inc.. (Attachments: # 1 Facebook Declaration, # 2 Wilcox Declaration, # 3 Exhibit 1, # 4 Exhibit 2, # 5 Exhibit 3, # 6 Exhibit 4, # 7 Exhibit 5, # 8 Exhibit 6, # 9 Exhibit 7, # 10 Exhibit 8, # 11 Exhibit 9, # 12 Exhibit 10, # 13 Exhibit 11, # 14 Exhibit 12, # 15 Exhibit 13, # 16 Exhibit 14)(Wilcox, Justin)

EXHIBIT 2

Exclusive

Myhrvold-Connected Firm Sues YouTube,
Facebook And LinkedIn Over Patents
Nov 18, 2010 4:35 PM ET

Joe Mullin @joemullin

A

n obscure Virginia company,
Pragmatus
AV,
has sued YouTube, Facebook, LinkedIn and Photobucket.com, claiming the
companies infringe three
of its patents related to
playing digital video. Who
is Pragmatus? It’s a company that was formed only
five months ago after acquiring a batch of patents
from Intellectual Ventures,
the giant patent-holding
company run by ex-Microsoft (NSDQ: MSFT) CTO Nathan
Myhrvold.
It isn’t clear whether the terms of the deal with Pragmatus
give Intellectual Ventures a cut of any settlement money or
litigation win. About a year ago, Intellectual Ventures started
selling off some of its 30,000 patents to small, startup outfits much like Pragmatus—companies often derided in tech
circles as “patent trolls.” Some of those firms, in turn, have
filed lawsuits against companies like Kodak, CDW, AT&T
(NYSE: T), GoDaddy.com, and Iron Mountain.

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One odd twist to the latest group of companies being sued:
YouTube’s parent company, Google (NSDQ: GOOG), was
an early investor in Intellectual Ventures, back when Myhrvold was pitching the organization as a sort of patent defense
fund.
The patents appear to make wide-ranging claims to online
video. The lawsuit [PDF] says the companies infringe the patents simply because they “allow users to upload, link to, and
comment on videos.”

http://cnt.to/mSr

Nearly all patent-troll suits end in confidential settlements,
especially since the cost of litigating a high-stakes patent case
through trial now averages more than $4 million. However,
this batch of suits will be interesting to watch, as Pragmatus has chosen to sue the two toughest targets in the patenttrolling world. Facebook has been sued for patent infringement 15 times since 2007—and hasn’t settled a single suit.
Google has been sued over patents close to 50 times in the
same time frame, and has settled only a few cases.
The patents in this lawsuit [PDF] were originally held by
Avistar Communications, which sold most of its patent portfolio to Intellectual Ventures in January for $11 million. In
June, IV sold them to Pragmatus AV. It isn’t clear who owns
Pragmatus.
An Intellectual Ventures spokeswoman confirmed that the patents that Pragmatus is suing over were held by IV and sold
to Pragmatus, but declined to elaborate on the deal. In some
cases, IV is entitled to a share of the proceeds from those lawsuits—in others, it sells the patents outright.
The patent “trolling” business has grown enormously in the
past decade, and hundreds of companies are sued by trolls,
which some lawyers call “non-practicing entities,” each year.
Big tech companies like Apple (NSDQ: AAPL) and Microsoft are typically sued dozens of times in a single year. A
study by PatentFreedom, a patent consultancy, estimates that
in 2009, patent troll lawsuits cost defendant companies $5
billion in litigation expenses alone.
Separately, Intellectual Ventures announced a deal with
Samsung today, under which the Korean company paid an
unspecified sum for a license to IV’s entire patent portfolio.
»  Read Pragmatus AV v. Facebook et al. Complaint [PDF]

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Nov 18, 2010

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