DCT

2:17-cv-00263

Lexington Services Ltd v. US Patent No 8019807 Delegate LLC

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:17-cv-00263, E.D. Va., 05/17/2017
  • Venue Allegations: Venue is alleged to be proper in the Eastern District of Virginia because the Defendants availed themselves of the court's jurisdiction by filing the allegedly fraudulent patent assignment at the U.S. Patent & Trademark Office (USPTO), which is headquartered in Alexandria, Virginia.
  • Core Dispute: Plaintiff alleges that Defendants, its former business partners, fraudulently executed and recorded a patent assignment to steal title and ownership of a U.S. patent related to computer system communication.
  • Technical Context: The patent-in-suit concerns enterprise application integration, specifically a "service broker" system that allows heterogeneous computer systems to communicate without needing to know the technical details of the other systems.
  • Key Procedural History: The complaint describes a long-standing business relationship that soured, leading to high court litigation in Ireland over ownership of the patent-in-suit. That litigation reportedly settled in 2015 with Plaintiff taking title, only for Defendants to allegedly file a fraudulent assignment in March 2017 to reclaim ownership, which Plaintiff then sought to remedy with a corrective recordation in April 2017.

Case Timeline

Date Event
2001-05-23 '807 Patent Priority Date
2002-04-11 '807 Patent Application Filing Date
2011-09-13 '807 Patent Issue Date
2013-00-00 Irish litigation concerning '807 Patent ownership begins
2015-00-00 Irish litigation settles, with Plaintiff taking title to '807 Patent
2015-12-28 Assignment of '807 Patent to Plaintiff recorded at USPTO
2017-03-07 Allegedly fraudulent assignment recorded by Defendants
2017-04-19 Plaintiff files Corrective Recordation of assignment at USPTO
2017-05-17 Complaint Filing Date

II. Technology and Patent(s)-in-Suit Analysis

No probative visual evidence provided in complaint.

U.S. Patent No. 8,019,807 - "Method and System for Communication Between Computer Systems"

The Invention Explained

  • Problem Addressed: The patent describes the challenge large enterprises face with "islands of heterogeneous IT systems" that cannot easily communicate or share data ('807 Patent, col. 1:35-37). Conventional integration methods are described as proprietary, inflexible, and requiring applications to have a "coded understanding of the logical layout of the data and services that it is accessing," which makes adapting to new technologies difficult and time-consuming ('807 Patent, col. 2:25-29).
  • The Patented Solution: The invention proposes a "service broker system" that acts as an intermediary or "virtual endpoint" between a service requester and a service provider ('807 Patent, col. 2:42-43). A requesting application sends a service request to the broker without needing to know the location, identity, or technical specifications of the application that will ultimately fulfill it ('807 Patent, col. 2:43-54). The broker is responsible for identifying the appropriate provider, translating and forwarding the request, receiving the response, and returning it to the original requester, thereby abstracting the underlying complexity ('807 Patent, Abstract).
  • Technical Importance: This technology facilitates Enterprise Application Integration (EAI), allowing disparate software systems within a company to function together more seamlessly, which is critical for modern business operations (Compl. ¶13).

Key Claims at a Glance

  • The complaint does not assert specific claims for infringement, as the action centers on the patent's title and ownership rather than its technical implementation by an accused product.

III. The Accused Instrumentality

Product Identification

The accused "instrumentality" is not a commercial product but a legal document: the "Patent Assignment Agreement" ("PAA") recorded at the USPTO as Assignment 7 (Compl. ¶25, Ex. B).

Functionality and Market Context

  • The function of the PAA, as alleged in the complaint, was to unlawfully transfer all right, title, and interest in the '807 Patent from the Plaintiff, Lexington Services, to the Defendant, U.S. Patent 8019807 Delegate LLC (Compl. ¶25-26).
  • The complaint alleges this act was intended to "steal title and ownership" of the '807 Patent (Compl. ¶2) and cloud Plaintiff's title, thereby harming its ability to engage in "licensing and/or enforcement of the '807 Patent" (Compl. ¶64). The complaint alleges the PAA was executed without authority, as Defendant Walters, who signed on behalf of the Plaintiff, is not an authorized representative of the Plaintiff (Compl. ¶27, ¶29). It further alleges the stated consideration of €100 is a "gross undervaluation" of the patent's true value (Compl. ¶31).

IV. Analysis of Infringement Allegations

This section is not applicable as the complaint does not contain allegations of patent infringement.

V. Key Claim Terms for Construction

This section is not applicable as the complaint does not assert any patent claims or raise issues of claim construction.

VI. Other Allegations

The complaint's primary causes of action are not for patent infringement but for torts and statutory violations related to the disputed ownership of the '807 Patent.

  • Fraudulent Assignment and Conveyance: The complaint alleges Defendants violated 35 U.S.C. § 261 and Virginia state law by executing and recording the PAA with the intent to deprive Plaintiff of its rightful title to the patent (Compl. ¶¶41-42, 51). The basis for this allegation is that Defendant Walters purportedly signed the PAA on behalf of Plaintiff without authorization (Compl. ¶29).
  • Slander of Title and Quiet Title: Plaintiff alleges that by recording the allegedly fraudulent PAA in a publicly available USPTO database, Defendants knowingly "disparaged Plaintiff's title" (Compl. ¶59). This has allegedly created a "cloud that has been cast over the title of the '807 Patent," harming current and future business negotiations (Compl. ¶64). Plaintiff seeks a court declaration to quiet title and affirm its lawful ownership (Compl. ¶74).
  • Intentional and Malicious Conduct: The complaint alleges the Defendants' conduct was "taken intentionally, in bad faith and with malice and/or in gross and reckless disregard of Plaintiff's rights" (Compl. ¶39). This allegation is supported by references to the parties' prior litigation and settlement, which allegedly put Defendants on notice of Plaintiff's ownership rights, and the allegedly inadequate consideration of €100 paid for the patent transfer (Compl. ¶¶19, 31, 86). These allegations form the basis for requests for punitive damages (Compl. ¶¶66, 82).

VII. Analyst’s Conclusion: Key Questions for the Case

The disposition of this case appears to depend not on technical claim interpretation, but on factual questions regarding the legitimacy of a title transfer document.

  • A core issue will be one of corporate authority: Did Defendant Mortimer J. Walters possess the legal authority to execute the Patent Assignment Agreement on behalf of the assignor, Plaintiff Lexington Services Ltd.? The complaint alleges he is not and was not an authorized representative.
  • A key evidentiary question will be one of fraudulent intent: Can Plaintiff prove that the Defendants acted with the intent to defraud, as required for several of its claims? The court may consider evidence such as the history of litigation between the parties, the alleged lack of authority to execute the assignment, and the adequacy of the €100 consideration paid for the patent.
  • A central legal question will be one of remedy: If the court finds the assignment was fraudulent, what is the proper remedy? Plaintiff requests both a declaration quieting title and an order for the USPTO to "expunge the assignment record," raising questions about the court's power to direct such administrative action.