Cisco, Motorola Patent Owner Racketeering Claims Rejected

Claims by Cisco Systems Inc. (CSCO) and Motorola Solutions Inc. (MSI) that an owner of wireless networking equipment patents is engaging in racketeering by unlawfully demanding licensing fees from hotels, cafes and other businesses was thrown out by a federal judge.

U.S. District Judge James Holderman in Chicago yesterday dismissed the allegations filed last year against Innovatio IP Ventures LLC by Cisco, Motorola Solutions and a third company, Netgear Inc. (NTGR)

The companies’ claims, even if taken as true, “do not establish that Innovatio’s licensing campaign alleging infringement of the Innovatio patents is a sham,” Holderman said in a 34-page ruling tossing the racketeering allegation along with claims of civil conspiracy and unfair competition.

Innovatio, a Chicago-based business, has sued about 20 businesses, claiming their use of local WiFi networking technology infringes its patents and demanding licensing fees. The cases were later consolidated for pretrial proceedings before Holderman in Chicago.

Netgear, Cisco and Motorola Solutions in October filed a combined amended complaint against Innovatio, accusing the company of targeting businesses that have been their clients.

Holderman said the companies can continue to pursue claims against Innovatio for breach of contract and those claiming it is bound by promises of its predecessor patent holders that it wouldn’t be unreasonable in the licensing of those technologies.

350 Claims

“Innovatio is pleased with, but not surprised by, the court’s ruling,” Matthew McAndrews, Innovatio’s lead counsel, said in an e-mailed statement. “Now that Cisco’s legal misdirection has hit a dead end, it will have to turn its attention to the real merits of this dispute: the defendants’ infringement of more than 350 of Innovatio’s patent claims and the appropriate measure of damages for that infringement.”

Kristin Carvell, a spokeswoman for San Jose, California- based Cisco, said that while company is pleased the court allowed some claims to go forward, it is disappointed that Holderman’s ruling gave immunity to Innovatio statements she said are meant to force “thousands of U.S. businesses to pay money that they do not owe.”

Tama McWhinney, a spokesman for Schaumburg, Illinois-based Motorola Solutions, said he couldn’t immediately comment on the court’s ruling. Jeff Norris, an outside spokesman for San Jose- based Netgear, said he couldn’t immediately comment on the decision. Norris is affiliated with New York-based Weber Shandwick.

The case is In re Innovatio IP Ventures LLC, 11-cv-09308, in the U.S. District Court for the Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew Harris in the Chicago federal courthouse at

aharris16@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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