Back in January of this year, Crowdfund Insider covered a patent lawsuit that sought to challenge many of the prominent US crowdfunding platforms in operation today. This included both rewards/donations and investment crowdfunding platforms. AlphaCap ventures, a company that has been described as a patent troll, filed suit in the cuddly part of Texas known to embrace patent litigation with a tendency to err on the side of the plaintiff. Go ahead and try to load the AlphaCap Ventures website and chances are it will fail. The company is obviously investing its resources elsewhere.
Patent Attorney David Postolski, from Gearhart Law, recently told Crowdfund Insider;
“Cases like this are unfortunately indicative of existing challenges in the patent space. I am certain all parties involved have received solid counsel on the IP in question, as would anyone attempting to protect IP or defend its use.”
Kickstarter got lucky and was previously sued for patent infringement. The case was recently settled in Kickstarter’s favor as ArtistShare failed to prove its case. Unfortunately for Kickstarter it took 4 years to achieve victory.
Back in May, AlphaCap Ventures filed a “notice of voluntary dismissal with prejudice” of its claims against defendants, AngelList, CircleUp, Indiegogo, Kickstarter and RealtyMogul this past May. In all likelihood a settlement had been reached amongst the group. No details have been made available. Crowdfunding platforms that Crowdfund Insider has contacted have been rather reticent to discuss specifics. I would harbor a guess that no warm hugs between plaintiffs and defendants were exchanged.
But here is where it gets interesting. Three parties have persevered – at least until this past week. Innovational Funding, RocketHub and Gust demanded a trial by jury. This is a costly exercise for both sides of the argument as we know that paying lawyers an hourly rate can be rather expensive.
Gust (AngelSoft LLC) took the lead and sent forth an emissary to Texas, an attorney by the name of Frank Bruno from White and Williams LLP. Bruno is a litigator that specializes in patent battles. His trip to Texas included several pressing demands including:
- Deadline for Plaintiff to serve RFPs (limit of 10), Interrogatories, and a 30(b)(6) deposition notice relating to venue: July 10, 2015
- Deadline for Defendant to serve responses to discovery requests: August 10, 2015
- 30(b)(6) deposition(s): Week of August 17, 2015
- Deadline for Plaintiff to file opposition to motion to transfer : August 28, 2015
- Deadline for Defendant to serve reply in support of motion to transfer: September 4, 2015
As of July 13th, according to a court filing;
“Before the Court is the Joint Motion to Stay All Deadlines Pending Dismissal as to AlphaCap Ventures LLC and RocketHub, Inc. The Court, having considered this motion is of the opinion that it should be GRANTED.”
All deadlines have been stayed pending dismissal. Now I am no patent attorney, and I hope to gather some clarity on this soon, but it appears AlphaCap may have tried to pick a fight outside its weight class and lost.
Patent troll activity costs small businesses and the U.S. economy an estimated $29 billion a year (or more) in lost capital. There have been multiple entities calling for patent reform. The crowdfunding industry appears to have dodged a bullet for now. Hopefully more details on this case will come to light soon.