Global Equity Management (SA) Pty. Ltd. (“GEMSA”), a foreign non-practicing entity (“NPE”) organized under the laws of Australia, filed almost 40 patent lawsuits in five batches in 2015 and 2016.  The majority of these lawsuits are filed against customers for using cloud computing services provided by Amazon Web Services, Inc. (“AWS”).  These customer defendants include a group of well-known companies, including Adroll, Inc., AirBNB, Inc., Alcatel-Lucent, Inc., Artek Surfin Chemicals, Ltd. (d/b/a Galata Chemicals, LLC), Ericsson, Inc., General Electric Co., Hitachi America, Ltd., Johnson & Johnson USA, Inc., Live Nation Entertainment, Inc. (d/b/a Ticketmaster, Inc.), McGraw Hill Financial, Inc. (d/b/a S&P Global and S&P Capital IQ), The Nasdaq OMX Group, Inc., NASDAQ, Inc., Netflix, Inc., Philips, Inc., SAP America, Inc., Siemens Corp., Spotify USA, Inc., Ticketleap.com LLC, Ticketleap, Inc., Uber Technologies, Inc., Ubisoft Studio, Inc. (d/b/a Ubi soft), Zillow, Inc., Zillow Group, Inc., and Zynga, Inc., etc.

GEMSA may have taken minimal effort to launch its seemingly massive patent lawsuit campaign.  Customer defendants can be easily cherry-picked from AWS’s own publication of “All Customer Success Stories.”  GEMSA alleged each of the defendants infringed U.S. Patent No. 6,690,400 (“the ’400 patent”) or U.S. Patent No. 7,356,677 (“the ’677 patent”) in template-like complaints.  GEMSA alleged defendants infringed the ’400 patent, entitled “graphic user interface for resources management of super operating system based computers,” or the ’677 patent, entitled “computer system capable of fast switching between multiple operating systems and applications,” by using the GUI of AWS for the administration and management of those cloud computing services.  GEMSA’s patent lawsuits are seemingly based on the premise that whoever uses cloud computing services via the GUI of AWS would infringe its patents.

“HITACHI, through http://www.hitachi.com or one of its websites linked directly or indirectly thereto, accesses Amazon Web Services (‘AWS’) as illustrated at https://aws.amazon.com/solutions/case-studies/hitachi/. The use of http://www.hitachi.com, or one of its websites linked directly or indirectly thereto, and AWS infringes one or more claims of [the GEMSA Patents].” Global Equity Management (SA) Pty. Ltd. v. Hitachi America, Ltd., No. 16-cv-00636-RWS-RSP, Dkt. No. 1 at ¶ 6 (E.D. Tex. June 14, 2016).

“NETFLIX, through http://www.netflix.com/ or one of its websites linked directly or indirectly thereto, accesses Amazon Web Services (‘AWS’) as illustrated at https://aws.amazon.com/solutions/case-studies/netflix/.  The use of http://www.netflix.com/, or one of its websites linked directly or indirectly thereto, and AWS infringes one or more claims of [the GEMSA Patents].” Global Equity Management (SA) Pty. Ltd v. Netflix, Inc., No. 16-cv-00633-RWS-RSP, Dkt. No. 1 at ¶ 6 (E.D. Tex. June 1 4, 2016).

Amazon and its customers defended themselves in synergy.  A group of defendants launched inter partes review (IPR) petitions on 2016-09-22 to invalidate the patents-in-suit, and both IPR petitions (IPR2016-01829 and IPR2016-01828) were successfully instituted on 2017-04-21.  Amazon filed a declaratory judgment (DJ) action against GEMSA seeking a declaration of non-infringement and invalidity of the ’400 and ’677 patents.  An IPR petition may be statutorily barred under 35 U.S.C. § 315(a)(1) if it was filed after the Petitioner had filed a civil action for declaratory judgment of non-infringement.  However, 35 U.S.C. § 315(a)(1) has no control here as the IPR and DJ actions were initiated by different actors.

Forum matters for patent litigation.  Amazon’s DJ action was filed at the U.S. District Court for the Eastern District of Virginia (E.D. Va.) five days before GEMSA’s filing of its patent infringement suit against Amazon at the Eastern District of Texas (“E.D. Tx”).  The magistrate judge found that Amazon’s DJ action in Virginia should proceed first while the 21 GEMSA lawsuits in Texas related to Amazon should be stayed based on the first-to-file rule, or independently under the customer suit exception, “especially if there is a possibility or likelihood that all of GEMSA’s pending patent cases can be resolved once Amazon’s E.D. Va. DJ action is resolved.” Global Equity Management (SA) Pty. Ltd. v. Ericsson, Inc., No. 2:16-cv-00618-RWS-RSP, Memorandum Order (E.D. Tex. January 24, 2017).

GEMSA’s seemingly massive patent lawsuit campaign could be dismantled from the Eastern District of Texas.  Recently, as reported by CloudIPQ, the Federal Circuit reversed the denial of a motion to transfer venue from the E.D. Tx. See In Re Cray (Fed. Cir. Sept. 21, 2017).  In this first published venue decision after TC Heartland, the Federal Circuit clarified three requirements for proper patent venue: (1) a physical place in the district; (2) a regular and established place of business; and (3) the place of the defendant.  GEMSA still has 34 (85%) of its patent cases pending in E.D. Tx.  Customer defendants in GEMSA’s lawsuits may transfer venue out of the E.D. Tx. if venue has not been waived.  In that case, GEMSA will likely need much greater litigation resources to keep all of its patent lawsuits alive in various district courts in the future, even if its patents survive the ongoing IPR and DJ actions.