ParkerVision (NASDAQ:PRKR) is a player in the patent assertion world that I previously discussed may be up for sale. It's received scant coverage in the media compared to other patent assertion companies, like Vringo (VRNG) and VirnetX (NYSEMKT:VHC), perhaps because its patent infringement case against Qualcomm (NASDAQ:QCOM) is still in the early stages, with trial not slated until next summer.
Last week, on Thanksgiving eve, the Judge overseeing the case issued an order dismissing certain counterclaims Qualcomm wanted to make against ParkerVision's outside law firm, Sterne Kessler Goldstein and Fox ("SKGF"), a very reputable patent law firm in Washington, D.C.. The Judge summarized Qualcomm's counterclaims against SKGF as follows:
Qualcomm's factual allegations against SKGF, in pertinent part, are these: (1) SKGF worked concurrently for both ParkerVision and Qualcomm; (2) Robert Sterne, a partner at SKGF, is on the board of ParkerVision; and (3) ParkerVision's CEO made statements that its "legal counselors" helped ParkerVision to verify the alleged infringements at issue and that SKGF was "very involved in the creation and prosecution" of the patents-in-suit.
In essence, Qualcomm was trying to malign ParkerVision's integrity by saying its patent infringement claims were crafted improperly with SKGF's Director's assistance. To me, this was a very weak argument, in no small part because it wasn't supported by specific direct evidence of Attorney Sterne giving ParkerVision any confidential information regarding Qualcomm products. On that point, the Court said:
From these bare-bones assertions, Qualcomm asks this Court to draw an attenuated chain of inferences leading to the legal conclusion that SKGF breached its fiduciary and contractual duties to Qualcomm by assisting ParkerVision in procuring the
instant suit. Essentially, Qualcomm argues that because SKGF prosecuted the patents at issue and Robert Sterne is associated with ParkerVision, SKGF must have helped prepare for this litigation and Robert Sterne must have participated in discussions with ParkerVision about initiating this litigation.
I also thought Qualcomm's claims were weak because they threaten to impede on the attorney-client relationship. In my opinion, Qualcomm's attempt to come in between ParkerVision and its counsel with only bare-bones assertions of misconduct was abhorrent. The Judge was much more polite in his Order, saying:
While Qualcomm's claims are perhaps conceivable, the factual underpinnings are simply not present to nudge such speculation into the realm of plausibility.
However, I note that the Judge did proceed to warn Qualcomm that if it makes such claims again, he may find them frivolous and punish Qualcomm as a result. That part of the Order, which is the last sentence before the Conclusion, reads:
[T]he Court reminds Qualcomm of its obligations under Federal Rule of Civil Procedure 11(b) and cautions it that the Court will carefully scrutinize any amended counterclaim for Rule 11 compliance.
Non-lawyers may not recognize that Rule 11(b) is the rule that prohibits parties from making frivolous claims, which can be sanctioned under Rule 11(c). In my opinion, Qualcomm made a very big tactical mistake by attempting to bring these claims against ParkerVision's attorneys, as it likely impugns their reputation in the eyes of the judge. Now he may be more likely to be skeptical of any other arguments they make, remembering that they were the same party that made these speculative claims. It also wreaks of a bit of desperation, as if Qualcomm had better claims to actually make on the merits of ParkerVision's patents themselves, it would (or at least, in my opinion, should) do so.
ParkerVision noticed a slight bump on the day the Order was issued, which seems reasonable to me. The parties are still waiting for the Judge to issue a decision defining ambiguous terms in the patents in suit. That decision, often referred to as Markman or Claim Construction, is perhaps the most important decision in any patent case, and is likely to have a substantial impact on this case as well.
Disclosure: I am long PRKR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.