Network Protection Sciences, LLC v. Fortinet, Inc.

Fortinet, Inc. (defendant) made and sold network security products. Network Protection Sciences, LLC (NPS) (plaintiff) was founded by Rakesh Ramde and Wilfred Lam, two attorneys who had been part of over a dozen patent lawsuits against over 40 defendants. NPS had one employee, Gregory Cuke, who was referred to as its director of business development but who had no actual involvement in NPS’s business. NPS’s headquarters was a small, windowless file-cabinet room without a phone or chairs. Cuke leased the room to NPS. On April 30, 2010, NPS was allegedly assigned a patent owned by Mount Hamilton Partners (MHP), another entity of Ramde and Lam’s. The patent agreement was signed and notarized on behalf of MHP on April 30, 2010. The agreement contained a signature block for NPS with the words “accepted by.” The agreement also contained an acknowledgment of receipt of good and valuable consideration. On July 6, 2010, NPS sued Fortinet, alleging patent infringement of MHP’s patent. Cuke did not sign the agreement on behalf of NPS until 22 days after NPS sued Fortinet. Certain court orders held that NPS had engaged in unreasonable and improper litigation conduct in that NPS had tried to conceal evidence of the incomplete transfer of the patent, delayed discovery, and made misleading statements to Fortinet and to the court. Fortinet moved to dismiss the action on the grounds that NPS did not own the patent at the time NPS filed suit, that NPS had tried to conceal defects in standing, and that NPS had engaged in litigation misconduct. Fortinet also sought attorney’s fees.