You’ve probably heard this story before.  A little known patent holder begins a licensing campaign sending letters to hundreds of companies letting them know that they need a license to its patent.  The letters continue and offer discounts for early licensees and say that they hope to avoid the need for litigation.  The companies who receive the letters are confused as the product which supports the alleged infringement was purchased from another company.

It’s a common strategy employed by some patent holders, and often those referred to as non-practicing entities (NPEs) or patent trolls.  The goal is to impose uncertainty and the threat of large legal costs upon a large number of established companies and hopefully obtain many small settlements in lieu of litigation as opposed to going after the vendor who provides the product.

Cisco, and more specifically its customers, were recently the target of such an effort by Innovatio IP Ventures, LLC, a company which acquired several wireless networking patents.  However, rather than deal with its own indemnification obligations on a case by case basis, Cisco has chosen to taken an aggressive stance in filing a lawsuit claiming that Innovatio is guilty of racketeering based upon its sending of over 8,000 letters to coffee chains, hotels, and other retailers who use Cisco’s equipment or comparable Wi-Fi equipment.  Cisco claims the letters are nothing more than extortion as Innovatio based many of its claims for infringement upon patents which had already expired as well as upon patents to which Cisco’s products were already licensed.

In order to prevail, Cisco will be forced to prove its allegations and Innovatio’s knowledge of them.  While many commentators believe this will difficult, the fact that Cisco has turned the tide on Innovatio, forcing it to now defend its actions, just as it sought to do to Cisco’s customers, is an interesting development and will no doubt be interesting to observe going forward.