Court Refuses to Pierce Plutus/Orion/Taurus/Spangenberg Corporate Veil Without Better Evidence

Taurus IP v. Ford, Mazda, and Volvo (W.D.Wisc. 2008)

Erich Spangenberg owns Plutus IP. Plutus, in turn, owns a host of patent assertion companies, including Orion [Texas] IP, Constellation IP, Caelum IP, and the plaintiff, Taurus IP.  (Polaris IP is in the mix as well.) A September 2007 article tells the story of the asserted patents, [Link][PTT], and how they were acquired from Firepond in 2004 for $1,000 by Spangenberg (a former director of Firepond). 

Prior Settlement: After separate patent litigation in 2006, Orion IP settled with the defendants. (Taurus was not a party at that point).  The settlement included a mandatory alternate dispute resolution process. Although Taurus is owned by the same company as Orion, Taurus is a separate corporate entity. Consequently, without some proof of “alter ego,” Taurus will not be bound by a settlement agreement signed by Orion.

At this stage, defendants have failed to show that plaintiff and Orion are “alter egos” of Spangenberg [under Wisconsin law]. All that plaintiff has established is that Spangenberg was a sole managing member of both and was involved in the transfer of the patent from one entity to another in a suspicious time period. This is a far cry from the requirement that the entity have “no separate mind, will or existence” and be used to commit fraud against defendants.

Interestingly, the same Wisconsin court has already pierced the veil on Orion IP and Taurus IP — finding them merely alter egos. See Taurus IP v. DaimlerChrysler, 519 F. Supp. 2d 905 (W.D. Wis. 2007). The court refused to carry-over that holding made in a different case and “different context.” In particular, the court implied that the veil was pierced in that case because of the manner that Spangenberg and the his multiple parties dealt with the DaimlerChrysler defendants.

More Definite Statement: The court did require that Taurus provide a “more definite statement” that identifies the particular claims and products that it believes are infringing or to provide “a criteria by which defendants can identify the infringing products.” The Taurus IP patent appears to be directed at a way of selecting the features of an automobile through an interactive online system. (U.S. Patent No. 6,141,658).

Notes:

• Court Decision
• Foley Anti-Troll Presentation
• Patent Troll Tracker Coverage
• Marketwatch Coverage

Comments

[patent.drafter]

I took a look at the MarketWatch story you linked to, Dennis ... priceless quote there:

"DaimlerChrysler was angered that Spangenberg and Pridham said nothing at the meeting about possible infringement of a third patent related to Web site functions, which had been transferred from Orion to other Plutus affiliates -- eventually ending up with Taurus IP in Wisconsin."

Seems like someone in-house failed to do all of their due diligence prior to settlement negotiations ...

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