DBD Credit Funding LLC

A fight between Fortress Investment Group LLC and Erich Spangenberg over the transfer of a single patent already in active litigation has broken out, first into federal court and now into New York state court. The patent is one among many relinquished by Marathon Patent Group, Inc. to Fortress last year after the NPE failed to repay Fortress $15.99M in debt financing. Rensselaer Polytechnic Institute (RPI) developed the patent, which a Fortress entity is currently asserting against Amazon; the patent was also the subject of litigation against Apple that ended in a reported $24.9M settlement in 2016. Court filings in connection with the dispute between Fortress and Spangenberg shed light on the millions of dollars at stake in the monetization of patents that Marathon was forced to hand over.

The Patent Trial and Appeal Board (PTAB) saw activity in August 2018 involving a variety of frequent litigants. This included petitions for inter partes review (IPR) filed against two NPEs controlled by Fortress Investment Group LLC, INVT SPE LLC and Uniloc 2017 LLC, the latter of which has in recent months cofiled a barrage of lawsuits with subsidiaries of Australian NPE Uniloc Corporation Pty. Limited (Uniloc). The PTAB also instituted trial in August for IPRs against Uniloc 2017 and some of its campaign coplaintiffs, and in an IPR against an NPE controlled by patent attorney Brian Yates, whose US litigation has waned as he pursues a new patent licensing initiative through his company iPEL, Inc. Finally, the PTAB issued final decisions in August for IPRs against Uniloc, Empire IP LLC, and Quarterhill Inc.

Marathon Patent Group, Inc. entered into a termination and release agreement on August 3 with Erich Spangenberg, whom it had hired in 2016 as its Director of Acquisitions, Licensing, and Strategy. Spangenberg’s departure came as Marathon was approaching an August 15 deadline, under which it was to repay Fortress Investment Group LLC $15.99M according to a debt restructuring plan signed in May. With Q1 revenue of just $78K, and with roughly $500K cash on hand going into Q2, it is not surprising that Marathon has now begun relinquishing patents to Fortress.

Per a recently signed debt restructuring plan, publicly traded NPE Marathon Patent Group, Inc. has three months to pay Fortress Investment Group LLC over $15M. With just around $500K cash on hand, Marathon—which on May 15 reported Q1 2017 revenue of just $78K—may be hard pressed to find the funds needed to meet that deadline.