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Apple Tormentor Parlays Patent Verdicts Into Brand-Name Clients

April 9, 2020, 10:30 AM

Caldwell Cassady & Curry PC has been a thorn in Apple Inc.’s side.

Since it was founded seven years ago by three thirty-something McKool Smith alums, the small Dallas law firm has raked in more than $1 billion in patent verdicts against the iPhone maker.

A good chunk of the verdicts are still being disputed, but they have turned heads. The firm’s work for a few clients, software developer VirnetX Holdings Corp., in particular, has been a launching point, opening the door to new work and helping the firm muscle its way into a crowded patent litigation market.

“They’ve earned a reputation for their results and nobody on the defense side really wants to see them on the plaintiff’s side,” said Ed Nelson, a founding partner at Nelson Bumgardner Albritton PC in Fort Worth who has worked with the firm’s attorneys on cases.

Caldwell Cassady & Curry has parlayed its wins for lesser-known companies into work for brand-name clients. Its rapid ascent illustrates how the support of just a few dedicated clients can boost the fortunes of an upstart law firm.

The firm, which has 13 attorneys, represents Tinder’s parent company, Match Group LLC, in its fight with rival dating app Bumble Trading Inc. It also signed on this year to represent Huawei Technologies Co. in cases against Verizon Communications Inc.

The firm is also defending World Programming Ltd. and some of its customers, including Yum! Brands, Inc., in a copyright and patent lawsuit filed by SAS Institute Inc. over business analytics software. The case is set for trial in July.

“The amount of clients and the diversity of those clients has changed a little bit,” Jason Cassady said. “Now it’s a much more open set of clients, both defense and plaintiff, that come to us.”

Finding Its Footing

Caldwell Cassady & Curry opened in January 2013 and, for the first couple of years, the work was steady. Court dockets show that, besides VirnetX, the firm was filing infringement cases for companies like Smartflash LLC and Cellular Communications Equipment LLC.

But it wasn’t getting looks from the big names.

That began to change in 2015, after the firm won a $533 million verdict for Smartflash in a case against Apple. The verdict was later wiped out and the patents invalidated by an appeals court. But the following year, the firm tried three more cases against Apple.

“People that may not have come to us in year one or two started putting us on their short list,” Brad Caldwell said.

With new clients signing on, the firm found its footing at a time when the market for patent litigation was shrinking. In 2013, there were more than 6,300 patent cases filed in district court. The volume of cases steadily dropped, falling below 3,600, before stabilizing to some extent in 2019, Bloomberg Law data show.

VirnetX Relationship

The law firm essentially started with VirnetX. The three attorneys worked with VirnetX while at McKool Smith and were part of the company’s 2010 patent trial against Microsoft Corp. The case settled two months after the verdict for $200 million.

“They were young but they were ready to step into that responsibility of being name-on-the-door partners,” VirnetX CEO Kendall Larsen said.

Larsen stuck with, as he calls them, the “three C’s” when VirnetX began a patent battle with Apple. Following years of litigation, the company said March 13 it had collected $454 million in one case against the iPhone maker. Apple continues to contest the judgment in district court filings.

VirnetX won $503 million over the same patents in a second case against Apple, but an appeals court in November ordered those damages to be recalculated. VirnetX has argued it is entitled to at least $461 million, plus interest.

“It would be very hard to overstate the importance that VirnetX has had to us as a firm,” Austin Curry said.

Apple has taken the biggest trial losses among the law firm’s foes, but the tech giant isn’t the only one that has taken courtroom beatings.

The partners said they were initially concerned when starting the firm about where they would get their non-VirnetX work. But the attorneys helped land $5.8 million for Acantha LLC in a suit against a unit of Johnson & Johnson, and $15 million for Summit 6 LLC against Samsung Electronics Co. Ltd.

People who work with the attorneys talk about their professionalism and ability to understand complicated technology—Caldwell and Curry both have engineering degrees—as well as their courtroom skills.

“Even though this is a relatively small shop, it’s a small shop with people that absolutely know what they’re doing on their feet in the courtroom,” said Steve Moore, a partner at the Zhong Lun Law Firm in Southern California who litigated multiple cases against the attorneys while at a previous firm.

Jason McManis said one of his takeaways after four years at the firm was how the men approach cases.

“It’s a mentality that comes along with every case,” McManis, who is now an attorney at Ahmad Zavitsanos Anaipakos Alavi & Mensing PC in Houston, said. “It’s an assumption that every case will go to trial and preparing your case as if you will go to trial.”

Davids Vs. Goliaths

Some tech companies and their reps have criticized the business model of certain firm clients.

“VirnetX, you’re a patent troll,” Matt Levy, the former patent counsel at the Computer and Communications Industry Association, wrote in a 2016 blog post. CCIA’s members include Amazon, Samsung and Google. Cellular Communications and Smartflash have been tagged with similar labels in their fights with Apple.

The iPhone maker referenced VirnetX’s patent business when it asked the Supreme Court in December 2019 to review one of its cases against VirnetX. Apple said it had “revolutionized” the industry for mobile devices while VirnetX “seeks to sell licenses for its patents.”

“Most of VirnetX’s licensing efforts have failed with respect to large companies like Google, Samsung, and Verizon,” Apple wrote. “Instead, VirnetX has typically licensed its technology to smaller companies in settlement agreements meant to avoid expensive litigation.”

The attorneys acknowledge they hear these characterizations of some of their clients. Cassady said he believes companies like to finger point when they “get in a bad spot in a case.”

“If we’re a patent troll, why can’t you beat us?” Curry said. “If you want to talk bad about any of our clients, then what are you doing losing in court?”

The firm makes no apologies for representing the “small guy” in patent cases. And despite its diversifying client roster, the firm’s “David versus the Goliath” ethos hasn’t changed, Caldwell said.

“That is still a big part of our practice and something that we want to be a large part of our practice,” he said.

To contact the reporter on this story: Matthew Bultman in New York at mbultman@correspondent.bloomberglaw.com

To contact the editors responsible for this story: Roger Yu at ryu@bloombeglaw.com; Keith Perine at kperine@bloomberglaw.com

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