California Judge May Dismiss Apple-Intel Antitrust Suit Targeting Patent Troll

The DOJ recently joined the lawsuit on the side of Fortress, a patent aggregator sued by Apple and Intel on antitrust grounds.
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A California judge questioned the soundness of an unusual lawsuit filed jointly by Apple  (APPL)  and Intel  (INTC) - Get Report, which accuses Fortress Investment Group, a firm that aggregates patents, of anticompetitive conduct. 

The antitrust lawsuit, filed by Apple and Intel late last year, charges that Softbank-backed Fortress of illegal conduct in stockpiling patents, then filing infringement lawsuits against the tech firms and demanding steep patent royalties.

The U.S. Department of Justice recently joined the lawsuit on behalf of Fortress, asking a federal judge in California's Northern district to throw out the lawsuit.

At a hearing on Monday, U.S. District Judge Edward M. Chen said that while the plaintiff's arguments are conceptually sound, the case may need to be refiled in order to better define the specific market area in which Fortress acts anticompetitively, appearing to agree with a similar argument made earlier by the DOJ. 

The lawsuit marks an unusual strategy for making antitrust claims by Apple and Intel, and a major test of the legality of "patent trolling." Patent trolling, a bugaboo of many tech firms that generate a high number of patents, is the practice of accumulating patents for the specific purpose of filing patent infringement lawsuits. 

Apple has been targeted repeatedly by patent trolls in recent years, some of whom have managed to extract sizable settlements from the tech giant. Apple was ordered to pay more than $400 million in damages to VirnetX, a patent troll that accumulated patents related to messaging features. 

In the Fortress antitrust lawsuit, Apple argued in a legal filing that it "suffered economic harm in the form of litigation costs and diversion of resources away from innovation to respond to these entities' serial nuisance suits."

Apple shares are up 19% year to date.