The ongoing dispute between patent licensing company Soverain Software and law firm Jones Day continues to rattle the legal industry. Soverain insists it has fulfilled its financial obligations, having paid the law firm over $22 million before their relationship dissolved in 2010. However, Jones Day claims that Soverain has not paid for work conducted following the patent infringement case against Amazon, which settled for $40 million in 2005.
Despite the lucrative outcome of the Amazon case, Jones Day insists the client has refused to pay the legal fees for subsequent work, and is currently pursuing a $1.5 million arbitration award it received against Soverain in 2015. The law firm accuses Soverain of conducting a fraudulent “shell game” to avoid paying this figure.
Soverain came into the public eye after suing online retailers such as Amazon and The Gap Inc., seeking royalties for patents it held on online “shopping carts”. However, the company has faced challenges since a federal appeals court invalidated its key patents in 2013.
Moreover, Jones Day has raised specific allegations of impropriety against Soverain executives, including its founder Christian Oberbeck. The firm alleges that Oberbeck siphoned $50 million out of the company through fraudulent financial maneuvers. Jones Day also takes issue with Soverain’s transfer of over $275,000 to Katharine Wolanyck, the company’s former president and chief legal officer, asserting this was done fraudulently while the firm was chasing outstanding legal fees.
Currently, Soverain’s lawyers are seeking to dismiss Jones Day’s suit seeking enforcement of the arbitration award, stating that it was filed too late. The case of Jones Day v. Soverain Software LLC is set to continue, bringing further scrutiny on how large legal entities manage relations and disputes with their high-value clients.