NextCard was a dotcom wonder that went dotcom dead. Nextcard raised $120 million in 1999, when the Internet bubble was fully blown, and the company had a $900 million valuation tag attached, if you believed what was put in front you at the time. More than a bit of books-cooking went on at NextCard. The SEC charged co-founder Jeremy Lent with manipulating financial results and insider trading. An outside auditor with Ernst & Young did a year's hard time for fudging financial digits. NextCard went tits up.

Rusty Rose picked up NextCard's patents at a bankruptcy auction for $1.8 million: six issued and six pending patents. The patents are: 6324524; 6405181; 6567791; 6718313; 6795812; & 7143063.

Robert Frohwein, CEO of Lava Group, a patent pony punter, thought the price a bit rich, as "they are still relatively speculative in terms of their value". To a money mouse, absolutely Robert. A man with vision has a different calculator.

Seeking a dash of discretion, Rusty wrapped the patents in layers of shell companies, then sallied forth against American Express, Discover, and other credit card purveyors. In the Eastern District of Texas, naturally. At this point, the story is just at wind-up; the tale herein but a prelude.

David Bloch of Winston & Strawn thinks the suit is going to be more than just a stroll in the rose garden: "A going concern has a story to tell; it has inventors that are allegedly having their patents infringed on. That's a very different story than the one you would tell about this shell corporation in Texas that's owned by this millionaire that has nothing to do with the patents."

Bloch misses the point. Who owns the patents is only a story when there's a story to tell about infringement having a competitive effect; otherwise, there's nothing to say except "I own the patents, and I want reasonable royalty. Show me the money." Rusty's just looking to add a little pocket change.

Primary source: Law.com