Valve Corporation v. Rothschild — Western District of Washington Jury Returns First-of-Its-Kind Verdict Under State Patent Troll Prevention Act

Background

In 2016, Valve and Leigh Rothschild’s patent holding companies entered into a Global Settlement and License Agreement (GSLA) granting Valve a perpetual, irrevocable, royalty-free license to a portfolio of Rothschild-controlled patents and a covenant not to sue. Despite the GSLA, Rothschild-affiliated entities filed a 2022 patent suit against Valve through Display Technologies and, in 2023, sent a letter that Valve treated as anticipatory repudiation of the GSLA. Valve filed this declaratory-judgment action in 2023 and added counterclaims under Washington’s Patent Troll Prevention Act (RCW 19.350) and the Washington Consumer Protection Act, alleging that the assertions were made in bad faith.

The case proceeded to a jury trial before Judge Jamal N. Whitehead. The jury was asked to decide patent invalidity (advisory), two breach-of-contract theories, and the bad-faith assertion claims under RCW 19.350 and the WCPA. The defendants on the bad-faith claims were the Rothschild entities plus their litigation counsel, Samuel Meyler, and his firm, Meyler Legal PLLC.

The Court’s Holding (Jury Verdict)

The jury returned a verdict for Valve on every question put to it.

Patent invalidity (advisory). The jury found that Valve had proven by clear and convincing evidence that claim 7 of U.S. Patent No. 8,856,221 would have been obvious to a person of ordinary skill in the art at the time of filing.

Breach of contract. Following the court’s prior holding that Rothschild and Display Technologies had breached the GSLA by filing the 2022 lawsuit against Valve, the jury found that breach was material and awarded Valve $130,000. On Valve’s anticipatory-repudiation claim arising from the June 2023 letter, the jury found Rothschild and Rothschild Broadcast Distribution Systems repudiated the GSLA without just excuse, that the repudiation was material, and awarded a nominal $1.

Patent Troll Prevention Act and Consumer Protection Act. The jury found that all five defendants — Leigh Rothschild personally, Rothschild Broadcast Distribution Systems, Patent Asset Management, attorney Samuel Meyler, and Meyler Legal PLLC — violated RCW 19.350 and the WCPA by making bad-faith assertions of patent infringement, that the assertions occurred in the conduct of trade or commerce, and that they were made for an improper purpose. The jury awarded $7,364 in compensatory damages and found Valve entitled to increased damages, awarding the maximum statutory enhancement of $22,092 (i.e., treble damages capped at the lesser of $25,000 or 3× compensatory).

Total damages: $152,093 (the $130,000 + $1 contract awards plus the $7,364 + $22,092 statutory awards). The PTPA/WCPA findings importantly extended personal liability to outside counsel and the law firm itself, not just to the patent-holding entities.

Key Takeaways

• This appears to be the first jury verdict under any of the state anti-patent-trolling statutes that proliferated in the mid-2010s. RCW 19.350 has been on the books since 2015 but has been little used; this verdict gives operating companies a concrete template for asserting it as a counterclaim or affirmative case.
• The verdict reaches both the patent owner and its outside counsel personally. Holding the lawyer and his PLLC jointly liable for bad-faith assertions is a major escalation in risk for monetization-shop attorneys whose practices ride the line between aggressive enforcement and bad-faith assertion.
• The damages number is small, but the statutory PTPA and CPA framework yields treble damages, attorneys’ fees, and injunctive relief — meaning the practical exposure for the defendants is much larger than the headline $152K once fees are decided. Operating companies considering counter-claims will be drawn to the fee-shifting more than the damages.
• Pairing the breach-of-license theory with the PTPA/WCPA theory was effective: the breach of the GSLA established a clean factual hook for the bad-faith finding and made the patent asserted look pretextual.
• Procedurally, this case was made in part by the contract record. Operating companies should preserve clean settlement and license documentation; patent-monetization plaintiffs should treat their licensee covenants as litigation-grade promises, not paperwork.

Why It Matters

State anti-patent-trolling laws have been a sleeping cause of action for a decade. Around 30 states adopted them in the wake of the FTC’s PAE Report, but they have been used almost exclusively by state attorneys general (and infrequently at that) rather than by private operating companies. Valve v. Rothschild is the first time a jury has actually rendered a verdict under one of these statutes, and the first time the statute has been used to reach individual liability against the asserting attorney and his firm. That doctrine is now real, not theoretical.

Two further consequences follow. First, target defendants in patent-monetization suits in any of the ~30 jurisdictions with these statutes now have a litigation-grade counterclaim playbook to consult: identify the licensee status, document any pre-suit demand correspondence, and frame the bad-faith assertion as a state-law tort with treble damages and fees. Second, attorneys conducting opportunistic patent campaigns face personal exposure. The downstream chilling effect on the most aggressive monetization practices may be larger than the dollar amount of this verdict suggests.

The advisory invalidity finding on the underlying ‘221 patent claim leaves the plaintiff entities with a much weaker portfolio for any remaining or future enforcement, and the court still has to enter judgment, decide a pending sanctions motion (the docket reflects a separate sanctions battle in which a defense brief was found to contain AI-fabricated case citations), and rule on attorneys’ fees. Each of those is its own event — this verdict is only the headline, and the published opinion(s) on judgment, sanctions, and fees will fill in the legal reasoning that the verdict form itself does not.

Surfaced via Law360 IP coverage and corroborated against the verdict form filed at Dkt. 252.