The fraud case brought by Island Intellectual Property
and Double Rock Corporation
against Reich & Tang
and its CEO, Michael Lydon
, will move forward thanks to an updated ruling
on June 14, 2017. And there may be further updates next week.
Bruce Bent II
, President of Double Rock, declined to comment immediately.
"We cannot comment publicly on any litigation beyond what is in the court documents. What we can say is that Reich & Tang is appealing the ruling and intends to continue vigorously pursuing its rights under law. The current litigation has not changed our business and it does not impact our ability to provide our services to Reich & Tang clients," a Reich & Tang spokesperson writes to MFWire
Under the new ruling Reich & Tang has to provide Double Rock and Island IP access to their accounting records.
Double Rock, Island IP, Reich & Tang, and Lydon are all ordered to appear for a preliminary conference on July 18, 2017.
Island IP and Double Rock initially
sued Reich & Tang and Lydon in 2015 for not meeting the licensing agreement that was a part of the deal under which Reich & Tang bought Double Rock’s FDIC-insured cash management business and licensed the patent for that businiess from Double rock's Island IP.
Under the agreement Reich & Tang bought the $12-billion AUM business for $15 million up front with a licensing agreement to pay Double Rock 15 percent of the business' revenue or 0.5 basis points each quarter. The team at Double Rock estimated that the ongoing royalty payments would add up to around $92 million. But Reich stopped paying the licensing fee in the spring of 2015, according to the initial
Lydon justifies Reich's missed payments saying the patents Reich bought from Double Rock are invalid under the precedent set by the 2014 U.S. Supreme Court decision in Alice Corp v. CLS Bank International, which invalidated some software patents. Lydon emailed Bent on May 5, 2015 saying that the patents Double Rock filed with Island IP are "violative of public policy and void under Supreme Court precedent."
Double Rock is represented by Kelley Drye & Warren LLP
and is asking for Reich to pay the royalties agreed upon— both the future payments and those already missed. In addition Double Rock is asking for a minimum of $80 million in damages, 9 percent interest, and for Reich to cover their legal fees.
Reich & Tang also has a lawsuit against Bent claiming the patents are invalid. The spokesperson for Reich would not comment on this lawsuit beyond confirming its existence.
Reich & Tang exited the mutual fund business shortly before the initial lawsuit was filed, moving its money market mutual funds over to Federated Investors in the summer of 2015. As for Double Rock, Bruce Bent along with Henry B.R. Brown invented the money market fund along with in 1969. Double Rock is no longer in the mutual fund business.
Stay ahead of the news ... Sign up for our email alerts now