The complaint

The case is NextGen Innovations, LLC v. Microsoft Corporation, No. 2:26-cv-00880 (E.D. Tex.), filed October 2, 2026, the same day as NextGen's suit against CoreWeave, No. 2:26-cv-00879, on the same three patents. NextGen is represented by Russ August & Kabat. The complaint describes NextGen as the exclusive licensee of the patents under a license from inventors Walter and Alexander Soto. Microsoft is a Washington corporation headquartered in Redmond.

The three patents share the title System and Method for Performing High-Speed Communications over Fiber Optical Networks and name Alexander Soto and Walter Soto as inventors: U.S. Patent 9,887,795, issued February 6, 2018; U.S. Patent 10,263,723, issued April 16, 2019; and U.S. Patent 10,771,181, issued September 8, 2020. The complaint describes the '723 patent as a continuation of the '795 patent and the '181 patent as a continuation of both. One count per patent alleges direct infringement under 35 U.S.C. 271(a) of at least claim 1, with claim charts attached as Exhibits 4 through 6, and induced infringement under 35 U.S.C. 271(b). The complaint alleges compliance with the marking statute, 35 U.S.C. 287.

What the asserted claims cover

Claim 1 of the '795 patent is a method claim. It covers m-ary modulation communication carried out by a pluggable optical transceiver module: receiving a first electrical binary data signal through the module's system interface, converting it to a first electrical m-ary modulation signal, amplifying that signal to drive an optical transmitter, emitting a first optical signal on a first wavelength, receiving a second optical signal on a second wavelength at an optical detector that produces an electrical signal, amplifying that signal to facilitate clock and data recovery, recovering clock data information to produce a second m-ary modulation signal, demodulating it to a second electrical binary data signal, and transmitting that signal through the system interface. The claim does not recite an equalizer, an encoder or decoder, or a digital to analog converter.

Claim 1 of the '723 patent covers a pluggable optical transceiver module with an electrical system interface; an encoder unit that codes the incoming electrical data signal according to an error correcting code; an m-ary modulator that increases the number of bits per symbol; a digital to analog converter; a driver that amplifies the resulting analog m-ary signal to drive an optical transmitter; the optical transmitter, emitting on a first wavelength; an optical detector for a second optical signal on a second wavelength; an amplifier; a clock data recovery unit that produces a second m-ary modulation signal; an equalizer that performs equalization on that signal to remove noise; an m-ary demodulator that decreases the number of bits per symbol; and a decoder unit that decodes according to an error correcting code.

Claim 1 of the '181 patent covers a pluggable optical transceiver module with the same transmit and receive chain as claim 1 of the '723 patent, from the electrical system interface through the equalizer and the m-ary demodulator, but without the encoder unit and the decoder unit.

The accused modules

The complaint uses the same definition of the accused modules as the CoreWeave complaint: pluggable optical transceiver modules performing m-ary modulation and demodulation, clock and data recovery, and equalization within the module. It lists two categories, which it says the accused modules include "without limitation." The first is 100 Gbps DWDM PAM4 modules in the QSFP28 form factor that it says Microsoft developed and deployed for datacenter interconnect within metro regions, exemplified by the Inphi ColorZ module. The second is 400 Gbps coherent modules built to the OIF 400ZR implementation agreement in the QSFP-DD and OSFP form factors, exemplified by the Arista QDD-400G-ZR and OSFP-400G-ZR and the Cisco QDD-400G-ZR-S.

For the 100G category, the complaint quotes a Microsoft blog post saying Microsoft invested in its own optical program, built a 100 Gbps colored optic in a QSFP28 package to replace long-haul optics at distances up to 80 km, and worked with Arista, Cisco, and Juniper, and it quotes a 2017 conference paper co-authored by a Microsoft engineer and published by Microsoft describing a PAM4 chip with an integrated digital signal processor, forward error correction encoding of two 28 Gbaud PAM4 streams, receive-side feed-forward and decision-feedback equalizer options with adaptively updated taps, and a decoder that corrects errors. For the 400G category, it quotes the 400ZR implementation agreement's use of single-carrier coherent dual-polarization 16QAM with low-power digital signal processors and concatenated forward error correction, and a Microsoft statement calling 400ZR a key enabler of its regional architecture for the 400G generation.

How the complaint reads on claim 1

Unlike the CoreWeave complaint, which quotes a vendor's description of a module converting NRZ electrical data to a PAM4 optical signal, this one quotes material describing error correction coding and adaptive equalization inside the module. Read against claim 1 of the '723 patent, the 2017 paper's passages speak to the error correcting code on transmit and receive and to equalization in the receive DSP, though they do not mention clock recovery; against claim 1 of the '181 patent they speak to the equalizer. The complaint leaves the element-by-element mapping to its exhibits. Claim 1 of the '795 patent requires none of those components; the complaint alleges that Microsoft's operation of the accused modules performs every step of at least claim 1.

Knowledge and inducement

Each count alleges, on information and belief, that Microsoft induced infringement by encouraging others, including its customers and operators of third-party datacenters where its equipment is installed, to use the accused modules in an infringing manner; the inducement paragraphs do not identify a specific act of encouragement. For knowledge, the complaint alleges that Microsoft received a letter by FedEx around February 12, 2024 stating that "NextGen believes several of Microsoft's products infringe the M-ary Patents, including but not limited to 400G QSFP-DD pluggables." No paragraph in the body of the complaint alleges willful infringement; the request appears only in the prayer, which asks for a judgment that the infringement was willful and for enhanced damages under 35 U.S.C. 284. The only specific basis for knowledge the complaint pleads is the February 2024 letter, in the inducement paragraphs.

Venue

The complaint pleads venue under 28 U.S.C. 1400(b), which allows a patent suit where the defendant resides or where it has committed acts of infringement and has a regular and established place of business. It alleges that Microsoft keeps servers and networking equipment at the Aligned data center in Plano, Texas, and alleges on information and belief that switches and routers there hold modules of the accused type, that Microsoft controls the space, and that its personnel or agents install and service the equipment. It also cites an Azure point of presence in Plano, business personal property Microsoft reported in Collin and Denton Counties, and, on information and belief, a contract with CoreWeave for use of CoreWeave's Plano datacenter for Azure AI workloads. The complaint alleges that the accused modules are installed and operated at Microsoft's datacenter facilities in the district and that the acts of infringement were committed in part at the facilities that establish venue; its facility-specific allegations about the modules, for the Aligned facility and CoreWeave's Plano datacenter, are made on information and belief.

Earlier cases and Patent Office review

NextGen's notice of related cases, filed in the CoreWeave case, lists nine other cases that it describes as involving one or more of the asserted patents. One is this suit against Microsoft. The other eight are listed as closed: suits against II-VI (filed in this district and transferred to the Northern District of California), Infinera, Fujitsu Network Communications, AT&T Services (two cases), Nokia of America (two cases), and Cisco Systems.

Nokia of America petitioned for inter partes review of all three patents in March 2023 (IPR2023-00680, -00681, and -00682), challenging claims that include claim 1 of each patent. The Patent Trial and Appeal Board denied institution under 35 U.S.C. 325(d) in November 2023. The USPTO Director vacated those decisions on March 28, 2024 and remanded. After the Board denied institution again, the Director on December 3, 2024 vacated the remand decisions, declined to deny institution under 35 U.S.C. 325(d) or 314(a), and remanded for the Board to decide whether the petitions show a reasonable likelihood of prevailing on at least one challenged claim, the threshold set by 35 U.S.C. 314(a). The docket of NextGen's 2023 case against Nokia of America in the same court, No. 2:23-cv-00637, shows a stipulation of dismissal filed December 27, 2024 and an order dismissing the case entered January 2, 2025.

Relief

The prayer asks for a judgment of infringement under 35 U.S.C. 271, damages of no less than a reasonable royalty under 35 U.S.C. 284 with interest and costs, an accounting, a willfulness judgment with enhanced damages under 35 U.S.C. 284, attorneys' fees under 35 U.S.C. 285, and other relief. The complaint does not ask for an injunction. Google Patents lists an anticipated expiration date of June 10, 2024 for each of the three patents and shows the '795 and '181 patents with a fee-related expired status; the complaint does not state an expiration date. Under 35 U.S.C. 286, damages may not be recovered for infringement committed more than six years before the complaint or counterclaim for infringement is filed.

What to watch next

Watch for Microsoft's answer or any motion to dismiss or transfer, including any challenge to how the complaint pleads inducement and willfulness, or to venue under 28 U.S.C. 1400(b); any coordination with the CoreWeave case; and any new petition for inter partes review. The case can end at any time by license, settlement, or dismissal.