Magic Labs v. Horkos (Privy): Embedded Wallet Patent Suit Dismissed With Prejudice
Magic Labs filed suit against Horkos, Inc. (operating as Privy) in Delaware District Court, asserting two patents covering embedded wallet technology. After 476 days of litigation, both parties stipulated to dismissal with prejudice — each bearing its own legal costs — under Rule 41(a)(1)(A)(ii).
Embedded Wallet IP Battle Ends in Bilateral Walkaway After 16 Months
Magic Labs, Inc. — developer of the Magic embedded wallet platform — filed this infringement action on 1 September 2023 in the District of Delaware before Judge Richard G. Andrews. The suit targeted Horkos, Inc., which operates under the Privy brand and competes directly in the non-custodial embedded wallet space. Magic asserted two patents: US11546321B2 and US11818120B2, both directed at wallet authentication and embedded wallet infrastructure technology.
The case closed on 20 December 2024 via a joint stipulation under Federal Rule of Civil Procedure 41(a)(1)(A)(ii), resulting in dismissal with prejudice. Critically, neither party obtained a fee award — each side agreed to bear its own costs, attorneys’ fees, and expenses. Dismissal with prejudice means Magic Labs is permanently barred from asserting the same claims against Horkos on the same grounds, making the resolution final as between these two parties.
The 476-day duration before resolution suggests the parties engaged in meaningful litigation activity — likely through the pleadings and potentially early discovery or claim construction preparation — before reaching a resolution. The mutual cost-bearing structure is consistent with a negotiated settlement or cross-licensing arrangement, though the public record is silent on any underlying commercial terms. What drove the resolution, whether it was a licensing deal, a product pivot, or simply litigation economics, cannot be determined from the available docket record.
Filing to Dismissed with Prejudice in 476 days
476 days — above the median for stipulated dismissals in D. Del. patent cases
Dismissed with prejudice: what the stipulated exit means for both parties
Rule 41(a)(1)(A)(ii) stipulated dismissal explained
A Rule 41(a)(1)(A)(ii) dismissal requires a signed stipulation from all parties and is self-executing — no court order is needed. When entered with prejudice, it carries the same preclusive effect as a final judgment on the merits. Magic Labs cannot re-file these patent claims against Horkos in any federal court. This mechanism is commonly used when parties have reached a private resolution but do not wish to disclose commercial terms publicly.
Permanent bar on re-filingMagic Labs surrenders re-filing rights — but may have extracted value
Agreeing to dismissal with prejudice is a significant concession for a plaintiff. Magic Labs permanently relinquishes the ability to assert US11546321B2 and US11818120B2 against Horkos in this dispute. However, the mutual cost-bearing structure suggests Magic Labs did not capitulate under duress — a pure defendant win typically results in fee motions. A private licensing arrangement or competitive accommodation is consistent with the symmetrical exit terms, though the record does not confirm this.
No public licensing termsPrivy secures permanent protection from these patent claims
For Horkos (Privy), dismissal with prejudice is a strong outcome: it eliminates ongoing litigation risk from these two specific patents and prevents Magic Labs from reviving the suit. The absence of a fee award means Privy absorbed its own defence costs — typically in the millions for D. Del. patent litigation — without compensation. This is consistent with a negotiated exit rather than an adjudicated defendant win, and Privy’s patent exposure to Magic’s broader portfolio remains theoretically open.
Protected on these two patentsEmbedded wallet IP competition: a sector on notice
This dispute signals that embedded wallet and Web3 authentication technology is now a contested IP space. Magic Labs’ willingness to assert granted patents against a direct competitor suggests an enforcement posture that other players in the sector — including wallet SDK providers, dApp developers, and Web3 identity platforms — should not ignore. US11546321B2 and US11818120B2 remain valid and enforceable against third parties; only Horkos benefits from the with-prejudice bar.
Patents remain live vs. third partiesFull party and counsel information
| Role | Name | Type | Detail |
|---|---|---|---|
| Plaintiff | Magic Labs, Inc. | Company | Embedded wallet platform provider — holder of US11546321B2 and US11818120B2Search in Eureka ↗ |
| Defendant | Horkos, Inc. | Company | Horkos, Inc. d/b/a Privy — non-custodial embedded wallet and Web3 auth providerSearch in Eureka ↗ |
| Plaintiff counsel | Alexandra M. Joyce | Attorney | Counsel for Magic Labs, Inc.Search in Eureka ↗ |
| Plaintiff counsel | Daniel M. Silver | Attorney | Counsel for Magic Labs, Inc.Search in Eureka ↗ |
| Plaintiff counsel | Daralyn J. Durie | Attorney | Counsel for Magic Labs, Inc.Search in Eureka ↗ |
| Plaintiff counsel | Fitz B. Collings | Attorney | Counsel for Magic Labs, Inc.Search in Eureka ↗ |
| Plaintiff counsel | Joyce C. Li | Attorney | Counsel for Magic Labs, Inc.Search in Eureka ↗ |
| Plaintiff counsel | Ragesh K. Tangri | Attorney | Counsel for Magic Labs, Inc.Search in Eureka ↗ |
| Plaintiff counsel | Sara Doudar | Attorney | Counsel for Magic Labs, Inc.Search in Eureka ↗ |
| Plaintiff counsel | Timothy C. Saulsbury | Attorney | Counsel for Magic Labs, Inc.Search in Eureka ↗ |
| Plaintiff law firm | McCarter & English LLP | Law Firm | Representing Magic Labs, Inc.Search in Eureka ↗ |
| Defendant counsel | Brian P. Egan | Attorney | Counsel for Horkos, Inc.Search in Eureka ↗ |
| Defendant counsel | Jack B. Blumenfeld | Attorney | Counsel for Horkos, Inc.Search in Eureka ↗ |
| Defendant counsel | Jeremy A. Tigan | Attorney | Counsel for Horkos, Inc.Search in Eureka ↗ |
| Defendant counsel | Kenneth G. Schuler | Attorney | Counsel for Horkos, Inc.Search in Eureka ↗ |
| Defendant counsel | Shridhar Jayanthi | Attorney | Counsel for Horkos, Inc.Search in Eureka ↗ |
| Defendant law firm | Morris, Nichols, Arsht & Tunnell LLP | Law Firm | Representing Horkos, Inc.Search in Eureka ↗ |
| Presiding judge | Judge Richard G. Andrews | Judge | Delaware District CourtSearch in Eureka ↗ |
Official order — verbatim text
The stipulation’s language — ‘dismissal of this action with prejudice, with each party to bear its own costs’ — is legally precise and commercially neutral. The with-prejudice designation confers res judicata effect, foreclosing any future action by Magic Labs against Horkos on these claims. The symmetrical fee arrangement, however, departs from the adversarial norm and is more consistent with a negotiated resolution than a unilateral capitulation. No merits finding was reached; claim construction, validity, and infringement remain legally undetermined on the public record.
US11546321B2 & US11818120B2 — Embedded Wallet Authentication Technology
US11546321B2 (application no. US17/031372) and US11818120B2 (application no. US18/148934) are both granted US patents covering embedded wallet technology — the infrastructure that allows Web3 applications to provision and manage cryptographic wallets for end users without requiring those users to manage private keys directly. This category of technology sits at the intersection of public-key cryptography, identity management, and decentralised application architecture, and is foundational to mainstream Web3 user onboarding.
For the embedded wallet sector, these two patents represent a meaningful IP barrier. Magic Labs competes directly with Privy, Coinbase (Smart Wallet), and other wallet-as-a-service providers. The decision to assert both patents against a direct competitor in Delaware — rather than pursuing an IPR challenge or PTAB proceeding — suggests Magic Labs views its granted claims as commercially strong. The continued enforceability of both patents post-settlement means the competitive IP risk in this space is asymmetric: Magic holds offensive leverage that its rivals currently do not.
Should your team run an FTO check against US11546321B2 and US11818120B2?
If your product team is building or shipping any form of embedded wallet, wallet SDK, delegated key management system, or Web3 authentication layer — particularly one that provisions wallets programmatically for end users — these two Magic Labs patents should be on your FTO checklist. The infringement theory advanced against Privy was never publicly construed, which means the outer boundary of the asserted claims is unknown. Products that route around the Privy architecture may not be safe without independent claim analysis.
PatSnap Eureka’s FTO Search Agent enables your IP team to map the claim language of US11546321B2 and US11818120B2 against your specific product architecture — identifying overlap, design-around opportunities, and prior art that may support validity challenges. Given that no claim construction order exists in this case, Eureka’s AI-assisted claim interpretation can model the most likely infringement perimeters and flag where your implementation sits relative to the risk zone.
Run a freedom-to-operate analysis on US11546321B2 to assess your product’s exposure
Run FTO in Eureka →Similar Embedded Wallet and Web3 Authentication Patent Cases
Explore patent infringement cases involving embedded wallet, Web3 authentication, and cryptographic key management technology filed in Delaware and other federal districts.
What this case signals for the embedded wallet and Web3 identity IP landscape
A 476-day patent fight between two embedded wallet competitors in Delaware ends quietly — but the underlying IP risk is far from resolved.
Magic’s patents remain enforceable against all other wallet competitors
The with-prejudice dismissal only protects Horkos/Privy. US11546321B2 and US11818120B2 are still granted, still valid, and still potentially asserted against other embedded wallet providers, SDK vendors, or dApp platforms that implement similar authentication flows. Competitors should not treat this settlement as sector-wide clearance.
Symmetric cost-bearing in patent suits typically signals a negotiated resolution
When neither party seeks fees in a dismissed patent case, it strongly suggests the parties reached a private commercial arrangement — whether a cross-licence, market allocation, or technology agreement. IP teams monitoring this space should consider that the competitive dynamic between Magic and Privy may have shifted structurally, not merely legally.
Magic v Horkos — key questions answered
The case was dismissed with prejudice on 20 December 2024 by joint stipulation under Rule 41(a)(1)(A)(ii), with each party bearing its own costs. No merits ruling was issued. Magic Labs is permanently barred from asserting the same claims against Horkos on these patents.
Magic Labs asserted US11546321B2 (application US17/031372) and US11818120B2 (application US18/148934), both covering embedded wallet authentication and key management technology. Both patents remain granted and enforceable against third parties following the dismissal.
No. The preclusive effect of a with-prejudice dismissal under Rule 41 is limited to the named parties — in this case, Magic Labs and Horkos/Privy. Other embedded wallet providers, SDK vendors, and Web3 authentication platforms remain fully exposed to potential infringement claims under US11546321B2 and US11818120B2.
It means neither party was awarded attorneys’ fees, litigation costs, or expenses by the court or by agreement. Each side absorbs its own legal spend. In patent litigation, this outcome typically suggests the parties reached a negotiated resolution rather than one side prevailing outright, though the public record does not confirm any underlying commercial terms.
Magic Labs was represented by McCarter & English LLP (local counsel) alongside attorneys from Durie Tangri, including Daralyn J. Durie and Ragesh K. Tangri. Horkos was represented by Morris, Nichols, Arsht & Tunnell LLP, with attorneys including Jack B. Blumenfeld and Kenneth G. Schuler of Latham & Watkins.
PatSnap Eureka searches patents and litigation data to answer instantly.