Uniloc USA, Inc. v. Apple Inc.

Background

Uniloc USA and Uniloc Luxembourg filed the patent-infringement lawsuit in the Western District of Texas on February 22, 2018. The case was later transferred to the Northern District of California. When the lawsuit began, Uniloc Luxembourg owned the patents at issue. The plaintiffs asserted that an assignment effective in May 2018 transferred Uniloc Luxembourg’s rights, interests, title, and related causes of action to Uniloc 2017 LLC.

On April 1, 2020, the plaintiffs moved under Rule 25(c) of the Federal Rules of Civil Procedure to substitute Uniloc 2017 as the plaintiff. Rule 25(c) allows a court to continue an action with the original party, substitute the party that received the transferred interest, or join that new party.

Parties’ Positions

The plaintiffs argued that substitution was appropriate because Uniloc USA and Uniloc Luxembourg no longer had an interest in the patent or the litigation. Apple opposed the motion. It argued that the plaintiffs waited nearly two years after the transfer to seek the change and that adding Uniloc 2017 would cause delay and prejudice because Apple might have to serve discovery again.

Apple pointed to discovery-related problems it said had occurred in other cases involving Uniloc entities. The court acknowledged concerns about possible delays but found that the possible prejudice to Apple was minimal.

Court’s Analysis

The court held that Rule 25(c), rather than the rules governing amendment of pleadings, applied because the motion concerned a transfer of interest in the patent. The court explained that Rule 25(c) gives the trial court discretion to substitute or join parties after an interest is transferred. The rule does not require a change in the parties, and the merits of the lawsuit remain determined in relation to the originally named parties.

Because of the delay in filing the motion and the plaintiffs’ discovery-related conduct in other cases, the court shared Apple’s concerns about possible delay. Even so, it concluded that allowing Uniloc 2017 to participate would facilitate the litigation. To minimize possible prejudice, the court chose joinder rather than substitution.

Disposition

The court granted the plaintiffs’ motion and ordered Uniloc 2017 joined as a plaintiff. Uniloc USA and Uniloc Luxembourg remained parties to the action. This order addressed the parties’ status after the alleged transfer of patent interests; it did not decide the underlying patent-infringement claims.