Uniloc 2017 LLC v. Google LLC

Background

Uniloc 2017 LLC brought eleven patent-infringement actions against Google LLC. The cases had been filed in the Eastern District of Texas and were later transferred to the Northern District of California. Google moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing both that Uniloc 2017 lacked constitutional standing and that it was not entitled to bring a patent-infringement action under 35 U.S.C. § 281.

The dispute concerned several agreements involving the patents. In 2014, Uniloc Luxembourg, S.A. entered into agreements with Fortress Credit Co LLC that granted Fortress a nonexclusive, transferable, sublicensable, irrevocable, royalty-free, worldwide license. The agreements stated that Fortress could use the license after an event of default. Uniloc Lux later transferred the patents to Uniloc 2017, and the parties entered into a termination agreement. Uniloc 2017 also entered into an agreement with Uniloc Licensing USA giving that entity rights to enforce the patents through litigation, although that agreement was later terminated. A security agreement with CF Uniloc included restrictions and provisions concerning the patents.

Standing and the Fortress license

The court explained that constitutional standing requires an injury that is concrete and traceable to the challenged conduct. In a patent case, the relevant injury generally requires an exclusionary right—the ability to prevent a particular defendant from practicing the invention. The court also explained that § 281 separately limits patent-infringement actions to a “patentee,” including an original patent owner or successor in title, and that these two requirements are distinct.

The court held that Fortress’s license defeated Uniloc 2017’s standing against Google. The license’s language immediately granted Fortress rights, even though Fortress could use those rights only after an event of default. The court found that Uniloc Lux had breached the revenue-sharing agreement by failing to meet a required revenue target and by making representations concerning patent challenges that were materially false. The court therefore found that the license had vested before Uniloc 2017 filed suit.

The court rejected Uniloc 2017’s arguments that the default had been cured or that the license had ended. The May 2018 termination agreement released claims but did not cure the failure to meet the revenue target or extinguish the license. The court also concluded that the license’s description as “irrevocable,” together with the agreement’s survival provisions, meant that Uniloc 2017 had not shown that Fortress lost the ability to license Google. Uniloc 2017 did not provide competent evidence of the parties’ intent concerning those contract terms.

The court consequently held that Uniloc 2017 had not met its burden to prove standing and dismissed the cases for lack of subject-matter jurisdiction.

Section 281 arguments

Google separately argued that Uniloc 2017 lacked a cause of action under § 281 because it had transferred all substantial patent rights to Uniloc Licensing USA or CF Uniloc. The court denied that part of Google’s motion at that stage.

As to Uniloc Licensing USA, the court found that the agreement had been terminated before suit and that Google’s remaining evidence did not establish that Uniloc Licensing USA held substantial patent rights. As to CF Uniloc, the court found the security agreement ambiguous and concluded that, even if CF Uniloc had some substantial rights, Uniloc 2017 retained important rights, including the rights to sue, practice the invention, and license infringers. Google therefore had not shown that CF Uniloc became the “patentee” under § 281.

This denial did not prevent dismissal because the court had already dismissed the cases for lack of constitutional standing based on Fortress’s license.

Other rulings and disposition

The court granted Uniloc 2017’s motion to seal portions of exhibits identifying third-party licensees, their payment amounts, and confidential financial information. It denied Google’s motion to seal because it was based on Uniloc 2017’s confidentiality designations, which Uniloc 2017 no longer sought to maintain. The court also denied as moot requests for supplemental briefing in certain cases, directed Google to file unredacted exhibits within seven days, and ordered the clerk to close each case.

Judge Yvonne Gonzalez Rogers signed the order on December 22, 2020.