Uniloc 2017 LLC v. ZTE (USA) Inc et al
- Filed: 11/17/2018
- Case Updated Daily
- Latest Docket Entry: 06/25/2019
May 3, 2020
Last week, the Federal Circuit revived a wireless communications patent—asserted first by Australian NPE Uniloc Corporation Pty. Limited and then by Fortress Investment Group LLC—reversing an order from Judge Lucy M. Koh of the Northern District of California that invalidated all claims as directed to unpatentable subject matter (2019-1835). Last May, the Federal Circuit similarly overturned the Alice invalidation of two former IBM patents held and asserted by Fortress-Uniloc, in response to which the resuscitated assets began appearing in litigation anew. However, greater caution may prevail this year as to the patent just revived, which was originally developed by Philips, as claims 1 and 8 stand invalidated as indefinite as a result of an Eastern District of Texas claim construction order. Patent Trial and Appeal Board (PTAB) trials are also underway over the validity of claims 11 and 12, in response to separate petitions for inter partes review (IPR) filed by Apple, Microsoft, and LG Electronics (LGE).
In the April 2019 Alice order just reversed, Judge Koh skirted Aatrix (which bars a Rule 12 Alice decision on subject matter patentability where factual disputes remain over a patent’s inventiveness); relied on separate caselaw from the Northern District finding no factual dispute where an inventive concept is not reflected in a patent’s specification (itself subsequently overruled in a decision faulting the trial court judge for “ignoring the principle, implicit in Berkheimer and explicit in Aatrix, that factual disputes about whether an aspect of the claims is inventive may preclude dismissal at the pleadings stage under § 101”); and analogized to several Federal Circuit cases (in “misplaced” reliance, according to the appeals court) to rule that the representative claim of the besieged patent (6,993,049), claim 2, is patent-ineligibly drawn to the abstract idea of “additional polling in a wireless communication system”.
As explained by the Federal Circuit, the ‘049 patent is “directed to a communication system comprising a primary station (e.g., a base station) and at least one secondary station (e.g., a computer mouse or keyboard)”. Since many such secondary stations rely on batteries for power, they may enter a “park” mode, which can introduce lag time as they “wake up” when pinged in order to join in ad hoc network communication (called a “piconet”) or in order to transmit data through that piconet after having joined. “The specification explains that the invention improves conventional communication systems by including a data field for polling as part of the inquiry message, thereby allowing primary stations to send inquiry messages and conduct polling simultaneously.” Thus, according to the Federal Circuit, claim 2 of the ‘049 patent is directed to “a patent-eligible improvement to computer functionality, namely the reduction of latency experienced by parked secondary stations in communication systems”.
The ‘049 patent issued to Philips in January 2006, making its way into Uniloc’s hands through a large portfolio acquisition from Pendrell Corporation in early 2018. With backing from Fortress, the Australian NPE began ramping up its litigation activity in 2017, accelerating those efforts through that Pendrell acquisition before transferring control over its entire holdings to Fortress in May 2018, which continued, at first, those enforcement efforts. However, a legal death-match over standing in light of the transfer of assets to Fortress (with RPX breaking that news here), initiated by Apple, led to additional Fortress-Uniloc agreements and more briefing to the Northern District of California on their impact (see here for RPX’s last coverage of the standing morass). While Fortress did continue to file additional complaints, the pace slowed.
The ‘049 patent has been asserted in separate cases against Apple, BlackBerry, HTC, Huawei, Lenovo (Motorola Mobility), LGE, Logitech, Samsung, and ZTE. The accused devices with respect to the ‘049 patent across the Fortress-Uniloc campaign have been mobile devices (i.e., smartphones, tablets) compatible with the Bluetooth Low Energy standard, version 4.0 and above. The ‘049 patent has 12 claims, 1 through 10 of which recite various elements in means-plus-function style, and in an April 2019 claim construction order, Magistrate Judge Roy S. Payne of Texas took issue with three of those elements: (1) “determining when an additional data field has been added to the plurality of data fields”; (2) “determining whether [the secondary station] has been polled from the additional data field”; and (3) “responding to a poll when it has data for transmission to the primary station”. Judge Payne ruled that the ‘049 patent specification fails to disclose sufficient structure to perform the functions recited in each of these limitations and that as a result, claims 1 and 8 from the patent are indefinite.
As part of a more global, apparent resolution of disputes, Fortress-Uniloc and Huawei began dismissing the cases between them but hit a snag in the last open case, the one over the ‘049 patent in which Judge Payne handed down his claim construction order invalidating claims 1 and 8 of the ‘049 patent as indefinite. On July 2, 2019, the parties filed a first motion to end the case, conditioning dismissal on vacatur of Judge Payne’s April 5 claim construction order. The parties did not specify an explicit reason for the request that the court vacate the claim construction order, but Judge Payne denied their motion based expressly on an unwillingness to vacate, directing the parties to file a “new motion to dismiss that is not conditioned upon” the requested vacatur.
The parties did just that. The new motion, filed on July 9, requested that all claims and counterclaims between the parties be dismissed with prejudice, “except [that] the dismissal is without prejudice to Uniloc’s right to appeal the Claim Construction Memorandum Opinion and Order, Dkt. No. 53, (‘Order’), entered April 5, 2019”. (“Uniloc” here is defined as two Uniloc Corporation Pty. Limited subsidiaries and Uniloc 2017 LLC, a Fortress entity, all of which are plaintiffs in this lawsuit.) The court granted the revised request to dismiss, but the plaintiffs never filed an appeal.
The Federal Circuit’s reversal of Judge Koh’s Alice decision does open the door for Fortress-Uniloc to assert claims 11 and 12 of the ‘049 patent, which recite methods not framed in means-plus-function terms and not invalidated as indefinite under Judge Payne’s order. However, Apple, LGE, and Microsoft have each challenged just those two claims as obvious in light of certain prior art, in separate petitions for IPR. Trial was instituted in response to the Apple petition (IPR2019-00251) in July 2019, to which a trial over the LGE petition has since been joined (IPR2019-01530). Trial in response to the Microsoft petition was instituted in December 2019 (IPR2019-01026).
As noted in “Fortress Looms Large with a Growing Stockpile of Patents and Cash” (December 2018), Fortress’s monetization activity extends well beyond the former Uniloc portfolio, and in May 2018—the same month that Fortress received that portfolio—the firm announced the launch of a $400M IP fund focused on patent assertion. (Some sources have reported the fund as being closer to $900M.) This means that additional assertion of the ‘049 patent may be coming, particularly if the PTAB declines to cancel claim 11, claim 12, or both. Indeed, after the Federal Circuit resuscitated those two former IBM patents following their invalidation under Alice, a wave of new cases asserting them was filed across multiple venues (with further details here).
Meanwhile, Fortress has also been embroiled in an antitrust action filed in November 2019 against it in the Northern District of California by Apple and Intel (3:19-cv-07651). That complaint followed a voluntary dismissal without prejudice of a similar complaint filed a month before against Fortress by Intel alone (details here). The plaintiffs accuse the investment firm of stifling competition through the acquisition and “endless, meritless litigation” of “weak patents” through “serial suits . . . under the theory that even a modest settlement for supracompetitive royalties will be profitable”. Fortress has moved to dismiss the complaint, and the US has filed a statement of interest in the case, urging the court to grant that motion for failure to define a market with sufficient particularity and cohesion and for failure to identify “any harm to competition here” (emphasis in the original). The court has yet to rule.
An in-depth treatment of the history of Uniloc, starting well before its deal with Fortress, can be read at “From Fearsome to Fortress: The Long Fall of Uniloc” (March 2019).
July 14, 2019
Last month, RPX surveyed the effective use of inter partes review (IPR) by defendants in the many campaigns launched over patents once held by Uniloc Corporation Pty. Limited. The Australian NPE—and Fortress Investment Group LLC after its takeover of those campaigns in May 2018—has hit multiple invalidity walls in district court as well. For example, this past April was not a good month for a wireless communications patent, issuing to Philips, that Uniloc began asserting in early 2018. On April 5, Magistrate Judge Roy S. Payne of Texas invalidated claims 1 and 8 from that patent as indefinite, and four days later, District Judge Lucy H. Koh in California took the whole patent down as patent-ineligibly drawn to an abstract idea under Alice. However, recent decisions, in Fortress-Uniloc suits and elsewhere, may have provided the plaintiff additional motivation to clear a path, however rocky, for that embattled patent to survive in the end.
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February 3, 2019
For Uniloc 2017 LLC—the Fortress Investment Group LLC entity that took ownership of Uniloc Corporation Pty. Limited’s patent portfolio last May—2019 has begun much as 2018 ended, with the NPE asserting those patents against various defendants across multiple litigation campaigns. January’s defendants include Bitmovin (1:19-cv-00179), Brightcove (1:19-cv-00180), Dailymotion (1:19-cv-00181), Sling TV (1:19-cv-00278), Telestream (1:19-cv-00182), and Wal-Mart (Vudu) (1:19-cv-00183), all sued as part of what might be called the “video streaming segment” of a campaign that has sprawled over more than two dozen defendants, with more than 15 patents asserted, since just last February. Uniloc 2017 has also filed two new suits against Microsoft (8:19-cv-00158, 8:19-cv-00196), one asserting a homegrown Uniloc patent (generally related to testing whether a remote device is secure) for the first time while the other concerns a patent (generally related to marking speaker changes in a videoconference application) already in suit against Alphabet (Google).
January 5, 2019
December saw continued litigation over patents from a portfolio that Uniloc Corporation Pty. Limited acquired from Pendrell Corporation in January 2018. Having taken ownership of seemingly all of Uniloc’s patents in May, including the former Pendrell patents, Fortress Investment Group LLC (through subsidiary Uniloc 2017 LLC) is the plaintiff asserting them now. Alphabet (Google) was the NPE’s principal target in December, with seven new Eastern District of Texas suits filed against the tech giant, but Fortress also sued Microsoft (8:18-cv-02224), Netflix (8:18-cv-02150), Roku (1:18-cv-01126), and Verizon (2:18-cv-00536) last month.
Amid Turmoil Following Fortress Takeover of Uniloc Portfolio, NPE Files More Original Cases over Mobile Communications and Media Distribution PatentsDecember 9, 2018
The May 2018 assignment of seemingly the entire patent portfolio of Uniloc Corporation Pty. Limited to Fortress Investment Group LLC triggered a legal throw-down over standing in the cases that Uniloc had filed over some of those patents before their transfer, as well as the dismissal and refiling of the cases that Fortress brought after their transfer. Undeterred, Fortress—through controlled plaintiff and apparent patent owner Uniloc 2017 LLC—also continues to file new suits, over the past two weeks adding HTC and Lenovo (Motorola Mobility) to several campaigns already underway against smartphone and tablet manufacturers Apple, BlackBerry, Huawei, LG Electronics, and/or Samsung, and asserting two media distribution patents already at issue in cases previously filed against Walt Disney (ABC) and Hulu.
November PTAB Activity Included IPRs Against Fortress as Standing Dispute over Uniloc Deal Escalates, with Apple Rejecting “Oxymoronic” CounterattackDecember 7, 2018
In November 2018, Fortress Investment Group, LLC subsidiary Uniloc 2017 LLC was hit by a series of inter partes review (IPR) petitions filed by Apple as the two parties continue to brief a contentious dispute over standing in related district court litigation. November also saw the Patent Trial and Appeal Board (PTAB) institute trial in IPRs involving Japanese patent monetization firm IP Bridge, Inc. and issue final decisions in IPRs against Quarterhill Inc. and Alacritech, Inc., the latter an operating company-turned-NPE formed by SCSI inventor Larry Boucher.
October 7, 2018
The filing spree of Uniloc Corporation Pty. Limited continues unabated after handing over the reins of its monetization efforts to Fortress Investment Group LLC earlier this year. Last week alone, plaintiffs related to these entities jointly filed a new suit against Apple in the Western District of Texas, one against Cisco, two against Hike, and four against Alphabet (Google), all in the Eastern District of Texas. Since its acquisition of a large portfolio from Pendrell Corporation subsidiary Pendragon Wireless LLC this past January, Uniloc has been filing new lawsuits on nearly a weekly basis over those patents, on its own, before its transfer of over 600 US patent assets to Fortress in May, and together with Fortress since. That shift in patent ownership came as Fortress announced a new, $400M IP fund focused on patent assertion.
September 3, 2018
Fortress Investment Group LLC and Uniloc Corporation Pty. Limited have added two additional patents to one of their existing litigation campaigns with new suits against AT&T (AT&T Mobility) (2:18-cv-00379) and Verizon (Cellco Partnership d/b/a Verizon Wireless) (2:18-cv-00380). The plaintiffs accuse AT&T of infringing a patent generally related to system control using a “wireless terminal” through the provision of the Smart Home Manager mobile app, as used to change settings for a home Wi-Fi network; Verizon, of infringing a patent broadly related to the delivery of data through “beacon devices” through the use of Bluetooth Low Energy (LE) beacons in its retail stores, as used to send notifications to mobile devices running the Verizon app. The two complaints each assert additional patents already in suit in the campaign, all of them part of a large, January 2018 acquisition from Pendrell Corporation, with ownership moving to Fortress subsidiary Uniloc 2017 LLC this past May.
Uniloc Unloads Against Amazon, BlackBerry, Huawei, Microsoft, Samsung, and ZTE, as Apple Moves for Another Transfer out of TexasJuly 29, 2018
Uniloc Corporation Pty. Limited, through controlled subsidiaries and at least in some instances with the apparent backing of Fortress Investment Group LLC, has continued to roll out new cases in 2018, hitting Amazon (with four additional cases), BlackBerry (four new cases), Huawei (one case), Microsoft (one case), Samsung (one case), and ZTE (four cases) just last week. One of the new suits against Amazon returns to Uniloc’s earlier litigation strategy, asserting a patent naming Uniloc cofounder Craig Etchegoyen as inventor, but the other new suits continue the assertion of former Philips patents received this past January from publicly traded NPE Pendrell Corporation. Pendrell sold hundreds of patent assets from its “Pendragon” portfolio (held by subsidiary Pendragon Wireless LLC) to Uniloc in January—the patents deriving from multiple original sources, including the Electronics and Telecommunications Research Institute (ETRI) and IBM as well as Philips. Nearly all of the new complaints have been filed in Texas, confirming Uniloc’s commitment to litigate in that state, if not solely in the Eastern District, after the US Supreme Court’s TC Heartland decision in May 2017.
March 15, 2018
So far this year, Uniloc Luxembourg S.A. and Uniloc USA, Inc. (collectively, Uniloc) have initiated five new litigation campaigns, each with a suit against Apple, quickly adding Samsung to three of them; Logitech to one; LG Electronics to four; and now Huawei to the same four (2:18-cv-00072, 2:18-cv-00073, 2:18-cv-00074, 2:18-cv-00075). The patents asserted were apparently acquired from Pendrell Corporation subsidiary Pendragon Wireless LLC, and the accused products comprise a long list of smartphones, tablets, wireless speakers, and many other computing devices.
March 9, 2018
Last year, Uniloc Luxembourg S.A. and Uniloc USA, Inc. (collectively, Uniloc) initiated 11 new litigation campaigns, all but one of them with a suit filed against Apple. In the subsequent months, Uniloc added LG Electronics (LGE) as a defendant in seven of those campaigns; Huawei in six of them; HTC, Lenovo (Motorola Mobility), and Samsung in four of them; and a few other companies in just one. 2018 appears to be shaping up similarly. Uniloc has so far opened up five new litigation campaigns this year, each with a suit against Apple, quickly adding Samsung to three of them; Logitech to one, and now, LGE to four (3:18-cv-00557, 3:18-cv-00559, 3:18-cv-00560, 3:18-cv-00561). The patents asserted were apparently acquired from Pendrell Corporation subsidiary Pendragon Wireless LLC, and the accused products form a long list of smartphones, tablets, wireless speakers, and many other computing devices.
February 28, 2018
After filing multiple new cases in February, first against Apple, then Samsung, Uniloc Luxembourg S.A. and Uniloc USA, Inc. (collectively, Uniloc) closed out the month with a suit against Logitech (5:18-cv-01304). The patent asserted, generally related to delivering data through “beacon devices”, is one among several that Uniloc has apparently acquired from Pendrell Corporation subsidiary Pendragon Wireless LLC. In a 10-K recently filed with the SEC, Pendrell indicated that it had divested the “majority” of its “Pendragon portfolio”, which contained “patents related to cellular and digital wireless devices and infrastructure” from multiple sources, including the Electronics and Telecommunications Research Institute (ETRI), IBM, and Philips. Logitech joins Apple as defendants in this campaign, with Uniloc’s infringement allegations focused on devices that “utilize Bluetooth Low Energy version 4.0 and above”.