Another Fortress-Uniloc Patent Rises from an Alice Grave—but Still Looks Wobbly

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).