Opinions

This month, the Federal Circuit issued its opinion in Uniloc USA, Inc. v. Motorola Mobility LLC, a patent case we have been following because it attracted an amicus brief. In this case, Uniloc sued Motorola for infringement of a patent that discloses pairing a telephone with another device and using the other device to make a call. The district court, however, denied Uniloc’s claim, finding that Uniloc did not hold all exclusionary rights to the patent in question for purposes of satisfying the requirement of standing. Uniloc appealed. In an opinion authored by Judge Dyk and joined by Judges Lourie and Hughes, the Federal Circuit affirmed the district court’s ruling. This is our opinion summary.

Judge Dyk presented the facts of the case:

On December 30, 2014, Uniloc 2017’s predecessors, the Unilocs, entered into a Revenue Sharing and Note and Warrant Purchase Agreement (“RSA”) with Fortress in connection with a loan Fortress made to the Unilocs.

In other words, Fortress effectively would obtain a license if there was an Event of Default. The Patent License Agreement, which formally granted the license referenced in the RSA, stated that the license was “non-exclusive, transferrable, sub-licensable, divisible, irrevocable, fully paid-up, royalty-free and worldwide.” 1 Motorola J.A. 174, § 2.1. The patents involved in these cases were all included in the RSA and License Agreement.

There was no dispute the Unilocs failed to reach the $20,000,000 monetization target for the four quarters ending in March 2017. Under the terms of the RSA, this appeared to constitute an Event of Default resulting in an effective license grant to Fortress.

Against this background, on November 15, 2017, the Unilocs filed the Motorola case, a patent infringement suit . . . alleging infringement of U.S. Patent No. 6,161,134, which was included in the License Agreement. In response, Motorola moved to dismiss for lack of standing.

Motorola filed a Notice of Subsequent Authority alerting the district court to the recently decided Apple case where the district court had found lack of standing on virtually identical facts. There, the court found that Uniloc USA lacked standing because the asserted patent had been licensed to Fortress, and Fortress had the right to sublicense the asserted patent to the alleged infringer. Apple 2020 WL 7122617 (N.D. Cal. Dec. 4, 2020). Motorola characterized the Apple decision as “not binding.” Motorola J.A. 1076. On December 30, 2020, the district court granted Motorola’s motion and dismissed the Motorola case for lack of subject matter jurisdiction without reference to the Apple case.

The district court concluded that the Unilocs committed at least one Event of Default sufficient to trigger Fortress’s acquisition of the license and that this Event of Default was neither cured nor annulled . . . . The district court held that the Unilocs lacked standing to sue for infringement because Fortress had the theoretical right to sublicense the asserted patent to the alleged infringer, and the Unilocs, as a result, lacked the exclusionary right necessary to confer standing.

On May 3, 2018, Uniloc 2017 acquired all relevant patents from Uniloc Lux. On December 11, 2018, the Unilocs filed a motion to substitute Uniloc 2017 as a party. After deciding that Uniloc USA and Uniloc Lux lacked standing, the district court dismissed the motion to substitute as moot.

The Unilocs appealed the decision in the Motorola case . . . .

After providing this background, Judge Dyk addressed Uniloc’s argument that, “even if it granted a license and right to sublicense to Fortress, the district courts’ rulings are not consistent” with the Federal Circuit’s precedent. According to Uniloc, Judge Dyk explained, the Federal Circuit has previously held “that the patentee’s grant of a license that includes the right to sublicense did not deprive the patent owner of Article III standing.”

Judge Dyk rejected Uniloc’s argument on procedural grounds. He reasoned that the Federal Circuit “need not resolve the question of whether a patent owner who granted a right to sublicense lacks standing here” because “Uniloc is collaterally estopped from asserting that it has standing in these cases.” Judge Dyk explained that “collateral estoppel would appear to apply” because “the Apple case addressed and decided the very same issues as are presented here; those issues were actually litigated; the issues were determined by a valid and final judgment; and the determination of all three issues was essential to the prior judgment.” Moreover, the court reasoned, “there was no forfeiture and, even if there were, we have discretion to excuse any forfeiture.”

The Federal Circuit also rejected Uniloc’s contention that “Motorola waived its issue preclusion argument “when Motorola said the Apple case was ‘not binding.'” According to the court, “Motorola used ‘not binding’ only in the sense that the Apple decision was not binding as a matter of stare decisis.”

Finally, Judge Dyk explained that “Uniloc had sufficient incentive to litigate the issues in the Apple case itself.”

Ultimately, Judge Dyk concluded, “Uniloc is collaterally estopped from arguing that it did not grant a license, including a right to sublicense, to Fortress, and that the existence of that license deprived Uniloc of standing.”

In short, in this case the Federal Circuit held that, because Uniloc is collaterally estopped from arguing that is has standing, the district court’s ruling was correct. And, as a result of its analysis, the Federal Circuit affirmed the district court’s dismissal for lack of standing.