Uniloc 2017 LLC v. Google LLC

508 F.Supp.3d 556

UNILOC 2017 LLC, Plaintiff,

v.GOOGLE LLC, Defendant.

Case Nos. 4:20-cv-04355-YGR

4:20-cv-05330-YGR

4:20-cv-05333-YGR

4:20-cv-05334-YGR

4:20-cv-05339-YGR

4:20-cv-05341-YGR

4:20-cv-05342-YGR

4:20-cv-05343-YGR

4:20-cv-05344-YGR

4:20-cv-05345-YGR

4:20-cv-05346-YGR

United States District Court, N.D. California.

Signed December 22, 2020

James L. Etheridge, Jeffrey Huang, Brett Aaron Mangrum, Brian Matthew Koide, Ryan Scott Loveless, Travis Lee Richins, Etheridge Law Group, PLLC, Southlake, TX, Aaron Seth Jacobs, Kevin Gannon, Prince Lobel Tye LLP, Boston, MA, for Plaintiff

Michael A. Berta, Masanori Koresawa, Arnold & Porter Kaye Scholer LLP, San Francisco, CA, Andrew T. Dufresne, Pro Hac Vice, Perkins Coie LLP, Madison, WI, Bonnie Phan, Carson Dean Anderson, David Adam Caine, Arnold Porter Kaye Scholer LLP, Palo Alto, CA, Dan L. Bagatell, Hanover, NH, E. Glenn Thames, Jr., Michael Edwin Jones, Patrick Colbert Clutter, IV, Potter Minton, P.C., Tyler, TX, Mark Joseph Samartino, Arnold & Porter Kaye Scholer LLP, Chicago, IL, Nicholas H. Lee, Arnold & Porter Kaye Scholer LLP, Los Angeles, CA, Nicholas M. Nyemah, Paul Isaac Margulies, Patrick Conor Reidy, Arnold & Porter Kaye Scholer LLP, Washington, DC, for Defendant.

ORDER GRANTING MOTIONS TO DISMISS

Yvonne Gonzalez Rogers, United States District Court Judge Plaintiff Uniloc 2017 LLC brings these eleven patent infringement actions against defendant Google LLC for infringement of certain patents. After pending in the Eastern District of Texas since late 2018, the cases were transferred, and now before the Court is Google's motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Google asserts that Uniloc 2017 has not been injured by Google's alleged infringement because it lacks the right to exclude Google from practicing the invention and therefore lacks standing. Moreover, Google argues that Uniloc 2017 lacks "all substantial rights" in the asserted patents to have a cause of action under the Patent Act. Having considered the papers and pleadings in this action, the Court GRANTS Google's motions.

I. BACKGROUND

Uniloc 2017 is one of multiple Uniloc entities that have frequently asserted patent infringement in federal courts.¹ Uniloc 2017 acquired the patents-at-issue from its predecessor, Uniloc Luxembourg, S.A. ("Uniloc Lux"), in May 2018. (See Dkt. No. 355-1 at 124-62.)² At issue in this motion is the scope and meaning of a license agreement that Uniloc Lux entered into with Fortress Credit Co. LLC ("Fortress"), as well as two subsequent agreements between Uniloc 2017 and Uniloc Licensing USA ("Uniloc Licensing") and CF Uniloc Holdings LLC ("CF Uniloc"). The following facts are undisputed.

A. Fortress License Agreement

On December 14, 2014, Uniloc Lux entered into a revenue sharing agreement ("RSA") with Fortress, which purchased notes, warrants, and future revenue shares from Uniloc Lux.³ (Dkt. No. 355-1 at 29-54.) Article II of the RSA (Closing and Terms of the Revenue Stream and Notes) included the issuance of a "Patent License" and provided that:

Effective as of the Closing Date, [Uniloc Lux] shall grant to [Fortress], for the benefit of the Secured Parties, a non-exclusive, royalty free, license (including the right to grant sublicenses) with respect to the Patents, which shall be evidenced by, and reflected in, the Patent License Agreement. [Fortress] and the Secured Parties agree that [Fortress] shall only use such license following an Event of Default.

(Id. at 37 § 2.8 (emphasis supplied).) A separately executed Patent License Agreement ("Patent License"), effective December 30, 2014, confirmed the same:

Subject to the terms and conditions herein and in the Purchase Agreement, [Uniloc Lux] hereby grants to [Fortress] a non-exclusive, transferrable, sub-licensable, divisible, irrevocable, fully paid-up, royalty-free, and worldwide license to the Licensed Patents, including, but not limited to, the rights to make, have made, market use, sell, offer for sale, import, export and distribute the inventions disclosed in the Licensed Patents and otherwise exploit the Licensed Patents in any lawful matter in [Fortress's] sole and absolute discretion solely for the benefit of the Secured Parties ("Patent License") provided that [Fortress] shall only use the Patent License following an Event of Default.

(Id. at 57 § 2.1 (emphasis supplied).)

The parties defined an "Event of Default" broadly for purposes of both the RSA and the Patent License. (See id. at 46 § 7.1, 57 § 1.) An "Event of Default" may occur from failure to make payments under the RSA, a breach of any covenant, and the making of any materially false representation or warranty. (Id. at 46 § 7.1.) However, the RSA explicitly provided that an Event of Default could be "annulled."⁴ (Id. at 47 § 7.3.) Under this section:

[O]nce an Event of Default has occurred, such Event of Default shall be deemed to exist be continuing for all purposes of this Agreement until the earlier of (x) Majority Purchasers shall have waived the Event of Default in writing, (y) [Uniloc Lux] shall have cured such Event of Default to the Majority Purchaser's reasonable satisfaction or [Uniloc Lux] or the Event of Default otherwise ceases to exist, or (z) [Fortress and the majority purchasers] have enter into an amendment to this Agreement which by its express terms cures such Event of Default.

(Id. at 47-48 § 7.3.)

In addition to the annulment provision in the RSA, the Patent License expressly provided a termination clause. (Id. at 58 § 5.) That section permitted the parties to terminate the agreement by mutual agreement, subject to certain survival rights, as follows:

The Parties may terminate this Agreement at any time by mutual written agreement executed by both Parties provided that any sublicenses granted hereunder prior to the termination of this Agreement shall survive according to the respective terms and conditions of such sublicenses ....

Any rights and obligations which by their nature survive and continue after any expiration or termination of this Agreement will survive and continue and will bind the Parties and their successors and assigns, until such rights are extinguished and obligations are fulfilled.

(Id. at 58 §§ 5.1, 6.)

In May 2018, the parties executed a Payoff and Termination Agreement with respect to, among other agreements, the RSA and the Patent License. ( Dkt. No. 355-2 at 136-37 & § 1(d)(i).) However, the "mutual release" therein contained a carve-out which excluded from release "any provision of any Released Agreement that survives the termination." (Id. at 139 § 2(b).)

B. Uniloc Licensing License Agreement

In May 2018, on the same day that Uniloc Lux terminated its agreements with Fortress and assigned the patents to Uniloc 2017, Uniloc 2017 entered into a license agreement with Uniloc Licensing. (Dkt. No. 355-1 at 186.) Under that agreement, Uniloc Licensing acquired the rights to "enforce through litigation" the patents-at-issue outside of the European Union. (Id. at 187 § 2.1.) The agreement granted Uniloc Licensing the exclusive right to "bring suit," to manage such lawsuits, and to settle the litigation with prior written consent from Uniloc 2017. (Id. at 188 § 3.1.) However, all proceeds acquired through the litigation, as well as all costs incurred, were to be remitted and invoiced to Uniloc 2017. (Id. at 188 § 3.2.) In November 2018, Uniloc 2017 and Uniloc Licensing terminated their license agreement. (Dkt. No. 355-2 at 299 § 1.)

C. CF Uniloc Security Agreement

Further on the same day of the Fortress agreement termination, Uniloc 2017 assignment, and Uniloc Licensing license, Uniloc 2017 entered into a security agreement with CF Uniloc. (Dkt. No. 355-2 at 28.) Under the security agreement, CF Uniloc provided Uniloc 2017 with financing in exchange for, among other things, "Intellectual Property Collateral." (Id. at 35 § 4.9.) Uniloc 2017 agreed not to "sell, lease, transfer or otherwise dispose of ... any of its assets constituting Collateral" as part of the agreement. (Id. § 7.1(d).) Uniloc 2017 further covenanted to maintain the validity of the IP collateral, including by paying maintenance fees. (Id. § 4.9(a).)

In November 2018, Uniloc 2017 and CF Uniloc entered into an "Amended and Restated" security agreement. (Id. at 152.) The amended agreement added language that Uniloc 2017 "has and retains all rights in all Patents owned, controlled, or exclusively licensed" by Uniloc 2017, and has "sole authority and discretion regarding the exercise of all rights under such Patents." (Id. at 160 § 4.9(e).) The agreement lists maintenance, use, right to exclude, disposition, licensing, and enforcement as rights reserved for Uniloc 2017. (Id. ) However, it maintains all of the provisions described above. (See id. at 152.)

D. Procedural History

Each of the above-captioned actions was filed in the Eastern District of Texas in late December 2018. Google filed its motions to dismiss for lack of standing and improper venue in April and June 2019. (Dkt. No. 20.) The court entered a scheduling order allowing discovery on the issues raised by Google's motion, setting deadlines in August 2019 to complete standing-related document production and depositions. (Dkt. No. 64.) The deadlines were subsequently amended to allow depositions in October 2019. (Dkt. Nos. 73, 80.) Briefing on Google's renewed motion to dismiss for lack of standing and improper venue was completed in November 2019. (See Dkt. Nos. 99, 117, 127.)

The Texas court transferred the cases, without ruling on the motion to dismiss, to this district in August 2020. (Dkt. No. 308.) Each case was assigned to this Court shortly thereafter. (Dkt. No. 356.) Based on Google's request, the Court permitted additional discovery into standing issues, along with limited supplemental briefing. (Dkt. No. 353.) The parties refiled their briefs and all supporting exhibits on October 2, 2020 (Dkt. No. 355), and Google filed a supplemental brief on ...