Uniloc USA, Inc. v. Apple, Inc.

508 F.Supp.3d 550

UNILOC USA, INC., et al., Plaintiffs,

v.APPLE, INC., Defendant.

No. C 18-00358 WHA

No. C 18-00360 WHA

No. C 18-00363 WHA

No. C 18-00365 WHA

No. C 18-00572 WHA

United States District Court, N.D. California.

Signed December 22, 2020

Paul J. Hayes, Pro Hac Vice, Kevin Gannon, Michael James Ercolini, Robert R. Gilman, Aaron Seth Jacobs, James J. Foster, James John Foster, Dean G. Bostock, Prince Lobel Tye LLP, Boston, MA, Matthew David Vella, Prince Lobel Tye LLP, Laguna Beach, CA, for Plaintiffs Uniloc USA, Inc., Uniloc Luxembourg S.A.

Aaron Seth Jacobs, James J. Foster, Prince Lobel Tye LLP, Boston, MA, for Plaintiff Uniloc 2017 LLC.

Michael Thomas Pieja, Alan E. Littmann, Andrew John Rima, Pro Hac Vice, Douglas Jordan Winnard, Emma Christine Ross, Pro Hac Vice, Jennifer Laura Greenblatt, Lauren C. Abendshien, Shu Zhang, Goldman Ismail Tomaselli Brennan & Baum LLP, Chicago, IL, Kenneth Frederick Baum, Goldman Ismail Tomaselli Brennan & Baum LLP, Santa Monica, CA, Melissa Richards Smith, Gillam & Smith, LLP, Marshall, TX, for Defendant.

ORDER RE SEALING

WILLIAM ALSUP, United States District Judge

INTRODUCTION

This order addresses the sealing of evidence submitted in a patent infringement suit. Accepting that several courts of appeal have held certain licensing and financial records sealable at times, on the record provided, the sealing motions are DENIED .

STATEMENT

Previous orders detail the background (No. C 18-00358, Dkt. No. 186, No. C 18-00360, Dkt. No. 157). In brief, these patent infringement suits have been funded by an entity called Fortress Credit Co. LLC, which took a broad license in the asserted patents as security and imposed annual monetization goals on plaintiff Uniloc. Accused-infringer Apple later discovered that when Uniloc filed these cases, it had failed to meet its monetization goals for the preceding twelve months, which released the sole condition on Fortress's license, letting it sub-license the asserted patents to the world. After several rounds of briefing and decision, and a remand by the Court of Appeals for the Federal Circuit to take a fresh look, a December 4 order concluded that Uniloc indeed lacked standing to sue here (No. C 18-00358, Dkt. No. 186).

Several sets of sealing motions now converge here because of the piecemeal manner in which Uniloc's lack of standing has surfaced across these cases. We address both Uniloc's request to seal portions of Apple's most recent motion to dismiss and its requests to seal similar material in the related cases, Nos. C 18-00360 et seq. , where Apple first raised the standing issue. The Federal Circuit largely affirmed denial of those sealing requests, but has remanded for our reconsideration of third party confidentiality interests. Uniloc 2017 LLC v. Apple, Inc. , 964 F.3d 1351, 1364 (Fed. Cir. 2020). The Electronic Frontier Foundation again moves to intervene in opposition to Uniloc's sealing requests. This order follows full briefing and a hearing (held telephonically due to COVID-19).

ANALYSIS

Federal courts are public tribunals, not private mediators. They belong to the people, not to corporate America. The public has legitimate interests in looking over our shoulders to see why and how we grant relief (or not) and specifically what record justified (or not) that relief. So our court of appeals has recognized a strong presumption of public access to our records. On a dispositive motion, sealing any part of a record requires, without "hypothesis or conjecture," a compelling factual basis which outweighs the public interest in disclosure. Ctr. for Auto Safety v. Chrysler Grp. , 809 F.3d 1092, 1096–97 (9th Cir. 2016) ; Kamakana v. City & County of Honolulu , 447 F.3d 1172, 1178–79 (9th Cir. 2006).

In our present case, a second public interest also favors access. The United States Supreme Court "has long recognized that the grant of a patent is a matte[r] involving public rights." A patent is not a private agreement between private parties. Rather, as a creature of statute, the national government grants the patent in derogation of the usual free flow of goods and ideas. See Oil States Energy Servs. v. Greene's Energy Grp. , 584 U.S. ––––, 138 S. Ct. 1365, 1373, 200 L.Ed.2d 671 (2018) (quotation marks omitted). Thus, the undersigned has recognized that:

Because [a patentee's] rights flow directly from this government-conferred power to exclude, the public in turn has a strong interest in knowing the full extent of the terms and conditions involved in [the patentee's] exercise of its patent rights and in seeing the extent to which [the patentee's] exercise of the government grant affects commerce.

The impact of a patent on commerce is an important consideration of public interest. One consideration is the issue of marking by licensees. Another is recognition of the validity (or not) of the inventions. Another is in setting a reasonable royalty. In the latter context, patent holders tend to demand in litigation a vastly bloated figure in "reasonably royalties" compared to what they have earned in actual licenses of the same or comparable patents. There is a public need to police this litigation gimmick via more public access. We should never forget that every license has force and effect only because, in the first place, a patent constitutes a public grant of exclusive rights.

(No. C 18-00360, Dkt. No. 187) (emphasis added).

We turn first to the Federal Circuit's task on remand, to reconsider the "sealing or redaction of the purportedly confidential information of third parties" and to "make particularized determinations as to whether and, if so, to what extent, the materials of each of these parties should be made public." Uniloc , 964 F.3d at 1364. Uniloc seeks to seal the details of its patent licensing agreements, taking the form of: (i) tables containing the names of Uniloc's licensees and the dates and dollar amounts of the deals; (ii) brief references to data from that table in an Apple brief; (iii) a licensing agreement between Uniloc and Microsoft; (iv) eight declarations from various licensees requesting the Court keep their license details under seal; and (v) a declaration summarizing similar requests from many licensees.

Uniloc argues that judges, including many in this district, routinely find patent licensing data sealable. Our court of appeals has found a videogame publisher's licensing agreements with a professional athletes’ union sealable; and the Federal Circuit has found profit and cost data for patented and infringing goods sealable. But the crux of the problem is not just whether the information falls within categories of sealable information. It is, rather, whether the particular bases offered by our third parties outweigh the presumption of public access. If these bases exist here, they come not from Uniloc, but from the third parties. After all, the Federal Circuit affirmed the rejection of Uniloc's requests for sealing and remanded solely for this Court to consider third party interests. See Uniloc , 964 F.3d at 1364 ; Chrysler , 809 F.3d at 1096–97 ; see, e.g. , Apple v. Samsung , 727 F.3d 1214, 1225–26 (Fed. Cir. 2013) ; In re Elect. Arts , 298 Fed. App'x 568 (9th Cir. 2008) ; Parrish v. Nat'l Football League Players Ass'n , No. C 07-0943 WHA, Dkt. No. 498 (N.D. Cal. Oct. 21, 2008) (EA's motion to seal).

Moreover, Uniloc's reliance on the numerous district court orders which have sealed similar information underscores the larger problem of indiscriminate oversealing in patent and commercial cases nationwide.

This order readily acknowledges that this Court, among the many Uniloc cites, has at times fallen into the habit, as a concession to the shortness of life, of oversealing information that in truth should be made public. But the culprits seem plain. Our adversarial system collapses when, as often occurs in these suits, both parties seek to seal more information than they have any right to and so do not police each other's indiscretion. Perhaps no case better illustrates this collusive oversealing so much as the one upon which Uniloc continually relies, Apple v. Samsung . There, both Apple and Samsung bombarded the Honorable Lucy H. Koh with excessive and unopposed sealing motions, took full advantage of the judge's patience in permitting them to revise and narrow their motions, and then appealed the partial denial of their sealing motions to the Federal Circuit, where they again refused to oppose each other's motions, leaving that task to amici curiae. 727 F.3d at 1218–20.

True to form, given the opportunity to oppose Uniloc's oversealing at oral argument here, Apple abandoned the Court in its enforcement of the local rules and circuit precedent, further confirmed that it would not oppose the sealing on appeal, and opted instead to grab its December 4 victory on the standing issue and head for the hills. This is why EFF must be permitted to intervene. Without EFF, the public's right of access will have no advocate. Our court of appeals has permitted similar permissive intervention by parties seeking record access. See Beckman Indus. v. Int'l Ins. Co. , 966 F.2d 470, 473–74 (9th Cir. 1992). EFF's timely motion to intervene is thus granted.

Uniloc solicited the views of all one hundred nine licensees regarding the sealing of their patent license details. It reports that two agreed to disclosure, eight offered to disclose their identities but asked to keep the remaining details under seal, and twenty three asked to keep all...