Uniloc USA, Inc. v. Motorola Mobility, LLC

Opinion

MEMORANDUM OPINION

December 30, 2020

Wilmington, Delaware

/s/ Colm F. Connolly

COLM F. CONNOLLY

UNITED STATES DISTRICT JUDGE

Plaintiffs Uniloc Luxembourg, S.A. and Uniloc USA, Inc. have sued Defendant Motorola Mobility LLC for infringement of U.S. Patent No. 6,161,134 (the #134 patent). D.I. 10. Motorola has moved pursuant to Federal Rule of Civil Procedure 12(b)(1) to dismiss for lack of subject matter jurisdiction on the grounds that the Unilocs do not have standing to sue for infringement of the asserted patent. D.I. 56. I will grant the motion.

I. BACKGROUND

The Uniloc Plaintiffs are in the business of acquiring patents and suing companies for infringement of those patents. Beginning in December 2014, to fund their litigation efforts, the Unilocs made certain financial arrangements with nonparty Fortress Credit Co. LLC. In a nutshell, [*2]  Fortress agreed to loan the Unilocs up to $26 million and purchased stock options in Uniloc Luxembourg; in return, the Unilocs granted Fortress a share of their revenues. As security for the $26 million loan, the Unilocs granted Fortress a license in a patent portfolio.

The relevant terms of the financial arrangements between Fortress and the Unilocs were set forth in two written agreements originally executed in December 2014 and amended thereafter. The first is titled Conformed Revenue Sharing and Note and Warrant Purchase Agreement and is referred to by the parties as the Purchase Agreement. The second is titled Patent License Agreement.

Under the express terms of both agreements, Fortress obtained a license to the Uniloc patent portfolio on December 30, 2014, but it agreed not to "use" the license unless and until a so-called "Event of Default" occurred. D.I. 58-1, Ex. A § 2.8; D.I. 58-1, Ex. B § 2.1. The Purchase Agreement describes the license as "a non-exclusive, royalty free, license (including the right to grant sublicenses). . . which shall be evidenced by, and reflected in, the Patent License Agreement." D.I. 58-1, Ex. A § 2.8. The Patent License Agreement grants to Fortress the right to [*3]  sublicense the patents (after an Event of Default) at its "sole and absolute discretion solely for the benefit of [Fortress]." D.I. 58-1, Ex. B § 2.1.

Under section 7.1.2 of the Purchase Agreement, the "fail[ure of the Unilocs] to perform or observe any of the covenants or agreements contained in Article VI" constitutes an Event of Default. D.I. 58-1, Ex. A § 7.1.2. One of those covenants, set forth in section 6.2.2 of the Purchase Agreement, required that, "[a]s of March 31, 2017 and the last day of each fiscal quarter thereafter, the [Unilocs] . . . have received at least $20,000,000 in Actual Monetization Revenues during the four fiscal quarter period ending on such date." D.I. 58-1, Ex. A § 6.2.2. Motorola has asserted, and the Unilocs have not contested, that the Unilocs received only $14 million in revenues as of March 31, 2017 and thus failed to satisfy section 6.2.2's monetization requirement.

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