IP Law Daily District court must decide whether Uniloc owned asserted battery charging patent
Tuesday, September 3, 2019

District court must decide whether Uniloc owned asserted battery charging patent

By Thomas Long, J.D.

After Uniloc appealed order in favor of defendant Apple, finding that the patent claims were ineligible under 35 U.S.C. §101, Apple discovered information suggesting that Uniloc was not the true owner of the patent when it filed suit.

A decision of the federal district court in San Francisco, finding that the claims of a patent covering a method and apparatus for controlling the charge and discharge currents in a battery as a function of temperature were ineligible for protection under 35 U.S.C. §101, has been vacated by the U.S. Court of Appeals for the Federal Circuit and remanded for the district court to resolve jurisdictional issues regarding ownership of the patent-in-suit. After the plaintiff filed an appeal of the district court’s Section 101 ruling, defendant Apple Inc. discovered information calling into question the plaintiff’s ownership of the patent, and therefore its Article III standing to sue for infringement. Because resolution of this issue could deprive the district court of subject matter jurisdiction, the case was sent back to the lower court for development of the factual record and consideration of the ownership question in the first instance (Uniloc USA, Inc. v. Apple Inc., August 30, 2019, Hughes, T.).

Uniloc USA, Inc., and Uniloc Luxembourg, S.A. (collectively, "Uniloc") sued Apple Inc. for infringing U.S. Patent No. 6,661,203 ("the ’203 patent"), which claims a method and apparatus for controlling the charge and discharge currents in a battery as a function of temperature. As the patent explained, the process of charging or discharging a rechargeable battery generates "a certain amount of internal heat" proportional to the amount of electrical current flowing through the battery. Devices powered by batteries also usually generate heat during operation. The high temperatures potentially caused by the operation of batteries and adjacent circuitry create a "dilemma" for battery designers. The invention of the ’203 patent purportedly solved the problem of high temperatures caused by the operation of batteries and adjacent circuitry by employing a charging circuit adapted to charge a battery and a temperature sensor positioned to sense a battery temperature, that is, the adjacent environmental temperature. Apple moved for judgment on the pleadings, and the district court granted the motion on May 18, 2018, finding that the claims of the ’203 patent were directed to the patent-ineligible concept that battery designers can adjust a battery’s current flow to control its temperature. Uniloc appealed.

Apple asserted that on May 3, 2018, Uniloc Luxembourg—which owned the ’203 patent—transferred its patent holdings to an entity named Uniloc 2017 LLC. According to Apple, Uniloc Luxembourg did not inform Apple or the district court about this transfer. Uniloc 2017 entered into a licensing agreement with Uniloc USA that gave Uniloc USA the authority to enforce the transferred patents. The agreement provided that Uniloc USA would remit all proceeds from enforcing the patents to Uniloc 2017. Apple did not learn about the transfer until late August 2018, after the district court entered judgment. However, several related cases between the parties were still pending in the district court, and Apple asked Uniloc to produce documents regarding the transfer of ownership in those cases. Uniloc did not respect to Apple’s request, and the district court ordered Uniloc to come forward with a detailed account of the history of the ownership of the Uniloc patents. Uniloc only partially complied with this order, neglecting to include documents on Uniloc Luxembourg’s patent portfolio before the May 3, 2018, transfer. The district court issued another order compelling Uniloc to produce all relevant documents, and Uniloc produced documents relating to a loan agreement between Uniloc Luxembourg and Fortress Credit Co. LLC. Under this agreement, Uniloc Luxembourg collateralized its patent portfolio in exchange for a loan. Apple contended that default would give Fortress the right to transfer or sublicense any of Uniloc’s patents.

Because the case against Apple over the ’203 patent was already on appeal, Apple could not move to dismiss or supplement the record with its recent discoveries as to ownership of the patent. However, Apple moved to dismiss the pending related cases for lack of subject matter jurisdiction, arguing: (1) no plaintiffs currently in the suit had standing to bring an infringement claim, and (2) Uniloc’s default on the loan agreement meant that the plaintiffs lacked standing to bring an infringement claim when they filed for infringement. Uniloc moved to add Uniloc 2017 as a party to those cases. The district court cured the ongoing jurisdictional defect by adding Uniloc 2017 as a party to the related cases, and it determined that the loan agreement with Fortress did not deprive Uniloc Luxembourg of standing to bring those suits when the claims were filed.

The Federal Circuit noted that Article III of the Constitution provided that federal courts only have subject matter jurisdiction when the plaintiff has standing to sue. Section 281 of the Patent Act provides that only a patentee shall have standing to bring a civil action for infringement of the patent. When a patentee assigns all substantive rights under the patent to another, the assignee may be deemed the effective patentee. To assert standing to sue for patent infringement, the plaintiff must demonstrate that it held enforceable title to the patent at the inception of the lawsuit, the appellate court explained. If Apple was correct in contending that Fortress was the true owner of the ’203 patent, this would indicate an incurable jurisdictional defect due to the lack of Article III standing. However, the appellate court was limited to considering the factual record presented in the district court. The record before the district court in the related cases was not the record before the Federal Circuit on appeal, and the district court had not made a final decision in those cases.

"Because the facts relating to the Fortress loan agreement came to light after the district court’s final judgment, we lack the necessary record to rule on the jurisdictional issue," the Federal Circuit said. "And because Apple raised the prospect of a foundational defect in jurisdiction, we must remand for the district court to supplement the record and resolve any outstanding jurisdictional issues."

This case is No. 2018-2094.

Attorneys: James J. Foster (Prince Lobel Tye LLP) for Uniloc USA, Inc., and Uniloc Luxembourg S.A. Michael T. Pieja (Goldman Ismail Tomaselli Brennan & Baum, LLP) for Apple Inc.

Companies: Uniloc USA, Inc.; Uniloc Luxembourg S.A.; Apple Inc.

MainStory: TopStory Patent FedCirNews

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