Victory! Court Unseals Records Showing Patent Troll’s Shakedown Efforts


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Victory! Court Unseals Records Showing Patent Troll’s Shakedown Efforts

EFF has prevailed in a years-long effort to make public a series of court records that show how a notorious patent troll, Uniloc, uses litigation threats to extracts payments from a variety of businesses.

Uniloc earlier this month complied with a federal district court’s unsealing order by making public redacted versions of several previously sealed documents. That ended more than three years’ worth of litigation, including two appeals, in which EFF sought public access to judicial records in a case between Uniloc and Apple that was shrouded in secrecy.

The case began in 2018 as an effort to make sense of heavily redacted filings in the patent infringement case between Uniloc and Apple. It resulted in greater transparency into how Uniloc coerces businesses into licensing its weak patents, and shields its activities from public scrutiny by claiming any information about its licenses amounts to a trade secret.

The great majority of Uniloc’s previously secret court records are now public. For instance, a list of Uniloc’s trolling victims, which Uniloc sought to keep entirely under seal, is now more than 80% unredacted. The list of the amounts those companies paid is now more than 70% unredacted. Several other key documents—like the contract between Uniloc and a private equity firm that allowed for this patent trolling expedition in the first place—are entirely public.

Although the court ruling did not require Uniloc to make all of its previously secret records public, we are pleased that it rejected Uniloc’s repeated attempts to get blanket secrecy for licensing information, compelled it to disclose information that should never have been sealed in the first place, and affirmed the public’s right to access records filed in federal court.

Unsealed licensing document shows how Uniloc financed its litigation

EFF’s chief purpose in intervening in this case was to understand Apple’s reasons for arguing that Uniloc’s patent lawsuit should be dismissed. Apple supported its argument with evidence showing Uniloc did not have the legal right to assert the patents it accused Apple of infringing. Although the district court ultimately agreed with Apple and dismissed Uniloc’s suit, the key evidence it relied on remained secret. That evidence included a table showing how much money Uniloc made by extracting license payments from companies. Why did Uniloc create that table? To convince a massive private equity firm, Fortress, to give it money to demand payments from other companies—and sue those who tried to resist.

The court’s most recent order provided the public with the first meaningful look at the licensing table by unsealing the identities of more than 70 companies that paid Uniloc a license as well as the amounts they paid. Although the court agreed to redact the names and payments of a small number of companies that submitted statements to the court, it granted the public access to most of the information in the table as well as the total amount of revenue—$105 million—that Uniloc made from these payments.

None of this information should have ever been sealed. Yet as the below images show, it took years of advocacy by EFF to go from a nearly unreadable document to one that sheds light on how Uniloc obtains license payments. For example, the table shows that sometimes Uniloc licenses patents for as little as $2,500, while Activision Blizzard, Inc. paid $3.5 million for a license. But most payments are for less than $300,000. According to the FTC, when patent owners settle for that little, it’s usually a sign of patent trolling, which occurs when the threat of expensive litigation is used to extract settlements rather than to vindicate a patent infringement claim.

Here's the patent-licensing table that Uniloc filed with the court before the unsealing order:

 

Here's the same table after the unsealing order: 

Other unsealed records highlight the absurdity of Uniloc’s trade secrets claims

Throughout the transparency fight, Uniloc and Apple argued that any details about the companies that paid Uniloc must remain completely under seal to protect those companies’ trade secrets. The court’s most recent order largely rejected those claims. And newly unsealed written testimony shows that the desire for secrecy of some companies sued by Uniloc was rooted in practical concerns about being targeted by other patent trolls.

As one representative wrote in a declaration, disclosing the entities’ name and how much it paid Uniloc would make it more likely that other patent trolls seeking quick payments would target them in the future.

“We agreed to settle this case and enter this Agreement not because of its merits but because of the high cost of defense and the risk of a trial to our small company,” the representative wrote. “Further legal attacks of this sort are an existential threat to our business and we do not wish to become the target of other Non-practicing entities.”

A representative from another entity forced to pay Uniloc echoed those concerns, writing that “other non-practicing entities would be encouraged by knowledge of [the company’s] settlement with non-practicing entity Uniloc to seek nuisance licenses from [the company] in the future.”

And another company’s representative wrote that “even being identified as a party to the Uniloc Document may result in [the company] being a target of future patent litigation.” Similarly, a different company’s representative wrote that disclosing its identity would make “it a target in future litigation campaigns by non-practicing entities.”

The documents belie the trade secrecy claims advanced by Uniloc and Apple, raising legitimate questions about whether they accurately characterized these companies’ concerns in seeking to keep these records secret. As the above quotes show, their concerns were largely centered on protecting their companies, especially small companies, from further patent trolling. Now we know why Uniloc fought so hard to keep these statements out of public sight.

Court praises EFF for its work to vindicate public access to court records

EFF has long fought to bring greater transparency to patent litigation, as well as supporting proposals to shed light on patent trolls. This transparency effort, however, took a number of twists, including Apple joining with Uniloc in avoiding transparency and a bad decision by the U.S. Court of Appeals for the Federal Circuit that appeared to give Uniloc an opportunity to maintain excessive secrecy.

So we were quite pleased when the district court stood up for the public’s right to access court records and required Uniloc to disclose a number of documents in redacted form (you can view them all here). And we were relieved when Uniloc complied with the court order requiring disclosure instead of challenging it yet again.

But we were also humbled by the court’s recognition of EFF’s years-long advocacy on behalf of the public’s right to understand what’s happening in federal courts.

“The Electronic Frontier Foundation has been of considerable assistance to the Court,” the judge wrote. “The real parties herein have jointly aligned themselves against the public interest and EFF has been of enormous help in keeping the system honest. This order recognizes that assistance and thanks EFF.”

EFF will continue to push back on secrecy claims in patent litigation and elsewhere to ensure that the public is able to access court records and understand how patent trolls misuse our legal system to threaten innovation.



* This article was originally published here

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