Uniloc 2017 LLC v. Google LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

UNILOC 2017 LLC, §

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Plaintiff, §

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v. § Case No. 2:18-cv-00503-JRG-RSP

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GOOGLE LLC, §

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Defendant. §

MEMORANDUM ORDER

Before the Court are two Motions, both filed by Defendant Google LLC: the Motion for

Attorneys’ Fees and Expert Fees Pursuant to 35 U.S.C. Section 285 and the Motion for Fees and

Costs Pursuant to 28 U.S.C. § 1927 (collectively, the “Motions”). Dkt. Nos. 298, 299.

I. BACKGROUND

Plaintiff Uniloc 2017 LLC filed this action against Google, as well as a dozen others

asserting different patents, in late 2018. In this case, Uniloc alleged that the health-checking

functionality in Google Cloud Platform (“GCP”), including the virtual machines within GCP,

infringed various claims of U.S. Patent No. 9,141,489. See Dkt. No. 1 at ¶¶ 79–109. The ’489

patent generally relates to a failover system in which a routing device monitors the operational

status of servers via status messages that include a fingerprint generated by the server. Dkt. No. 1-

1 at Abstract. Uniloc served its infringement contentions in May 2019.

Uniloc alleged that the “server” limitation was met by GCP’s virtual machines and the

“fingerprint” limitation was met by GCP’s usage of SSL in connection with GCP’s Load Balancing

and Health Test. Uniloc provided support for its allegations. See Dkt. No. 305 at 2–3 (citing Dkt.

No. 305-2 at 1–3, 6–23, 35; Dkt. No. 305-5 at ¶¶ 3, 5–13, 15–18, 20–21); see also Dkt. No. 298 at

ii (citing Dkt. No. 1 at ¶¶ 84, 85, 89, 92, 93, 96, 102; Dkt. No. 298-2 at 1, 3, 11, 12, 20, 22, 29, 34,

50, 54, 58, 61, 67, 72).1 The parties clearly disagree on what Uniloc needed to show to prove

infringement. Google disclosed some of its materials, such as source code, in support of its case.2

The Court construed disputed claim terms after holding a claim construction hearing in

January 2020. Relevantly, the Court construed “server” as “machine or device that includes a

hardware component, software component, or data component that provides services to other

components” and “server fingerprint” as

data that is reliably reproducible by an application operating on a particular client machine,

while being virtually irreproducible by any other means, and virtually impossible to guess

using any systematic or brute force algorithm. In short, each fingerprint is a complex and

unique data pattern generated from a stable system configuration of a particular client

machine.

Dkt. No. 164 at 11, 25. On March 24, 2020, Google sent Uniloc a letter explaining why it believed

Uniloc had no basis to maintain the suit in view of the Court’s Claim Constriction Order. Google

argued (1) the accused system lacked a hardware “server” because it used only virtual machines;

and (2) the accused health checking functionality did not rely upon SSL certificates and private

keys. Dkt. No. 298-11 at 4–6; see also Dkt. No. 298-13 at 3–5 (similar letter on April 24).

In May 2020, the Court placed Uniloc’s nine remaining active cases against Google into

three trial groups and scheduled three one-week trials for all nine cases. On June 5, 2020, Uniloc

asked for this case to be dismissed, along with two others, so that one case from each of the trial

groups would be eliminated. Dkt. No. 290. Google filed the present Motions soon after.3

1 Google argues that the Declaration of Palash Kacholia, Dkt. No. 305-5, should be disregarded. Dkt. No. 314 at 3 n.1.

This issue is moot, however, because the Court arrived at its conclusion without needing to rely on this declaration.

2 The parties fought over source code production for months. Uniloc took the position that it could not review the

produced source code without some guide or resource explaining what it was looking at. See e.g., Dkt. No. 207.

3 Google filed similar motions in in the two other dismissed cases: Case Nos. 2:18-cv-497 and 2:18-cv-503.

II. LEGAL STANDARD

a. 35 U.S.C. § 285

A district court “may award reasonable attorney fees to the prevailing party” if the case is

“exceptional.” 35 U.S.C. § 285. A case is “exceptional” if it “stands out from others with respect

to the substantive strength of a party’s litigating position (considering both the governing law and

the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness,

LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014)).

“[C]ourts contemplating an award of attorney’s fees should consider the totality of the

circumstances in the case.” Stragent, LLC v. Intel Corp., No. 6:11-cv-421, 2014 WL 6756304, at

*3 (E.D. Tex. Aug. 6, 2014) (Dyk, J., sitting by designation) (citing id.). “The totality of the

circumstances standard is not, however, an invitation to a ‘kitchen sink’ approach where the

prevailing party questions each argument and action of the losing party in an effort to secure

attorney’s fees.” Id. “[T]he mere fact that the losing party made a losing argument is not a relevant

consideration; rather, the focus must be on arguments that were frivolous or made in bad faith.”

Id. at *4 (citing Octane, 572 U.S. at 548).

Whether a case is exceptional is within the sound discretion of the district court. Highmark

Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559, 564 (2014). The Supreme Court and Federal

Circuit have recognized that it is “the district court . . . that lives with the case over a prolonged

period of time” and as such, “is better positioned to decide if the case is exceptional.” Id. (internal

quotation marks and citation omitted); see also Medtronic Navigation, Inc. v. BrainLAB

Medizinische Computersysteme GmbH, 603 F.3d 943, 953 (Fed. Cir. 2010) (expressing

“reluctance to second-guess the judgment of trial judges who typically have intimate knowledge

of the case”).

b. 28 U.S.C. § 1927

Counsel who “unreasonably and vexatiously” multiplies legal proceedings can be held

liable for fees and costs. 28 U.S.C. § 1927. Unreasonable and vexatious behavior means “evidence

of bad faith, improper motive, or reckless disregard of the duty owed to the court.” Edwards v.

Gen. Motors Corp., 153 F.3d 242, 246 (5th Cir. 1998) (citations omitted). “Conduct is

unreasonable and vexatious if there is evidence of the persistent prosecution of a meritless claim

and of a reckless disregard of the duty owed to the court.” Morrison v. Walker, 939 F.3d 633, 637–

38 (5th Cir. 2019) (internal quotation marks and citations omitted). To “shift the entire cost of

defense, the claimant must prove, by clear and convincing evidence, that every facet of the

litigation was patently meritless.” Id. at 637 n.13 (citations omitted).

III. ANALYSIS

Google argues that Uniloc pursued an implausible infringement theory that stood no chance

of success. Dkt. No. 298 at 1. Google also argues that Uniloc’s counsel had “unfettered control”

over this case and should be held jointly and severally liable for the actions discussed in its 285

Motion. Dkt. No. 299 at 1.

Google raises two major points. First, Google argues that its virtual machines cannot be

the claimed “servers” because servers require a hardware component, unlike its virtual machines.

It argues Uniloc made this point during prosecution of the patent. Dkt. No. 298-4 at 10–11. Second,

Google argues that its GCP does not meet several of the limitations of the claimed “server

fingerprint.” In fact, it argues that its GCP does not even use SSL. It further contends that an

adequate pre-suit investigation would have revealed that Uniloc’s case was meritless and this was

further reinforced throughout the case. It also argues that Uniloc’s counsel intentionally ignored

the weakness of its client’s position, which led to more litigation then necessary.

Uniloc responds that it acted reasonably in dismissing this case. Uniloc first counters that

it dismissed this case to narrow the issues for the jury and create overall judicial efficiency for the

overall trial process, which is conduct that is encouraged by the Court. Dkt. No. 305 at 5 (citing

VirnetX Inc. v. Cisco Sys., No. 6:10-CV-417, 2014 U.S. Dist. LEXIS 200766, at *20 (E.D. Tex.

Mar. 28, 2014). It also argues that it had a reasonable infringement case for both of the terms

brought up by Google.

For the “server” term, it argues that Google’s virtual machines are machines with multiple

hardware components, such as processors, memory, and storage. It points to Google’s

documentation, which acknowledges that its virtual machines are machines, explaining that the

user uses “virtual machines (VMs), called instances, to build your application, much like you

would if you had your own hardware infrastructure.” Dkt. No. 1 at ¶ 84; see also Dkt. No. 298-2

at 4. It next distinguishes the cited prosecution history. Uniloc contends that the argument there

was focused on a different issue entirely. It also explains that the prior art dealt with “virtual

servers” as opposed to Google’s “virtual machines” which are different.

As for Google’s argument regarding the “server fingerprint” term, Uniloc argues that

Google’s public documentation and source code support Uniloc’s allegation that Google uses SSL

encryption. Google, according to Uniloc, points to irrelevant portions of the code. Dkt. No. 305 at

8 (discussing the alleged “null” setting for SSL). When looking at the key parts, Uniloc still

contends that Google may infringe. Uniloc also explains how all the relevant limitations are met.

It then characterizes Google’s arguments as “unsupported attorney argument.” See id. at 8–9.

Uniloc ends by arguing that it litigated this case reasonably and in good faith. It contends

that it reasonably believed Google’s virtual machines met the “server” and “server fingerprint”

limitations of the claims. It argues that the reasonableness of its position is supported by the fact

that Google did not raise an issue with Uniloc’s infringement theories until months after the Claim

Construction Order issued. /d. at 10. It therefore asks that the Motions be denied.

The Court has reviewed the arguments made by both sides. Google has not shown that

Uniloc had “arguments that were frivolous or made in bad faith.” Stragent, 2014 WL 6756304, at

*4 (citing Octane, 572 U.S. at 548). The key question is whether Uniloc’s positions and conduct

stood out from the norm. They did not in this case. Accordingly, taking all factors into account

and in light of the Court’s extensive experience with both parties, the Court finds that the facts

here do not give rise to the extraordinary circumstances needed to declare the case exceptional.

For similar reasons, Google has not shown that Uniloc’s counsel “unreasonably and vexatiously”

multiplied the proceedings in this case.

IV. CONCLUSION

For the reasons stated herein, the Court DENIES Google’s Motions. Dkt. Nos. 298, 299.

SIGNED this 13th day of December, 2020.

ex S. v.,

ROY S. PAYNE

UNITED STATES MAGISTRATE JUDGE

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