Uniloc USA, Inc. et al. v. Kaspersky Lab, Inc.

Case Overview: NPE Uniloc Targets Kaspersky's Software Activation

This patent infringement lawsuit was a typical engagement in a broader campaign by Uniloc, a well-known non-practicing entity (NPE), also described as a patent assertion entity (PAE) or, by critics, a "patent troll". Uniloc USA, Inc. and its Luxembourg-based affiliate acquire patents and generate revenue through litigation and licensing rather than producing their own technology. In this case, they targeted Kaspersky Lab, Inc., a global cybersecurity and anti-virus software company founded in Russia. The accused products were Kaspersky's popular anti-virus and security software suites, which Uniloc claimed infringed its patent covering software activation and anti-piracy technology. The core of the dispute revolved around the method used to verify a legitimate software license and prevent its use on multiple unauthorized devices.

The lawsuit was filed in the U.S. District Court for the Eastern District of Texas, a venue historically favored by patent plaintiffs for its fast-paced "rocket docket" and reputation for plaintiff-friendly juries and procedures. Uniloc asserted a single patent, U.S. Patent No. 5,490,216, titled "System for Software Registration." The '216 patent, which had been asserted against over 160 companies including Microsoft in a high-profile case, describes a system to prevent software piracy by generating a unique ID for a user's machine and matching it with a remotely generated ID to unlock the software's full functionality.

This case is notable as part of the extensive litigation campaign surrounding the '216 patent, which terrorized the tech industry for years. The widespread assertion of this patent eventually led to numerous challenges at the Patent Trial and Appeal Board (PTAB). While Kaspersky's own PTAB petition to institute an inter partes review (IPR) against the patent was denied in 2015, other petitions filed by companies like Sega were successful. Ultimately, the PTAB invalidated all claims of the '216 patent, a decision affirmed by the Court of Appeals for the Federal Circuit in October 2017. This invalidation was a major victory for the tech industry and effectively ended Uniloc's long-running and lucrative litigation campaign based on this patent, leading to the dismissal of the case against Kaspersky.

Key Legal Developments & Outcome

This case followed a path common for many lawsuits involving Uniloc's U.S. Patent No. 5,490,216: initial litigation activity, a stay pending review by the Patent Trial and Appeal Board (PTAB), and eventual dismissal after the patent was invalidated. The key events occurred over nearly five years, culminating in the patent's demise at the federal appellate level.

Chronology of Key Events

• 2013-10-18: Complaint Filed. Uniloc USA, Inc. and Uniloc Luxembourg S.A. filed their patent infringement complaint against Kaspersky Lab, Inc. in the Eastern District of Texas, alleging that Kaspersky's software activation and product registration systems infringed the '216 patent (Dkt. 1).

• 2014-01-13: Answer and Counterclaim. Kaspersky filed its answer, denying infringement and asserting that the '216 patent was invalid on multiple grounds, including anticipation, obviousness, and failure to meet the requirements of 35 U.S.C. § 101 for patentable subject matter. Kaspersky also filed a counterclaim seeking a declaratory judgment of non-infringement and invalidity (Dkt. 10).

• 2014-11-19: Kaspersky Petitions for Inter Partes Review (IPR). In a crucial parallel proceeding, Kaspersky Lab, Inc. filed a petition with the USPTO's Patent Trial and Appeal Board (PTAB) to institute an inter partes review of all claims of the '216 patent, arguing the claims were obvious over prior art. The assigned case number was IPR2015-00361.

• 2015-05-27: PTAB Denies Institution of Kaspersky's IPR. In a setback for Kaspersky, the PTAB denied its petition to institute the IPR. The Board was not persuaded at that stage that there was a "reasonable likelihood" that Kaspersky would prevail in showing the patent's claims were unpatentable based on the specific prior art and arguments presented in its petition (IPR2015-00361, Paper 10).

• 2015-09-08: Case Stayed Pending Other IPRs. Despite the denial of Kaspersky's own IPR petition, the district court case was stayed. By this time, numerous other IPR petitions had been filed against the '216 patent by other accused infringers, including Sega of America, Inc., Electronic Arts Inc., and Ubisoft, Inc. The PTAB had instituted reviews based on those petitions (e.g., IPR2015-00445, IPR2015-00446). Recognizing the significant overlap and the potential for the PTAB to invalidate the patent, Judge Rodney Gilstrap ordered the Uniloc v. Kaspersky case stayed pending the final outcome of those parallel PTAB proceedings.

• 2016-04-26: PTAB Invalidates All Claims of the '216 Patent. The PTAB issued its Final Written Decision in the consolidated IPRs brought by Sega, Ubisoft, and others. The Board found all challenged claims (1-29) of the '216 patent to be unpatentable as obvious over the prior art. This was a decisive victory for the dozens of companies Uniloc had sued.

• 2017-10-23: Federal Circuit Affirms PTAB's Invalidation. Uniloc appealed the PTAB's decision to the U.S. Court of Appeals for the Federal Circuit. In a summary Rule 36 affirmance, the Federal Circuit upheld the PTAB's invalidation of all claims of the '216 patent, effectively rendering the patent permanently unenforceable. This decision, styled as Uniloc USA, Inc. v. Sega of America, Inc., was the final nail in the coffin for the '216 patent litigation campaign.

• 2018-07-31: Stipulation of Dismissal. Following the Federal Circuit's final decision affirming the patent's invalidity, the parties—Uniloc and Kaspersky—had no basis to continue the litigation. They filed a joint stipulation to dismiss the case.

• 2018-08-01: Final Judgment and Dismissal. Pursuant to the parties' stipulation, Judge Gilstrap entered a final judgment, dismissing all claims and counterclaims with prejudice. Each party was ordered to bear its own attorneys' fees and costs (Dkt. 34). The case was officially closed.

Counsel for Plaintiff Uniloc USA, Inc.

Plaintiffs Uniloc USA, Inc. and Uniloc Luxembourg S.A. were represented by attorneys from the Etheridge Law Group, a firm heavily involved in Uniloc's litigation campaigns, and the prominent East Texas litigation firm Ward, Smith & Hill (now known as Miller Fair Henry, PLLC), which served as local counsel.

Lead Counsel

• Name: James L. Etheridge
  • Role: Lead Counsel
  • Firm: Etheridge Law Group, PLLC (Southlake, TX)
  • Note: Etheridge has been a central figure in Uniloc's litigation campaigns for years, having been involved in over 550 patent litigations and serving as lead counsel in hundreds of cases.

Local Counsel

• Name: T. John Ward, Jr. ("Johnny" Ward)

  • Role: Local Counsel
  • Firm: Ward, Smith & Hill, PLLC (Longview, TX)
  • Note: A founding partner of his firm, Johnny Ward is a veteran East Texas trial lawyer well-known for representing patent plaintiffs in high-stakes litigation.

• Name: J. Wesley Hill

  • Role: Local Counsel
  • Firm: Ward, Smith & Hill, PLLC (Longview, TX)
  • Note: A partner at Ward, Smith & Hill, Hill is an experienced trial lawyer frequently involved in the firm's significant patent infringement cases in the Eastern District of Texas.

Defendant Representatives

Defendant Kaspersky Lab, Inc. was represented by the prominent intellectual property law firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. The firm is known for its extensive experience in all aspects of patent law, including litigation and post-grant proceedings. Kaspersky has a history of vigorously defending itself against patent infringement claims, particularly from non-practicing entities.

The following attorneys from Finnegan appeared on behalf of Kaspersky in this matter:

Lead Counsel

• Name: Michael J. Flibbert

  • Role: Lead Counsel
  • Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (Washington, D.C.)
  • Note: A partner with over 20 years of experience, Flibbert frequently serves as lead counsel in district court litigation and PTAB proceedings, focusing on complex patent cases.

• Name: William B. Raich

  • Role: Lead Counsel
  • Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (Washington, D.C.)
  • Note: Dr. Raich is a partner whose practice centers on patent litigation in the life sciences and technology sectors, and he previously clerked at the U.S. Court of Appeals for the Federal Circuit.

Of Counsel

• Name: Eliot D. Williams

  • Role: Of Counsel
  • Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (Washington, D.C.) (at the time of the case); now a partner at Baker Botts LLP.
  • Note: Williams is an experienced trial and appellate advocate who has appeared in over 300 PTAB trials and argued numerous cases before the Federal Circuit.

• Name: G. Franklin Burnett, III

  • Role: Of Counsel
  • Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (Washington, D.C.)
  • Note: There is limited public information available regarding G. Franklin Burnett's specific past cases, but his association with Finnegan's IP litigation practice indicates experience in this area.