Aptix Corporation v. Quickturn Design Systems, Inc.

148 Fed. Appx. 924 (2005)

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Nature of the Case

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Facts

Aptix (D) is the owner of U.S. Patent No. 5,544,069. Mohsen (D) founded Aptix (D) and at all relevant times was the majority shareholder, chief executive officer and chairman of the company. Mohsen (D) is also the only inventor named in the '069 patent. Quickturn (P) won a United States patent infringement suit against two companies, Mentor and Meta. Aptix (D) entered into an agreement with Mentor and Meta whereby Aptix (D) licensed the '069 patent and granted Meta the right to sue to enforce the patent. Mentor agreed to advance Aptix (D) all costs of prosecuting a patent infringement suit against P. Aptix (D) and Meta subsequently filed an infringement suit against P. The court dismissed the complaint and as a sanction for Aptix's (D) having engaged in a pattern of fraudulent behavior through the alteration and fabrication of evidence, perjury and the staged theft of evidence, the court held the '069 patent unenforceable and found that the case was exceptional such that P was entitled to attorney fees. The parties agreed to a settlement amount of $4.2 million with Aptix (D) retaining the right to object to certain categories of Quickturn's (P) attorney fees and costs. During the summer of 2000, Aptix (D) was in financial trouble. On July 25, 2000, Aptix (D) and Mohsen (D) entered into a security agreement whereby Mohsen (D) was granted a security interest in all of its assets in exchange for certain loan funds. Prior to July 2000, Mohsen (D) had loaned at least $2 million on an unsecured basis. Pursuant to the security agreement, Mohsen (D) loaned Aptix (D) at least $ 9.7 million between July 2000 and September 2003. Mohsen (D) received nineteen installments on the debt totaling approximately $ 1.5 million. On July 27, 2000, Aptix (D) filed an objection to certain categories of P’s attorney fees and costs. On August 10, 2000, P made its last filing on the issues surrounding the judgment by submitting a response. It was not until August 16, 2000, that Mohsen (D) perfected his security interest by filing a UCC financing statement. On September 8, 2000, the court awarded P the entire amount of attorney fees sought and entered final judgment in the case. Aptix (D) appealed, and the court vacated the finding that the '069 patent was unenforceable. P collected on the proceeds of a $2 million supersedeas bond posted by Aptix (D). Aptix (D) agreed to make monthly payments on the remainder of the judgment starting January 2, 2003. P established a judgment lien on Aptix's (D) assets pursuant to California law. P levied on certain of Aptix's (D) assets, and Mohsen (D) then made a third party claim to the assets based on his security interest executed in July 2000. The district court entered an order finding that Aptix (D) had granted the security interest to Mohsen (D) with 'actual intent …to hinder or delay satisfaction of the judgment due its creditor.' The court voided Mohsen's (D) security interest as a fraudulent transfer, and Mohsen (D) appealed.