## Facts

- Aptix Corporation and its licensee sued Quickturn Design Systems, Inc. for patent infringement in the Northern District of California.
- The district court found Aptix, acting through its founder and CEO Amr Mohsen, engaged in serious litigation fraud, including fabrication and alteration of evidence and perjury, and dismissed the infringement case as a terminating sanction.
- Quickturn obtained an attorney’s-fees judgment against Aptix of about $4.2 million.
- Before entry of the fee judgment, Mohsen had made about $2 million in unsecured loans to Aptix.
- Near the time Quickturn’s fee award was pending or imminent, Aptix granted Mohsen a security interest securing a $9.7 million “loan,” encumbering essentially all of Aptix’s assets.
- Quickturn moved under Federal Rule of Civil Procedure 69(a) to enforce the fee judgment and to void Mohsen’s security interest as a fraudulent transfer under California’s Uniform Fraudulent Transfer Act (UFTA), Cal. Civ. Code § 3439.04(a).
- The district court held the grant of the security interest to Mohsen was made with actual intent to hinder, delay, or defraud Quickturn and voided the lien.
- Mohsen, as a third-party claimant asserting the lien, appealed.

## Issues

1. Whether the district court clearly erred in finding Aptix granted Mohsen the security interest with actual intent to hinder, delay, or defraud Quickturn under Cal. Civ. Code § 3439.04(a)(1).
2. Whether the district court properly inferred actual intent from UFTA “badges of fraud,” including insider status, timing, and transfer of substantially all assets.
3. Whether Rule 69(a) permitted use of California fraudulent-transfer law to invalidate the security interest in aid of executing the federal fee judgment.

## Decision

- The Federal Circuit affirmed the order voiding Mohsen’s security interest.
- The court held the district court did not clearly err in finding actual fraudulent intent under Cal. Civ. Code § 3439.04(a)(1).
- The court held Rule 69(a) authorized reliance on state-law execution remedies, including California’s UFTA, to evaluate the lien’s validity against the judgment creditor.

## Legal Principles

- Under Rule 69(a), a federal court may apply the forum state’s procedures and remedies in aid of enforcing a federal money judgment.
- A transfer is fraudulent under Cal. Civ. Code § 3439.04(a)(1) if made with actual intent to hinder, delay, or defraud a creditor.
- Actual intent may be inferred from circumstantial evidence and statutory “badges of fraud,” including transfer to an insider, timing after suit or when liability is imminent, transfer of substantially all assets, and resulting impairment of a creditor’s collection prospects.
- Appellate review of a district court’s finding of actual fraudulent intent is for clear error, and the reviewing court does not reweigh competing inferences if the finding is plausible on the record.

## Conclusion

The Federal Circuit upheld the voiding of Aptix’s broad, insider-granted security interest to Mohsen because the record supported a finding that the lien was structured and timed to obstruct Quickturn’s collection of its attorney’s-fees judgment, making the transfer fraudulent under California UFTA in postjudgment enforcement proceedings.


Aptix Corp. v. Quickturn Design Sys., Inc., 148 F. App’x 924 (Fed. Cir. 2005)