Recalibration of RPI/Privy Perspectives Post-WiFi

Prior to the Federal Circuit’s decision in WiFi One, real-party-in-interest/privy disputes in AIA trials were the sole province of the Patent Trial & Appeal Board (PTAB). Now that the softened appeal bar allows consideration of such disputes (especially as they relate to the one year window of 315(b)), the Court is recalibrating PTAB practices in this regard.

Earlier this month, the Court issued its decision in Applications in Internet Time, LLC v. RPX Corporation. The public version of that opinion was issued yesterday, explaining that the Board was unduly narrow in its RPI analysis. This is one of the more significant decisions on PTAB practice this year and will very likely reinvigorate RPI/privy disputes at the Board.

The dispute in this case stemmed from the petitioner’s (RPX) alleged relationship with Salesforce.com. Salesforce filed CBMs against the Internet Time patents, but these filings were denied. After Salesforce was time barred from further PTAB challenges, RPX pursued IPRs of the same patents. Around this same time, the relationship between RPX and Salesforce was renewed. Patent Owner argued that the IPRs were improper for failing to name Salesforce as a RPI. Patent Owner insisted, based upon documents it had obtained in discovery, that RPX was just a proxy for Salesforce. The Board instituted the IPRs explaining that the record did not demonstrate inter alia, the requisite control by Salesforce over the RPX filings.

The Federal Circuit faulted this analysis as unduly narrow, explaining (here):

"Determining whether a non-party is a “real party in interest” demands a flexible approach that takes into account both equitable and practical considerations, with an eye toward determining whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner. Indeed, the Trial Practice Guide, on which the Board relied, suggests that the agency understands the “fact-dependent” nature of this inquiry, explaining that the two questions lying at its heart are whether a non-party “desires review of the patent” and whether a petition has been filed at a nonparty’s “behest.” Trial Practice Guide, 77 Fed. Reg. at 48,759. . . . .

The point is . . .to probe the extent to which Salesforce—as RPX’s client—has an interest in and will benefit from RPX’s actions, and inquire whether RPX can be said to be representing that interest after examining its relationship with Salesforce. The Board’s focus on RPX’s motivations to the exclusion of Salesforce’s reveals its misunderstanding of controlling legal principles. . . . . .

Here, the Board’s failure to consider Salesforce’s interest in the IPRs, its decision not to examine critically either RPX’s business model, its underestimation of the relevance, in the context presented here, of the fact that Salesforce and RPX had overlapping members on their respective boards of directors, and its decision to accept at face value RPX’s explanation of its own interest in the IPRs indicates that the Board did not adequately assess whether Salesforce actually “desire[d] review of the patent[s].” 77 Fed. Reg. at 48,759.

Next, the Board relied on [RPX Officer’s] averment that “RPX did not have any contractual obligation to file [the] IPRs or any ‘unwritten,’ implicit or covert understanding with Salesforce that it would do so.” [H]owever, a nonparty to an IPR can be a real party in interest even without entering into an express or implied agreement with the petitioner to file an IPR petition.

(emphasis added, internal citations omitted)

This decision is significant as it makes clear that “control,” the factor previously considered almost to the exclusion of other factors in such RPI disputes, is not the exclusive test. Moreover the decision explains the burden of persuasion will shift to the petitioner once the Patent Owner “provides sufficient evidence prior to institution that reasonably brings into question the accuracy of a petitioner’s identification of RPIs.”

The concurrence explains a similar view of privity analyses, and notes that such relationships as indemnification may lead to an argument that a privy has not been identified. This aspect of the decision is sure to trigger a renewed interest in privity battles at the PTAB in multi-defendant JDG settings.

Scott A. McKeown is an author of the Patents Post Grant