The U.S. Patent and Trademark Office is making it harder for companies to try to get patents invalidated when partner organizations are legally barred from doing so, causing practitioners on both sides to reconsider strategies.
The agency in a precedential decision laid out a framework for patent tribunal judges to apply in weighing whether companies involved with membership groups like RPX Corp. or partnering with other patent challenging outfits qualify as real parties in interest (RPIs)—those who would benefit from a patent tribunal decision even though they’re not the petitioner.
RPX Corp. v. Applications in Internet Time LLC, a decision of the Patent Trial and Appeal Board designated as precedential on Dec. 4, is aimed at preventing multiple, coordinated attacks on a rival’s intellectual property.
Attorneys say RPX marks a sea change in how the PTAB analyzes whether a third party qualifies as an RPI. Patent owner counsel can use the decision to fend off certain validity challenges. Challenger attorneys also can benefit by knowing what evidence judges could uncover that would ruin their challenges.
The case has been a hot one for the PTAB bar, because “the statutory requirements to name all interested parties has been sort of unsettled for a while, and these issues come up all the time,” Michelle Armond, a patent attorney and co-founder of Armond Wilson LLP, said.
The decision makes it harder for membership companies, partner entities, and organizations described as middlemen to mount PTAB challenge when a connected company sued in court for infringement of a patent missed the one-year window to mount a challenge to the patent’s validity. It also makes it more difficult for connected parties to make a multiple attacks on a patent.
“This is a big shift for everybody,” Armond said.
Bridget Smith, a patent attorney at Lowenstein & Weatherwax LLP, said that under RPX, “it’s easier to find a party to be a real party in interest.”
“I think a lot of petitioners and these middleman entities were under the assumption that they did not qualify as real parties in interest,” Smith said. And while the case was fact specific, the boundaries of how facts apply in different cases will be “hotly disputed,” she said.
To make a case for or against a party being an RPI, “you have to have some strong facts,” Tyson Benson, patent attorney at Vivacqua Crane PLLC, said.
Among other things, companies will want to ensure their marketing materials are “up to snuff,” Benson said.
The dispute revolved around Applications in Internet Time LLC patents. The PTAB took the dispute on remand from the U.S. Court of Appeals for the Federal Circuit. Previously, the patent board found that Salesforce.com Inc.—an RPX member that AIT sued and that was time-barred from using the PTAB— wasn’t a real party in interest. The PTAB then instituted a validity challenge.
The Federal Circuit, however, said the board applied too narrow a definition of RPI, and sent the case back for reconsideration.
On the second—and precedential—go, the PTAB took a deep dive into RPX’s business model. The board said RPX filed inter partes reviews to benefit its member Salesforce, and that this supported the conclusion that Salesforce was an RPI in the proceedings, meaning RPX, too, was time-barred.
RPIs, like petitioners, can’t rehash arguments from a prior IPR decided by the board in a fresh validity challenge at the tribunal or district court. In addition, petitioners have one year from being served a patent infringement lawsuit to try to kill the patent at the PTAB. Parties found to be RPIs are held to that same restriction.
RPX’s marketing materials were among the evidence that the PTAB pointed to in determining that Salesforce was an RPI.
“Make sure all of your business dealings are at arm’s length, and that you can show these are not real parties in interest,” Benson said.
Caution to Challengers
The decision also gives lessons in caution for challengers and their partners.
Petitioners have to be careful to avoid appearing as if an outside party has “control” regarding “any aspect of a filing,” said Ravi Mohan, a patent attorney at Rutan & Tucker LLP.
Patent owners have learned lessons as well.
Overall, the decision provides patent owners more “angles” to poke under to identify interested parties who may be barred from challenging their IP, Armond said.
Benson said that patent owners have a better idea as to what to look for in discovery to prove a petitioner has a problematic interested party. This means that patent owner’s counsel will want to make sure they can access meaningful information to establish a business relationship, including using technology for finding old online postings, periodicals, and other materials.