Inter partes reviews (IPRs) (37 C.F.R. §42.100 et seq.) may be instituted by the USPTO, at its discretion, but there are some defined statutory requirements. On August 17, 2018, the Court of Appeals for the Federal Circuit unsealed an opinion that was originally written on July 9, 2018, Applications in Internet Time, LLC v. RPX Corp.,[1] which held that the USPTO’s definition of “real party in interest” was too narrow for a reading of the inter partes review time-bar statute, §315(b).
The facts are as follows.
Applications in Internet Time (AIT) owns U.S. Patent Nos. 7,356,482 (‘482) and 8,484,111 (‘111), both entitled “Integrated change management unit,” and directed to methods and systems for integrated management of information of regulatory systems in a computer environment. On November 8, 2013, AIT filed a suit against Salesforce, Inc. alleging infringement of the ‘482 and ‘111 patents; a complaint was served on November 20, 2013. Salesforce then filed a covered business method (CBM) review (37 C.F.R. §42.300) in August 2014. The CBM petition was denied by the USPTO for failure to establish the patents at-issue were covered business methods as defined by the AIA.[2]
RPX Corp., a patent risk management company of which Salesforce is a client, then filed three IPR petitions against AIT on August 17, 2015, challenging the patentability of the ‘482 and ‘111 patents. AIT argued that RPX was merely a proxy for Salesforce, which was the real party in interest, but the USPTO instituted review over those objections. The PTAB then found the ‘482 and ‘111 patents invalid as unpatentable as obvious. AIT appealed, especially the time-bar ruling.
The Fed Circuit panel was composed of Judges O’Malley, Reyna, and Hughes, with Judge O’Malley writing for the court.
35 U.S.C. §315(b) states that:
An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy is served with a complaint alleging infringement of the patent. The time limit set forth in the preceding sentence shall not apply to a request for joinder under section (c).
(Emphasis added.)
By a plain reading of the statute, the RPX IPRs were filed nineteen months after AIT’s service of the patent infringement complaint on Salesforce, making the IPRs time-barred under §315(b) if RPX had filed the IPRs with Salesforce as the real party in interest. This question is the primary issue the Fed Circuit panel addressed in the ruling. The purpose of the privity requirement is to prevent parties who have had an opportunity to litigate a patent challenge from making multiple challenges to that same patent.[3] Judge O’Malley noted that the PTAB enunciated the proper standard of review:
Whether an entity that is not named as a participant in a given proceeding constitutes [a real party in interest] is a highly fact-dependent question that takes into account how courts generally have used the terms to “describe relationships and considerations sufficient to justify applying conventional principles of estoppel and preclusion.” citing Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759 (Aug. 14, 2012) . . . [T]he spirit of that formulation as to IPR [] proceedings means that, at a general level, the “real party-in-interest” is the party that desires review of the patent. Thus, the “real party-in-interest” may be the petitioner itself, and/or it may be the real party or parties at whose behest the petition has been filed.[4]
Judge O’Malley believed from there the PTAB’s analysis goes off the rails. She noted that it disregarded AIT’s citation to the record as “take out of context or mischaracterized.” Specifically, RPX’s clients are charged a subscription fee for RPX’s risk management services. The PTAB did not warrant this enough to make Salesforce a “real party-in-interest” because it failed to consider this fact to be relevant. Judge O’Malley found this faulty, and criticized the PTAB’s narrow reading of the real party-in-interest definition, in both the PTAB trial guide procedures and common law principles.
[T]he [PTAB] never required RPX to assert or prove that “the industry at large” would be impacted by or have an interest in these patents or these IPRs. Thus, even if it were enough for RPX to prove that it had other clients who might benefit from the invalidation of the patents at issue, the PTAB did not require RPX to prove that to be true.[5]
Thus, based on the factual findings – the subscription agreement between RPX and Salesforce, RPX’s general practice to pursue IPRs regardless of whether its clients agreed to be named as a real party-in-interest in the petitions, as well as the litigation history between Salesforce and AIT which was a product of the failed CBM petitions filed by Salesforce requesting invalidation of the same patents at-issue in these IPRs – should have been enough finding to demonstrate that RPX was, in fact, acting as a proxy for Salesforce on the issue of invalidating the ‘482 and ‘111 patents.
Judge O’Malley also noted – and critiqued – the PTAB’s assessment of Salesforce’s refusal to engage with RPX to file the IPRs demonstrated Salesforce’s recognition of the time-bar limitations:
[T]he evidence submitted indicates [Salesforce’s] understanding that the very challenges to validity included in the IPR petitions were challenges Salesforce would like to have made if not time-barred from doing so. [] Approximately five weeks after the [PTAB] denied Salesforce’s CBM petitions, RPX asked Salesforce . . . “if it would like RPX to reach out to AIT to try to obtain information regarding AIT’s expectations for its litigation campaign in view of the fact that Salesforce’s petition for CBM had been denied” . . . Salesforce indicated that it was not interested in having RPX reach out to AIT at that time . . . . Had the Board examined any of this evidence, it might have interpreted Salesforce’s change of heart and RPX’s effort not to acquire any additional information as a mutual desire to avoid entering into an express agreement under which RPX would file IPR petitions challenging AIT’s patents for Salesforce’s benefit.[6]
She suggested that Salesforce knew that by agreeing to RPX’s request to file the IPRs would be an express agreement to challenge AIT’s ‘482 and ‘111 patents, which Salesforce knew would be construed as “privity,” and most likely denied as time-barred under §315(b).
As a result of the unanimous opinion of the panel, the IPR final decisions were vacated as time-barred by §315(b), with final determination of whether Salesforce was either a real party in interest or a privy of RPX remanded back to the PTAB. The substantive §103 invalidity decision was also left untouched by the panel.
This decision, although a bit lengthy, did create a clearer understanding of the “real party in interest” language of §315(b), which must be done through a careful reading of the factual record. Salesforce is likely to file a petition for en banc review, so this issue may not be entirely concluded.
[1] ___F.3d___ (Fed. Cir. 2018) (slip op.), vacating and remanding RPX Corp. v. Applicants in Internet Time, LLC, No. IPR2015-01751, IPR2015-01752, 2016 WL 7985456 (P.T.A.B. Dec. 28, 2016) (’482 Decision), and No. IPR2015-01750, 2016 WL 7991300 (P.T.A.B. Dec. 28, 2016) (‘111 Decision).
[2] See Salesforce.com, Inc. v. Applications in Internet Time LLC, No. CBM2014-00168, 2015 WL 470747, at *6 (P.T.A.B. Feb. 2, 2015), and No. CBM 2014-00162, 2015 WL 470746, at *7 (P.T.A.B. Feb. 2, 2015).
[3] See AIT, supra (slip op. at 4) (Reyna, J., concurring) (citing WesternGeco LLC v. ION Geophysical Corp., 889 F.3d 1308, 1319 (Fed. Cir. 2018).
[4] Id. (slip op. at 9) (O’Malley, J.).
[5] Id. (slip op. at 31).
[6] Id. (slip op. at 34-35).