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Latest Federal Court Cases, 7/30/18

July 30, 2018

Overview

Applications in Internet Time, LLC v. RPX Corp., Appeal Nos. 2017-1698, et al. (Fed. Cir. July 9, 2018) (unsealed July 24, 2018)

In a lengthy decision on an issue of first impression, the Federal Circuit addressed the standard for finding a party to be a “real party in interest” in an inter partes review35 U.S.C. § 312(a)(2) requires the petitioner to identify “all real parties in interest.”  35 U.S.C. S 315(b) prohibits the filing of an IPR if “the petitioner, real party in interest, or privy of the petitioner” was served with a complaint alleging infringement of the patent more than one year prior.

The IPRs at issue were brought by RPX Corporation, a “leading provider of patent risk solutions, offering . . . patent intelligence, insurance services, and advisory services.”  It stated in the petitions that it was the sole “real party in interest.”  However, there was more to the story.  The patent owner, AIT, had previously sued SalesForce.com for infringement.  Rather than file IPRs, SalesForce.com filed two CBM petitions, which were denied.  Shortly thereafter, RPX filed the IPR petitions.

Numerous pieces of circumstantial evidence raised questions about whether RPX was acting on behalf of SalesForce.com when it filed the petitions.  Among those facts were the following: SalesForce.com was an RPX client; they shared a member on their boards of directors; SalesForce.com had made large payments to RPX, which amounts had been increasing; RPX was aware of the AIT lawsuit and the denied CBM petitions; numerous communications between RPX and SalesForce.com leading up to the filing of the IPRs; RPX’s advertising materials stating that its interests were “100% aligned” with its clients, that it provided patent infringement “insurance” services to its clients, and that it served as an adjunct to its clients’ in-house legal departments.

The PTAB found that SalesForce.com was not a real party in interest, although previous panels had held that RPX was acting merely as a proxy for other large technology companies when it filed IPR petitions that appeared to benefit its clients.

The Federal Circuit reversed in a 41 page precedential opinion written by Judge O’Malley.  The Court noted that this was its first opportunity to review the “real party in interest” doctrine in post grant reviews because, prior to the en banc decision in Wi-Fi One, LLC v. Broadcom Corp., 878 F.3d 1364, 1374 (Fed. Cir. 2018), the Court had held that such issues were not subject to appellate review.

The Court first held that its review of the legal standard for real party in interest determinations was not subject to Chevron deference.  Then, tracing the common law on the real party in interest doctrine, the statutory text, and the legislative history, the Court concluded that “[d]etermining 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.”  The Court noted the Trial Practice Guide’s understanding of the inquiry as focusing on two questions: “whether a non-party ‘desires review of the patent’ and whether a petition has been filed at a non-party’s ‘behest.’”

The Court then concluded that the PTAB had failed to properly apply this test.  The Court also suggested that RPX might be guilty of “willful blindness” by working to confirm that SalesForce wanted RPX to file the IPRs, but “taking last-minute efforts to avoid obtaining an express statement of such desires.”  The Court also suggested that the PTAB may have improperly shifted the burden of proof on the issue.

In conclusion, the Court vacated the Board’s decisions and remanded for further proceedings, and suggested that additional discovery may be “warranted in the face of the non-frivolous challenge made to date by AIT to RPX’s somewhat bald assertions regarding who the real parties in interest are in these IPRs. 

Judge Reyna issued a 15 page concurring opinion, further elaborating on the issue of “privity,” and the relationship between “real party in interest” and “privity.”  He also expressed concerns that 35 U.S.C. § 312(a)(2), requiring the petitioner to identify all real parties in interest and the time bar under 35 U.S.C. § 315(b), were being conflated.

Opinion can be found here.

ALSO THIS WEEK

Trustees of Boston University v. Everlight Elects. Co., Ltd., Appeal Nos. 2016-2576 et al. (Fed. Cir. July 25, 2018)

In an appeal from the denial of a JMOL asserting lack of enablement, the Federal Circuit reversed.  The patent claimed certain types of LEDs in which materials are “grown on” the substrates.  Boston University sought a broad construction of two terms that, collectively, would have invoked six different potential permutations.  But one of the permutations would have been impossible to create.  Thus, the Federal Circuit reasoned, that embodiment was not enabled by the specification, and the claims were thus invalid.  The Court noted that the problem was one of Boston University’s own making—by seeking a broad construction of the terms to assert against competitors, it created an untenable situation where its patent failed to enable the claims as construed.

Opinion can be found here.

ZUP, LLC v. Nash Manufacturing, Inc., Appeal No. 2017-1601 (Fed. Cir. July 25, 2018)

In an appeal from a summary judgment decision, the Federal Circuit affirmed the district court’s holding that patent claims relating to a water recreational board and method of riding were obvious.  Patent owner ZUP, LLC argued that the district court applied a flawed obviousness analysis—finding a motivation to combine where there was none—and failed to properly consider evidence of secondary considerations of non-obviousness.  The Court rejected ZUP’s arguments, holding that the evidence sufficiently supported summary judgment.  Judge Newman dissented, asserting that the Court belatedly applied the secondary considerations and “the majority’s decision is a textbook example of hindsight.”

Opinion can be found here.

NantKwest, Inc. v. Iancu, Appeal No. 2016-1794 (Fed. Cir. July 27, 2018) (en banc)

In an en banc review of a panel decision concerning the scope of 35 U.S.C. § 145, the Federal Circuit reversed.  When the United States Patent and Trademark Office’s Patent Trial and Appeal Board affirms an examiner’s rejection of a patent application, § 145 of the Patent Act permits the disappointed applicant to challenge the Board’s decision in district court. Applicants who invoke § 145 are required by statute to pay “[a]ll the expenses of the proceedings” incurred by the PTO in defending the Board’s decision, regardless of the outcome. Historically, the agency relied on this provision to recover sums it spent on travel and printing and, more recently, expert witnesses. In this case, the agency argued that § 145 also compels applicants to pay its attorneys’ fees.  The en banc Federal Circuit held that “the American Rule prohibits courts from shifting attorneys’ fees from one party to another absent a ‘specific and explicit’ directive from Congress. The phrase ‘[a]ll the expenses of the proceedings’ falls short of this stringent standard.”  Thus, “all the expenses” excludes attorneys’ fees.

Opinion can be found here.

GoPro, Inc. v. Contour IP Holding LLC, Appeal No. 2017-1894, -1936 (Fed. Cir. July 27, 2018)

In an appeal from two inter partes reviews, the Federal Circuit reviewed the Board’s decision that a certain GoPro catalog was not a prior art printed publication.  The main issue was whether the catalog was sufficiently accessible.  The Court noted that it has interpreted § 102 broadly to cover even relatively obscure documents so long as they are accessible by the public.  Here, the Board found that GoPro failed to meet its burden of showing that a person skilled in the art conducting a reasonable diligent search would not have located the catalog at issue.  Consequently, the Court ordered the Board to consider the catalog as prior art and remanded for further proceedings consistent with its opinion.

Opinion can be found here.

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