In its pivotal 2018 decision in Applications in Internet Time v. RPX Corp. ("AIT"), the Federal Circuit admonished the PTAB for focusing too rigidly on "control" in analyzing whether an unnamed party qualifies as real party-in-interest ("RPI") in a post-grant patent challenge. Under 35 U.S.C. § 315(b), an inter partes review may not be instituted "if the petition requesting the proceeding [wa]s filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner [wa]s served with a complaint alleging infringement of the patent." Prior to AIT, the PTAB's RPI "control" analysis relied on factors such as the decision to file a post-grant challenge, payment of attorney/filing fees, and selection of prior art in support of the challenge.
In 2015, RPX filed IPR petitions challenging two AIT patents. RPX is a company that, among other things, works "to help members of its client network quickly and cost-effectively extricate themselves from non-practicing entity lawsuits." Salesforce, an RPX client, was time-barred from filing these IPR petitions itself because the filings were made more than one year after AIT sued Salesforce for patent infringement. AIT argued that the IPRs should be dismissed because Salesforce was both an RPI to the RPX petitions and time-barred. Nevertheless, the PTAB ruled that RPX was the sole RPI, instituted the IPRs, and later issued final written decisions, determining that the challenged claims were unpatentable.
On appeal, the CAFC vacated the final written decisions, holding that the PTAB erred in its consideration of the RPI issue. The CAFC held that determining whether a non-party is an RPI requires "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."
On remand with directions to apply a broader test, the PTAB examined the extensive record in connection with RPX's business model; RPX's own interest in the IPRs; whether, and under what circumstances, RPX takes a particular client's interests in determining whether to file an IPR; Salesforce's relationship with RPX; Salesforce's interest in and benefit from RPX's IPRs; whether RPX could be said to be representing Salesforce's interests in the IPR; whether Salesforce desired review of the patents; the relevance of RPX and Salesforce's overlapping board of directors; and communications between RPX and Salesforce.
While no single factor was deemed dispositive, seemingly the most important considerations to the PTAB's decision were RPX's business model, RPX's relationship with Salesforce, and Salesforce's direct benefit from RPX's IPRs. The PTAB also observed that RPX's activities, in general, included filing 57 IPR petitions, 47 of which challenged patents actively asserted against its clients. In sum, the PTAB found that "RPX was representing Salesforce's interests in filing these IPR proceedings. Most critically, Salesforce paid RPX to reduce Salesforce's patent litigation exposure, and RPX filed these IPRs despite having no apparent risk of infringement liability itself. In such circumstances, 'equitable and practical considerations' point clearly towards RPX and its members sharing a common interest in these proceedings."
Thus, although the PTAB did not find overt "control" of the IPR petitions by Salesforce (for example, an express or implied agreement with RPX to file the IPRs), the PTAB concluded that RPX was unable to show, by a preponderance of the evidence, that Salesforce was not an RPI. Accordingly, the PTAB ruled that RPX's IPR petitions were time-barred under 35 U.S.C. § 315(b) and terminated the IPRs.
Although the PTAB's decision turned on the specific facts of the case, patent owners may attempt to rely on this decision to argue that any IPR filed by RPX or similar defensive patent aggregators should not be instituted unless all of their clients are identified as real parties-in-interest or, at a minimum, if any client presently in litigation concerning the patent at issue is not listed as a real party-in-interest. It also remains to be seen whether RPX will modify its business model in view of this decision. Beyond the context of IPRs filed by defensive patent aggregators, parties considering a post-grant patent challenge, and those defending such challenges, should heed the CAFC's "flexible approach" in evaluating RPI inquires.
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