Petition for Writ of Certiorari — RPX Corporation, Petitioner v. Applications in Internet Time, LLC
Supreme Court briefJan 22, 2019
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APPENDIX
TABLE OF CONTENTS
Public Material (Appended to Petition)
Page
Opinion of the United States Court of Appeals
for the Federal Circuit, Applications in
Internet Time, LLC v. RPX Corporation,
897 F.3d 1336 (Fed. Cir. 2018)...........................la
Final Written Decision of the Patent Trial and
Appeal Board, Applications in Internet
Time, LLC v. RPX Corporation, Case
IPR2015-01750, 2016 WL 7991300
(P.T.A.B. Dec. 28, 2016)....................................60a
Final Written Decision of the Patent Trial and
Appeal Board, Applications in Internet
Time, LLC v. RPX Corporation, Case
IPR2015-01751, IPR2015-01752, 2016 WL
7985456 (P.T.A.B. Dec. 28, 2016) ................... 101a
Decision of the Patent Trial and Appeal Board
Instituting Inter Partes Review, RPX
Corporation v. Applications in Internet
Time, LLC, Case IPR2015-01750 (P.T.A.B.
May 12, 2016), Paper 60 (redacted version)
(see Supplemental Appendix volume for
unredacted version) ........................................153a
Decision of the Patent Trial and Appeal Board
Instituting Inter Partes Review, RPX
Corporation v. Applications in Internet
Time, LLC, Case IPR2015-01751 (P.T.A.B.
May 12, 2016), Paper 62 (redacted version)
(see Supplemental Appendix volume for
unredacted version) ........................................194a
11
TABLE OF CONTENTS—Continued
Page
Decision of the Patent Trial and Appeal Board
Instituting Inter Partes Review, RPX
Corporation v. Applications in Internet
Time, LLC, Case IPR2015-01752 (P.T.A.B.
May 12, 2016), Paper 62 (redacted version)
(see Supplemental Appendix volume for
unredacted version) ........................................243a
Order of the United States Court of Appeals for
the Federal Circuit Denying Petition for
Rehearing En Bane, Applications in
Internet Time, LLC v. RPX Corporation,
Nos. 2017-1698, 2017-1699, 2017-1701
(Fed. Cir. Oct. 23, 2018) .................................295a
35 U.S.C. § 312......................................................297a
35 U.S.C. § 314......................................................298a
35 U.S.C. § 315......................................................299a
35 U.S.C. § 319......................................................302a
Under Seal Material
(Supplemental Appendix Volume)
Decision of the Patent Trial and Appeal Board
Instituting Inter Partes Review, RPX
Corporation v. Applications in Internet
Time, LLC, Case IPR2015-01750 (P.T.A.B.
May 12, 2016), Paper 60 (unredacted
version) (see Appendix appended to
Petition for redacted version).........................153a
111
TABLE OF CONTENTS—Continued
Page
Decision of the Patent Trial and Appeal Board
Instituting Inter Partes Review, RPX
Corporation v. Applications in Internet
Time, LLC, Case IPR2015-01751 (P.T.A.B.
May 12, 2016), Paper 62 (unredacted
version) (see Appendix appended to
Petition for redacted version).........................194a
Decision of the Patent Trial and Appeal Board
Instituting Inter Partes Review, RPX
Corporation v. Applications in Internet
Time, LLC, Case IPR2015-01752 (P.T.A.B.
May 12, 2016), Paper 62 (unredacted
version) (see Appendix appended to
Petition for redacted version).........................243a
la
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
APPLICATIONS IN INTERNET
TIME, LLC, Appellant
V.
RPX CORPORATION, Appellee
2017-1698
2017-1699
2017-1701
Decided: July 9, 2018
897 F.3d 1336
Before O'MALLEY, REYNA, and HUGHES,
Circuit Judges.
Opinion for the court filed by Circuit Judge
O'Malley, in which Circuit Judge Hughes joins in the
judgment.
Concurring opinion filed by Circuit Judge Reyna.
O'MALLEY, Circuit Judge.
This appeal arises from three inter partes reviews
("IPRs") challenging claims of two patents owned by
Appellant Applications in Internet Time, LLC ("AlT"):
U.S. Patent Nos. 7,356,482 ("the '482 patent") and
8,484,111 ("the '111 patent"). The Patent Trial and
Appeal Board ("Board") of the United States Patent
and Trademark Office ("PTO") instituted the IPRs
over AlT's objection that the three IPR petitions filed
by Appellee RPX Corporation ("RPX") were timebarred under 35 U.S.C. §315(b) (2012). AlT
contended that RPX was acting as a "proxy" for one of
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its clients, Salesforce.com, Inc. ("Salesforce"), on
whom AlT had served a complaint alleging
infringement of the '482 and '111 patents more than
one year before RPX filed its petitions. Thus, AlT
alleged that RPX was not the only real party in
interest and that the time bar applicable to Salesforce
was equally applicable to RPX. In two final written
decisions, the Board held certain claims of the patents
unpatentable under 35 U.S.C. § 103. RPX Corp. v.
Applications in Internet Time, LLC, Nos. IPR201501751, IPR2015-01752, 2016 WL 7985456 (P.T.A.B.
Dec. 28, 2016) (482 Decision); RPX Corp. v.
Applications in Internet Time, LLC, No. IPR201501750, 2016 WL 7991300 (P.T.A.B. Dec. 28, 2016)
(111 Decision).
AlT appeals, among other things, the Board's
time-bar and unpatentability determinations. For
the reasons set forth below, we conclude that the
Board applied an unduly restrictive test for
determining whether a person or entity is a "real
party in interest" within the meaning of § 315(b) and
failed to consider the entirety of the evidentiary
record in assessing whether § 315(b) barred
institution of these IPRs. We accordingly vacate the
Board's final written decisions and remand for further
proceedings.
I. BACKGROUND
A. The Salesforce Litigation and Failed Covered
Business Method Petitions
Salesforce is a software company that offers
customer relationship management software to its
clients. On November 8, 2013, AlT filed a complaint
against Salesforce, asserting infringement of both
patents. See Compi., Applications in Internet Time,
3a
LLC v. Salesforce.com, Inc., No. 3:13-cv-00628 (D.
Nev. Nov. 8, 2013), ECF No. 1. Salesforce was served
with a copy of the complaint on November 20, 2013.
As the district court noted, Salesforce's "right to
file a petition with the PTAB seeking [IPR] of the
patents in suit expired in November 2014" under 35
U.S.C. § 315(b). Id. Rather than timely petition for
IPR of the '482 and '111 patents, Salesforce filed
petitions for covered business method ("CBM") review
in August 2014. Applications in Internet Time, LLC
v. Salesforce.com, Inc., No. 3:13-cv-00628, 2015 WL
8041794, at *1 (D. Nev. Dec. 4, 2015). The Board
denied both CBM petitions in February 2015,
concluding that Salesforce failed to establish that the
patents are "covered business method patent[s]"
within the meaning of the AlA. Salesforce.com, Inc.
v. Applications in Internet Time LLC, No. CBM201400168, 2015 WL 470747, at *6 (P.T.A.B. Feb. 2, 2015);
Salesforce.com , Inc. v. Applications in Internet Time
LLC, No. CBM2014-00162, 2015 WL 470746, at *7
(P.T.A.B. Feb. 2, 2015).
B. RPX's IPR Petitions and Pre-Institution
Discovery
RPX is a public company whose stated "mission is
to transform the patent market by establishing RPX
as the essential intermediary between patent owners
and operating companies." J.A. 31. One of its
strategies is "to help members of [its] client network
quickly and cost-effectively extricate themselves from
[non-practicing entity ('NPE')] lawsuits." J.A. 29.
Salesforce is one of RPX's clients.
On August 17, 2015—more than one year after
Salesforce was served with copies of AlT's complaint
in the Salesforce litigation and several months after
Salesforce's CBM petitions were denied—RPX filed
three IPR petitions challenging the patentability of
claims of the '482 and '111 patents. In each petition,
RPX identified itself as the "sole real party-ininterest," and certified that it is not barred or
estopped from requesting IPR as to the '482 and '111
patent claims. Moreover, in each petition, RPX
acknowledged that the outcome of the IPRs could
impact the ongoing Salesforce litigation.
Shortly thereafter, AlT filed motions for
additional discovery, in which it asked the Board to
compel RPX to produce documents relevant to
identifying the real parties in interest.
AlT
"expect[ed] that the requested discovery, together
with additional information, will make a compelling
showing that RPX is the agent of unnamed third
party Salesforce .com, Inc. (Salesforce), thus
-establishing that the petitions are time-barred under
35 U.S.C. § 315(b)." J.A. 17. RPX opposed the
motions. The Board, relying on passages in the PTO's
Patent Trial Practice Guide, 77 Fed. Reg. 48,756 (Aug.
14, 2012) ("Trial Practice Guide"), was "persuaded
that the combination of factors present here justifie[d]
permitting additional discovery on the issue of
whether Salesforce is a" real party in interest, and
granted in part AlT's motions. J.A. 1068-69.
Over the following weeks, RPX produced
documents responsive to certain of AlT's discovery
requests. Among these documents are webpages that
reveal, among other things, that (1) RPX "is the
leading provider of patent risk solutions, offering
defensive buying, acquisition syndication, patent
intelligence, insurance services, and advisory
services," id. at 73; (2) its "interests are 100% aligned
with those of [their] clients," id. at 71; (3) RPX
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"work[s] to ensure that each RPX client avoids more
in legal costs and settlements each year than they pay
RPX in subscription fees," id.; and (4) although RPX
"prevent[s] patent litigation," it also "can help after a
litigation has begun," id. at 72. Another webpage,
titled "Client Relations," provides that the company
has teams that "vet each possible asset for quality,
assertion history, seller reputation, and—especially—
likelihood of threat to any or all RPX members." Id.
at 28. This same webpage states that RPX's "insight
into the patent market allows [it] to serve as an
extension of a client's in-house legal team to better
inform its long-term IP strategy." Id. Also among the
documents produced were RPX's Form 10-K annual
report for the period ending December 31, 2013,
which lists one of RPX's "[s]trateg[ies]" as
"facilitati[ng]
challenges to patent validity
Id. at 30-31. Other documents reveal that RPX and
Salesforce share a member on their respective boards
of directors. Id. at 32-36.
In addition to the foregoing, RPX produced three
documents containing confidential information that
are relevant to this appeal. The first, titled "Validity
Challenge Identification Process and Best Practices"
("Best Practices Guide"), sets forth the company's
"best practices" for identifying patents whose validity
it will challenge in an IPR. Id. at 80-81. The
document, which was created on July 9, 2014, id. at
1227 ¶ 14, provides that "RPX best practices help
ensure that RPX is complying with all contractual
obligations and to ensure that RPX is and will be
deemed by the PTAB and district courts as the sole
real party-in-interest in all validity challenges unless
another real party-in-interest is expressly identified."
Id. at 80.
RPX's best practices (1) expressly
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discourage the company from taking suggestions from
third parties, including clients, regarding validity
challenges; (2) provide that it will not discuss
forthcoming validity challenges with third parties in
advance of filing; and (3) mandate that RPX will not
discuss strategy or take feedback on pending validity
challenges, and will "maintain complete control of all
aspects of pending validity challenges." Id. This
document further explains that "[a] validity challenge
identification team
will identify potential validity
challenges to propose to the Validity Challenge
Approval Committee," and "will identify potential
candidates based, in part, on" multiple factors. Id. at
80-81.
The second document is a declaration from RPX's
Vice President of Client Relations, William W.
Chuang, in which Chuang testified as to the reasons
RPX files IPRs, the process that led to RPX's filing of
the IPR petitions in this case, and RPX's interactions
with Salesforce. Chuang testified that "RPX has
many reasons for filing IPR petitions," including (1)
reducing patent risk to an industry of companies,
including current and potential clients; (2) decreasing
the number of plainly invalid patents, which
undermines confidence in the general patent market
and might cause current and prospective clients to
question whether they should pay subscription fees to
RPX; (3) providing leverage in negotiating reasonable
prices for acquiring patent rights and removing them
from the hands of NPEs; and (4) conveying to the
industry that RPX, unlike certain of its competitors,
"uses every available method to reduce patent risk
efficiently." J.A. 1223-26 ¶J 5-10.
Chuang also averred that RPX followed its Best
Practices Guide in deciding to file the three IPR
.
.
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petitions in this case, and that it accordingly "had no
communication with Salesforce whatsoever regarding
the filing of IPR petitions against the AlT Patents
before the AlT IPRs were filed." J.A. 1229 ¶ 20. He
testified that "RPX originally looked at the AlT
Patents after the AIT-Salesforce Litigation was filed"
pursuant to its "customary practice" of monitoring
newly filed patent infringement lawsuits to identify
suits brought by NPEs.
J.A. 1235 ¶J 35-36.
According to Chuang, RPX "most likely" identified the
'482 and '111 patents as "good potential IPR
candidates that aligned well with the selection
criteria" set forth in the Best Practices Guide during
a meeting held on February 20, 2015—just after
Salesforce's CBM petitions were denied. J.A. 123637 ¶IJ 37-40.
Chuang further testified regarding "six
communications between RPX and Salesforce
employees in which the AIT-Salesforce Litigation
and/or the AlT Patents were mentioned or discussed."
J.A. 1230 ¶ 22. The first of these communications,
initiated by RPX, occurred on January 7, 2014, during
which Chuang "mentioned that RPX had become
aware that Salesforce had been sued by AlT";
"provided a small amount of information" that RPX
knew about the litigation; indicated that, although
RPX did not have knowledge of AlT's expectations for
its litigation campaign, it had previous dialogue on
other matters with the same counsel who was
representing AlT in the litigation; and offered to
reach out to that counsel. J.A. 1231 ¶ 23. The
following month, after Salesforce "had just renewed
its membership agreement with RPX," an in-person
meeting was held during which Salesforce "indicated
that it would be interested if RPX could reach out to
AlT and find out any information regarding AlT's
expectations for its litigation campaign." J.A. 1231
During a phone call on June 30, 2014,
Salesforce "again indicated that it would be interested
in any information RPX could obtain concerning AlT's
expectations for its litigation campaign." J.A. 1232
It does not appear that any contact between
RPX and AlT's counsel occurred during that time
period. J.A. 1231-32 ¶J 24-25.
Shortly after this third communication, Salesforce
filed its CBM petitions. See Salesforce, 2015 WL
8041794, at *1. According to Chuang, RPX initiated
a call to Salesforce approximately two weeks later,
during which Salesforce informed RPX that it had
filed the CBM petitions, that a stay would therefore
be granted in the district court litigation, and that
Salesforce no longer was interested in having RPX
reach out to AlT to obtain information about AlT's
expectations for that litigation. J.A. 1232 ¶ 26.
On March 11, 2015, approximately five weeks
after the Board denied Salesforce's two CBM
petitions, RPX again asked Salesforce during a phone
call "if Salesforce would like RPX to reach out to AlT
to try to obtain information regarding AlT's
expectations for its litigation campaign in view of the
fact that Salesforce's petition for CBM review had
been denied." J.A. 1232 ¶ 27. According to Chuang,
Salesforce indicated that it was not interested in
having RPX reach out to AlT at that time, but would
inform RPX if circumstances changed in the future.
J.A. 1232-33 ¶ 27. Very shortly thereafter, however,
in April or May 2015, "Salesforce began to bring up
the subject of the AIT-Salesforce Litigation," but RPX,
apparently experiencing a change of heart,
"immediately indicated that it was not inclined to
M.
discuss that matter, and the topic of discussion turned
elsewhere." J.A. 1233 1 28.
The third document contains information
regarding the terms of Salesforce's contractual
arrangement with RPX. In relevant part, the
document reveals that Salesforce has paid RPX
substantial sums as membership fees since its
membership began, including a very significant
payment shortly before the IPR petitions at issue here
were filed. J.A. 82.
After receiving and reviewing the aforementioned
discovery, AlT filed preliminary responses in which it
argued, among other things, that the IPRs could not
be instituted because RPX failed to properly identify
Salesforce as a real party in interest and because the
petitions were time-barred. It noted the volume and
timing of payments Salesforce had made to RPX and
provided timelines plotting correspondence between
Salesforce and RPX relating to the Salesforce
litigation, the CBM proceedings, and the IPR
proceedings. AlT did not, however, depose Chuang.
C. The Institution Decisions
The Board instituted IPRs over AlT's real party in
interest challenges, which it construed as being
premised on 35 U.S.C. § 312(a), 37 C.F.R. § 42.8(b)(1),
and § 315(b). It acknowledged that both the '482 and
'111 patents had been asserted against Salesforce,
RPX's client, in district court, but concluded that AlT
"ha[d] not provided persuasive evidence to support"
its assertion that "RPX must have filed the [petitions]
as a proxy for Salesforce" or that its "business model
is built upon [RPX] acting as an agent or proxy for
third parties in cases just like this." In reaching this
lOa
conclusion, the Board articulated the legal standard
as follows:
Whether an entity that is not named as a
participant in a given proceeding constitutes [a
real party in interest] is a highly factdependent 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." Office
Patent Trial Practice Guide, 77 Fed. Reg.
48,756, 48,759 (Aug. 14, 2012). According to
the Trial Practice Guide,
the spirit of that formulation as to IPR
proceedings means that, at a
general level, the "real party-ininterest" 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.
Id. As stated in the Trial Practice Guide, there
are "multiple factors relevant to the question of
whether a non-party may be recognized as" an
RPI. Id. (citing Taylor v. Sturgell, 533 U.S.
880, 893-895, 893 n.6, 128 S.Ct. 2161, 171
L.Ed.2d 155 (2008)). There is no "bright line
test." Id. Considerations may include, for
example, whether a non-party exercises control
over a petitioner's participation in a
proceeding, or whether a non-party is funding
the proceeding or directing the proceeding. Id.
at 48,759-60.
ha
A petition is presumed to identify
accurately all RPIs. See Zerto, Inc. v. EMC
Corp., Case IPR2014-01295, slip op. at 6-7
(PTAB Mar. 3, 2015) (Paper 34). When a
patent owner provides sufficient evidence prior
to institution that reasonably brings into
question the accuracy of a petitioner's
identification of RPIs, the overall burden
remains with the petitioner to establish that it
has complied with the statutory requirement to
identify all RPIs. Id.
J.A. 1483-84.
The Board then wrote that several of AlT's
citations to the record, including one in which RPX
states its interests are "100% aligned" with those of
its clients, were either taken out of context or
mischaracterized. J.A. 1484. It juxtaposed those
statements against other paragraphs in Chuang's
declaration, including those in which he testified (1)
that the "primary factor" driving RPX's decision to file
the petitions was the ability to file a strong petition
against a low-quality software patent "before the NPE
extracted its price from its first litigation and
proceeded to assert the patents more broadly against
other targets," which would "provide significant
reputational benefits to RPX"; and (2) that "RPX did
not have any contractual obligation to file [this and
the related] IPRs or any 'unwritten,' implicit or covert
understanding with Salesforce that it would do so."
J.A. 1485. The Board also rejected AlT's argument
that "RPX has a history of acting as a proxy,"
distinguishing on their facts two of its earlier
decisions on which AlT relied: RPX Corporation v.
Virnetx Inc., No. IPR2014-00171 (P.T.A.B. June 5,
12a
2014), Paper No. 49, and RPX Corporation v.
ParkerVision, No. IPR2014-00946 (P.T.A.B. Jan. 8,
2015), Paper No. 25. J.A. 1486.
The Board next disposed of AlT's argument that
RPX has "adopted a 'willful blindness' strategy,"
under which "it intentionally operates its business to
circumvent the [Board's] RPI case law," stating that
it was "not persuaded that the evidence of record
supports this assertion" and that RPX's declaration
testimony "that explains RPX's 'best practices' for
identifying RPIs
contradicts [AlT's] assertion."
J.A. 1487. The Board was likewise not persuaded by
AlT's argument that Salesforce "advanced" RPX the
cost of the petitions, finding this "conjecture without
evidentiary support." J.A. 1487-88. Finally, the
Board disagreed with AlT's assertion that timelines
showing RPX's communications with Salesforce
demonstrate "a clear pattern of conspiracy." The
Board pointed to portions of Chuang's declaration in
which he testified, without rebuttal, that, although
RPX communicated with Salesforce regarding the
Salesforce litigation, the CBM proceedings, offers to
reach out to AlT, and requests for additional
information from Salesforce, RPX did not
communicate with Salesforce on the specific topic of
the IPRs. J.A. 1489.
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.
.
D. The Final Written Decisions
AlT filed a combined response to the IPR petitions,
reiterating its belief that RPX was acting as a proxy
for real party in interest Salesforce. RPX filed
separate replies, and the Board held an oral hearing
on December 7, 2016, during which AlT again raised
its real-party-in-interest argument. At the hearing,
AlT, for the first time, raised the possibility that RPX
13a
might be time-barred under § 315(b) as a "privy" of
Salesforce, arguing that the statute "merely requires
that the real party-in-interest or a privy be time
barred without speaking of control." J.A. 2024.
In its final written decisions, the Board again
rejected AlT's real-party-in-interest challenge and
determined that all challenged claims are
unpatentable as anticipated or obvious in view of
certain prior art references. 482 Decision, 2016 WL
7985456, at *19; 111 Decision, 2016 WL 7991300, at
*3 *15. AlT appeals
from the final written decisions,
arguing that the Board both "lacked authority to
proceed in rendering the [decisions] because it
misconstrued the law of privity and real party in
interest" and erred in certain of its claim
constructions and unpatentability determinations.
J.A. 483-91.
II. DISCUSSION
The primary issue in this appeal is whether the
Board relied on an erroneous understanding of the
term "real party in interest" in determining that the
IPR petitions filed by RPX were not time-barred
under § 315(b).1 We conclude that it did.
' As stated above, the time-bar argumen
ts that AlT made
to the Board centered on a theory that Salesforce was a real
party in interest, rather than a privy of RPX. The first time it
hinted that it believed Salesforce was a privy of RPX was during
the oral hearing, where counsel argued that § 315(b) "merely
requires that the real party-in-interest or privy be time barred
without speaking of control." J.A. 2024. It then argued in its
Notices of Appeal that "the Board lacked authority to proceed in
rendering the Final Written Decision because it misconstrued
the law of privity and real party in interest." J.A. 298, 303, 308,
484, 489. Because AlT focused its arguments on whether
Salesforce was an unnamed real party in interest and because
14a
This court has had little occasion to grapple with
the meaning of the term "real party in interest" in the
context of § 315(b). This is due, in no small part, to
the fact that time-bar determinations under this
provision were not reviewable until we issued our en
banc opinion in Wi-Fi One, LLC v. Broadcom
Corporation, 878 F.3d 1364, 1374 (Fed. Cir. 2018) (WiFi En Bane), holding "that time-bar determinations
under § 315(b) are reviewable by this court." On
remand, the panel held that "[t]he use of the familiar
common law terms 'privy' and 'real party in interest'
indicate that Congress intended to adopt common law
principles to govern the scope of the [] 315(b) oneyear bar." Wi-Fi One, LLC v. Broadcom Corp., 887
F.3d 1329, 1335 (Fed. Cir. 2018) (Wi-Fi Remand).
Although we have issued a few decisions recently
applying these common-law principles in the context
of § 315(b) challenges, they have been in cases where
privity challenges were raised and where the
arguments on that question related to the parties'
relationship during an earlier litigation that reached
a final judgment; the question of who is a "real party
in interest" in the context of an IPR was not
addressed.
In the years since the enactment of the Leahy—
Smith America Invents Act, Pub. L. No. 112-29,
§ 6(a)—(c), 125 Stat. 284, 299-305 (2011) ("AlA"), the
PTO has attempted to provide guidance with respect
to the meaning of § 315(b) and the terms used therein.
Specifically, it has published a Trial Practice Guide
we vacate the Board's determination on that score, we need not
address in this opinion whether RPX and Salesforce were in
privity, and leave this argument for the Board to consider on
remand.
15a
discussing these terms.2 And the PTO's tribunals,
including the Board below, have rendered time-bar
determinations involving alleged real parties in
interest and privies of petitioners that have relied, to
varying degrees, on statements contained in the Trial
Practice Guide.
The facts of this case and the arguments made by
the parties require us to explore in greater detail the
2
We discuss the Trial Practice Guide in more detail later.
We note, however, that the Trial Practice Guide is exactly that
and no more. It is "a practice guide" published by the PTO "to
advise the public on the general framework of the regulations,
including the structure and times for taking action in each of the
new proceedings." 77 Fed. Reg. at 48,756. Importantly, it is not
binding on Board panel members. Accordingly, it is, at best,
"entitled to respect' under" Skidmore v. Swift & Co., 323 U.S.
134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944), "only to the extent
that those interpretations have the 'power to persuade'
Christensen v. Harris Cty., 529 U.S. 576, 587, 120 S.Ct. 1655,
146 L.Ed.2d 621 (2000) (describing agency manuals and
interpretive guidelines as documents that "lack the force of law"
and "do not warrant Chevron-style deference," but instead are
"entitled to respect" under Skidmore). We do not pass judgment
on the persuasiveness of all aspects of the Trial Practice Guide
here, or whether it covers the entirety of the common-law
landscape covered by § 315(b). We note that many of the
statements in the Trial Practice Guide concerning § 315(b) are
consistent with the language, structure, and purpose of the
statutory provision it addresses and with its common-law
predicates. More particularly, we do not believe that any of the
general legal principles expressed in the Trial Practice Guide
cited by the Board here run contrary to the common-law
understanding of "real party in interest." Our concern here is
not with whether the Trial Practice Guide is a thoughtful and
useful resource to which individual Board members and the
public might turn for guidance—it is—but with this particular
panel's understanding and application of the principles
articulated therein, and articulated in the common law which
the Trial Practice Guide considers.
. . .
16a
meaning of the term "real party in interest" in the
context of the AlA. As such, we first construe § 315(b)
by examining the language of the provision, its place
in the overall statutory scheme, and the legislative
history of the provision. We then explain how the
Board in this case rendered a flawed time-bar
determination under § 315(b) by taking an unduly
narrow view of the meaning of the governing
statutory term and by failing to consider the entirety
of the record before it.
A. Legal Standards
We review the PTO's statutory interpretations
pursuant to Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 104
S.Ct. 2778, 81 L.Ed.2d 694 (1984); Auer v. Robbins,
519 U.S. 452, 117 S.Ct.905, 137 L.Ed.2d 79 (1997);
and United States v. Mead, 533 U.S. 218, 229-30, 121
S.Ct. 2164, 150 L.Ed.2d 292 (2001). Chevron requires
that a court reviewing an agency's construction of a
statute it administers first discern "whether Congress
has directly spoken to the precise question at issue."
467 U.S. at 842, 104 S.Ct. 2778. If the answer is yes,
the inquiry ends, and the reviewing court must give
effect to Congress's unambiguous intent. Id. at 84243, 104 S.Ct. 2778. If the answer is no, the court must
consider "whether the agency's answer [to the precise
question at issue] is based on a permissible
construction of the statute." Id. at 843, 104 S.Ct.
2778. The agency's "interpretation governs in the
absence of unambiguous statutory language to the
contrary or unreasonable resolution of language that
is ambiguous." United States v. Eurodif S.A., 555 U.S.
305, 316, 129 S.Ct. 878, 172 L.Ed.2d 679 (2009) (citing
17a
United States v. Mead, 533 U.S. 218, 229-30, 121
S.Ct. 2164, 150 L.Ed.2d 292 (2001)).
When a statute expressly grants an agency
rulemaking authority and does not "unambiguously
directfl" the agency to adopt a particular rule, the
agency may "enact rules that are reasonable in light
of the text, nature, and purpose of the statute."
Cuozzo Speed Techs., LLC v. Lee,
U.S.
136 S.Ct.
2131, 2142, 195 L.Ed.2d 423 (2016) (first citing Mead,
533 U.S. at 229, 121 S.Ct. 2164; then citing Chevron,
467 U.S. at 843, 104 S.Ct. 2778). In such situations,
when the PTO does adopt rules, "[w]e accept the
[Director's] interpretation of Patent and Trademark
Office regulations unless that interpretation is
plainly erroneous or inconsistent with the
regulation." In re Sullivan, 362 F.3d 1324, 1326 (Fed.
Cir. 2004) (first citing Auer, 519 U.S. at 461-62, 117
S.Ct. 905; then citing Bowles v. Seminole Rock &
Sand Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 89 L.Ed.
1700 (1945) (internal quotations omitted)).
Where an agency instead engages in "interpretive"
rulemaking, at best, a lower level of deference might
apply. See Mead, 533 U.S. at 227-29, 230-31, 121
S.Ct. 2164 (describing notice-and-comment as
"significant
in pointing to Chevron authority");
Reno v. Koray, 515 U.S. 50, 61, 115 S.Ct. 2021, 132
L.Ed.2d 46 (1995) (according "some deference" to an
interpretive rule that did "not require notice and
comment"). The Supreme Court has explained that
"[t]he fair measure of deference to an agency
administering its own statute has been understood to
vary with circumstances, and courts have looked to
the degree of the agency's care, its consistency,
formality, and relative expertness, and to the
persuasiveness of the agency's position." Mead, 533
-,
.
.
.
No
U.S. at 228, 121 S.Ct. 2164 (footnotes omitted) (citing
Skidmore, 323 U.S. at 139-40, 65 S.Ct. 161).
B. Interpreting § 315(b)
We begin our analysis of the Board's application of
§ 315(b) by construing the provision. "As in any case
of statutory construction, our analysis begins with the
language of the statute." Hughes Aircraft Co. v.
Jacobson, 525 U.S. 432, 438, 119 S.Ct. 755, 142
L.Ed.2d 881 (1999) (internal quotation marks
omitted). "The first step 'is to determine whether the
language at issue has a plain and unambiguous
meaning with regard to the particular dispute in the
case." Barnhart v. Sigmon Coal Co., 534 U.S. 438,
450, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002) (quoting
Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct.
843, 136 L.Ed.2d 808 (1997)). We also "must read the
words 'in their context and with a view to their place
in the overall statutory scheme." King v. Burwell,
U.S.
135 S.Ct. 2480, 2489, 192 L.Ed.2d 483 (2015)
(quoting FDA v. Brown & Williamson Tobacco Corp.,
529 U.S. 120, 133, 120 S.Ct. 1291, 146 L.Ed.2d 121
(2000)). This is because statutory "[aimbiguity is a
creature not [just] of definitional possibilities but
[also] of statutory context." Brown v. Gardner, 513
U.S. 115, 118, 115 S.Ct. 552, 130 L.Ed.2d 462 (1994).
Importantly, we may not conclude that a statutory
provision is ambiguous until we conclude that resort
to all standard forms of statutory interpretation are
incapable of resolving any apparent ambiguity which
might appear on the face of the statute. See Chevron,
467 U.S. at 843 11.9, 104 S.Ct. 2778.
The primary dispute in this case is whether the
Board applied an unduly narrow test for determining
whether Salesforce is a "real party in interest" under
-
-,
19a
§ 315(b). We apply the principles set forth in Chevron
and its progeny with this dispute in mind.
1. The Common Law in Context
Section 315 governs the relationship between IPRs
and other proceedings conducted outside the IPR
process. Section 315(b), titled "Patent Owner's
Action," provides that an IPR "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 of the petitioner is served
with a complaint alleging infringement of the patent."
Two insights into Congress's intent vis-à-vis the
reach of § 315(b) can be gleaned from the statutory
text alone. First, the inclusion of the terms "real
party in interest" and "privy of the petitioner" in
§ 315(b) makes clear that Congress planned for the
provision to apply broadly—sweeping in not only
what might be traditionally known as real parties in
interest, but privies as well. Second, Congress did not
speak of there being only one interested party in each
case; instead, it chose language that bars petitions
where proxies or privies would benefit from an
instituted IPR, even where the petitioning party
might separately have its own interest in initiating an
IPR. Indeed, Congress understood that there could be
multiple real parties in interest, as evidenced by
§ 312(a)'s requirement that an IPR petition must
"identif[y] all real parties in interest." 35 U.S.C.
§ 312(a)(2) (emphasis added).
The terms "real party in interest" and "privy of the
petitioner" are not defined in the AlA. As we
recognized in Wi-Fi Remand, however, "[t]he use of
the familiar common law terms 'privy' and 'real party
in interest' indicate that Congress intended to adopt
20a
-
common law principles to govern the scope of the
section 315(b) one-year bar." 887 F.3d at 1335; see
also Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S.
519, 538, 133 S.Ct. 1351, 185 L.Ed.2d 392 (2013)
(explaining that, where terms in a statute cover
'"issue[s] previously governed by the common law,"
courts "must presume that 'Congress intended to
retain the substance of the common law." (quoting
Samantar v. Yousuf, 560 U.S. 305, 320 n.13, 130 S.Ct.
2278, 176 L.Ed.2d 1047 (2010))). In WesternGeco LLC
v. ION Geophysical Corp., we shed additional light on
the meaning of "privy" in the context of § 315(b), but
did not elaborate on the scope of "real party in
interest" because the patent owner focused on privity
as the key basis of its time-bar challenge.
WesternGeco, 889 F.3d 1308, 1316-19 (Fed. Cir.
2018). We now examine the common-law meaning of
"real party in interest," keeping in mind the
administrative context in which this question arises.
As the Supreme Court explained in Sprint
Communications Co. v. APCC Services, Inc., the
concept of a "real party in interest" developed at
common law over the centuries in large measure as a
means of eliminating a restrictive common law rule
that prohibited assignees of a legal claim for money
from bringing suit in their own name. 554 U.S. 269,
273-81, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008); see
also GA Charles Alan Wright, Arthur R. Miller, &
Mary Kay Kane, Federal Practice & Procedure § 1545
(3d ed. 2018) ("Wright & Miller") ("At common law the
assignee of a chose in action did not hold legal title to
it and could not qualify as the real party in interest.
Indeed, in large measure the real-party-in-interest
concept developed as a means of eliminating this
restrictive rule." (footnote omitted)). The Court
21a
explained that 17th century English courts "strictly
adhered to the rule that a 'chose in action'—an
interest in property not immediately reducible to
possession (which, over time, came to include a
financial interest such as a debt, a legal claim for
money, or a contractual right)—simply 'could not be
transferred to another person by the strict rules of the
ancient common law." Sprint Commc'ns, 554 U.S. at
275, 128 S.Ct. 2531 (quoting 2 William Blackstone,
Commentaries *442).
Over time, "the law
increasingly permitted the transfer of legal title to an
assignee, [and] courts agreed that assignor and
assignee should be treated alike in this respect." Id.
at 279-80, 128 5.Ct. 2531.
Federal Rule of Civil Procedure 17(a), titled "Real
Party in Interest," codifies these broad, common-law
principles. See Wright & Miller § 1541 (explaining
that the "original text of Rule 17(a) was taken almost
verbatim" from equitable and legal rules that
"discarded the cumbersome procedures for 'use'
actions at law"). The Rule provides that "[a]n action
must be prosecuted in the name of the real party in
interest," and specifies seven categories of individuals
who "may sue in their own names without joining the
person for whose benefit the action is brought": (1)
executors; (2) administrators; (3) guardians; (4)
bailees; (5) trustees of express trusts; (6) parties "with
whom or in whose name a contract has been made for
another's benefit"; and (7) parties authorized by
statute. Fed. R. Civ. P. 17(a). "The list in Rule 17(a)
is not meant to be exhaustive and anyone possessing
the right to enforce a particular claim is a real party
in interest even if that party is not expressly identified
in the rule." Wright & Miller § 1543 (emphasis
added).
KPO
As stated in Wright & Miller, the effect of Rule
17(a) "is that the action must be brought by the person
who, according to the governing substantive law, is
entitled to enforce the right." Id. (emphasis added).
Indeed, "[t]he basis for the real-party-in-interest rule
was stated by the Advisory Committee in its Note to
the 1966 amendment to Rule 17(a)" as follows:
[Tihe modern function of the rule in its
negative aspect is simply to protect the
defendant against a subsequent action by the
party actually entitled to recover, and to ensure
generally that the judgment will have its
proper effect as res judicata.
Id. The treatise also notes that, "[i]n order to apply
Rule 17(a)(1) properly, it is necessary to identify the
law that created the substantive right being asserted
by plaintiff." Id.
Two questions we must answer, then, are (1) what
"right" is being enforced; and (2) who is "entitled" to
enforce that right.
In the context of IPRs—
adversarial proceedings that offer "a second look at an
earlier administrative grant of a patent," Cuozzo, 136
S.Ct. at 2144—the "right" being enforced is a
petitioner's right to seek administrative
reexamination of the patentability of issued claims as
an alternative to invalidating those claims in a
judicial proceeding. Thus, the focus of the real-partyin-interest inquiry is on the patentability of the
claims challenged in the IPR petition, bearing in mind
who will benefit from having those claims canceled or
invalidated.
We now turn to the second question: who is
entitled to bring an IPR? Under the provisions of the
AlA, "a person who is not the owner of a patent" may
23a
petition for IPR, "[s]ubject to the provisions of this
chapter." 35 U.S.C. § 311(a). One of these limiting
provisions is § 315(b). A second is § 315(a), a related
provision that prohibits an IPR from being "instituted
if, before the date on which the petition for such a
review is filed, the petitioner or real party in interest
filed a civil action challenging the validity of a claim
of the patent." Other provisions place requirements
on the petition itself. See id. §§ 311(b)—(c), 312.
Structurally, the AlA permits the filing of an IPR
by anyone who is neither the patent owner nor a
petitioner, "real party in interest," or "privy of the
petitioner" whose petition would be time-barred
under either § 315(a) or § 315(b) from filing an IPR
petition. We note that the universe of permissible
IPR petitioners seeking to challenge patent claims is
significantly larger than the universe of plaintiffs who
would have Article III standing to bring a declaratory
judgment action challenging the validity of a patent
in federal court. The PTO recognizes this unique
feature of IPRs, stating in its Trial Practice Guide
that "[t]he typical common-law expression of the 'real
party-in-interest' (the party 'who, according to the
governing substantive law, is entitled to enforce the
right') does not fit directly into the AlA trial context"
because "[t]hat notion reflects standing concepts, but
no such requirement exists in the IPR or PGR
context." 77 Fed. Reg. at 48,759. Although we agree
with the PTO's assessment, we do not think that this
reality renders the meaning of the term "real party in
interest" ambiguous in the IPR context.
As a starting point, Congress clearly did not intend
for the term "real party in interest" to be interpreted
so broadly as to mean that "anyone who otherwise
would be able to petition for IPR" will always be
24a
deemed the sole real party in interest. Such an
interpretation would render the terms "petitioner"
and "privy of the petitioner" in § 315(b)—and
§ 312(a)'s obligation to identify all real parties in
interest—meaningless. It would also render much of
§ 315(e)'s two estoppel provisions meaningless. These
provisions prevent not only petitioners, but also real
parties in interest, from requesting or maintaining
alternative administrative attacks or asserting
subsequent invalidity challenges in federal court "on
any ground that the petitioner raised or reasonably
could have raised during that inter partes review." 35
U.S.C. §§ 315(e)(1), (2).3
Just how close must the relationship between the
real party in interest and the IPR petitioner (or the
petition) be? Wright & Miller and other authorities
provide examples of legal relationships in which a
nonparty is or is not a "real party in interest." Two
are particularly relevant in this case. First, "[a]s a
general rule, a person who is an attorney-in-fact or an
The legislative history of § 315(e), which we discuss in
greater detail below, confirms this view, with one Senator
stating:
The present bill also incorporates S. 3600's extension of
the estoppels and other procedural limits in sections 315
and 325 to real parties in interest and privies of the
petitioner
[P]rivity is an equitable rule that takes
into account the "practical situation," and should extend
to parties to transactions and other activities relating to
the property in question.
....
157 Cong. Rec. S1376 (Mar. 8, 2011) (statement of Sen. Kyl)
(emphasis added). Although the second sentence of this
Senator's statement only explicitly mentions privity, the
common-law rules governing real parties in interest are
similarly applicable to parties to transactions and other
activities relating to particular property.
25a
agent solely for the purpose of bringing suit is viewed
as a nominal rather than a real party in interest and
will be required to litigate in the name of the principal
rather than in the agent's own name." Wright &
Miller § 1553. That said, an agent with an ownership
interest in the subject matter of the suit, or one who
is the trustee of an express trust or a party in whose
name a contract has been made for the benefit of
another, may qualify as a real party in interest. Id.
Second, an incorporated or unincorporated
association "is not the appropriate party for bringing
suit to assert the personal rights of its members"
absent statutory authority to do so. Id. § 1552. "[T]he
association may become the real party in interest by
acquiring the rights of its members by a bona-fide
assignment." Id.
Thus, when it comes to evaluating the relationship
between a party bringing a suit and a non-party, the
common law seeks to ascertain who, from a "practical
and equitable" standpoint, will benefit from the
redress that the chosen tribunal might provide. See
Trial Practice Guide, 77 Fed. Reg. at 48,759. Indeed,
the PTO correctly recognizes that the related concept
of privity "is an equitable rule that takes into account
the 'practical situation,' and should extend to parties
to transactions and other activities relating to the
property in question." Id. (emphasis added) (citing
157 Cong. Rec. S1376 (Mar. 8, 2011) (statement of
Sen. Kyl)).
At the same time, the common law aims to protect
defendants in one action from later legal actions
brought by related parties who are actually entitled
to relief. As stated in Wright & Miller, "[t]he
'negative' function of the rule governing who is a real
party in interest enables a defendant to present
26a
defenses he has against the real party in interest to
protect the defendant against a subsequent action by
the party actually entitled to relief, and to ensure that
the judgment will have proper res judicata effect."
Wright & Miller § 1543 n.3 (citing Key Constructors,
Inc. v. Harnett Cty., 315 F.R.D. 179, 183 (E.D.N.C.
2016)). This notion applies with equal force in the
IPR context—a patent owner dragged into an IPR by
a petitioner, who necessarily has an interest in
canceling the patent owner's claims, should not be
forced to defend against later judicial or
administrative attacks on the same or related
grounds by a party that is so closely related to the
original petitioner as to qualify as a real party in
interest. Section 315(e) is designed to prevent this
very possibility by estopping real parties in interest
and privies of the petitioner from challenging claims
in later judicial or administrative proceedings on any
ground that the IPR petitioner raised or reasonably
could have raised during the IPR.
2. Legislative History
Turning to the legislative history, we find nothing
that suggests Congress intended for the term "real
party in interest" to have a meaning that departs from
its common-law origins. Instead, it reveals that
Congress intended for it to have an expansive
formulation. A 2011 House Report on the AlA
explains that, "[i]n utilizing the post-grant review
process, petitioners, real parties in interest, and their
privies are precluded from improperly mounting
multiple challenges to a patent or initiating
challenges after filing a civil action challenging the
validity a claim in the patent." H.R. Rep. No. 112-98,
at 48 (2011), reprinted in 2011 U.S.C.C.A.N. 67, 78
PArV
(emphasis added). In the following paragraph, the
report makes clear that Congress "recognizes the
importance of quiet title to patent owners to ensure
continued investment resources." Id. Thus, "[w]hile
this amendment is intended to remove current
disincentives to current administrative processes, the
changes made by it are not to be used as tools for
harassment or a means to prevent market entry
through repeated litigation and administrative
attacks on the validity of a patent." Id. (emphases
added).
Other statements from members of Congress
reveal that the terms "real party in interest" and
"privy" were included in § 315 to serve two related
purposes: (1) to ensure that third parties who have
sufficiently close relationships with IPR petitioners
would be bound by the outcome of instituted IPRs
under § 315(e), the related IPR estoppel provision;
and (2) to safeguard patent owners from having to
defend their patents against belated administrative
attacks by related parties via § 315(b).
For example, during the March 2011 Senate
debates, Senator Kyl stated that "[t]he present bill
also incorporates S. 3600's extension of the estoppels
and other procedural limits in sections 315 and 325 to
real parties in interest and privies of the petitioner."
157 Cong. Rec. S1376 (Mar. 8, 2011) (statement of
Sen. Ky!). He continued that "privity is an equitable
rule that takes into account the 'practical situation,'
and should extend to parties to transactions and other
activities relating to the property in question." Id.
(emphases added). He then stated that, "[i]deally,
extending could-have-raised estoppel to privies will
help ensure that if an inter partes review is instituted
while litigation is pending, that review will
RM
completely substitute for at least the patents-andprinted-publications portion of the civil litigation."
Id.
One of his colleagues, Senator Schumer,
expressed a similar belief, stating that "[a] 'privy' is a
party that has a direct relationship to the petitioner
with respect to the allegedly infringing product or
service." Id. at S5432 (Sept. 8, 2011) (statement of
Sen. Schumer).
3. Conclusion Regarding Statutory Interpretation
We conclude that, with respect to the dispute in
this case, § 315(b) is unambiguous: Congress intended
that the term "real party in interest" have its
expansive common-law meaning. Because "the
statutory language is unambiguous and 'the statutory
scheme is coherent and consistent," our inquiry
ceases and "we need not contemplate deferring to the
agency's interpretation." Barnhart, 534 U.S. at 450,
462, 122 S.Ct. 941 (first quoting Robinson, 519 U.S.
at 340, 117 S.Ct. 843; then quoting Chevron, 467 U.S.
at 842-43, 104 S.Ct. 2778).
C. The Board Took an Unduly Restrictive
View of "Real Party in Interest" and
Committed Other Errors
The Board made several critical errors in this case.
First, it made certain factual findings that are not
supported by substantial evidence and, at various
points, failed to consider the entirety of the record.
Second, it failed to adhere to the expansive
formulation of "real party in interest" that is dictated
by the language, structure, purpose, and legislative
history of § 315(b).
Determining whether a non-party is a "real party
in interest" demands a flexible approach that takes
into account both equitable and practical
29a
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
non-party's "behest." Trial Practice Guide, 77 Fed.
Reg. at 48,759.
Although the Board quoted the portion of the Trial
Practice Guide expressing these two questions and
the Guide's statement that "multiple factors [are]
relevant to the question of whether a non-party may
be recognized as" a real party in interest in its
institution decision, J.A. 1437, it did not apply these
principles in its § 315(b) analysis. For example, the
Board did not meaningfully examine two factors the
Trial Practice Guide deems "[r]elevant": Salesforce's
relationship with RPX and "the nature of" RPX as an
entity. 77 Fed. Reg. 48,760. The Trial Practice Guide
lists these factors after posing a hypothetical in which
a trade association to which "Party A" belongs, "Trade
Association X," files an IPR. Although the Guide
explains that, "if Trade Association X files an IPR
petition, Party A does not become a 'real party-ininterest' or a 'privy' of the Association simply based on
its membership in the Association," it also provides
that this reality does not mean "that Party A's
membership in Trade Association X
in th[is]
scenariofl is irrelevant to the determination..
Id.
Instead, "deeper consideration of the facts in the
particular case is necessary to determine whether
.
.
.
.
.
."
30a
Party A is a 'real party-in-interest' or a 'privy' of the
petitioner." Id.
We conclude that the Board's consideration of the
evidence was impermissibly shallow, both under the
Trial Practice Guide and the common law it
incorporates. The evidence of record reveals that
RPX, unlike a traditional trade association, is a forprofit company whose clients pay for its portfolio of
"patent risk solutions." J.A. 73. These solutions help
paying members "extricate themselves from NPE
lawsuits." J.A. 29. The company's SEC filings reveal
that one of its "strategies" for transforming the patent
market is "the facilitation of challenges to patent
validity," one intent of which is to "reduce expenses
for [RPX's] clients." J.A. 31. Yet the Board did not
consider these facts, which, taken together, imply
that RPX can and does file IPRs to serve its clients'
financial interests, and that a key reason clients pay
RPX is to benefit from this practice in the event they
are sued by an NPE.
This implication becomes stronger when one
considers the discovery produced in this case. First,
even though it is undisputed that RPX nominally
adhered to its "best practices," which prohibit it from
discussing IPRs with clients who do not agree to be
named as real parties in interest, J.A. 80, these
practices do not bear on whether RPX files IPR
petitions to benefit specific clients that previously
have been accused of patent infringement. Moreover,
several of the factors that RPX considers when
identifying potential IPR candidates are highly
probative of whether particular individual clients
would benefit from having RPX file IPR petitions
challenging patents they have been accused of
infringing. These include (1) the number of patents
31a
"asserted in the campaign"; (2) the likelihood of a new
validity challenge by another entity; (3) the number
of "RPX clients, including those covered under RPX
insurance policies, in suit"; (4) the "estimated cost of
litigation defense"; and (5) "potential reputational
benefits" to RPX. J.A. 80-81. Each of these factors is
suggestive of whether any given RPX client would
benefit from having RPX file an IPR petition
challenging patents that have been asserted against
that client in district court. Yet, again, the Board did
not examine these factors, in contravention of its
obligations under the Administrative Procedure Act
("APA"). Falkner v. Inglis, 448 F.3d 1357, 1363 (Fed.
Cir. 2006) ("This court applies the standards of the
Administrative Procedure Act ('APA') in reviewing
decisions of the Board." (citation omitted)).4
"[S]ubstantial evidence review 'requires an
examination of the record as a whole, taking into
account both the evidence that justifies and detracts
We also note that the circumstances surrounding RPX's
creation of its Best Practices Guide—none of which the Board
considered—cast additional doubt on the company's motivations.
On June 5, 2014, a different panel of the Board issued a decision
denying institution of an IPR in RPX Corp. v. Virnetx Inc.,
explaining why it believed that non-party Apple Inc. was a real
party in interest in that case. No. IPR2014-00171 (P.T.A.B.
June 5, 2014), Paper No. 49. The Board held that, "based on the
record presented, the interactions between RPX and Apple show
an implicit authorization to challenge the Virnetx Patent." Id.,
slip. op. at 9. Fewer than forty days later, RPX began following
its Best Practices Guide, which it claims "help [s] ensure that
RPX is complying with all contractual obligations and to ensure
that RPX is and will be deemed by the PTAB and district courts
as the sole real party-in-interest in all validity challenges unless
another real party-in-interest is expressly identified." J.A. 80
(emphases added); id. at 1227 ¶ 14 (disclosing the date on which
the Best Practice Guide was created).
32a
from an agency's opinion." Princeton Vanguard, LLC
v. Frito-Lay N. Am., Inc., 786 F.3d 960, 970 (Fed. Cir.
2015) (quoting Falkner, 448 F.3d at 1363); see Butte
Cty. v. Hogen, 613 F.3d 190, 194 (D.C. Cir. 2010)
(explaining that an agency's refusal to consider
evidence bearing on the issue before it is, by
definition, arbitrary and capricious within the
meaning of 5 U.S.C. § 706, which governs review of
agency adjudications, meaning that the agency must
take account of all the evidence of record, including
that which detracts from the conclusion the agency
ultimately reaches). "Our review under that standard
'can only take place when the agency explains its
decisions with sufficient precision, including the
underlying factfindings and the agency's rationale."
Princeton Vanguard, 786 F.3d at 970 (quoting
Packard Press, Inc. v. Hewlett-Packard Co., 227 F.3d
1352, 1357 (Fed. Cir. 2000)). None of the Board's
institution decisions nor its final written decisions
grapple with the facts outlined above, all of which
bear directly on the issue of whether, and under what
circumstances, RPX takes a particular client's
interests into account when determining whether to
file IPR petitions. The Board's selective weighing of
the record evidence does not pass muster under the
APA. "Just as it may not short-cut its legal analysis,
the Board may not short-cut its consideration of the
factual record before it." Id.
The facts and arguments that the Board did
consider do not persuade us that its decision not to
consider the aforementioned evidence was harmless.
First, although there is little evidence regarding
RPX's weighing of its "best practices" factors in this
case, its Vice President of Client Relations, Chuang,
did testify that:
33a
• RPX considered AlT a non-practicing entity,
J.A. 1235-36 ¶J 35-37;
• "RPX filing [these IPRs] would likely result in
positive rep utational benefits with the large
number of companies (clients and prospects
alike) in the software industry," J.A. 1237-38
¶ 41;
• After Salesforce's CBM petitions were denied,
"it was highly unlikely that any party other
than RPX would challenge the AlT Patents
before the Patent Office unless and until the
AIT-Salesforce Litigation was resolved," J.A.
1238-39 ¶ 43; and
• Salesforce was time-barred from challenging
the '482 and '111 patents before the PTO, J.A.
1239 ¶ 43.
RPX did not point to any other clients whom it
believed might be at risk of infringement claims
arising out of the patents on which the IPR was
instituted. Indeed, it conceded that no one else would
likely have an incentive to challenge these particular
patents. It simply cited testimony that its reputation
might be boosted by the filing of an IPR which could
serve to protect this client. Given that one of RPX's
publicly stated business solutions is to file IPRs where
its clients have been sued by non-practicing entities
to "reduce expenses for [its] clients," J.A. 31, and that
any IPR petitions Salesforce might have wanted to
file would have been time-barred, this evidence at
least suggests that RPX may have filed the three IPR
petitions, in part, to benefit Salesforce.
The Board emphasized Chuang's testimony that
"[t]he primary factor driving RPX's decision to file
[the] IPRs" was "the ability to file a very strong
34a
petition against a low quality patent in the software
sector before the NPE extracted its price from its first
litigation and proceeded to assert the patents more
broadly against other targets," which would "prevent
multiple future lawsuits against clients, prospects,
and the industry at large and, as a result, provide
significant reputational benefits to RPX." J.A. 1398.
The Board seemed to believe that, so long as RPX
articulated an independent interest in pursuing the
IPRs, that was enough to make it—and not
Salesforce—the real party in interest. But, as
discussed above, § 315(b) does not presume the
existence of only one real party in interest—it is not
an either-or proposition. The point is not to probe
RPX's interest (it does not need any); rather, it 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.5
A different Board panel recently focused on
similar connections between a time-barred party
(Springpath) and the nominal petitioner (Cisco) when
determining that a petition was barred for failing to
identify all real parties in interest. See Cisco Sys.,
Inc. v. Hewlett Packard Enter. Co., No. IPR2017As noted above, the Board 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 Board
did not require RPX to prove that to be true.
35a
01933 (P.T.A.B. Mar. 16, 2018), Paper No. 9. There,
after citing the Trial Practice Guide for the
proposition that Boards can take into account
"whether a non-party 'funds and directs and controls'
an IPR petition or proceeding; the non-party's
relationship with the petitioner; the non-party's
relationship to the petition itself, including the nature
and/or degree of involvement in the filing; and the
nature of the entity filing the petition," id. at 13
(citing 77 Fed. Reg. at 48,760), the Board found that
the patent owner "present[ed] unrebutted evidence
that Petitioner invested 34 million dollars into
Springpath prior to the filing of the Petition and had
attained 'board-level representation' at Springpath—
all of which establishes a longstanding relationship
between Petitioner and Springpath," id. at 14.
According to the Board, "[w]hile this evidence does not
show control or funding by Springpath of this IPR, it
can be considered as evidence that Cisco is
representing Springpath's interest, rather than its
own and, thus, it is pursuing its Petition as a proxy
for Springpath." Id.
The Board went on to determine that the evidence
was "sufficient to demonstrate a proxy relationship
such that Cisco was a proxy for Springpath in filing
the Petition," crediting the patent owner's assertion
that "[i]t is Springpath that is accused of infringing
the '799 Patent in the district court litigation, not
Cisco," that "Cisco is not, and has never been, a
defendant in the Springpath district court litigation,"
and that "[n]one of Cisco's products have been accused
of patent infringement in that litigation." Id. at 15
(citing 77 Fed. Reg. 48,759 for the proposition that a
"real party-in-interest" is "the party that desires
review of the patent"). Finding that Cisco had failed
36a
to explain adequately what "independent reason" it
had to file the IPR petition, the Board found it to be a
proxy of Springpath. Id. at 16. 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, J.A. 1401, 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 Chuang'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."
J.A. 1398 (citation omitted). As explained more fully
below, however, a non-party 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.
The Board also cited Chuang's testimony that RPX
followed its Best Practices Guide in this case and
accordingly "had no communication with Salesforce
whatsoever regarding the filing of IPR petitions
against the AlT Patents before the AlT IPRs were
filed." J.A. 1229 ¶ 20. RPX also submitted evidence
that it "did not know before filing the AlT IPRs what
(if any) impact an IPR filing would have on RPX's
relationship with Salesforce," and that it even
considered whether Salesforce might react negatively
to RPX's filing of the IPR petitions. J.A. 1240 ¶ 46.
Chuang testified that "defendants often express
37a
concern about validity challenges potentially
emboldening a plaintiff if unsuccessful or creating
conflicts with their litigation strategy," and that RPX
did not know what, if any, prior art challenges
Salesforce may be planning in the litigation. J.A.
1240 ¶ 46. He further testified 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. J.A. 1239 ¶ 45.
Chuang did not, however, testify that RPX
actually believed Salesforce would have reacted
negatively to RPX's filing of IPR petitions challenging
claims of the '482 and '111 patents. Rather, the
evidence submitted indicates the company'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. Indeed, Chuang's own averments
about the timing and content of the communications
between RPX and Salesforce in relation to the
Salesforce litigation and the denied CBM petitions
indicate the contrary.6 The evidence might actually
6 Chuang testified that "RPX originally looked at
the AlT
Patents after the AIT-Salesforce Litigation was filed" pursuant
to its "customary practice" of monitoring newly filed patent
infringement lawsuits to identify suits brought by NPEs. J.A.
1235 ¶J 35-36. Moreover, according to Chuang, RPX "most
likely" identified the '482 and '111 patents as "good potential IPR
candidates that aligned well with the selection criteria" set forth
in the Best Practices Guide during a meeting held on
February 20, 2015. J.A. 1236-37 ¶IJ 37-40. This was less than
three weeks after Salesforce's CBM petitions were denied.
Approximately five weeks after the Board denied
Salesforce's CBM petitions, RPX asked Salesforce during a
phone call "if Salesforce would like RPX to reach out to AlT to
try to obtain information regarding AlT's expectations for its
RM
indicate that RPX worked to ascertain, with a strong
degree of confidence, its client's desires, while taking
last-minute efforts to avoid obtaining an express
statement of such desires. The law has a label for
this: willful blindness. See Global-Tech Appliances,
Inc. v. SEB S.A., 563 U.S. 754, 769, 131 S.Ct. 2060,
179 L.Ed.2d 1167 (2011) ("While the Courts of
Appeals articulate the doctrine of willful blindness in
slightly different ways, all appear to agree on two
basic requirements: (1) the defendant must
subjectively believe that there is a high probability
that a fact exists and (2) the defendant must take
deliberate actions to avoid learning of that fact."
(footnote and citation omitted)).
AlT accused RPX of engaging in this very practice.
See J.A. 1368. But the Board, without providing any
reasoned explanation, wrote that it was "not
persuaded that the evidence of record supports th[e]
assertion[s]" that RPX has "adopted a 'willful
blindness' strategy" and "intentionally operates its
business to circumvent the PTAB's RPI case law."
J.A. 1400. It further explained that "RPX has
litigation campaign in view of the fact that Salesforce's petition
for CBM review had been denied." J.A. 1232 ¶ 27. According to
Chuang, Salesforce indicated that it was not interested in having
RPX reach out to AlT at that time, but would inform RPX if
circumstances changed in the future. J.A. 1232-33
¶ 27.
Finally, in April or May 2015, "Salesforce began to bring up the
subject of the AIT-Salesforce Litigation," and "RPX immediately
indicated that it was not inclined to discuss that matter, and the
topic of discussion turned elsewhere." J.A. 1233 ¶ 28. 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 AlT's patents for Salesforce's benefit.
RUM
provided declaration testimony that explains RPX's
'best practices' for identifying RPIs that contradicts
Patent Owner's assertion." J.A. 1400 (emphasis
added) (citing paragraphs 14-19 of Chuang's
declaration). Substantial evidence does not support
this determination—nothing in these paragraphs, or
anything else in Chuang's declaration or RPX's reply
to AlT's preliminary response on real-party-ininterest "contradicts" AlT's theory that RPX filed IPR
petitions challenging the two patents asserted in the
Salesforce action to benefit Salesforce, where
Salesforce itself was time-barred from filing petitions.
The insufficiency of the Board's reasoning is
especially important because RPX bore the burden of
persuasion on this issue, as the Board itself
recognized. J.A. 1396-97 (recognizing that, "[w]hen a
patent owner provides sufficient evidence prior to
institution that reasonably brings into question the
accuracy of a petitioner's identification of RPIs, the
overall burden remains with the petitioner to
establish that it has complied with the statutory
requirement to identify all [real parties in interest]."
(citing Zerto, No. IPR2014-01295, slip op. at 6-7)).7
This has been and continues to be the Board's position
with respect to the placement of the burden of persuasion on this
question. See, e.g., Dept of Justice v. Iris Corp. Berhad,
No. IPR2016-00497, slip op. at 5 (P.T.A.B. Jan. 22, 2018), Paper
No. 50 ("The real-party-in-interest and privity requirements are
components of a petitioner's case in chief; establishing a failure
to meet those requirements is not an affirmative defense on
which a patent owner bears the burden."); Atlanta Gas Light Co.
v. Bennett Regulator Guards, Inc., No. IPR2013-00453, slip op.
at 6-8 (P.T.A.B. Jan. 6, 2015), Paper No. 88 ("[T]he burden
remains with the petitioner to establish that it has complied
with the statutory requirement to identify all the real parties in
interest." (emphasis added)).
'
In sum, we believe that the Board's determination
that Salesforce was not a real party in interest under
§ 315(b) relied on an impermissibly narrow
understanding of the common-law meaning of the
term, was not based on consideration of the entirety
of the administrative record, and seemingly
misallocated the burden of proof. Any one of these
errors might warrant vacatur—together, they compel
it. The Supreme Court "has stressed the importance
of not simply rubber-stamping agency factfinding,"
explaining that the "APA requires meaningful
review" and that "its enactment meant stricter
judicial review of agency factfinding than Congress
believed some courts had previously conducted."
Dickinson v. Zurko, 527 U.S. 150, 162, 119 S.Ct. 1816,
144 L.Ed.2d 143 (1999) (holding that APA standards
governing judicial review of agency findings and
conclusions apply when the Federal Circuit reviews
PTO decisions). At the same time, the Court
explained that the APA requires courts to "reviewfl
an agency's reasoning to determine whether it is
'arbitrary' or 'capricious." Id. at 164, 119 S.Ct. 1816
(citing SEC v. Chenery Corp., 318 U.S. 80, 89-93, 63
S.Ct. 454, 87 L.Ed.626 (1943)). Relying on these
principles, we have held that "substantial evidence
review 'requires an examination of the record as a
whole, taking into account both the evidence that
justifies and detracts from an agency's opinion."
Princeton Vanguard, 786 F.3d at 970 (quoting
Falkner, 448 F.3d at 1363). The Board did not
consider critical evidence proffered by AlT. Nor did it
adequately explain why it rejected certain of AlT's
common law theories, particularly where RPX bore
the burden of proving its petitions were not timebarred under § 315(b).
41a
Finally, we note that several other legal theories
de-scribed in Wright & Miller that were not
considered by the Board may apply to the facts of this
case. The PTO's rules and Trial Practice Guide
expressly reference Wright & Miller as an authority
its tribunals should consider when rendering real
party-in-interest determinations, and we hold that it
was error for the Board not to have considered these
theories, particularly because AlT raised arguments
that directly implicate them.8
For instance, § 1553 of Wright & Miller explains
that, "[a]s a general rule, a person who is an attorneyin-fact or an agent solely for the purpose of bringing
suit is viewed as a nominal rather than a real party
in interest and will be required to litigate in the name
of the principal rather than in the agent's own name."
Wright & Miller § 1553. This section clarifies that an
agent with an ownership interest in the subject
matter of the suit, or one who is the trustee of an
express trust or a party in whose name a contract has
been made for the benefit of another, may qualify as
a real party in interest. Id. AlT effectively raised this
argument below, labeling RPX as "an extension of the
client's in-house legal team" that helps "selectively
clear" liability for infringement as part of its "patent
risk management solutions." J.A. 17. Depending on
the nature of the parties' relationship, an entity can
serve as an agent to a principal and file an IPR on the
8 While AlT's time-bar arguments below centered on the
theory that Salesforce was a real party in interest, rather than
a privy of RPX, AlT repeatedly urged that RPX was a "proxy" for
Salesforce and raised arguments resting on theories relating
thereto. See J.A. 17, 1367-68. On remand, if necessary, the
Board must address these other theories focused on the actual
relationship between Salesforce and RPX.
42a
principal's behalf even without the two formally
agreeing that the agent will do so. See Restatement
(Third) of Agency, § 1.01 cmt. c (Am. Law Inst. 2006)
("Thus, a person may be an agent although the
principal lacks the right to control the full range of
the agent's activities, how the agent uses time, or the
agent's exercise of professional judgment."). There is
no indication that the Board considered AlT's
contention that Salesforce is a real party in interest
because RPX acted as its attorney-in-fact or its
express or implied litigating agent.
Similarly, a related section of a different treatise
discusses "preclusion by consent and estoppel by
conduct," beginning with the remark that "[t]he
repose and reliance interests generated by a
judgment may deserve protection against nonparties
for reasons of acquiescence that depart from any of the
common 'privity' theories of participation,
representation, or property." 18A Charles Alan
Wright, Arthur R. Miller, & Edward H. Cooper,
Federal Practice & Procedure § 4453 (2d ed. 2018)
("Wright, Miller, & Cooper") (emphasis added). The
treatise continues by noting that, "[a]lthough
acquiescence furnishes the most apt single label for
these reasons, several distinctive principles can be
identified." Id. It then provides that:
One, relying on actual consent to be bound,
may fairly be treated as an aspect of preclusion
by judgment. The others are better viewed as
species of apparent authority or estoppel by
conduct; the distinctive feature of these
theories is that the apparent authority or
estoppel arises from conduct that relates to
litigation between other persons. Such conduct
may include conduct of a non-party that
43a
apparently authorizes a party to represent his
interests; acquiescence in a situation that has
been created by a prior judgment; and failure
to dispel a party's reasonable belief that the
non-party will honor the judgment in pending
litigation.
Id. (emphases added). In this case, AlT argued that
RPX had apparent authority to file the IPR petitions
to benefit Salesforce, pointing to RPX's public
statement that its "interests are 100% aligned with
those of [its] clients" and to the timing of Salesforce's
substantial payments to RPX. J.A. 20. The Board
erred in its § 315(b) analysis by not considering this
theory.9
Importantly, we do not question the Board's
authority to make findings of fact, or our obligation to
defer to those findings when not supported by
substantial evidence. Where, however, the Board
made its findings without considering the entirety of
the evidentiary record, appears to have imposed—
even if inadvertently—the burden of proving that
RPX was not the only real party in interest on AlT,
and assessed the evidence it did consider through an
incorrect legal lens, we cannot find that substantial
evidence supports the Board's ultimate conclusion.
III. CONCLUSION
For the foregoing reasons, we vacate the Board's
428 and 111 Decisions, and remand for further
proceedings. The Board's decisions in this case
neither considered the full range of relationships
In addition, § 1552 of Wright & Miller and § 4456 of
Wright, Miller, & Cooper examine the rights of associations, and
also appear to be relevant to the undisputed facts of this case.
MM
under § 315(b) and the common law that could make
Salesforce a real party in interest with respect to this
IPR nor properly applied the principles articulated in
the Trial Practice Guide upon which it purported to
rely. The Board also failed to comply with its
obligations under the APA to consider the evidence
that justifies and detracts from its conclusions and to
explain sufficiently its rationale for rejecting AlT's
arguments and theories.
We do not reach the merits of any of the
patentability arguments raised in AlT's opening brief.
In its discretion, the Board may authorize additional
discovery relevant to whether Salesforce is either a
real party in interest or a privy of RPX for purposes of
§ 315(b). Additional discovery may be particularly
warranted in the face of the non-frivolous challenge
made to date by AlT to RPX's some-what bald
assertions regarding who the real parties in interest
are in these IPRs.
VACATED AND REMANDED
COSTS
Costs to Applications in Internet Time, LLC.
Reyna, Circuit Judge, concurring.
I concur with my colleague Judge O'Malley's
opinion that the Patent Trial and Appeal Board
("Board") erred in its determination that RPX's
petitions for inter partes review ("IPR") are not time
barred under 35 U.S.C. § 315(b).
But I also conclude that the Board erred by failing
to fully address the question of whether RPX's
petitions are time barred under the privity provision
45a
of § 315(b). This error constitutes an independent
ground for vacating and remanding.
I. PRIVITY UNDER § 315(B)
The Leahy-Smith America Invents Act ("AlA")
provides that the Patent and Trademark Office
("PTO") may not institute an IPR where the petition
"is filed more than 1 year after the date on which the
petitioner, the real party in interest, or privy of the
petitioner is served with a complaint alleging
infringement of the patent." 35 U.S.C. § 315(b); Pub.
L. No. 112-29, § 3(b)(1), 125 Stat. 284, 287 (2011).
Neither the AlA nor the Patent Act (35 U.S.C. §§ 1
et seq) defines "privity" or "privy of the petitioner."
Nor has this court had ample opportunity to address
the legal standards for privity under § 315(b),
primarily because time bar determinations under
§ 315(b) were not reviewable until the en banc court
recently held that "time-bar determinations under
§ 315(b) are reviewable by this court," and overruled
earlier panel decisions to the contrary. Wi-Fi One,
LLC v. Broadcom Corp., 878 F.3d 1364, 1374 (Fed.
Cir. 2018) (en bane).
In Wi-Fi One, we recognized that, as a wellestablished common law concept, privity under
§ 315(b) should be examined under the backdrop of
the "cardinal rule of statutory construction that
where Congress adopts a common-law term without
supplying a definition, courts presume that Congress
knows and adopts the cluster of ideas that were
attached to the term." WesternGeco LLC v. ION
Geophysical Corp., 889 F.3d 1308, 1317 (Fed. Cir.
2018) (quoting FAA v. Cooper, 566 U.S. 284, 291-92,
132 S.Ct. 1441, 182 L.Ed.2d 497 (2012)) (quotation
marks omitted); see Wi-Fi One, LLC v. Broadcom
M
Corp., 887 F.3d 1329, 1335 (Fed. Cir. 2018) ("Wi-Fi
One Remand") ("Congress intended to adopt common
law principles to govern the scope of the section 315(b)
one-year bar."). The AlA's legislative history also
recognizes the common law meanings for privity. See
WesternGeco, 889 F.3d at 1317; Wi-Fi One Remand,
887 F.3d at 1335. Congress did not leave to the PTO's
discretion to determine the legal standards for
privity; it is a question well within the province of the
judiciary. See McDonnell Douglas Corp. v. United
States, 323 F.3d 1006, 1014 (Fed. Cir. 2003) (holding
that "determination of legal standards is a pure issue
of law" that we review de novo).
Privity is a well-recognized common law concept
that is primarily based on the legal relationship
between parties. The general definition of privity is
"[t]he connection or relationship between two parties,
each having a legally recognized interest in the same
subject matter (such as a transaction, proceeding, or
piece of property)." Privity, Black's Law Dictionary
(10th ed. 2014). The Supreme Court has noted that
"[t]he substantive legal relationships justifying
preclusion are sometimes collectively referred to as
'privity." See Taylor v. Sturgell, 553 U.S. 880, 894
n.8, 128 S.Ct. 2161, 171 L.Ed.2d 155 (2008).
The roots of privity are grounded in the general
principle of due process that one is not bound by a
judgment "in a litigation in which he is not designated
as a party or to which he has not been made a party
by service of process." Hansberry v. Lee, 311 U.S. 32,
40, 61 S.Ct. 115, 85 L.Ed. 22 (1940) (quoting Pennoyer
v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877)). On the
other side of the same coin, due process also prohibits
a litigant from taking a second bite at the apple by
relitigating the same case through the persona of
r, VNI
another, its privy. See Green v. United States, 355
U.S. 184, 187, 78 S.Ct. 221, 2 L.Ed.2d 199 (1957)
(explaining that it is "deeply ingrained" in our system
of jurisprudence that one should not be allowed to
make "repeated attempts" to prosecute a case). Thus,
due process protects both claimants and defendants
from abusing the judicial system, and privity is a key
safeguard of this protection.'
Relevant here, a person not a party to a litigation
may have appeared in that litigation through the
persona of another, its privy. Privity recognizes those
instances where a person that was not a party in an
initial litigation should be precluded from a
subsequent litigation involving the same or a similar
claim. See Montana, 440 U.S. at 153-54, 99 S.Ct. 970.
Thus, where privity is shown to exist between a party
to a second case and a party who is bound by an
earlier judgment, the party to the second case—who
was not a party in the first action—is also bound by
the earlier judgment. Richards v. Jefferson Cty., 517
U.S. 793, 798, 116 S.Ct. 1761, 135 L.Ed.2d 76 (1996).
In the AlA context, the privity provision of § 315(b)
"prevent[s] successive challenges to a patent by those
who previously have had the opportunity to make
such challenges in prior litigation." WesternGeco, 889
F.3d at 1319. Congress deemed the common law
principle of privity important enough that, under
1 Privity serves the important purpose of precluding
parties from contesting matters where they had a "full and fair
opportunity to litigate[,] protect[ing] their adversaries from the
expense and vexation attending multiple lawsuits, conserve [ing]
judicial resources, and foster[ing] reliance on judicial action by
minimizing the possibility of inconsistent decisions."
See
Montana v. United States, 440 U.S. 147, 153-54, 99 S.Ct. 970, 59
L.Ed.2d 210 (1979).
no
§315(b), it withheld from the PTO authority to
institute an IPR where the petition "is filed more than
1 year after the date on which the petitioner, the real
party in interest, or privy of the petitioner is served
with a complaint alleging infringement of the patent."
In this case, the question squarely before the PTO
was whether non-party Salesforce.com, Inc.
("Salesforce") is a privy of appellee RPX Corporation
("RPX") such that RPX should be time barred under
§ 315(b) because Salesforce was served with an
infringement complaint by appellant Applications in
Internet Time, LLC ("All") more than one year prior
to the filing of the IPRs. The legal standard
applicable to that question is whether there exists a
significant legal relationship between Salesforce and
RPX that establishes privity.
The Supreme Court has provided a nonexhaustive list for examining whether the legal
relationship between two parties establishes that one
is the privy of the other. The list consists of six
categories that create independent exceptions to the
common law rule that normally forbids non-party
preclusion in litigation: (1) an agreement between the
parties to be bound; (2) pre-existing substantive legal
relationships between the parties; (3) adequate
representation by the named party; (4) the nonparty's control of the prior litigation; (5) where the
non-party acts as a proxy for the named party to
relitigate the same issues; and (6) where special
statutory schemes foreclose successive litigation by
the non-party (e.g., bankruptcy and probate). Taylor,
553 U.S. at 894-95, 128 S.Ct. 2161. The Supreme
Court noted that this list of six categories is meant to
provide a "framework" for considering non-party
preclusion, "not to establish a definitive taxonomy."
Men
Id. at 893 n.6, 128 S.Ct. 2161. The Supreme Court did
not limit the application of the framework to either
real party in interest or privity; it equally applies to
both. See id. at 894 n.8, 128 S.Ct. 2161 (applying in
situations where "non-party preclusion is appropriate
on any ground" (emphasis added)).
This court has recognized and applied the Taylor
framework for § 315(b) time bar determinations. See
WesternGeco, 889 F.3d at 1319 (listing the six Taylor
categories); Wi-Fi One Remand, 887 F.3d at 1336
(holding that privity and real party in interest under
§ 315(b) should be examined "consistent with general
legal principles," citing Taylor). In addition, the PTO
follows the caselaw from the Supreme Court and this
court. See Office Patent Trial Practice Guide, 77 Fed.
Reg. 48,756 (Aug. 14, 2012). The PTO's Trial Practice
Guide provides that "[t]he USPTO will apply
traditional common-law principles" to evaluate what
parties constitute "privies" or "real parties in
interest." Id. at 48,759. The Trial Practice Guide
seeks to define "real party in interest" and "privity"
by indicating that a real party in interest is the party
that desires review of the patent or the party on
behalf of which the petition was filed, while
explaining that "[t]he notion of 'privity' is more
expansive," encompassing legal relationships that are
"sufficiently close such that both [the petitioner and
the privy] should be bound by the trial outcome and
related estoppels." Id.
II. THE BOARD'S DECISION
In its arguments before the Board, AlT contended
that RPX's petitions should be time barred under
§ 315(b) because the statute "merely requires that the
real party-in-interest or a privy be time barred
50a
without speaking of control." J.A. 2024 (emphasis
added). AlT argued that RPX had "an unusually close
relationship" with Salesforce and acted as a "proxy"
or an "agent" for Salesforce—allegations that are
traditionally associated with privity. See Taylor, 553
U.S. at 894, 128 S.Ct. 2161. AlT specifically cited
Taylor's "six categories that create an exception to the
common law rule that normally forbids non-party
preclusion in litigation." Patent Owner's Preliminary
Response at *5 RPX Corp., IPR2015-1750 (P.T.A.B.
Nov. 27, 2015). AlT further alleged that this case fit
"[u]nder a [Taylor] category relevant here"—namely,
relitigating through a proxy. Id. By linking the
alleged "proxy" relationship between RPX and
Salesforce to Taylor, AlT correctly understood that
"proxy" is a form of privity. AlT has maintained its
position throughout the IPR proceedings.
In its institution decisions and final written
decisions, the Board ignored the
§ 315(b) privity
question. Instead, it focused on the real party in
interest inquiry and decided that Salesforce was not
a real party of interest because RPX did not have
actual control in the prior CBM proceeding. I agree
with Judge O'Malley that the standard employed by
the PTO in its real party in interest inquiry was
impermissibly narrow and constituted error. In my
view, the Board also erred by failing to address
whether RPX was a privy of Salesforce.
III. PRIVITY BETWEEN RPX AND SALESFORCE
Consistent with its arguments before the Board,
AlT argues on appeal that the Board committed legal
error by "ignor[ing] the prohibition against a 'privy"
mandated by § 315(b). Appellant's Br. 11, 23-24. AlT
argues that the Board's failure to address privity
51a
under § 315(b) constitutes legal error because "the
Board exceeded the scope of its delegated authority
and violated a clear statutory mandate." Id. at 18. I
agree.
AlT invokes the second ground under Taylor—
substantive legal relationship—by arguing that
"[a]dditional relevant factors [for finding privity]
include fl the non-party's relationship with the
petitioner," id. (citing the PTO's Trial Practice Guide),
and that RPX had "an unusually close relationship"
with Salesforce. Id. at 20-21. AlT also alleges that
RPX's petitions violated the fifth ground under
Taylor—relitigate through a proxy. Patent Owner's
Preliminary Response at *5 RPX Corp., IPR201501750. I address these two grounds in turn.
AlT is correct that privity is based on whether
there is a "substantive legal relationship" between the
parties. Taylor, 553 U.S. at 894, 128 S.Ct. 2161. The
substantive legal relationship inquiry focuses on the
legal obligations between the parties, not between a
party and a proceeding. See Institution Decision at
*8 RPX Corp., IPR2015-1750 (P.T.A.B. May 12,
2016) (basing its real party in interest determinations
on "whether a non-party exercises control over a
petitioner's participation in a proceeding, or whether
a non-party is funding the proceeding or directing the
proceeding" (emphases added)). While "control" over
a proceeding may be germane to a form of privity, the
Board failed to consider whether RPX and Salesforce
were in a substantive legal relationship in a broader
context. This was error.
Privity between parties does not hinge on any
single proceeding. It is a broader inquiry into
whether the parties have a "substantive legal
relationship." See Taylor, 553 U.S. at 894, 128 S.Ct.
52a
2161.
Under Taylor, "[q]ualifying relationships
include, but are not limited to, preceding and
succeeding owners of property, bailee and bailor, and
assignee and assignor." Id. A common character of
these relationships is that the two parties share a
high degree of commonality of proprietary or financial
interest. See In re Gottheiner, 703 F.2d 1136, 1140
(9th Cir. 1983) (holding that privity exists "when
there is sufficient commonality of interest"). These
forms of relationship are based on whether the
relationship is anchored or based on legal obligations
or commitments. For example, non-party preclusion
could apply between an indemnitor and an
indemnitee, or between an insurer and an insured on
the basis that such relationships form privity. Intel
Corp. u. U.S. Intl Trade Comm'n, 946 F.2d 821, 839
(Fed. Cir. 1991) (holding that "an indemnification
agreement, in other cases, has alone been enough to
find privity"); see Ridgway v. Gulf Life Ins. Co., 578
F.2d 1026, 1029 (5th Cir.1978) ("The contractual
relation of liability and social policy supply the
necessary privity of party between insured and
insurer to bind the latter."). The foregoing examples
have little to do with "control" over a prior or current
litigation, yet privity exists.
The record before the court shows that although
RPX and Salesforce are separate business entities,
there exists a legal relationship between them that is
defined by mutual legal obligations and commonality
of interest. The record suggests that the form of
substantive legal relationship between RPX and
Salesforce precisely is that which defines privity.
First, RPX advertises itself as "the leading
provider of patent risk solutions, offering defensive
buying, acquisition syndication, patent intelligence,
I
53a
insurance services, and advisory services." J.A. 7374. RPX's business model involves buying patents
from companies and licensing them back. Hence, one
form of the legal relationship between RPX and
Salesforce is that of patentee and licensee.
Second, RPX provides insurance against nonpracticing entities ("NPE") patent infringement suits
to clients who purchase insurance policies.2 This
suggests another form of the legal relationship
between RPX and Salesforce as that of insurer and
insured.3
Third, RPX has advertised that its "interests are
100% aligned with those of [its] clients," it could
"serve as an extension of a client's in-house legal
team," and it could "facilitat[e] challenges to patent
validity." J.A. 28, 31, 71. Thus, another form of the
legal relationship between RPX and Salesforce is an
attorney-client relationship.
To be clear, the existence of any one of these forms
of legal relationships alone does not necessarily
establish privity. However, if the extent of the legal
2 According to an annual report to the Securities and
Exchange Commission filed on March 10, 2014, RPX stated that
"[w]e offer and have written insurance policies for clients
interested in additional management of their exposure to patent
infringement claims brought by NPEs." J.A. 31. It is unclear
whether Salesforce has purchased any insurance policies from
RPX.
In this context, upon payment of a claim, an insurer
typically becomes subrogated to the interests of the insured, in
particular to recover monies paid by the insured. Any judgment
taken in subrogation for or against the insured would extend to
the insurer precisely because there exists a substantive legal
relationship. See 18A C. Wright, A. Miller, & E. Cooper, Federal
Practice and Procedure, § 4451 (2d ed. 2002).
54a
obligations between the parties (i.e., RPX and
Salesforce) is such that the parties share a high
degree of commonality of proprietary or financial
interest, privity is established and § 315(b) bars the
institution of the IPR petitions. Indeed, given the
circumstances, any single one of the forms could
suffice to establish privity under § 315(b).4 In this
case, when viewed in aggregate, the record evidence
suggests sufficient basis of privity, such that the PTO
erred in ignoring the issue of privity.
The record also suggests that RPX may have acted
as a proxy/representative for Salesforce, which
independently establishes privity under the Taylor
framework. See Taylor, 553 U.S. at 895, 128 S.Ct.
2161 ("[A] party bound by a judgment may not avoid
its preclusive force by relitigating through a proxy.").
RPX's Vice President Mr. Chuang states that "the
services RPX provides Salesforce do not include filing
IPRs." J.A. 96, 101. The record, however, suggests
that RPX may have acted in a proxy/representative
capacity. The invalidation of AlT's patents-in-suit
would directly benefit Salesforce because Salesforce
was sued by AlT for infringing the same patents.
RPX, as advertised, provides complementary patent
risk solutions to its clients, "including the facilitation
of challenges to patent validity, coordinating prior art
searches, and other services intended to improve
patent quality and reduce expenses for our clients."
For example, the terms of the insurer—insured
relationship could create certain subrogation rights wherein in
the case of a loss, the insurer stands in the shoes of the insured,
a legal obligation that may establish that, as a matter of law, the
insurer had notice of the action giving rise to its subrogated
interest. See Intel Corp., 946 F.2d at 839; Ridgway, 578 F.2d at
1029.
55a
J.A. 31 (emphasis added). RPX's past practice
included filing IPRs on behalf of its clients. See
Denial of Institution at *940 RPX Corp. v. VirnetX,
Inc., IPR2014-0171 (P.T.A.B. June 23, 2014) (and six
other related proceedings). IPR is one form of
"challenge fl to patent validity."
RPX stated to the Board that "[e]ven if it were true
that RPX's services to Salesforce involved the filing of
IPRs, that alone would not make Salesforce an RPI
[i.e., real party in interest]." J.A. 103. This is
incorrect. Relitigation through a proxy is itself an
independent ground to establish privity. See Taylor,
553 U.S. at 895, 128 S.Ct. 2161. If RPX was indeed
contractually obligated to file the IPRs on behalf of
Salesforce, then privity exists and the petitions
should be time barred. See Pac. Gas & Elec. Co. v.
United States, 838 F.3d 1341, 1350 (Fed. Cir. 2016)
(finding that "party standing outside of privity by
contractual obligation stands in the shoes of a party
within privity"). This and other arguments by RPX
concerning real party in interest were effective in
drawing the attention of the PTO away from privity
and to focus on real party in interest. It caused the
PTO to lose sight of the "more expansive" notion of
privity. See 77 Fed. Reg. at 48,759.
When viewed through the lens of the more
expensive notion of privity, the record clearly
suggests that RPX may have acted as a proxy on
behalf of Salesforce. The record contains evidence
suggesting that the interests of RPX and Salesforce
are aligned. Salesforce is a significant client for
RPX.5 They are not competitors: Salesforce is a
The nonpublic record shows that Salesforce is a
significant client for RPX. Salesforce paid RPX more than
0
56a
software company and RPX holds itself out to the
public as a patent risk management company. Both
Salesforce's prior CBM petitions and RPX's IPR
petitions sought to invalidate the same patents owned
by AlT. RPX claims to have independent reasons for
pursuing the IPR petitions, but there is no evidence
to show that RPX's interests conflict with Salesforce's
interests. To the contrary, RPX advertises that its
"interests are 100% aligned with those of [its] clients,"
and that it "serve[s] as an extension of a client's inhouse legal team." J.A. 28, 31, 71.
Thus, the record reveals that Salesforce was more
than a bystander to RPX's filing of these IPR
petitions. Salesforce was a preexisting client of RPX,
representing a significant and growing revenue
stream. Invalidation of the patents-in-suit would
directly benefit Salesforce. RPX advertised providing
insurance services against patent infringement
claims brought by NPEs. These are indicators of
privity. And given RPX's documented history of
acting as a proxy on behalf of its clients in filing IPR
petitions, coupled with RPX's offering of patent
validity challenges to its fee-paying members, AlT
proffered sufficient concrete evidence to suggest that
RPX was in privity with Salesforce.
I would remand with instruction that the Board
thoroughly review whether privity exists between
RPX and Salesforce, including application of all of the
Taylor factors. In addition, while the Board partially
granted AlT's motion for additional discovery into
"whether Petitioner [RPX] should have' identified
between 2012 and 2015 with increasing annual payments from
about IJ in 2012 to more than El in 2015. J.A. 82 (confidential
information redacted).
57a
Salesforce as an RPI in this proceeding," it denied
AlT's request for discovery into "[d]ocuments
discussing any efforts by RPX to shield its clients from
being named as real parties in interest in inter parte
[sic] reviews and covered business method patent
reviews." J.A. 972, 1069. The § 315(b) time bar
inquiry is broader than the real party in interest
inquiry, and the Board should consider new motions
for additional discovery.
IV. CONFLATION OF § 315(B) WITH § 312(A)(2)
On remand, the Board should not repeat its error
of conflating § 315(b) with § 312(a)(2). Sections 315(b)
and 312(a)(2) entail distinct, independent inquiries.
Section 312(a)(2) requires that a petition may be
considered only if "the petition identifies all real
parties in interest." Section 312(a)(2) is akin to a
pleading requirement that can be corrected, and this
court has noted that "the Director [of the PTO] can,
and does, allow the petitioner to add a real party in
interest."
Wi-Fi One, 878 F.3d at 1374 n.9.
Section 312(a)(2) does not act as a prohibition on the
Director's authority to institute. In contrast, § 315(b)
"sets limits on the Director's statutory authority to
institute" if a petition is time barred. Id. at 1374.
This court has recognized the difference between
the two statutory provisions and has warned that
§ 315(b) should not be "conflat[ed]" with § 312(a)(2).6
6 Importantly, this court has not determined whether it
has authority to review the Board's institution decisions related
to § 312(a)(2) determinations. Wi-Fi One, 878 F.3d at 1375 ("We
do not decide today whether all disputes arising from §§ 311-14
are final and nonappealable. Our holding applies only to the
appealability of § 315(b) time-bar determinations.").
EM
Id. at 1374 n.9. I suspect that this is what happened
in this case.
Despite AlT's specific allegation that RPX should
be time barred under § 315(b), the Board framed the
entire issue as "whether Petitioner has identified all
RPIs"—a § 312(a)(2) determination.
J.A. 1395
(institution decisions); see id. at 1396 (summarizing
that "we must determine whether Salesforce should
have been identified as an RPI in this proceeding');
id. at 1402-03 (concluding that "we are not persuaded
that Salesforce should have been identified as an RPI
in this proceeding"); id. at 403-04 (same, final written
decisions).
Importantly, the Board failed to expressly address
whether RPX's petitions were time barred under
§ 315(b). Rather, the Board viewed § 315(b) as a mere
"relevant factor" to the real party in interest inquiry.
J.A. 1069 ("[D]etails of the relationship between
Petitioner [RPX] and Salesforce and Petitioner's
reasons for filing the instant Petitions, particularly in
view of the fact Salesforce is time-barred under 35
U.S.C. § 315(b), are certainly relevant to the RPI
inquiry in these proceedings." (emphasis added)).
As the Supreme Court recently noted, Congress
designed IPR to be a "party-directed, adversarial
process," not an "agency-led, inquisitorial process."
SAS Inst. Inc. v. lancu,
U.S.
138 S.Ct. 1348,
1355, 200 L.Ed.2d 695 (2018) (emphasis added). The
Board is required to address the issues that the
parties raise during the proceeding, and it lacks
authority to substitute its choice of issues over that of
the parties'. Thus, when a patent owner alleges a
violation of § 315(b) and proffers concrete evidence in
support, the Board is required to conduct a thorough
-
-'
59a
§ 315(b) analysis and include such analysis it in its
decisions.7
Due process, the bedrock of privity, requires as
much. This is particularly true in the context of
§315(b). As a threshold issue prior to institution,
§ 315(b) time bar determinations are vital because
IPRs can deprive a patentee of significant property
rights through the cancellation of claims, as in this
case. The AlA imposes no standing requirement on
who may file a petition, but the gate to IPR institution
is not open to every would-be petitioner. Section
315(b) is the gatekeeper to deny institution of
petitions from time barred petitioners, their real
parties in interest, and their privies.
Note that the conflation of § 315(b) and § 312(a)(2) is not isolated
to this case. See, e.g., Institution Decision at *1, Broad Ocean Techs.,
LLC, IPR2017-0803, 2017 WL 3671102 (P.T.A.B. Aug. 23, 2017);
Institution Decision at *3, Elekta, Inc., IPR2015-1401, 2015 WL 9898990
(P.T.A.B. Dec. 31,2015); Institution Decision at *3, LG Display Co., Ltd.,
IPR2014-1362, 2015 WL 930460 (P.T.A.B. Mar. 2, 2015). The Board,
however, has properly distinguished § 315(b) and § 312(a)(2) in some
cases. See Institution Decision at *3, Aruze Gaming Macau, Ltd,
IPR2014-1288, 2015 WL 780607 (P.T.A.B. Feb. 20,2015). For example,
the Board in Aruze noted that "[t]he parties' briefs comingle their analyses
of the issues of RPI and privity, and often use the terms interchangeably."
Id. The Board in Aruze recognized that "[t]he two terms describe distinct
concepts with differing effects under the statute," noting that "35 U.S.C.
§ 312(a)(2) [requires that a] petition must identify all RPIs, but not
privies," and proceeded in analyzing § 315(b) and § 312(a)(2) separately.
Id. at *8_11. Nonetheless, the body of the Board's decisions conflating
§ 315(b) and § 312(a)(2) inquiries could be one reason why the parties
sometimes corn ingle privity and real party in interest challenges in IPR
proceedings. This comingling practice cannot continue.
'
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.