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USPTO Vacates Salesforce Reexaminations
August 3rd, 2023
The US Patent and Trademark Office (USPTO) has vacated Salesforce’s reexaminations against Applications in Internet Time (AIT) because Salesforce was a real-party-in-interest (RPI) in RPX’s previous inter partes review (IPR) against the same patents.
AIT contended that RPX was acting as a "proxy" for Salesforce in the previous IPR.
Salesforce is a client of RPX, which helps clients that are sued for patent infringement by non-practicing entities (NPEs, sometimes called “patent trolls”).
RPX helps its clients by evaluating the validity of patents and, if appropriate, filing IPRs challenging those patents.
The USPTO found that the grounds Salesforce presented for a finding of unpatentability could “reasonably could have been raised in the previous inter partes reviews.” Thus, Salesforce was estopped from challenging the patents under 35 U.S.C. 315(e)(1).
The patents at issue were challenged by RPX in 2015. The Patent Trial and Appeals Board (PTAB or Board) decided in favor of RPX, and found that Salesforce wasn’t a RPI.
The PTAB found that although Salesforce communicated with RPX about the patent litigation and paid membership fees to RPX, there was no evidence showing that Salesforce controlled RPX or paid it to file the IPRs at issue.
Federal Rule of Civil Procedure 17(a), titled "Real Party in Interest," 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."
However,
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.
The Federal Circuit vacated the decisions finding that Salesforce wasn’t a RPI, stating 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.
In Applications in Internet Time, LLC v. RPX Corp. the Federal Circuit judge explained what it means to be a real-party-in-interest:
[T]he focus of the real-party-in-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.
The Federal Circuit said that the PTAB had focused too narrowly on whether Salesforce had control over, or a financial interest in, the IPRs. The court said that the PTAB should have considered whether RPX was simply acting as a proxy for Salesforce.
Judge Reyna of the Federal Circuit, writing separately in a concurrence, pointed out that the PTAB also failed to consider whether RPX was also a “privy” of Salesforce.
A petitioner is time barred under 35 USC § 315(b) from filing a petition more than one year after the “petitioner, the real party in interest, or privy of the petitioner is served with a complaint.”
As Judge Reyna noted,
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).
During debates over the America Invents Act (AIA), Senator Schumer said “[a] `privy' is a party that has a direct relationship to the petitioner with respect to the allegedly infringing product or service.”
Under the PTAB’s Trial Practice Guide, "if Trade Association X files an IPR petition, Party A does not become a 'real party-in-interest' or a 'privy' of the Association simply based on its membership in the Association…"
However, said Judge Reyna,
The evidence of record reveals that RPX, unlike a traditional trade association, is a for-profit company whose clients pay for its portfolio of "patent risk solutions."… These solutions help paying members "extricate themselves from NPE lawsuits." 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." .. 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.
The dispute dates back to a 2013 patent (the ‘111 patent) assigned to AIT which claimed priority through a chain of continuations to a patent filed in 1998.
In 2013, AIT asserted the ‘111 patent against Salesforce.
In 2014, Salesforce filed a petition for covered business method review (CBM) challenging claims 1-18 of the patent.
(Covered Business Method (CBM) Review applied to patents that claimed a method, apparatus, or operation used in the practice, administration, or management of a financial product or service. This type of review is no longer available as of September 2020.)
In 2015, RPX filed a petition for IPR, challenging claims 13-18 of the ‘111 patent on the grounds that they were obvious or anticipated in light of prior art.
In 2022, Salesforce filed a request for ex parte reexamination of these same claims.
The practice of entities like RPX filing petitions challenging patents on behalf of others is the subject of an Advance Notice of Proposed Rulemaking (ANPRM) published by the USPTO in the Federal Register:
The USPTO is also considering broadening the types of relationships between petitioners and other entities the Office will consider when evaluating discretionary denial in order to ensure that entities related to a party in an AIA proceeding are fully evaluated with regard to conflicts, estoppel provisions, and other aspects of the proceedings….
In addition, the Office is considering whether to promulgate discretionary denial rules to ensure that certain for-profit entities do not use the IPR and PGR processes in ways that do not advance the mission and vision of the Office to promote innovation or the intent behind the AIA to improve patent quality and limit unnecessary and counterproductive litigation costs.
Categories: Patents