PTAB Says Alphabet is No Real Party-in-Interest With Google

“It is time for Director Iancu and the Precedential Opinion Panel to step up to the plate and put the PTAB genie back in the bottle. Declaring what is the real, sensible and correct legal meaning for who is a real party-in-interest should be a layup, and needs to happen soon.”

The PTAB Says Alphabet is not a real party-in-interest with Google. With an appeal filed to the Precedential Opinion Panel, what will Director Iancu decide?

Several weeks ago, a panel of the Patent Trial and Appeal Board (PTAB) instituted IPR2018-01047, in which Google LLC challenges U.S. Patent No. 9,516,129, which is owned by SEVEN Networks, LLC. While the institution decision has not yet published in redacted form, we know the PTAB instituted the petition because on December 17, 2018, SEVEN Networks filed a Request for Rehearing by the Precedential Opinion Panel (POP). It seems Google was not required to identify Alphabet Inc. as a real party-in-interest under 35 U.S.C. § 312(a)(2). To make matters worse, a telephonic hearing was held to specifically discuss whether Alphabet needed to be listed as a real party-in-interest, and the PTAB gave Google extra time to comply with § 312(a)(2). Still, at the end of the day, the IPR was instituted and Google was not required to identify Alphabet as a real party-in-interest despite the fact that Google is a completely 100% owned subsidiary of Alphabet.

This PTAB ruling that Alphabet is not a real party-in-interest is emblematic of all that is wrong with the PTAB as an institution, and why the tribunal is hopelessly broken and in need of a complete tear down and rebuild. It is astonishing that anyone, let alone anyone with even basic legal training could ever conclude that the parent company of Google is not a real party-in-interest.

If Google loses this IPR would Alphabet really be allowed to file another IPR against SEVEN Networks because the estoppel provisions of 35 U.S.C. § 315(e) don’t apply since they aren’t a real party-in-interest?

In Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336 (Fed. Cir.), Judge O’Malley explained that the PTAB had been engaging in inappropriately shallow consideration of who is a real party-in-interest. O’Malley would return to the Wright & Miller treatise law students first become familiar with during their first year of law school while taking Civil Procedure, explaining the well-established law of what it means to be a real party-in-interest, and concluded: “[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.” Id. At 1348.

“[W]hen 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,” O’Malley would go on to further explain before vacating the PTAB’s determination that Salesforce was not a real party-in-interest.

Who stands to gain if Google prevails? Well, Google certainly, but so too does Alphabet, which is precisely why Alphabet is a real party-in-interest under any fair and rational interpretation of the law.

In Q3 2018, Google revenue amounted to $33.6 billion. In Q3 2018, Alphabet revenue amounted to $33.74 billion. That means that 99.59% of Alphabet’s Q3 2018 revenue came from Google.

Alphabet is Google, Google is Alphabet. Sure, they have different corporate structures for a variety of business and tax reasons, but there can be no doubt that if the test for determining whether an entity is a real party-in-interest is about “who will benefit from having those claims canceled or invalidated”, Alphabet is a real party-in-interest and the PTAB is not just wrong, they are embarrassingly wrong.

USPTO Director Andrei Iancu created the POP in order to bring uniformity to the Patent Office, and to bring uniformity to the PTAB. This will be the first real test of the POP. Who is and who is not a real party-in-interest is a critical question. Now that the U.S. Supreme Court has ruled in SAS Institute v. Iancu, 138 S.Ct. 1348 (2018) that the PTAB must address all claims challenged, estoppel provisions should start to work as intended with claims not found invalid enjoying protection against subsequent challenge. The estoppel provisions apply to the petitioner, any real party-in-interest or those in privy. If Director Iancu wants to reign in an out of control PTAB the POP must overturn this PTAB decision and find that Alphabet is a real party-in-interest.

It is time for Director Iancu and the Precedential Opinion Panel to step up to the plate and put the PTAB genie back in the bottle. Declaring what is the real, sensible and correct legal meaning for who is a real party-in-interest should be a layup, and needs to happen soon.

Gene Quinn Gene Quinn is a patent attorney and a leading commentator on patent law and innovation policy. Mr. Quinn has twice been named one of the top 50 most influential people [...see more]

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Join the Discussion

14 comments so far.

Pro Say
January 8, 2019 06:10 pm
If this incomprehensible miscarriage of justice isn’t overturned; and overturned soon (so other panels — or worse the CAFC — can’t rely on it); here’s what’s going to happen:

Companies of all sizes which have been — or believe they’re likely to be — sued are going to form LLCs and other “separate” legal “entities.”

Then THESE entities are going to be the ones who actually file the IPRs and CBMs against the patents the corporate parent has been sued on.

The RPXs and Unified Patents of the world will be obsolete.

Please Mr. Director — end this charade.
SVI
January 8, 2019 01:20 pm
Speaking of the Alphabet stock, it trades as GOOG and Google is the only reason the company has any revenues. Ridiculous decision by the court, regardless of any technicality that legally shields an umbrella company.

Alphabet was also recently in the news for shifting $22.8 billion to Bermuda via a shell company. Such a shame if any fraction of that horde would be used to actually pay a licensing fee to inventors who are being robbed.
Jeff L.
January 7, 2019 08:39 pm
Outrageous and ludicrous. May I ask about the judges who made this decision and what interest they have in Google or Alphabet? Any former Google lawyers, for example, or spouses of Google employees, or owners of Alphabet stock? It’s hard to get decisions this outrageous without some seriously mind-numbing incentives.
AC
January 7, 2019 03:25 pm
I think that you are conflating just what is intended to be shielded (liability) and what the thrust in determining Real Party in Interest is for.

It would be a perversion to use a shield against liability to obtain gains for which the whole point of the Real Party in Interest doctrine is for. <>

This is not a matter to which any identified Real Party in Interest is incurring liability. The Real Party in Interest thrust is one of justified protection FROM those who may be attempting to shield themselves. <>

I think that you have seen the concept of “shield” and have incorrectly assumed that anything that can be shielded should be shielded (liability or otherwise). <>

One quick way to see this is through your own comment of “certain precautions like having corporate guidelines that are followed, board meetings that are recorded.” IF one is recording just who is shielded (who is on the corporate records and who is protected with the shield), then that extant information is itself UNshielded. Yes, the shield is there for the protection against liabilities in certain regards. No, the shield is NOT there in order to circumvent other protections under the law. <>
Anon
January 7, 2019 03:07 pm
Anthony,

Your reply does not address the counter points that I have presented to you.

Please do not attempt to hide behind a bland definition and a “I am not doing further case study” reply. The merits of what a shield is meant for versus what understanding privity (and Real Party in Interest) clearly do not support your first assertion that Real Parties should enjoy the shield of limited liability business formation.

That is a perversity of BOTH legal concepts.
Anthony Curro
January 7, 2019 02:50 pm
I think what a real-party in interest is is defined by law, and shouldn’t be upset by the P.T.A.B. of all organizations! (F.R.C.P. 17, I believe, I’m not doing further casleaw research on Westlaw about the issue!). Each and every shareholder is a “party in interest” as well, based on the plain meaning (and not a legal definition) of a “party in interest”….
Eric Berend
January 7, 2019 02:39 pm
Nose. Of. Wax?

Alpha/Goog’s *slave*(!)

U.S. Inventors? Extinct.

Remember, this is “what” America “wants”. To the average America, an ‘inventor’ is either a “patent troll” – or, an under-20 so-called ‘maker’ script-kiddie shoving Arduino code through robotic toys or IOT devices with NO IP protections.

Thus, grooming the ‘next generation’ of tomorrow to expect to be a human code widget, either generating or consuming software, with NO ownership nor investment stake whatsoever.

This is exactly as I have predicted: by the above criminally influenced means, BigTech becomes akin to the “Big Three” U.S. automakers, damping down innovation so as to neuter the possibility of the ‘disruptive competition’ that is supposed to the economic mechanism by which capitalism renews the future to promote the common good.

At the same time, millions of ‘socially conscious’ people, usually of college age or slightly older, have enthusiastically agreed to help destroy the American Inventor. Internet mobs spontaneously formed with malice, some making amorphous online death threats, with others calling us the ‘worst evil on Earth’, thus providing the popular backdrop necessary to promote passage of the 2011 AIA, and to have even further so-called “patent reform” inventor-antagonistic efforts paraded before Congress every single year, since then.

In all this criminal conspiracy writ large, no inventor ever appeared before Congress, even as our so-called “franchise” was stripped down and handed over to the ‘Don’t be Evil!’ IP pirates, by the “good” Congresspersons and Senators of this doddering Republic.

No need for all the artifice, pseudo-intricacy and artificial complexity. To a U.S inventor? A U.S. legislator, CAFC judge or PTAB Google-thrall = treacherous backstabber.

Plain and simple.
Anon
January 7, 2019 01:51 pm
Anthony @5,

I think that you are conflating just what is intended to be shielded (liability) and what the thrust in determining Real Party in Interest is for.

It would be a perversion to use a shield against liability to obtain gains for which the whole point of the Real Party in Interest doctrine is for.

This is not a matter to which any identified Real Party in Interest is incurring liability. The Real Party in Interest thrust is one of justified protection FROM those who may be attempting to shield themselves.

I think that you have seen the concept of “shield” and have incorrectly assumed that anything that can be shielded should be shielded (liability or otherwise).

One quick way to see this is through your own comment of “certain precautions like having corporate guidelines that are followed, board meetings that are recorded.” IF one is recording just who is shielded (who is on the corporate records and who is protected with the shield), then that extant information is itself UNshielded. Yes, the shield is there for the protection against liabilities in certain regards. No, the shield is NOT there in order to circumvent other protections under the law.
EG
January 7, 2019 01:39 pm
Hey Gene,

This ruling by PTAB is beyond absurd, it’s insulting and outrageous. Alphabet is the parent of Google, and yet PTAB says there’s no privity between the two? PTAB needs to be abolished, along with IPRs and CBMs.
Anthony Curro
January 7, 2019 03:44 am
I don’t agree. The purpose of corporate personhood is to shield investors with limited liability, so long as you take certain precautions like having corporate guidelines that are followed, board meetings that are recorded, etc. So long as these are adhered to, the investors enjoy limited liability, whether the investors are natural people or another corporation.
George
January 6, 2019 04:26 pm
FUBAR!!! That’s all that can be said about our entire system now, especially after passage (and widespread approval) of the very corrupt and corporate friendly, AIA (even though many are now starting to have buyers remorse)!

Patents were such a nice, ‘simple’ and powerful concept, when the Founder’s first came up with it! Should have stayed that way, and could have – if lawyers, corporations, corrupt politicians and their well-funded lobbyists hadn’t mutilated and twisted this concept beyond all recognition. It could have remained as just a set of simple ‘common law’ (and common sense) principles, but instead has now ‘mutated’ into thousands of pages of legal and semantic ‘gobbledygook’ that serves no real purpose except to help make the ‘arbiters’ of what is and is not, ‘significant’, and valuable, lots of money.

Inventors don’t benefit at all from any of this! In fact, soon there won’t be anymore ‘non-corporate’, ‘non-salaried’ inventors in America! They will all have been driven into bankruptcy and extinction (while their lawyers and adversaries all still enjoy their nice and comfortable retirements)! Shame on America and its ‘myopic’ and corrupt leaders! Shame on lawyers who don’t really care about the future of invention and innovation in America, and who fully supported the AIA (that among other things took away the concept of ‘first to invent’)! This is NOT what the Founders intended! Clearly! That it be ‘impossible’ to be an independent inventor in the future, for economic reasons?! REALLY?!
JCD
January 6, 2019 02:21 pm
It is worth noting that a party not found to be a real party in interest of a petitioner may still be estopped under 35 U.S.C. § 315(e) if they are “privy of the petitioner.”
Anon
January 6, 2019 12:24 pm
Nice article – even (and perhaps especially) since this does not touch on the business model that the PTAB is still apparently embracing as “permissible” even though the very purpose of the business model is clear as to “who will benefit.”

Yes, I am talking about the business models of the RPXs and Unified Patents of the world.

What the article does show is that the political reach (quite natural to an agency of the Executive branch), doubles down for the particular agency of the Patent Office, and for which agency, the (nominal) separation of any type of “judicial function” and the executive oversight is known to be one of the poorest separations of any of the administrative state apparatiques.
Joachim Martillo
January 6, 2019 10:54 am
This failure to list Alphabet as a real party in interest almost seems like some sort of perverted joke.