On Tuesday, November 27th, the Patent Trial and Appeal Board (PTAB) issued a redacted version of a decision to institute an inter partes review (IPR) proceeding petitioned by Unified Patents to challenge the validity of patent claims that have been asserted in district court against at least one of Unified’s subscribing members. The PTAB panel of administrative patent judges (APJs) decided to institute the IPR despite the patent owners’ assertion that the petition should be denied because Unified didn’t identify all real parties in interest (RPIs) including members of Unified’s Content Zone.
For all of the chest thumping that Unified Patents typically engages in, they don’t publicly post a list of their members but at least one of these district court cases has been filed against a company subscribing to Unified: Google.
The charade that Unified is the only real party in interest and simply acts in uncoordinated ways and not at the behest of those who pay for them to challenge patents continues, at least at the PTAB.
It seems the PTAB believes that companies pay Unified Patents for no particular service and for no particular reason, but then somehow still surreptitiously and secretively manage to find the patents they are sued on challenged at the PTAB. Of course — wink, wink, nod, nod — Unified clients are not in privy with Unified, and also not otherwise real parties in interest.
Of course, the PTAB continues to look the other way and pretend that Unified’s clients are not the real parties in interest, and remarkably are not paying for a service. Despite the Federal Circuit recently, and finally, recognizing that one who pays for and then receives the beneficial actions of another is by definition a real party in interest.
The patent-at-issue in this IPR proceeding is U.S. Patent No. 8934535, titled Systems and Methods for Audio and Video Data Storage and Distribution. Issued in January 2015, it covers data compression and decompression methods for compressing and decompressing data based on either actual or expected bandwidth of a system in such a way that eliminates bottlenecks in bandwidth. The IPR institution decision notes that the ‘535 patent is involved in 26 related proceedings in district court.
Under 35 U.S.C. § 312(a)(2), an IPR petition can only be considered by the PTAB if the petitioner identifies all of the real parties in interest. In this petition, Unified Patents identified itself as the sole real party in interest, despite the fact that one of its clients — Google — has paid Unified to challenge patents and will be the beneficiary of any invalidation of the patent in question.
When a patent owner provides sufficient evidence prior to institution questioning the accuracy of the petitioner’s identification of all real parties in interest, the burden is placed upon the petitioner to establish that it has complied with the identification requirement. Although it is redacted in the public version of the institution decision, patent owner Realtime Adaptive Streaming LLC did single out a company subscribing to Unified, which has been sued for infringing the patent claims challenged in the IPR. Realtime Adaptive Streaming also noted that several members subscribing to Unified’s Content Zone have been charged with infringing claims of the ‘535 patent. The patent owner argued that Unified acts as an association asserting the rights of its members which are at risk of being sued for patent infringement and that Unified acts as an attorney-in-fact because the members pay fees which they know will be used to file petitions within a particular technology zone to mitigate the risk of infringement litigation.
RPX at the Federal Circuit
Preclusion requires participation and control, Unified argued, and not just a mere interest as an advocate of its members’ interests. Unified further argued that it solely directed and funded this IPR, that no member communicated with Unified about this IPR or knew about it prior to the petition, and that none of its members have implicitly or explicitly participated in the IPR.
But this legal question is very similar to those decided earlier this year by the Federal Circuit in Applications in Internet Time v. RPX Corporation (AIT), in which the Federal Circuit overturned a decision by the PTAB to invalidate patent claims after finding that the PTAB was unduly restrictive in interpreting the statutory meaning of an RPI. Nevertheless, Unified argued that Realtime Adaptive Streaming incorrectly interpreted AIT as proposing a “benefits-plus-relationship” standard which would consider any party that benefits from an IPR and has any relationship to the petitioner to be an RPI.
Simply stated, Unified is incorrect. Applications in Internet Time absolutely and unambiguously stand for the proposition that the focus must be on benefits. “[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,” Judge O’Malley explained. “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.”
While Unified managed to convince the PTAB, try as they might they cannot erase the statements of Judge O’Malley in Applications in Internet Time, written on behalf the panel. Wish as they may, AIT is correctly interpreted as proposing a “benefits-plus-relationship” standard for determining real party in interest characterization, as is relatively familiar and common throughout the law for hundreds of years in a variety of contexts.
The PTAB’s institution decision found that Unified Patents had met its burden of proving it had accurately identified itself as the sole real party in interest and that Realtime Adaptive Streaming was overextending the reasoning of AIT. The PTAB found that there was a lack of evidence demonstrating a relationship the likes of the one between RPX and Salesforce in AIT, which included evidence of a substantial payment immediately prior to the filing of a petition with the PTAB as well as the fact that Salesforce was itself time-barred from filing a petition. In Unified’s case, there are no members time-barred from filing their own petition at the time of Unified’s petition and there is no evidence of Unified members contacting Unified about their ‘535 patent infringement litigation in district court. Further, the PTAB found that the company singled out by Realtime wasn’t accused of infringement as of the time that that Unified filed the IPR petition on the ‘535 patent and that there was no evidence that company knew it would be accused of infringement later.
Those distinctions being what they are, they do not address the beneficial relationship test of AIT. As a paying Unified member, Google clearly has a relationship and if we are honest that relationship is one where there is an expectation that Unified will use funds received to seek to invalidate patents being used against members. Likewise, if we are going to be perfectly honest, we all know who receives the benefit associated with invalidating patents, or Unified negotiating a no-fee settlement on behalf of all its members. The charade isn’t even subtle.
Although the Federal Circuit often doesn’t respect its own precedent, this case will make for an interesting appeal.