RPX Corp. v. Applications in Internet Time, LLC

When a membership organization that sells defensive patent aggregation and files IPRs for the benefit of its members files a petition against patents asserted against a member who is itself time-barred under 35 U.S.C. § 315(b), and the petitioner cannot show otherwise, the Board must treat the member as a real party in interest and deny review as time-barred. The petitioner bears the burden of persuasion to show that no real party in interest or privy was served with an infringement complaint more than one year before filing. The Board applies the expansive common-law meaning of RPI, a flexible approach weighing equitable and practical considerations and asking whether the non-party is a clear beneficiary with a preexisting, established relationship with the petitioner. On remand from the Federal Circuit, the Board replaced the unduly restrictive RPI test it had used earlier, including the approach reflected in its VirnetX decisions, with the expansive common-law approach the Federal Circuit required. A petitioner, particularly a membership or aggregation entity, can no longer rely on formal absence of request, funding or control by a client. It must carry the burden of showing that no time-barred client benefits from or is represented by its petition, and policies designed to avoid discussing IPRs with clients will count against it. A patent owner can defend by pointing to the petitioner's business model, its client relationships, communications, and the client's time-barred status, and need not prove express direction or payment. The analysis rests on Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336 (Fed. Cir. 2018), and Worlds Inc. v. Bungie, Inc., 903 F.3d 1237 (Fed. Cir. 2018), which places the burden of persuasion on the petitioner. LEGAL TEST OR STANDARD: Under 35 U.S.C. § 315(b) the petitioner bears the burden of persuasion to show no RPI or privy was served with a complaint more than one year before filing. The inquiry is flexible and takes into account equitable and practical considerations, asking whether the non-party is a clear beneficiary with a preexisting, established relationship with the petitioner. The Board examined (a) RPX's business model; (b) RPX's explanation of its own interest; (c) whether and under what circumstances RPX takes a client's interests into account; (d) the Salesforce relationship; (e) Salesforce's interest in and benefit from the IPRs; (f) whether RPX can be said to be representing that interest; (g) whether Salesforce desired review; and (h) overlapping board members. It also examined the communications. The two purposes are IPR estoppel under § 315(e) and protecting patent owners from belated attacks under § 315(b). TRIGGERING FACTS: RPX, a subscription-based defensive patent aggregator whose strategies include facilitating validity challenges to reduce client expenses, filed IPRs on August 17, 2015. Member Salesforce had been served with an infringement complaint on the same patents on November 20, 2013, and its CBM petitions had been denied on February 2, 2015, so it was time-barred as of November 2014. RPX and Salesforce communicated regularly about the litigation, RPX decided to file about five weeks after the CBM denial, and RPX had no infringement exposure itself. Its Best Practices Guide took client numbers in suit into account while avoiding naming clients. There was no evidence that Salesforce requested, funded or controlled the petitions. Overlapping board membership was neutral. KEY QUOTE: "That a member organization exists in part to file IPR petitions against patents being asserted or threatened to be asserted against its members is indicative of an RPI relationship between the organization and its members." (Paper 128, p. 26) PRIOR PRECEDENT AFFECTED: The Board follows Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336 (Fed. Cir. 2018), and Ventex Co., Ltd. v. Columbia Sportswear N. Am., Inc., IPR2017-00651, Paper 152 (PTAB Jan. 24, 2019) (precedential), on the petitioner's burden. It treats as resting on an unduly restrictive test its earlier decisions in RPX Corp. v. VirnetX Inc., IPR2014-00171, Paper 57 (PTAB July 14, 2014), and RPX Corp. v. ParkerVision, IPR2014-00946, Paper 25 (PTAB Jan. 8, 2015). It also notes that denial would be warranted under § 314(a) applying Valve Corporation v. Electronic Scripting Products, Inc., IPR2019-00062, Paper 11 (PTAB April 2, 2019) (precedential) and General Plastic Industries Co. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (PTAB Sept. 6, 2017) (precedential). PRACTICE TIP: If you are a petitioner, especially a membership or aggregation entity, do not rely on the absence of an express request, funding or control, or on a policy of not discussing IPRs with clients. Name every beneficiary client as an RPI, or assemble evidence showing no time-barred client benefits from or is represented by the petition. If you are a patent owner, develop discovery on the petitioner's business model, client communications and timing.