Shearman & Sterling LLP | IP Blog | Federal Circuit Considers Whether RPX Client Is A Real Party-In-Interest To RPX IPRs<br >  
IP Litigation
This links to the home page
  • Federal Circuit Considers Whether RPX Client Is A Real Party-In-Interest To RPX IPRs

    On July 24, 2018, the Court of Appeals for the Federal Circuit (“CAFC”) unsealed an opinion vacating a final written decision in two inter partes reviews (“IPRs”).  Applications in Internet Time, LLC v. RPX Corp., —F.3d— (Fed. Cir. July 9, 2018).  The CAFC remanded the IPRs to the Patent Trial and Appeal Board (“PTAB”) for further consideration of whether an RPX client was a real party-in-interest (“RPI”) to the IPRs, in which RPX had claimed to be the sole RPI.

    In 2013, patent owner Applications in Internet Time, LLC (“AIT”) sued for infringement of two patents.  Salesforce filed petitions for covered-business-method-patent (“CBM”) reviews of the two asserted patents.  The PTAB denied those petitions.

    RPX is a company that, among other things, works “to help members of its client network quickly and cost-effectively extricate themselves from non-practicing entity lawsuits.”  Salesforce was an RPX client.  In 2015, RPX filed IPR petitions challenging the two AIT patents.  RPX’s client, Salesforce, could not have filed those petitions itself, because the filings were made more than one year after AIT sued Salesforce for infringement.  The PTAB instituted IPRs in response to the RPX petitions.

    AIT argued to the PTAB that the IPRs should be dismissed because RPX’s client was both a real party-in-interest to the IPR petitions and time-barred from petitioning.  The PTAB allowed AIT to take discovery from RPX about the RPI issue, but ultimately ruled that the petitions were correct and that RPX was the sole RPI.

    In its opinion, the CAFC observed that RPX documents disclosed that RPX’s “interests are 100% aligned with those of their clients,” and that RPX can “serve as an extension of a client’s in-house legal team.”  The CAFC also observed that RPX filed its IPR petitions against AIT shortly after its client Saleforce’s CBM petitions were denied, and that RPX received from its client “a very significant payment shortly before the IPR petitions at issue here were filed.”

    The CAFC vacated the final written decisions, holding that the PTAB had erred in its consideration of the RPI issue.  The CAFC looked to common-law conceptions of RPI doctrine, concluding that “Congress intended that the term . . . have its expansive common-law meaning,” and quoted the PTAB’s own Trial Practice Guide:  “at a general level, the ‘real party-in-interest’ is the party that desires review of the patent.”  The CAFC suggested that the RPI question is, “whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner,” and found that the record suggested that RPX’s client might satisfy this test, even if it neither directly funded the IPRs nor even had any communications with RPX concerning the IPRs.

    Even beyond the time-bar issue that is the subject of this appeal, the CAFC’s decision is of considerable importance both to practitioners and to clients of businesses like RPX.  If an RPX client is a real party-in-interest to an RPX IPR, and RPX is not wholly successful, the client will be subject to the estoppel that results from an unsuccessful IPR—even if the client did not participate at all in formulating the IPR strategy or conducting the IPR.