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PTAB Finds Unified Patents’ Members Are Real Parties In Interest, But USPTO Director Says Determination Was Unnecessary And Vacates
06/21/2023The PTAB recently released public versions of earlier decisions about the implications of Unified Patents’ business model and when the PTAB should decide disputes about identification of real parties in interest (“RPIs”). On March 8, 2023, the PTAB issued a determination that Unified Patents should have identified its members Apple and Samsung as RPIs in its IPR challenge of MemoryWeb’s patent, which had been asserted against those members. Unified Patents, LLC v. MemoryWeb, LLC, IPR2021-01413, Paper 56 (P.T.A.B. Mar. 8 2023). On May 16, 2023, USPTO Director Vidal granted director review of the decision and vacated the RPI determination, finding it had been unnecessary to resolve the proceeding. Unified Patents, LLC v. MemoryWeb, LLC, IPR2021-01413, Paper 76 (P.T.A.B. May 22, 2023).
Unified Patents is a self-described membership organization that seeks to “deter Non-Practicing Entities (NPEs) who assert bad patents” and “protect against frivolous patent litigation.” In exchange for annual membership fees, Unified Patents provides benefits to members including monitoring NPE activity and filing USPTO challenges.
On September 3, 2021, Unified filed a petition for inter partes review of MemoryWeb’s U.S. Patent No. 10,621,228, after MemoryWeb had asserted the ’228 patent against Unified Patents members Samsung and Apple in April and May 2021, respectively. Unified Patents named itself as the sole RPI. In its Preliminary Response, MemoryWeb argued that Apple and Samsung should have been named as RPIs. The Board instituted IPR and, at that time, declined to determine whether Apple and Samsung were RPIs because of the undeveloped factual record and because the RPI issue did not implicate any time bar or estoppel provisions under 35 U.S.C. § 315, as required by the precedential decision in SharkNinja Operating LLC v. iRobot Corp., IPR2020-00734, Paper 11 (P.T.A.B. Oct. 6, 2020).
MemoryWeb raised the RPI issue again in its Response to the Petition. By that time, Apple and Samsung had filed their own follow-on IPRs challenging the ’228 patent. MemoryWeb argued that Apple and Samsung would be estopped from maintaining those follow-on challenges once the Unified IPR reached a final written decision because Apple and Samsung were RPIs of the instant proceeding. The Board then found it appropriate to decide that the RPI question both because it had a fuller factual record and because “[d]etermining whether Apple or Samsung are RPIs in this case is a necessary precursor to determining whether they would be estopped in a subsequent proceeding.”
Examining the factual record, some of which is confidential, the Board concluded that Apple and Samsung are RPIs and that Unified Patents had not complied with its obligation to identify RPIs in its Petition. The Board found, inter alia, that “Unified’s business model, finances, and operations are structured to support Unified’s patent validity challenges[, which] act to protect Unified’s members.” The evidence shows that “Unified has a strong financial incentive to serve its members’ needs—expressed or not” and that “Unified filed the Petition in this case to benefit its members Apple and Samsung.” The sequence and timing of events—that Unified Patents first learned that the ’228 patent was being asserted against Apple and Samsung before it began preparing and filing the Petition—also supported the conclusion that Apple and Samsung are RPIs. The Board further found that Unified Patents “crafted its membership agreements and its communication protocols with an eye to avoid naming members as RPIs” and engaged in a “willful blindness strategy” of avoiding discussions about its forthcoming IPR. Finally, the Board found that Unified Patents challenged the ’228 patent to benefit Apple and Samsung, and that Apple and Samsung desired review of the ’228 patent, as evidenced by their own separate IPR petitions. Having found that Apple and Samsung are RPIs, the Board ordered Unified Patents to update its Mandatory Notices to identify them.
Unified Patents sought Director Review of the Board’s RPI determination, which was granted. The Director found that, under SharkNinja, the Board should not have resolved the RPI issue because neither a time bar nor estoppel applies in the instant proceeding. That rendered the Board’s determination a “non-binding advisory opinion” and prejudiced Apple and Samsung by “prejudg[ing] the RPI issue without their participation,” even though it could bind them in their own subsequently-filed proceedings. The Director thus vacated the Board’s RPI determination.
Unified Patents thus defeated a Board determination that could have undermined its business model. However, the Director did not weigh in on the merits, and implied that the proper place to decide the RPI issue would be in Apple’s and Samsung’s proceedings, now that Unified Patents’ IPR has reached a Final Written Decision and would give rise to estoppel if Apple or Samsung are indeed RPIs. Therefore, it remains to be seen whether another panel might come to the same conclusion about Apple and Samsung’s RPI status, or whether Apple, Samsung, and/or Unified Patents might be able to supply a factual record that points to a different conclusion.
