Hard target: who's in charge in post-grant proceedings?

The 2011 America Invents Act (AIA) has created multiple post-grant proceedings including postgrant review (PGR), inter partes review (IPR) (which replaced inter partes reexamination), PGR of business method patents, and supplemental examination (SE).

Generally, these AIA post-grant proceedings are intended to reduce the amount of litigation because filing a petition for PGR, IPR or PGR for business method patents requires an identification of all real parties in interest (RPIs), and subsequently filed civil actions can be stayed.

Importance of identifying RPI and privy

The identification of all RPIs is significant because of the estoppel provisions.

Specifically, a final written decision by the US Patent & Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB), resulting from an IPR or PGR proceeding, estops (precludes) the petitioner, or the RPI of the petitioner or any privy of the petitioner, from asserting in a district court proceeding, an International Trade Commission (ITC) proceeding, or any other USPTO proceeding, that a claim is invalid or unpatentable on any ground the petitioner “raised or reasonably could have raised” during the IPR or PGR proceeding.

PGR for business methods estoppel applies only to those issues actually raised. As a basic example of estoppel, if Company X raises the issue that Company Z’s patent is unpatentable due to non-compliance with the enablement requirement in a PGR, and Company X loses the PGR, Company X cannot later raise another issue, such as a rejection for lack of utility, in any proceeding if that issue could have been raised in the PGR.

Therefore, if you do get involved in a PGR, IPR or PGR for business methods, you do not get ‘two bites at the apple’. At the same time, this also means that if a party is not listed as a RPI, that party may not be estopped from later challenging the same patent in litigation or another USPTO proceeding (eg, the party who is not an RPI can raise another unpatentability issue that could have been previously raised by Company X).

Given the relatively fast PTAB decision-making process and the scope of estoppel, properly defining an RPI and privy, and correctly listing all RPIs for instituting one of these proceedings, are significant considerations before initiating a post-grant proceeding.

Limited guidance

According to most legal definitions, the ‘real party in interest’ means the person or entity whose rights are involved, who has the legal right under applicable substantive law to enforce the claim in question, and who generally, though not necessarily, stands to gain from the petition, proceeding or lawsuit.

‘Privity’ is defined as the mutual or successive relationship to the same rights of property; ‘privy’ is one who takes part in, or has an interest in, the proceeding. In the context of patent law and the AIA postgrant proceedings, the USPTO explained that a common consideration in determining an RPI or privy is “whether the non-party exercised, or could have exercised, control over a party’s participation in a proceeding”.

Further: “The concept of control generally means that ‘it should be enough that the nonparty has the actual measure of control, or opportunity to control, that might reasonably be expected between two formal co-parties’.”

On April 9, 2012, Verizon Communications, Google and several others provided comments to the USPTO publication for adopting a proper definition of RPI and privy. The comments propose a “control-focused” approach, and that merely participating in litigation to invalidate a patent does not automatically qualify that entity as an RPI or privy.

Generally, the comments advocate that the non-party RPI should assume control over the post-grant proceeding, and the control is significant enough that the non-party will have “had his day in court”. Non-party estoppel should be the “narrow exception”. In response, Chief Judge James Donald Smith at the Board of Patent Appeals and Interferences of the USPTO gave some limited guidance towards defining an RPI and privy:

"A first entity cannot pay a second entity to file a request for a post-grant proceeding and have the second entity named solely as the RPI."

“Who constitutes an RPI or privy is a highly fact-dependent question ... Courts and commentators agree that there is no ‘brightline test’ for determining the necessary quantity or degree of participation to qualify as an RPI or privy based on the control concept … Accordingly, the Office has not enumerated particular factors regarding a ‘control’ theory of ‘RPI’ or ‘privy’ in the proposed rules. Instead, to resolve an RPI or privy dispute that may arise during a proceeding, the Board plans to consider each case on its specific facts.”

In short, at this point, the USPTO has not defined the meaning of RPI and privy, there is no brightline rule for doing so, and it will instead make such determinations on a case-by-case basis.

Determining the RPI and privy

Generally, the RPI is the person or entity who controlled, or who could have exercised control over, the filing of the petition for PGR or IPR as well as the proceeding, provided the entity is eligible to file a petition for post-grant review under 35 USC §321(a) or inter partes review under 35 USC §311(a).

The privy of the petitioner cannot mean simply having an interest in the PGR or IPR. Instead, at the very least, the privy means an entity that assisted with, or assumed, the control of the PGR or IPR. However, ‘control’ can be defined in different ways. For instance, control could be considered as: