by Dennis Crouch
WesternGeco LLC, v. ION Geophysical Corp. (Supreme Court 2019) [Petition]
In 2018, WesternGeco seemingly won its international-patent-damages case against ION — with the court agreeing that lost-profit damages are available even for extra-territorial sales. After winning its $100 million trial against ION, WesternGeco sued another competitor, Petroleum Geo-Services (PGS), for infringement. PGS then challenged the asserted patents in an Inter Partes Review (IPR) proceeding that resulted in all of the claims being cancelled as obvious or anticipated.
35 U.S.C. §315(b) bars the Patent Office Director from instituting an IPR proceeding on a petition “filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” By the end of its infringement trial, ION was time-barred — however, PTO still allowed ION to join PGS’s case once instituted – but gave it “spectator status.” Still, ION (but not PGS) defended the Board’s decision on appeal.
The Federal Circuit affirmed the Board decision, finding that unpatentability findings supported by substantial evidence, and that the Section 315(b) time-bar didn’t apply since ION did not have any direct or indirect control PGS’s IPR filings and PGS had a separate legitimate reason to file the IPR other than protecting ION.
WesternGeco presented evidence that the two companies worked together to launch the infringing product, and that their agreement included an indemnity agreement — with ION making a “product assurance pledge” for products delivered by PGS. The Federal Circuit, however, disregarded the evidence as insufficient to create the specific privity needed to trigger the Section 315(b) time-bar.
Now, WesternGeco is back before the Supreme Court asking for review on the real-party-in-interest question. Here is how WesternGeco frames the question:
ION worked closely for years with another company, PGS, as its “launch partner,” to develop a product found to willfully infringe WesternGeco’s patents. ION and PGS shared an indemnity relationship, with ION making a “product assurance pledge” regarding the accused product and the asserted patents. After ION lost at trial and was concededly time barred from pursuing IPRs, PGS filed petitions (which ION later joined), resulting in the invalidation of many of WesternGeco’s patents. The Patent Office not only denied WesternGeco discovery into details of the PGS-ION relationship, it prohibited WesternGeco from even filing a motion for such discovery because WesternGeco did not already have evidence that ION “controlled” these IPRs. The Federal Circuit applied a “control” test in affirming.
The questions presented are:
1. Whether the court of appeals and agency erred by holding that “real party in interest, or privy of the petitioner” refers only to others who “control” the petitioner’s litigation before the agency.
2. Whether the Patent Office. may deny discovery—or even leave to file a discovery motion—designed to meaningfully test whether that statutory prohibition applies, and then invalidate a patent.
I see this as a good case for the Supreme Court to take and hear – especially since the court is already familiar with the patents and parties in question. I find it interesting how the Federal Circuit identified the indemnification provision as “fairly standard” and not specific enough to trigger the real-party-in-interest or privity clauses of 315(b).
One issue of importance in this area is the implied Warranty Against Infringement found in Article 2 of the Uniform Commercial Code.
Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.
UCC 2-312(3). Although the UCC does not apply to WesternGeco’s case, it likely applies in many others as a potential way to show sufficient privity to trigger the time-bar against against a supplier.
The issues here turn on and require interpretation of 35 USC 315(b) & (c):
“(b) Patent Owner’s Action- An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).
(c) Joinder- If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.”
Lode Runner makes some great observations below. Here are suggestions for what I think needs discussing here:
First, the key statutory word requiring interpretation here is the scope and determination of the legally ambiguous word “privy.” [That alone is worth cert.] Secondly, if the joinder party was a (b) “privy” of the suit-served party does the “properly files” term in (c) render (c)-joinder unavailable to that privy? Thirdly, note that the word “control” is nowhere in this statute. Fourthly, what is the statutory basis for allowing a non-party to “join?” an IPR on a “spectator status?”
Also, the second cert question presented, the inadequacy of discovery for privy status, is a good issue, but is it really appropriate for raising by a non-party spectator to the IPR? Or was it made and preserved by the original Petitioner?
Forget my erroneous last “also”question above. It seems well asserted that the patent owner made timely IPR discovery motion demands with supporting evidence of the relationships of the two petitioners that was rejected for lack of pre-discovery evidence of “control”?
Would a better last question re the second cert question here be: does refusal to grant discovery for a “privy” have any due process or other fatal effect on the IPR if it is proceeding under the original petitioner? A privy finding creates estoppel against someone else in ADDITION to the original petitioner.
Here is one of the most common circuit case cited on the point of “control”: Gonzalez v. Banco Cent. Corp., 27 F.3d 751, 758 (1st Cir. 1994) (“If a nonparty either participated vicariously in the original litigation by exercising control over a named party or had the opportunity to exert such control, then the nonparty effectively enjoyed his day in court, and it is appropriate to impute to him the legal attributes of party status for purposes of claim preclusion.”). I like the part “or had the opportunity to exert such control.”). Justice Ginsburg would write an excellent opinion on this topic; she is leading expert on claim and issue preclusion currently on the Court.
I like the part “or [if the non-party] had the opportunity to exert such control [over a named party].”)
Writing the sentence with the subject and indirect (?) objects expressly called out narrows the meaning substantially. It’s not a question of whether the party could have brought the litigation (or filed the IPR) itself. It really is a question of control. It’s more like a veil-piercing analysis than some theoretical “similar footing” analysis.
Magic boy, tell us about the new functions with no new structure?
How is that magic possible? Please tell us all Magic Boy.
“ It really is a question of control”
U m , no.
Writing the sentence with the subject and indirect(?) objects expressly called out does NOT “narrow the meaning substantially.”
Take comments 7 and 6 together, please.
That is, if you ever stop trying to deflect when questions are put to you…
Here is quote: Montana v. United States, 440 U.S. 147, 154 (1979):
“One who prosecutes or defends a suit in the name of another to establish and protect his own right, or who assists in the prosecution or defense of an action in aid of some interest of his own . . . is as much bound . . . as he would be if he had been a party to the record.” A similar but a little bit broader statement regarding “control” can be found in Restatement (Second) of Judgments § 39, comment a.
“One who … who assists in the prosecution or defense of an action in aid of some interest of his own . . . is as much bound . . . as he would be if he had been a party to the record.”
This might be the case if we’re talking about pure private property. But I think the analysis is more, shall we say, nuanced in the context of a public right. If donate to a non-profit which assists in the attempted invalidation of a patent (say by filing an amicus brief, or providing legal/factual research support), does the failure of the named party to invalidate the patent preclude me from challenging the patent later? I kinda doubt that.
I don’t see a link between your “public rights” nature and any donation to anything.
The donation is, by most definitions, “assisting” in the defense in aid of my interest.
Your “donation” is untethered to the nature of whether or not WHAT you are donating to is a Private personal property right or a Public franchise property right.
Not sure what you’re saying. What I’m getting at is that I think courts will treat me differently for preclusion purposes if I (a) donate 1 million dollars to Bob Smith so he can sue Jimmy Jones and get his ranch back, so that I might live on the ranch, versus (b) I donate a million dollars to the Sierra Club so they can sue Jimmy Jones and return the ranch to the national park system so that I can vacation in the park.
Why do I think this? It seems just and fair. If you disagree, explain why. Use your words.
I am still waiting for you to explain yourself.
Your added hypo has nothing to do with IP, so that does not help at all.
You are doing that deflecting thing again.
I am still waiting for you to explain yourself.
And I’m still waiting for you to f ck yourself. In the mouth. With a broken bottle.
Better hurry, Billy!
Wow, and to think that your poor mother may have once kissed that mouth….
Stay classy, San Diego (Malcolm is just aching to add to his already “more than all others combined” expungement record.
Your added hypo has nothing to do with IP, so that does not help at all.
Billy is truly a dissembling pile of g@ rbage and this right here is the proof (as if any more were needed).
There is nothing dissembling in pointing out your lack of tether from your first statement to your added hypo.
I realize that actually explaining your position is not something that you usually do, but maybe you should just be more on point when you DO try to explain yourself.
As it is, you still have not tied your view to the state of IP being either a Public franchise type of property or a Private personal type of property.
Is that magic boy posting again?
Magic boy tell us how you get these new functions without new structure.
Magic boy is “feeling his oats” and “Internet Tough Guy” feelings of late.
Can you recall anyone EVER given such latitude on ANY moderated professional discussion boards?
(and it’s not like this is a “new” type of behavior either)
This is indeed an intriguing preclusion question re “control”. One could be resolved it by looking at Taylor v. Sturgell, 553 U.S. 880 (2008) (claim preclusion). The fourth prong of the test established in Sturgell deals with the question of “control” to what extent a nonparty may be bound if she controlled the prior suit. Montana v. United States, 450 U.S. 544 (1981) was issue preclusion case which fleshed out the “control” element to some extent, too.
Speaking of 101, consider that the conservation of information is one of the most important laws of physics and that processing information requires time, energy, and space. This paper discusses the minimum amount of energy to erase one bit of information. (I know that 1/2 the CAFC and the entire Scotus thinks that their thinking is performed in the spirit world and not their brain or at least that they have a mind that floats outside their body and does the information processing.)
link to physics.aps.org
I know that 1/2 the CAFC and the entire Scotus thinks that their thinking is performed in the spirit world
Nobody thinks this.
But a lot of people do think that you’re a clu e less I di 0t. If any member of the SCOTUS reads your comment, they will surely join that club of thinkers and rightfully so.
MM, do you ever have any substance to your posts?
You regularly put forth theories that information processing may be performed without any structure.
New functions. No new structure. That is your argument. Etc.
Plus, yeah they do think that.
You regularly put forth theories that information processing may be performed without any structure.
No. Wrong. I regularly point out this fact: patent claims which purport to cover “new” data processing machines (based on their “new” functions) universally fail to recite any novel structures whatsoever. That’s not a “theory”. That’s a fact. It’s also a travesty.
And it’s also true that you lack the intelligence to understand what’s being discussed. Or you are a miserable t r 0 ll. Or both. My bet is on the latter.
MM, it seems it is impossible for you to be intellectually honest.
What did you just say. Let’s look at it logically.
MM: ” ‘new’ functions” <— admits.
MM: "fail to recite any novel structures whatsoever." <—contends.
Ergo, you are saying that new functions are performed without any new structure.
Do you have any in teg rity at all MM?
MM: ” ‘new’ functions” <— admits.
MM: "fail to recite any novel structures whatsoever." <—contends.
Ergo, you are saying that new functions are performed without any new structure.
First of all, there is no debate as to whether new structure is being recited in a claim to “machine with new function X” where that claim that doesn’t recite any new structure. So I’m not “contending” anything. I’m just stating a fact about claims to “new” computing machines that distinguish those machines from prior art machines purely by their functionality.
Ergo, you lack the reasoning skill necessary to have this conversation, or you are just a f king @ h0le. My bets are on both.
Let me know about that optional claim format thing before you dive into your number one meme of Accuse Others, Malcolm.
Except functional claims are reciting the set of possible solutions to one skilled in the art in view of the specification.
Plus as you know actual hardware solutions may be built for the “functional” claim. So there is a hardware solution to the “functional” claim and yet you still think it is ineligible.
Except functional claims are reciting the set of possible solutions to one skilled in the art
That’s not how it works with a newly recited functionality.
Nice try, though. And thanks for admitting that you are in fact claiming functionality as functionality. That’s extraordinarily helpful to my side (although not a novel admission by any means).
News flash: programmable computers are old and they are capable of processing any data provided to them, in any manner, according to the instructions provided to them. In other words, if all data processing structure is immediately known upon recitation of the functionality, then all of that functionality is inherently obvious or ineligible. Surely you can’t create non-obviousness simply by reciting abstract names for types of data.
LOL
Now you are going to dance for me like never before! Strike up the band!
LOLOL
actual hardware solutions may be built for the “functional” claim.
Go ahead and build them and then claim them by reciting their non-obvious distinguishing structures. It’s what the grown-ups have been doing for many many many years. It’s not easy, but you’ll eventually learn how. Well, you’ll never learn how but someone smarter than you can learn how to do it. And you can watch. You’re really good at watching, I bet.
…structures…
There goes that attempt to elevate an optional claim format into something not optional…
What was that?
Oh yes: “That’s not how it works”
Except a function claim is reciting the known solutions to the function in view of the specification. (Something that takes more than 5 seconds to understand so the anti-patent judicial activist propogandist try to ignore it and play to the ignorant justices). Plus, you hold the same view even if it is a special purpose chip, which is hardware.
So—you are magic boy. Magic boy MM believes that new functions are possible without new structure. Magic Boy!
you hold the same view even if it is a special purpose chip, which is hardware.
I don’t hold the same view about properly claimed hardware (i.e., claims that recite structure distinguishing the claimed hardware from prior art hardware). I’ve been crystal clear about that since day 1. You, my friend, are a li a r. Or an I di 0t. Or both.
Except Malcolm, you HAVE done exactly that – given as I have provided you the rebuttal of ANY software innovation can be written in your desired optional claim format, taking any particular physical media and painstakingly describe the “physical structure” of an encoded media.
As I pointed out, ALL that THAT would do would be to switch your infernal whining to a different point, and you would STILL whine about the protections afforded innovations that may present themselves through software.
ANY software innovation can be written in your desired optional claim format, taking any particular physical media and painstakingly describe the “physical structure” of an encoded media.
Then do it.
And we’ll evaluate that particular structure against the prior art structures. And you can provide your unexpected results to rebut the inevitable obviousness argument. And you’ll end up — maybe — with a claim that’s commensurate with what you’ve disclosed, which is a claim that you deserve.
This is how it works in the grown up world of patenting. I know it’s troubling for you. Buy some Kleenex.
How it works is NOT trying to pretend an optional claim format is somehow not optional.
You keep on saying “grown-up” when you apparently mean something else.
MM the magical boy. MM believes that a machine may be built with new functions and no new structure.
It’s magic! Magical boy MM.
For all his bluster, his position resolves down to the presentation as you put it or he insists on law that is not there (to wit, he attempts to elevate an optional claim form (of “objective physical structure”) to be a mandatory claim form.
He refuses to engage in the Grand Hall experiment.
As for lack of inte11ectual honesty, that too is true, as I have presented to him the situation in which ANY “software patent” could be expressed in his desired optional “objective physical structure” in that tens or hundreds of pages of such de script ion could be provided, would cover the same claim scope, would NOT be recognizable by any ordinary person (and FAR more difficult to examine as well as more amenable to manipulations), AND Malcolm would still rant against software innovation.
He would merely lose an item from his short script to use in his rants.
He has zero actual interest in innovation or innovation protection or laws to promote and protect innovation.
He refuses to engage in the Grand Hall experiment.
Your Monte Hall Experiment is a side-show that is not relevant to the issue being discussed.
Grown ups can admit that there is a judicially concocted exception for software inventions that allows those inventions to be claimed based on their functionality, something that is not allowed for any other type of “art.” Within that group of grown ups there is a “debate” (I use that term very loosely precisely because of the exchange that is taken place here) over whether this judicially concocted exception is absurd or somehow “justified”. But if you can’t admit that there is an exception, then you aren’t even grown up enough to have the conversation about whether the exception is justified (hint: it isn’t). In which case, f you.
You blatantly act NOT like a grown up while pretending that you have ever engaged in a grown up discussion on the topic?
Absolutely stultifying.
MM>>Grown ups can admit that there is a judicially concocted exception for software inventions that allows those inventions to be claimed based on their functionality,
MM. You know this is not true. And everyone that writes claims for another art knows it is not true.
There are so many possible attachments to the main molecule that molecules are claimed functionally.
There are so many possible solutions to mechanical inventions that almost every mechanical invention is claimed functionally.
Reality. The problem is that there is no consequence to someone like MM for intentional mistruths just like there is no consequence to Lemley. Disbar Lemley and ban MM from the blog and life would be much better.
Night Writer,
Rather than bar him directly – force him to be inte11ectually honest in order for his posts to be shared.
Not much unlike the ethical rule for attorneys to acknowledge controlling law even as they attempt that any such controlling law should be changed.
Other patent blog forums have a type of editorial control in which if you engage in such blatant mistruths or mindless ad hominem, your leash is yanked.
I see a lot of whining but no actual rebuttal to the points I’m making.
Again, there is a judicially concocted exception for software inventions that allows those inventions to be claimed based on their functionality, something that is not allowed for any other type of “art.” Within that group of grown ups there is a “debate” (I use that term very loosely precisely because of the exchange that is taken place here) over whether this judicially concocted exception is absurd or somehow “justified”. But if you can’t admit that there is an exception, then you aren’t even grown up enough to have the conversation about whether the exception is justified (hint: it isn’t). In which case, f you.
One more time for the world: f you.
There’s that Accuse Others thing again.
The whining is yours and you certainly are not making any points.
Come on MM….
Tell us about the magical functions with no structure.
Tell us how it doesn’t matter how the information is processes or what is processed that it is all the same.
The fact is that processing information is a physical process just like any other physical process.
And, I’ve pulled out quotes showing that Ginsburg and Stevens believe that their minds process information in the ether. But again you play the game of pretending that I haven’t done that. You such a lo w l if e MM.
it is all the same
It’s all the same to a programmable digital computer. The machine doesn’t care what the data means. It just does what it’s instructed to do, i.e., apply logic to “process” the digital data.
Logic is ineligible for patenting, by the way.
How about that Big Box of Protons, Neutrons and Electrons…?
Your “logic” is the same.
As to “just logic,” how goes your copyright project on just logic?
Yeah. Thought so.
Your canards don’t get better just because you blandly repeat them ad nauseum.
Joinder is often justified in these cases to prevent anticompetitive collusion between the patent owner and an IPR challenger. The most important line of the CAFC decision, in understanding the dynamics, was actually footnote 1: “While WesternGeco’s appeal before this court was pending, PGS settled with WesternGeco and withdrew from the appeal.”
This happens a lot in IPR proceedings. The patent owner cuts a sweetheart deal with the original IPR challenger, gives it a license, in exchange for the IPR challenger’s agreement to walk away from the IPR proceedings. It’s a sweetheart deal because the patent owner increases its chances of keeping its patent, and the IPR challenger gets a license under a patent that may remain in force and serve as a scarecrow against other competitors in the market.
And that’s actually a much better outcome for the IPR challenger than outright invalidation of the patent because the patented technology still cannot be used by other companies. In a way, an IPR proceeding that is not joined by a third party can become a tool for compelling a license.
This is one of the reasons, I think, the PTAB and CAFC have been more forgiving with respect to IPR joinder than original IPR petitions. Obviously if ION was “pulling the strings” behind the IPR petition filed by PGS, that would be improper and unfair. But if the IPR joining party wasn’t controlling the filing of the IPR petition it is joining–it would have been filed anyway–I really don’t perceive a policy or fairness issue. If the patent is really invalid, as it apparently was in this case, it should be removed from the IP landscape to avoid the two-party market problem mentioned earlier.
But a big problem with this appeal is a question of mootness; PGS, the original IPR filer, did not drop out until the case was on appeal. At that late stage, there was no obligation from the PTAB or CAFC to terminate the IPR proceeding or vacate the PTAB decision. The general rule, in fact, is that an IPR proceeding is almost never terminated after the PTAB issues its Final Written Decision.
In other words, what’s the point of this appeal? Even if ION had been booted from the proceeding as a joining party, the CAFC could still have gone ahead and affirmed the PTAB decision on its own, the same way it deals with appeals from ex parte reexaminations. And once the patent claims are invalidated, they are invalidated against the entire world. Booting ION would just have made the CAFC’s job a little more challenging, as they wouldn’t have the benefit of briefing and arguments from a party seeking affirmance of the PTAB decision. But most likely, affirmance would have happened here with or without the briefing/arguments from ION.
Interesting analysis regarding the mootness. And thank you for the nice clear writing.
I agree with Malcolm here – nice post!
Lode_Runner,
While you look at it from the point of anti-consumer “collusion” (which I don’t for a moment concede has occurred here)…the reality is that the parties to the dispute are ALWAYS going to pursue their OWN self-interests….not the entirely VAGUE “public interest” which no one can consistently define….(not even the courts)….so it VARIES so severely that making a fair policy around it is next to impossible. Thus…you are arguing for the courts to establish an ambiguous policy to solve a separate problem that no PARTY to the dispute at issue agrees with.
Offsetting that vague “competitive harm” you hold up as a reason…is the clear reality of large corporations (or even small ones) using 3rd party companies as clear proxies to file IPRs against patents which they are sued over but the 1-year IPR filing deadline has past….but with plausible deniability as to the extent of “control” over the 3rd party. The Virnetx series of cases against Apple and its various proxies (RPX, Mangrove, Black Swamp LLC) are good examples of this.
I won’t go into all the details…but suffice it to say that the various ties…..payments (in some cases)/investments (in others), same lawyers, joint agreements between the parties, etc….are all obfuscated by purposed client-lawyer privilege and trade secret BS and entirely in the hands of the colluding parties. Due to its time constraints, the PTAB won’t allow discover…despite the visible ties which are uncovered…unless the proverbial “smoking gun” is produced BEFORE discovery is allowed. (This is how Virnetx got RPX’s IPR’s tossed…..but Apple saw it would lose well ahead of any decision…so it moved to the NEXT proxy….Mangrove…..and so on (to Black Swamp LLC) as soon as any weakness in the prior proxy’s case was discovered.)
While Director Iancu is trying to clean up the serial challenges…he can’t do much about those serial challenges which are already initiated between 2012-2017 before his attempt to try and wrestle the out of control PTAB back into control. Additionally…having successfully used proxies in the past…the infringers will no doubt go back to using them once a more infringer-friendly Director is installed (i.e. such as former Director Lee who acted as Google’s policy puppet) if the courts doesn’t put a lasting stopper on the practice.
In Virnetx’s appeal of Apple joinder to Mangrove’s IPR petition, one of the CAFC Judges asked what is the PREJUDICE of having a barred party (Apple) from CONTROLLING the litigation instead of the initial named party (Mangrove)…which is what actually happened. This isn’t a proper question for the CAFC…..because Congress passed legislation and the PTO rules should preclude Apple’s ENTIRE participation. Because Apple is barred from filing for IPR in this instance….it could never meet the requirement of presenting a “proper petition for IPR” to allow it to be joined to Mangrove…yet the PTAB deliberately misreads the AIA on this point…concentrating on the “ANYONE can petition” [for joinder] requirement rather than the equally important but related separate requirement of presenting a “proper petition [for IPR]”.
The question the CAFC judge asked Virnetx is entirely backward and asked of the incorrect party IN FACT….as it is the GOV’T’s (PTAB’s) burden of proof to show that allowing Apple’s participation was HARMLESS despite being a legislatively barred (at least facially bypassing due process for Virnetx)….not Virnetx’s to prove actual harm.
Here too, an excellent post.
the entirely VAGUE “public interest” which no one can consistently define….
It’s not vague at all. The public is interested in having the property stolen from it returned back to it. The property taken from it = property falling within the scope of invalid patent claims.
The Supreme Court has recognized this interest as a paramount one. It’s the main driver behind all of the patent statutes.
Your rather odd “main driver” is nothing more than the plainly obvious cognitive dissonance when it comes to providing Patentee’s with the fuel of interest.
Your primary aim is the negation of that which is the actual primary aim.
You really should see a therapist about your cognitive dissonance.
Did I miss where David Boundy is getting ready to sue the PTO for its illegal subversion of the substantive law regarding eligibility?
He must be very concerned about that. Because he’s very serious and totally not a hypocrite.
It can be “illegal” only if the intitial item itself is legal.
The judicial branch writing patent law is not such an item.
Fascinating and very cogent. Is that Boundy’s position? I know he has a great deal of respect for you, given that you are both among the most serious and concerned people when it comes to phenomenally difficult patent issues like the eligibility of information and logic.
Maybe you should try this (albeit a different argument, it is nonetheless in a flavor that you are sure to “enjoy”):
link to ipwatchdog.com
I see that the WesternGeco team did a better redaction job than did Paul Manafort’s people. I suppose that we will have to wait to see if the unredacted petition is ever made available.
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