No Appeal of Real-Party-In-Interest Errors

by Dennis Crouch

Esip Series 2, LLC v. Puhzen Life USA, LLC (Fed. Cir. 2020)

In its decision here, the Federal Circuit has applied Thryv, Inc v. Click-To-Call Techs., LP, 140 S. Ct. 1367 (2020) and refused to consider whether the USPTO erred in its real-party-in-interest analysis.

In Cuozzo (2016), the Supreme Court held that this Court is precluded from reviewing Board decisions concerning the “particularity” requirement under § 312(a)(3). The Court explained that § 314(d) bars appellate review of “questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.” The Court further explained that “where a patent holder grounds its claim in a statute closely related to that decision to institute inter partes review, § 314(d) bars judicial review.”

[I]n Thryv (2020) … the Supreme Court held that § 314(d) also precludes judicial review of the agency’s decision whether to apply the one-year time bar set forth in § 315(b)). . . .

In view of Cuozzo and Click-to-Call, we find no principled reason why preclusion of judicial review under § 314(d) would not extend to a Board decision concerning the “real parties in interest” requirement of § 312(a)(2). ESIP’s contention that the Board failed to comply with § 312(a)(2) is “a contention that the agency should have refused to institute an inter partes review.” Indeed, ESIP expressly argues that the agency should have refused to institute inter partes review because of Puzhen’s failure to identify all “real parties in interest.”

Slip Op. Here, the statute requires that a petition for inter partes review “may be considered only if” the petition identifies all real-parties-in-interest.  In the case, ESIP argued that doTERRA should be considered a real-party-in-interest because the company is a co-defendant in the underlying litigation, sells the accused Puhzen product, and agreed to be bound by the IPR estoppel.  The Board’s approach to the issue will stand without considering whether it is in accordance with the law.

Thryv was released after briefing and oral arguments had been complete.  The court did accept the supplemental authority, but those are severely limited.  In its statement to the court, patentee ESIP argued that it wasn’t (only) appealing the institution decision but rather (also) whether the petition met the statutory requirements: “[We] contend that Puzhen’s IPR Petition did not satisfy the statutory requirement in 35 U.S.C. § 312(a)(2).”

= = = =

On the underlying merits, the Federal Circuit affirmed the PTAB’s obviousness final decision regarding the claimed “method for introducing a scent into breathable air,” US9415130; IPR2017-02197.

31 thoughts on “No Appeal of Real-Party-In-Interest Errors

  1. 3

    Potentially more important than a pre-IPR-trial squabble over whether [another besides the Petitioner] real party in interest has been identified or not is: Who besides the Petitioner is going to be subject to estoppel by an IPR decision against the Petitioner in the D.C. or any other proceeding, where the same RPI question may be raised and obtain more discovery?

    1. 3.1

      I checked 35 USC 315 for IPR estoppel in subsequent litigation to confirm that it does expressly apply to RPIs and privies, hence that RPI or privy issue can still be raised and examined then, when it counts, for the benefit of surviving asserted claims.

      1. 3.1.1

        examined then, when it counts

        of surviving

        No harm no foul – guilty until proven innocent — what could go wrong with that? If you did not commit the crime, how can ANY search and seizure bother you…?

  2. 2

    More importantly, why does the USPTO keep invalidating patents on prior art that was considered in examination? The same thing happened to me where the PTAB was overturning the examiner, then the examiner would come back in a child application and rebut the PTAB. The exact same references get allowance in examination and invalidation at PTAB. In this case Sevy and Tilton. This is total chaos. link to joshtheballoonguy.org

    1. 2.1

      Comparing the above ex parte examination, in the IPR, per the Court: “In reaching that determination, the Board relied on the disclosures of Sevy and Giroux, and the expert testimony of Mr. Smith, who testified that a skilled artisan “would have had a reason to combine the teachings of Sevy with those of Giroux.” “

      1. 2.2.1

        Thanks Pro Say, but since that link is behind a paywall, here is an ABA Journal article on this reported malpractice suit against some very well known lawyers for allegedly being too aggressive. [[Did they put rocks in their clients water balloons before throwing them in court?]
        link to abajournal.com

        1. 2.2.1.1

          the lead in to the story behind the paywall starts with the law firm slamming its former client Telebrands for the baseless and cynical malpractice claims asserting that the suit is merely an attempt to dodge paying the legal fees for the UNsuccessful attempt against Josh Malone.

          The level of the fees was not disclosed.

          The argument FOR malpractice is being tied to the sanctions that the law firm sustained – supposedly millions of dollars for egregious conduct.

          Josh, can you relay what that conduct actually was that was sanctioned?

          It seems from the article that a suggested design change that would provide clearance of the original claims in suit did not work out.

          Merely being defeated in various points along the path is also not a sanctionable offense (even though this is apparently stressed in the complaint).

          The whine comes that the law firm should have been more strenuous about telling the infringers that they would not win the lawsuit.

          Ah, near the end of the article, some of the (alleged) malfeasance is listed:

          overly aggressive,
          filing excessive and untimely motions and appeals (plaintiffs – as opposed to the law firm – were sanctioned and suffered enhanced damages),
          fees and expenses of the defendant were inflated (but plaintiff got stuck with them).

          What are the chances that had plaintiff won, they would have been singing the praises of that same aggressiveness and touting it as proof that “the system works”…?

        2. 2.2.1.2

          Thanks Paul.

    2. 2.3

      >>More importantly, why does the USPTO keep invalidating patents on prior art that was considered in examination?

      The mantra of PTO management is “find the best art prior art.” There is a conspicuous lack of emphasis on a rigorous and wise application of that “best prior art.”

      I suspect this is because they recognize there’s a limit to how much examination you can get in a handful of hours. Better to error on the side of search than evaluation. Your patent attorney can take that prior art and tell you how defensible the Examiner’s hasty opinion is… for just a little bit more money.

      1. 2.3.1

        There is a conspicuous lack of emphasis on a rigorous and wise application of that “best prior art.”

        … and yet, THAT has been one of my touchpoints as long as I have been posting on this blog.

        Gee, imagine that.

      2. 2.3.2

        Ben, compare the cited art in 2.1 above versus 2 above, which shows that it was not the same art being applied ex parte as was in the IPR.
        [As is almost always the case, even more so now with increased discretionary IPR denials.] [So I do not agree that the primary effect of PTO examiner time limitations is on art application rather than art search findings.]
        [The 2.1 case quote also shows that the cited IPR also relied on expert testimony of record which was apparently not effectively cross-examined or otherwise rebutted?]

        1. 2.3.2.1

          Good catch Paul. To clarify, Sevy and Giroux were both considered and initialed by the examiner in the child application. The examiner determined that Sevy and Tilton were the closest prior art so that was the combination analyzed in the notice of allowance.

          It is quite clear that the examiner disagrees with the PTAB. This is not a mistake, it is a subjective disagreement within the PTO. Which in my experience is representative of a large number of IPRs that go against the examiner and inventor.

          This is extremely destabilizing. How can an inventor obtain a patent he can rely on?

          1. 2.3.2.1.1

            Re: “How can an inventor obtain a patent he can rely on?” If you mean “rely on” solely because a PTO examiner allowed those claims [after a total of only 16.5 hours for the entire examination or whatever else the time quota was], that has NEVER been safe to rely on. Long before IPRs or the Federal Circuit a very significant percentage of patent claims were held invalid in patent suit trials and appeals. To be even reasonably “reliant” for successful trial and appeal a pre-suit neutral professional extensive search and evaluation was needed, that is, unless one was willing to settle for less than defendant litigation costs.

            1. 2.3.2.1.1.1

              If you mean “rely on” solely because a PTO examiner allowed those claims [after a total of only 16.5 hours for the entire examination or whatever else the time quota was], that has NEVER been safe to rely on

              Existence — and level — of the presumption of validity – an important stick in the bundle of property rights of a granted patent – says otherwise.

              You may not like that aspect of the law, but you do not get to make that aspect disappear.

            2. 2.3.2.1.1.2

              Are you saying that if we hired a neutral professional to search and evaluate our application that the PTAB would not invalidate it? That is simply not true. I would invite you to underwrite the title insurance policy for said evaluation.

              1. 2.3.2.1.1.2.1

                Of course that is not what I said. First I specifically started with “Long before IPRs or the Federal Circuit.” Secondly, it was about patent lawsuits. Thirdly, if you want to change the subject to IPRs, a pre-suit neutral professional extensive search and evaluation would enable an ex parte reissue or reexamination to get more and better claims better able to survive an IPR a lawsuit now often causes. And no there is no such thing as title insurance for patents, and you may be surprised how many loopholes there are in title insurance even for real estate.

                1. I was talking exclusively about IPRs. Sorry for the misunderstanding.

                  As to reissue, that would be unnecessary if we hire a neutral professional to search and evaluate the application.

                  As to ex parte reexamination, are you proposing that inventors request reexamination prior to attempting to enforce our patents? That won’t work either. Many IPRs are instituted on patents that have passed a reexamination.

                  Circling back, this case is about a PTAB invalidation of a patent where at least the child patent was thoroughly examined and allowed. The inventor in this case followed best practices and still got invalidated. This is my experience as well.

                2. Paul,

                  You are trying to insert a “best practices” type of thing as somehow being required to “earn” the presence and level of the presumption of validity.

                  It just does not work that way.

        2. 2.3.2.2

          >>[So I do not agree that the primary effect of PTO examiner time limitations is on art application rather than art search findings.]

          I didn’t mean to suggest that. I think that management, either unwilling or unable to significantly increase examination time, emphasizes search over evaluation.

          Whether or not the same prior art was used in this particular case, I would generally not be surprised if PTAB and an examiner disagree, because there is little consistency in evaluating prior art.

          From my hazy memory of the patent training academy, I recall there being something like 12 hours spent on PowerPoint decks about searching, but no classes on interpreting the prior art. Examiners learn this from once-off, and diverse, opinions of their trainer/primary. My standards reflects
          my primaries and the guy-across-the-hall’s standards reflect his primaries. There can be significant disagreement between examiners. So disagreement between an examiner and an attorney? Not shocking.

          If it was desirable to reduce that gap, the office should 1) improve training on evaluation, and 2) fill PTAB with examinera who have a JD.

          1. 2.3.2.2.1

            because there is little consistency in evaluating prior art.

            Why is that?

            Serious question. This is not something that should see inconsistency to the level of patent/no patent.

          2. 2.3.2.2.2

            … and whether or not you have a JD (and regardless of hours allotted — yet again, do not make your problems into being my problem), it remains your JOB to properly examine the applications.

            That includes getting the prior art evaluations correct.

            If it takes more time, talk with your union rep and get more time.

            Remember: applicants pay for the proper examination. They do NOT pay for “x hours and then that’s it” examination that is not proper under the law.

            Internal metrics — and your evaluation under them — are NOT in the equation.

            The offer (by the Patent Office) is simply a flat fee for the proper examination. It is not an amount of time examining.

          3. 2.3.2.2.3

            Thanks Ben, especially re [lack of?] Academy classes on interpreting art re claims.
            But as for “fill PTAB with examiners who have a JD” for many years now all APJs are required to be attorneys. [That had to be explained to some CAFC judges who did not know that either several years ago.]

            1. 2.3.2.2.3.1

              Sure, I get that it’s a non-starter. I’m also not saying it’s a good idea. Heh.

              But if the goal was reliability, that’d be a rather effective way to achieve it: reduce the experiential difference between the two populations of evaluators.

            2. 2.3.2.2.3.2

              Also, reflecting on it, I’m being a bit unfair to the PTO regarding training. There was an example that was heavily delved into, and sorta covered interpreting the prior art. But that example is not especially relevant for the vast majority of examiners, and all the actual-art-area interpretation was effectively taught 1-on-1 with trainers as I previously said.

    3. 2.4

      > why does the USPTO keep invalidating patents on prior art that was
      > considered in examination

      Umm, because patent examiners make mistakes, Josh. They’re human.

      And when those mistakes are made in ex parte patent prosecution, there’s no one around to challenge the Examiner or point out that an allowance was erroneous. Even if the patent owner objectively knows that the Examiner erroneously allowed the claims based on a fundamental misunderstanding of the prior art, it is a rare patent owner that wouldn’t just sit back and let the patent issue. The one-sided nature of the proceeding is one reason why both post-grant review in the PTO and invalidity defenses in district court allow the challenger to rely on previously-considered prior art.

      The fact that examiners can err in evaluating art is acknowledged in the ex parte reexamination statute, which states clearly that “[t]he existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office.” 35 U.S.C. 303. In the context of IPR, the PTAB has said that it’s reluctant to institute IPR based on art actually considered (not just listed on an IDS), but will if it is presented in a materially different light or in combination with other non-considered art, or if the Board believes the Examiner made a mistake in evaluating the art.

      1. 2.4.1

        based on art actually considered (not just listed on an IDS),

        You err (slightly, but importantly) here with attempting to have two meanings of the word “considered”

        There is no “actually” considered.
        There is only considered.

        Considered is a low (very low) bar.

        1. 2.4.1.1

          Lode Runner was undoubtedly referring to prior art actually cited in an examiner office action.

          1. 2.4.1.1.1

            I cannot make that assumption Paul.

            Art that is labeled as considered is MORE (much, much more) than merely the art that is ‘cited’ in an examiner office action.

            This goes to the heart of the matter as to what “considered” means.

            It does NOT mean what you suggest.

            At all.

      2. 2.4.2

        As for “making mistakes,” is it not a mistake to keep a system in place that KEEPS ON making such mistakes?

        “They are only human” is NOT an acceptable answer.

        They are paid professionals and are expected to NOT make mistakes.

        THAT is their job.

        If we are going to be nonchalant about mistakes, we do not simply scrap examination entirely? There is some 3 Billion dollars annually that innovators could save.

  3. 1

    Marbury v. Madison.

    Discuss.

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