Dir. Vidal on Privity and Real-Party-in-Interest in IPRs

Patent

by Dennis Crouch

Samsung v. NetList, IPR2022-00615 (Dir. Rev. 2023)

USPTO Director Vidal has ordered the PTAB to expand its approach to the privity and real-party-in-interest (RPI) analysis at the start of inter partes review (IPR) proceedings.  The question in the Samsung case is whether Google should be considered an RPI or privy in a way that would bar Samsung’s IPR petition.

Back in October 2022, Samsung filed an IPR petition against Neglist’s US7619912; and the PTAB granted institution.  The patent covers a memory module, and Netlist previously sued Google for infringement back in 2009. That case is amazingly still pending in C.D.Cal.  The accused modules were supplied by Samsung, and Google at one point demanded indemnification from Samsung. Netlist agreed to stay the Google case in while awaiting the outcome of a parallel Samsung lawsuit that was filed more recently.

After the PTAB granted the IPR, Director Vidal quickly issued a sua sponte director review order and also ordered the PTAB to allow additional discovery into Google’s role.  Repeating precedent and rules already in place, Dir. Vidal has now ordered the PTAB to particularly consider the “extent to which Google has an interest in and will benefit from Samsung’s actions, and inquire whether Samsung can be said to be representing that interest after examining its relationship with Google.” Quoting with modification, Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336 (Fed. Cir. 2018).  Further, the PTAB must also recognize that the notion of “privity” is a separate and distinct inquiry from that of RPI.  At times, a party may be in privity with the petitioner even if not a real-party-in-interest.

Statute of Limitations – One year Time Bar: An IPR petition has a clear deadline.  No IPR can be instituted if “the petitioner, real party in interest, or privy of the petitioner” had been sued for infringing the patent more than 1-year beforehand. 35 U.S.C. 315(b).   Based upon this statute, if Google is an RPI/Privy, then the IPR is time barred.

In this type of indemnification situation, it is easy for me to see the RPI/privity connection. But, the PTAB, at least originally, refused to see a connection.  Its basic idea is that Samsung’s indemnity agreement relieves Google of all liability — and therefore (despite being an accused infringer), Google has no interest in the outcome of the IPR.  It is really hard for me to wrap my head around this argument.  If I were being sued by a third party, I would be glad to have an indemnification agreement, but would be much more satisfied if the case were entirely dismissed.  A potential contract right is generally much less valuable than a final decision absolving liability.

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6 thoughts on “Dir. Vidal on Privity and Real-Party-in-Interest in IPRs”

  1. 4

    Great article! NLST has been abused for too many years by these giants IMO and the 912 patent has been challenged multiple times and upheld by the highest IP review so it appears Samsung is simply trying to stretch out more time in this process with their IPR attempt.

  2. 3

    “A final decision absolving liability” is good for everyone who purchased the Samsung module, except the patent holder Neglist. So, the fact that an IPR outcome of “invalid” would be good for one particular Samsung customer, Google, can’t be the only factor involved in finding that Google is in privity with Samsung. If it were, then any one lawsuit, against anyone, would start the one-year clock running. So then, it must be the other factor, i.e., the indemnity, right? But, what if all of Samsung’s customers have the same indemnity agreement that Google has? Then, aren’t they all similarly situated and thus all in privity? (Sorry, too complicated for a Friday.)

  3. 2

    Good job, Dir. Vidal. The time bar is there for a reason, so the PTO should be vigorous in its review of privity.

    1. 1.1

      Demanding indemnification, seeking indemnification, and taking a position that there is indemnification are different from a concession or admission of indemnification by the indemnitor or a final legal decree that indemnification exists. Will the PTAB conduct its own trial (a trial with live witnesses?) about whether indemnification exists? Does it have the power to do so?

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