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When a Patent Owner is not a Patent Owner

Two IPRs (IPR2016-00663 and IPR2016-00669) filed on patents asserted against Microsoft in district court have ended with victory for the tech giant in an unusual procedural turn. Claims of the two patents were cancelled as a result of adverse judgment being entered against the owner of record, Global Technologies, Inc., after the PTAB deemed that the Patent Owner had abandoned the IPR proceedings.

The conflict between the parties began when Keith Raniere filed suit against Microsoft in the Northern District of Texas alleging infringement of the patents. The issue of patent ownership became a point of contention in the litigation, with Microsoft ultimately moving to dismiss the case for lack of standing. A hearing was heard on the issue, and the district court dismissed the case with prejudice on the same day. A key issue appears to have been that Mr. Raniere, one of several named inventors on the patents, held himself out as the sole shareholder and director of Global Technologies, Inc. (“GTI”), but was unable to provide credible evidence that any of the original owners of GTI had either transferred their shares in the company or their interest in its patents to Mr. Raniere.

Around the time the district court dismissed the underlying litigation, Microsoft filed petitions on March 2, 2016, against two patents Mr. Raniere had asserted. The petitions noted that Patent Office records indicated GTI as the owner of the patents, but that as Mr. Raniere had asserted his ownership in the underlying litigation, that they had served Mr. Raniere and GTI according to its correspondence address at the Patent Office.

On March 17, 2016, an assignment executed in 2014 was recorded at the USPTO from GTI to Mr. Raniere, with Mr. Raniere holding himself out as the President and sole shareholder of GTI. In the IPRs, preliminary responses were filed on behalf of Mr. Raniere. When trials were instituted for both patents in September 2016, the Board noted the recorded assignments and stated that it would treat Raniere as the Patent Owner for the proceedings.

Through the preliminary proceedings and eventually institution of the IPRs, the dismissal of the district court litigation was the subject of appeals to the Federal Circuit. On January 18, 2017, the dismissals were affirmed. This set off a series of actions in the IPRs, beginning with a conference call discussing the issue of patent ownership in context of the district court dismissals. That discussion included review of a transcript of the district court hearing which discussed the same assignment from GTI to Raniere that had been recorded at the USPTO, with the district court finding the assignment ineffective, and found Mr. Raniere’s testimony to be “wholly incredible” and “untruthful.” It was noted that no evidence had been produced which supported either a transfer from owners of GTI to Raniere or evidence that Raniere otherwise had an interest in GTI that would allow him to transfer its assets to himself. The Board accepted these findings, and asked both parties, as well as the firm representing Raniere, to address issues related to representation of the Patent Owner and the impact on the IPR proceedings.

The law firm responded with evidence from the prosecution of the patents with Raniere listed as president of GTI, including powers of attorney signed by Raniere as President, and its brief argued that either Raniere was the owner, or that the law firm was authorized to represent GTI as all potential owners had given it power of attorney during prosecution of the patents. Microsoft’s briefing asked for all filings on behalf of Raniere to be expunged from the proceedings.

The Board ultimately decided that Raniere had not demonstrated an ownership interest in GTI or to the patents as the issue had been decided by the district court, which had considered and found insufficient the same documents that Raniere had presented in the IPRs. The Board also held that the law firm’s representation of GTI may have been ineffective as it relied primarily on documents executed by Raniere.

Attempting to locate an actual “authorized representative” of GTI, the Board asked both the law firm to produce a new power of attorney signed by someone other than Raniere and asked Microsoft to serve the individuals shown in the record to have ownership interests in GTI. When the law firm was unable to produce a new power of attorney, the Board expunged the Preliminary Response, Patent Owner Response and associated exhibits from the record.

Although one individual associated with GTI was in contact with the Board regarding the proceedings following receipt of service by Microsoft, ultimately no individual or entity made an appearance for GTI. Ultimately, the Board held that GTI had abandoned the proceedings, which was construed as a request for adverse judgment. As a result, the claims for which the IPRs had been instituted were cancelled.

While this case certainly presents a unique procedural background, it also gives a lesson so fundamental that many patent owners may overlook it or assume it is not an issue: if a party claims ownership of a patent, make sure there are no gaps in their paperwork tracing back to the assignment from inventors. Here, Mr. Raniere was an inventor on the patents and had held himself to be a representative for GTI for nearly two decades. In his mind, there may have been little issue with ownership he could foresee. Even so, the lack of documentation of either transfer of ownership to Raniere or sufficient evidence that Raniere was authorized to act on behalf of GTI was fatal not only to his suit, but also to the survival of claims of the patents.