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The PTAB Rejects a “Benefits-Plus-Relationship” Standard For Determining Real Parties-in-Interest

The PTAB, on November 27, 2018, released the public version of Unified Patents, Inc. v. Realtime Adaptive Streaming, LLC, IPR2018-00883, Paper 29 (P.T.A.B. Oct. 11, 2018), finding membership in petitioner’s company plus only an interest in the outcome of the IPR fails to satisfy the AIT analysis for a real party-in-interest (“RPI”).

Realtime Adaptive Streaming, LLC (“Patent Owner”) argued the petition to institute IPR should be denied because Unified Patents, Inc. (“Petitioner”) failed to identify its members as RPIs. Petitioner is a for-profit entity that collects subscription fees from many of its member companies and uses the fees to, to among other things, file IPR petitions at its sole discretion. Patent owner alleged petitioner’s members are RPIs since the members are “beneficiaries of this petition and have a preexisting, established relationship with Petitioner.”[i] The PTAB rejected patent owner’s “benefits-plus-relationship standard.” It explained that while the RPI analysis starts with the nature and degree of the relationship between petitioner, the members, and the filing of the IPR, to end the inquiry there “would be premature and cut short the RPI analysis set out in AIT.”[ii]

Earlier this year, the Federal Circuit in Applications in Internet Time, LLC v. RPX Corporation, 897 F.3d 1336 (Fed. Cir. 2018) [hereinafter AIT], found that “[d]etermining whether a non-party is a ‘real party in interest’ demands a flexible approach that takes into account both equitable and practical considerations, with an eye toward determining whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner.”[iii]

In vacating the PTAB’s decision in AIT, the Federal Circuit highlighted numerous instances of circumstantial evidence that indicated SalesForce.com was a real party in interest, including: SalesForce.com was RPX’s client; their boards of directors shared a common member; SalesForce.com made large payments to RPX shortly before RPX filed the IPR petition; RPX was aware of the AIT lawsuit; RPX and SalesForce.com engaged in numerous communications leading up to the filing of the IPRs; RPX advertised  that its interests were “100% aligned” with its clients; RPX advertised that it provided patent infringement “insurance” services to its clients; and RPX served as an “an extension of the client’s in-house legal team.”[iv]

In Unified Patents, the PTAB compared the many factual differences between petitioner RPX in AIT and Petitioner Unified Patents, Inc. Although both Petitioner and RPX are for-profit companies that also file IPRs to serve their clients, none of the other factors from AIT were present in Unified Patents. Patent Owner did not present evidence that any of Petitioner’s members controlled, directed, or directly financed the proceeding, nor that Petitioner’s actions appeared tailored to benefit any specific member. “[M]ost significantly, there is no evidence that any member desires review of the []patent but is time-barred from filing an IPR—a fact that was crucial in AIT.”[v]

Consequently, a party is not automatically an RPI solely based on membership to a for-profit company that files IPRs to serve the members. Although this arrangement may result in a relationship between the parties and some benefit to the members, patent owners must provide additional circumstantial evidence indicating that a member is a RPI. Under this fact intensive analysis other potentially relevant considerations are communications between the petitioner and the unnamed party regarding the IPR or underlying infringement suit; the unnamed party’s knowledge of petitioner’s intent to file the IPR; corporate relationship, aside from membership, such as shared officers or board members; significant payments from the unnamed party to the petitioner shortly before the IPR is filed; attorney-client relationship; and, the unnamed party desires review of the patent, but is barred from filing an IPR.

[i] Unified Patents, Inc. v. Realtime Adaptive Streaming, LLC, IPR2018-00883, Paper 29, at 12 (P.T.A.B. Oct. 11, 2018).

[ii] Id. at 15.

[iii] AIT, 897 F.3d at 1351.

[iv] Id. at 1351-1357

[v] Unified Patents, Inc., IPR2018-00883, at 16.