Customer/Manufacturer Relationship Insufficient To Bar

by | Aug 16, 2023 | PTAB News, Real Party in Interest, Time Limits

By Alexandra Boeriu,* Hannah Mehrle and Matt Johnson –

Recently, the PTAB held that Samsung Electronics Co. Ltd. (“Petitioner”), met its burden in showing that a third party (the “Third Party”) was neither a real party-in-interest (“RPI”) nor in privity with Petitioner.

Here, NetList, Inc. (“Patent Owner”) argued that Petitioner’s request for an inter partes review (“IPR”) proceeding for the sole remaining claim of the ’912 patent was time-barred under 35 U.S.C § 315(b), due to a 2009 lawsuit involving that same patent between itself and the Third Party.  After institution, the proceeding was stayed except for on the limited issued of whether the Third Party was a RPI or in privity with Petitioner.

Turning first to the issue of whether the Third Party was an unnamed RPI, the PTAB explained that RPI analyses require a “flexible” multi-factorial approach, with the patent owner’s evidence showing that a non-party and petitioner have an “extensive…[or] intertwined” business relationship to justify a finding in its favor.

The PTAB found that Patent Owner failed to establish such a relationship between the Third Party and Petitioner; their business models and lack of common ventures showed merely a “standard manufacturer-consumer” relationship.  Petitioner was not indemnifying the Third Party, and the Third Party was also not funding the IPR proceeding.  And, the PTAB noted, that although the two companies have overlapping interests in the proceeding due to their use of the same patented product, each has its own risks stemming from the alleged infringement.  The Third Party is “just one of many” in Petitioner’s consumer base, which is not tantamount to an RPI finding.  The PTAB found that holding otherwise would also violate the “customer-suit” doctrine, as the Third Party would bear the burden of trial, rather than the “true defendant,” Samsung.

The PTAB then addressed the privity issue, noting the six-factor approach under Taylor v. Strugell, 553 U.S. 880 (2008)–but highlighting that because privity is a broader claim than RPI, “[a]nalysis under any one factor can support a [privity] finding.”  Again, however, the PTAB dismissed any notion of privity between the Third Party and Petitioner, since Petitioner acted independently and in its own interest in requesting the IPR, rather than filing it at the behest of the Third Party.  The PTAB noted that Petitioner and the Third Party’s previous legal relationship was immaterial, since the parties did not have the right to control each other in any proceeding, including this IPR.

Without showing privity or RPI status for the Third Party, which is necessary for a successful claim under §315(b), the petitioner’s request for IPR cannot be time barred.

Takeaway

The PTAB will not consider “a standard consumer-manufacturer relationship” between a petitioner and third party sufficient to support a finding that the former is an RPI to the patent infringement suit.  A patent owner bringing an RPI claim to the PTAB should present evidence of a more substantial relationship, along with a showing that the non-party has some independent interest in the outcome of the suit, to ensure a sufficient basis for their claim.

* Alexandra was a Summer Associate in Jones Day’s Cleveland Office.

The following two tabs change content below.
My LinkedIn profile

Matthew Johnson

Partner at Jones Day
Matt Johnson is one of the Firm's primary contacts on practice before the PTAB. Currently co-chairing the Firm's PTAB subpractice and involved in proceedings at the Board since the first day of their availability in September 2012, Matt regularly represents clients as both petitioners and patent owners at the Board. He further works as an advocate for clients in appeals from Board proceedings at the Federal Circuit.