The Federal Circuit cannot say who constitutes a real-party-in-interest in an IPR.
Zachary Silbersher
It is an odd day for all things legal when the appellate court that has exclusive jurisdiction over a certain area of law cannot weigh in on the answer to a question that has decidedly vexed different courts. And yet, that is exactly where we are with respect to the question of who or what can constitute a real-party-in-interest within a proceeding for inter partes review. In a precedential decision that issued on May 19, ESIP Series 2, LLC v. Puzhen Life USA, LLC, the Federal Circuit confirmed that the Supreme Court’s recent Click-to-Call decision precludes judicial review of decisions by the PTAB concerning real-parties-in-interest.
In the ESIP case, Puzhen filed an IPR petition challenging a patent owned by ESIP. In its response, ESPI argued that the Puzhen had failed to name all real-parties-in-interest, including doTERRA International, LLC, and Puzhen Life Co., Ltd. The Board invalidated the challenged claims. In the Final Written Decision, the Board also addressed ESIP’s argument that the Board had improperly instituted Puzhen’s petition due to its alleged failure to name all required real-parties-in-interest. The Board rejected this argument after determining doTERRA and Puzhen Life Co were not, in the Boards’ view, real-parties-in-interest.
ESIP then carried that argument forward on appeal. The Federal Circuit began with the statute. Section 312(a)(2) of the Patent Statute provides that an IPR petition may only be instituted it identifies, among other things, all real-parties-in-interest. Yet, under Cuozzo, the Supreme Court held that § 314(d) precludes judicial review of the Board’s interpretation of statutes related to institution of IPRs. The Supreme Court also held that the bar on judicial review covers the “particularity” requirement under § 312(a). More recently, in Click-to-Call, the Court extended Cuozzo to Board decisions applying the time-bar under § 315(b). Given this precedent, the Federal Circuit in ESIP held there was no reason not to extend preclusion of judicial review to decisions by the Board related to real-parties-in-interest, also one of the enumerated criteria in the statute for instituting an IPR.
The EPIS decision confirms a corollary consequence from the Click-to-Call decision that has likely been celebrated by certain third-party IPR petitioners, such as Unified Patents. Despite being a periodically-contested issue IPR proceedings, the Federal Circuit cannot weigh in on what constitutes a real-party-in-interest. And it’s a peculiar fallout because there was a brief period when the Federal Circuit believed it was entitled to speak on this issue. And it did speak, rather sternly. Yet now, despite ostensibly being the authoritative court on all issues related to U.S. patent law, the Court has been effectively silenced.
IPRs remain a relatively new animal. Certain institution decisions were initially deemed unreviewable. That partially changed in 2018 after an en banc decision of the Federal Circuit holding that time-bar determinations related to institution can be appealed. See Wi-Fi One, LLC v. Broadcom Corporation, 878 F.3d 1364 (Fed. Cir. 2018) (en banc). Later that year, the Court issued a lengthy decision on the question of what constitutes a real-party-in-interest in an IPR proceeding. See Applications In Time v. RPX, which we previously blogged about (hereinafter, the “AIT” decision).
In the AIT decision, the Federal Circuit spoke directly to the question of which parties must be named as a real-party-in-interest in an IPR proceeding. More specifically, the Court addressed a dicey issue arguably at the fringe of the larger RPI debate—namely, whether members or subscribers to third-party IPR challengers must be named as real-parties-in-interest.
In particular, the Federal Circuit threw open several questions about the Board’s prior views on real-parties-in-interest. The Court questioned whether the business model of third-party challengers dictates that either all or some members, depending on the circumstances, should be deemed to be RPIs. The principal concern articulated by the Federal Circuit grew out of fairness and estoppel considerations already embedded in the statute. The Federal Circuit stated, a “patent owner dragged into an IPR by a petitioner, who necessarily has an interest in canceling the patent owner’s claims, should not be forced to defend against later judicial or administrative attacks on the same or related grounds by a party that is so closely related to the original petitioner as to qualify as a real party in interest.”
After the AIT decision, the Board continued to decide RPI issues in petitions filed by third-party challengers. And yet, as we previously blogged, the Board appeared to brush aside the Federal Circuit’s admonishments from its lengthy AIT decision. For instance, in one of those decisions, the PTAB appeared to rule out the possibility that the business model of a third-party challenger, alone, warrants disclosure of members as RPIs. The PTAB’s logic was that, as a general rule, “a litigant is not bound by a judgment to which she was not a party.” While that may be true, generally, it would appear to ignore the very question that the Federal Circuit wrestled with in AIT, namely, to what extent estoppel should extend to “a party that is so closely related to the original petitioner as to qualify as a real party in interest.”
Thus, despite the Federal Circuit’s expressed concerns that third-party challengers may be circumventing Congress’ policy for including estoppel provisions in the IPR statute, the PTAB instituted numerous petitions over RPI challenges that arguably fell within the scope of concerns expressed in AIT. Given there was not perfect alignment between the Court’s AIT decision and some of the subsequent Board decisions on RPIs, the presumption was that nothing would be certain until the Federal Circuit had occasion to once again weigh in on this question.
Now, however, the Federal Circuit will not have such an occasion. Under Click-to-Call and ESIP, the Federal Circuit has now confirmed that it cannot speak to this question. Which is odd. It is odd because the Court previously did speak to this question, and it did so rather sternly. And whether the Board subsequently honored the Federal Circuit’s concerns, or simply dispensed with them, we will never know.
In Cuozzo, the dissent pointed out that a fair reading of § 314(a) would “bar only an appeal from the institution decision itself, while allowing review of institution elated issues in an appeal from the Patent Office’s final written decision at the end of the proceeding.” Yet ESIP specifically appealed the Board’s findings with respect to the real-parties-in-interest within the Final Written Decision. Yet, because that determination was deemed to relate to the Board’s interpretation of the statute governing institution, it was deemed unreviewable.
So here we are. In a case where we know the Federal Circuit has arguably taken exception with the Board’s interpretation of the statute, the Federal Circuit has been silenced. How many other agencies enjoy such unfettered and unreviewable discretion?