Customer/Manufacturer Relationship Insufficient To Bar

• Published date: 17 August 2023
• Subject Matter: Intellectual Property, Patent
• Law Firm: Jones Day
• Author: Mr Matthew Johnson, Alexandra Boeriu (Summer Associate) and Hannah Mehrle

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...