After the Supreme Court’s 2019 decision in Return Mail, Inc. v. United States Postal Service, 139 S. Ct. 1853 (2019), held that federal agencies are not “persons” eligible to challenge a patent at the PTAB, the government was recently dealt another blow. On January 27, 2020, the PTAB denied five inter partes review petitions filed by Microsoft relating to technology Microsoft was developing for the U.S. government, finding that the petitions were barred by 35 U.S.C. § 315(b) because the government had been sued more than one year before Microsoft filed its petitions, and that Microsoft was in privity with the government. Under 35 U.S.C. § 315(b), “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”
Microsoft had initially entered a contract with the government in 2018 to develop an Integrated Visual Augmentation System with a Rapid Target Acquisition (“RTA”) feature. At the time, however, the government was defending an infringement suit in the Court of Federal Claims concerning products with the RTA feature that had been filed in June 2017. Some months later Microsoft successfully intervened in the suit, having established that it would be compelled to violate its contractual obligations were Patent Owner to prevail on its claims. Microsoft then filed IPR petitions requesting the PTAB invalidate the asserted patents in July 2019.
In reaching its decision that review was entirely barred, the Board looked to the six exceptions to the “rule against nonparty preclusion” identified in Taylor v. Sturgell, 553 U.S. 880, 893–95 (2008), a case in which the Court clarified that “privity” is simply “a way to express the conclusion that nonparty preclusion is appropriate on any ground.” Id. at 894 n.8; see also WesternGeco LLC v. ION Geophysical Corp., 889 F.3d 1308 (declining under the Taylor analysis to apply a § 315(b) bar to a party that had been third-party subpoenaed in a prior infringement suit). But the Court in Taylor was also keen to stress that these six bases, though a non-exhaustive list, are “discrete exceptions” to the “general rule against precluding nonparties.” Id. at 884, 893 n.6, 898; see also id. at 885 (holding that the D.C. Circuit’s doctrine of “virtual representation” did not make the list).
The PTAB’s privity analysis...
