Legal

Fintiv challenged in SCOTUS Amicus by Unified

On January 14, 2022, Unified Patents filed an amicus brief with the Supreme Court in support of the petition for certiorari in Intel Corp. v. VLSI Tech. LLC, challenging the USPTO's reliance on their own NHK-Fintiv ruling, as well as the reviewability of such a de facto rule on appeal.

Unified Patents is represented by Bill Jenks of Jenks IP and by in-house counsel, Jung Hahm and Jonathan Stroud. Read the amicus brief below:

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Access Advance, Who is Checking Essentiality? -- An HEVC Case Study

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Some patent holders and pools designate their patents as relevant or essential to a standard without proper scrutiny or analysis. As part of an ongoing series examining this dubious practice, we highlight U.S. Patent 9,838,714. The ‘714 patent is owned by the Electronics and Telecommunications Research Institute (ETRI), is purportedly essential to the H.265 (HEVC) standard as part of the Access Advance Patent Pool, and is part of a family of at least 29 applications globally. It should not be considered essential.   

The ‘714 patent is directed to the prediction phase of video coding, specifically, how to scan the decoded signals during intra-prediction. In this process, there is a specific order in which the values of a block (e.g., a 4x4 or 8x8 transform block) are processed. The ‘714 patent requires that the first row or column is scanned first, before any other column or row. See, e.g., claim 1 (“scanning entropy-decoded signals of a first row with priority so that all of the entropy-decoded signals of the first row are scanned prior to scanning entropy-decoded signals of any other row”). 

In contrast, the HEVC standard does the opposite. As illustrated below, the HEVC standard requires scanning in “reverse order,” meaning that the last row is scanned first (from right to left) or the last column is scanned first (from bottom to top). See HEVC, § 7.3.8.11. 

See T.Nguyen, “Transform coding techniques in HEVC,” IEEE Journal of Selected Topics in Signal Processing, vol. 7, no. 6, 978-989, Dec. 2013. The HEVC standard can scan in the diagonal (§ 6.5.3), horizontal (§ 6.5.4), or vertical (§ 6.5.5) directions for intra-mode prediction, but again, it does so in the “reverse order” direction, not the direction claimed by the ’714 patent.  

​​Thus, the ‘714 patent does not appear to be essential to the HEVC standard even though it has been declared essential and actively licensed as being so. The public would benefit from appropriate scrutiny of such large patent pools that allegedly cover critical technical standards.

Unified Patents Inc.’s Real Party-in-Interest and Discretionary Decisions

For the past nine years, across more than 250 inter partes, post-grant reviews, and other forms of administrative challenge, Unified Patents, LLC has won every real party-in-interest (RPI) challenge, both at institution, final written decision, and on appeal. It has also won all Fintiv related discretionary arguments and all Arthrex remands, as detailed below.

Unified’s status as the sole RPI was challenged in its first IPR where the Board held that Unified was the sole RPI. Unified Patents Inc. v. Clouding IP, LLC, IPR2013-00586, Paper 9 (Mar. 21, 2014) (members were not found to be RPIs, where there was no evidence of funding or control of the particular IPR; challenged claims were later cancelled in a Final Written Decision issued April 26, 2015). As catalogued below, Unified overcame every such challenge in the proceeding years. As a result, many times Unified’s RPI status was no longer being challenged. 

In 2018, the Federal Circuit had their first and (possibly only) opportunity to review the Board’s developing RPI jurisprudence in a case involving a different membership organization. That opinion endorsed the Board’s longstanding RPI test set forth in the Trial Practice Guide, but outlined facts particular to that situation (including a potential time-bar) and characteristics of that different membership organization that merited further scrutiny on remand. See Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336 (July 9, 2018) (“AIT”). It remanded for further fact finding but was troubled with the presence of a time bar, lengthy communications with the barred party (who had unsuccessfully challenged the patent previously), and with the RPX business model of acting as a third-party middleman for settlement negotiations.  

The AIT decision led to additional challenges to Unified’s RPI status.  In every ruling following the AIT decision, Unified was again found to be the sole RPI, without exception. 

Then in May of 2020, the Federal Circuit held that 35 U.S.C. § 314(d) precludes judicial review of the Board’s RPI determinations under 35 U.S.C. § 312 entirely, see ESIP Series 2, LLC v. Puzhen Life USA, LLC, 958 F.3d 1378 (Fed. Cir. 2020), extending the Supreme Court’s holding earlier that year that 35 U.S.C. § 315 time bar determinations were likewise unreviewable, Thryv, Inc v. Click-To-Call Techs., LP, 140 S. Ct. 1367 (2020), thus foreclosing most direct judicial review of Board RPI determinations, making it unlikely that the Federal Circuit will review or alter future board determinations. It later held that appeals on RPI in Unified cases were likewise unreviewable. See Fall Line Patents, LLC v. Unified Patents, LLC, No. 2019-1956 (Fed. Cir. July 28, 2020), remand denied, Paper 49 (PTAB Nov. 6, 2021). 

Shortly thereafter, the Board finally ruled on the remanded Applications in Internet Time, LLC v. RPX Corp. case, finding that, based on the facts of RPX, including a potential time bar, extensive pre-filing communications, a previous failed challenge, and the unique business model of RPX, they were a real party-in-interest acting at the behest of a time-barred party, and terminated the case. RPX Corp. v. Applications in Internet Time, LLC, IPR2015-01750, Paper 128 (Oct. 2, 2020) (“AIT Remand”). The Board termination applied existing orders, precedent, and case law to this ‘highly fact-dependent question,’ including all of the preexisting cases finding no problems with Unified’s business model and consistent approach. AIT, 897 F.3d at 1342 (citations omitted). 

Every panel to decide the issue thereafter has found that Unified’s business model is fundamentally different than RPX’s. Panels have noted that, contrary to RPX, which seeks to extricate clients from litigation by negotiating on behalf of defendants and acting as an “intermediary between patent owners and operating companies,” AIT Remand, 11-15, Unified is no dealmaking middleman, and “acts independent of its members or any other company.” It has found that neither the manner of how Unified selects cases nor the business model itself render any members RPIs, and the Board has repeatedly distinguished facts as they apply to Unified.  See, e.g., Velos Media, LLC, IPR2019-00707, Paper 55 (Sept. 3, 2020); Velos Media, LLC, IPR2019-00635, Paper 45 (Aug. 18, 2020); American Patents, LLC, IPR2019-00482, Paper 115 (Aug 13, 2020); Barkan Wireless, Inc., IPR2018-01186, Paper 57 (Dec. 4, 2019).

Additionally, the same day the Board rules the AIT Remand decision precedential, it likewise designated as precedential the case of SharkNinja Operating LLC v. iRobot Corp., IPR2020-00734, Paper 11 (Oct. 6, 2020) (“SharkNinja”). That case holds that “no real party-in-interest analysis is necessary at the institution phase absent an allegation of a time bar or estoppel under 35 U.S.C. § 315.” See Unified Patents, LLC v. Fat Statz LLC, IPR2020-01665, Paper 19 (Apr. 16, 2021) (institution). In all subsequent Unified decisions, the Board has determined that no RPI analysis was necessary, either at institution or at final written decision, absent a time bar. See, e.g., Unified Patents, LLC v. Justservice.net LLC, IPR2020-01258, Paper 18 (Feb. 18, 2021) (institution) (“we need not address whether a party is an unnamed RPI unless the time bar or estoppel provisions under 35 U.S.C. § 315 would be implicated”). 

​​Additionally, no Unified petition has been denied under the Board’s expanded understanding of their discretionary denial powers adopted in 2017. See Gen. Plastic Indus. Co. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 at 9–10, 16 (Sept. 6, 2017) and Apple Inc. v. Fintiv, Inc., IPR 2020-00019, paper 11 (PTAB Mar. 20, 2020). See also Snap, Inc. v. SRK Technology LLC, IPR2020-00820, Paper 15 (Oct. 21, 2020) (precedential as to § II.A) (instructing the Board to take a “holistic view” of the factors and declining to deny institution). 

Indeed, in every post-grant challenge that has raised arguments related to these discretionary denials, the Board has ignored or declined patent owner arguments that General Plastic or Fintiv applies. See, e.g., Unified Patents, LLC v. Oceana Innovations LLC, IPR2020-01463, Paper 11 (Feb. 23, 2021) (“We agree with Petitioner that the General Plastic factors weigh against denying an inter partes review under the circumstances here”). 

Lastly, Unified has not lost a Director review request under Arthrex. See Smith & Nephew Inc. v. Arthrex Inc., No. 19-1452 (U.S. June 21, 2021) (remanding then-pending appeals to allow for requests for Director review); see, e.g., Fall Line Patents, LLC v. Unified Patents, LLC, IPR20 (Fed. Cir. 2020) (remanding), request for review denied, Paper 49 (Nov. 6, 2021).

As catalogued below, Unified has been distinguished from AIT in every decision following that decision and the remand. The PTAB has thoroughly reviewed this issue in numerous cases when confirming that Unified was the sole RPI.

Exemplary “Discretionary” Institution Decision

  • Institution over arguments related to Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) (“Fintiv I”), with four parallel district court proceedings in the Western District of Texas’s Waco Courthouse before Judge Alan Albright scheduled near to the statutory final written decision. Finding that the ersatz trial dates scheduled were likely to shift, and discounting scheduled “earliest possible” trial date for some later “actual trial date” (emphases in original). Additionally, noting the merits as “strong,” thus favoring institution. See Unified Patents, LLC v. NavBlazer, LLC, IPR2020-00983, Paper 11 (PTAB Dec. 16, 2020).

Post-AIT Decisions

  • Federal Circuit opinion finding the Board’s decision that Unified Patents was the sole RPI (and cancelling all challenged claims) unreviewable in light of ESIP Series 2, LLC v. Puzhen Life USA, LLC, 958 F.3d 1378 (Fed. Cir. 2020) (nonprecedential), and remanding for Arthrex proceedings (subsequently denied by the Director’s office without comment). Fall Line Patents, LLC v. Unified Patents, LLC, No. 2019-1956 (Fed. Cir. July 28, 2020), remand denied, Paper 49 (PTAB Nov. 6, 2021). 

  • Board final written decision holding Unified had properly identified the real parties in interest, rejecting arguments that all zone members should all be named. Holding that “Patent Owner … has not identified an aspect of Petitioner’s business structure that we view as showing the alleged unnamed real parties in interest are clear beneficiaries with respect to this proceeding that have a preexisting, established relationship with Petitioner.” Unified Patents, LLC v. Velos Media, LLC,, IPR2019-00707, Paper 55 (PTAB Sept. 3, 2020) (final written decision) (cancelling claims and denying motion to amend). 

  • Final written decision holding that all RPIs had been properly named, rejecting arguments that several members of Unified’s Video Codec zone should have been named; noting that, absent any allegation that any of the RPIs “would have barred the Petition under 35 U.S.C. § 315,” Board did not need to reach the issue, but reaching it favorably nonetheless. Unified Patents, LLC v. Velos Media, LLC, IPR2019-00763, Paper 48 (PTAB Sept. 29, 2020) (final written decision). 

  • Institution and later final written decision holding that the general benefit a member may receive from Unified’s petition does not make the member an RPI. In addition, evidence that a company is a corporate affiliate of a Unified member is not by itself sufficient to place RPI in dispute; that decision was affirmed on Final Written decision.

    • Unified Patents, LLC v. American Patents, LLC, IPR2019-00482, Paper 36 (PTAB Aug. 6, 2019) (institution decision); Paper 115 (PTAB Aug. 13, 2020) (“[W]e again are persuaded that the Petition complied with 35 U.S.C. § 312(a)(2) because Member is not an RPI.”).

  • Institution decision holding that Unified is the sole RPI and that the mere fact that a member asserted invalidity using the same prior art in district court after Unified filed its petition is not enough, without more, to show a member is an RPI. 

  • Final decision holding that Unified properly identified all RPIs and that a member “is not an unnamed RPI [. . .] based on any of the following: its membership with Unified; the alleged control over this IPR; or the relationship between [the member] and Unified and the alleged benefit of the IPR to [the member].” 

    • Unified Patents Inc. v. Cellular Communications Equipment, LLC, IPR2018-00091, Paper 69 (PTAB May 22, 2019).

  • Final decision holding that Unified was the sole RPI and that a member’s decision to file its own petition further supports the conclusion that Unified was not acting under the control or direction of the member.

  • Final decision holding that Unified was the sole RPI and a member that may benefit from Unified filing the IPR is not an RPI without showing some other evidence of a specific interest in the particular proceeding. Unified’s business model alone was not enough for a member to be found as an RPI.

  • Final decision holding that Unified’s IPR was not controlled, funded, nor filed at the behest of one of its members. Found that membership fees are used to fund a variety of Unified’s deterrence activities (“Petitioner is not solely an inter partes review-filing entity”) and distinguishing the factors at issue in the AIT decision. “[W]e do not have evidence that Petitioner is representing any particular interest of [a particular member] here. Rather, the evidence shows Petitioner is representing the general interest that all subscribers to Petitioner’s have in mitigating litigation risk from patents in those zones.”

  • Final decision finding that Unified’s status as the sole RPI is not in question because “Petitioner’s members join particular zones [and] Petitioner files IPRs on behalf of those zones[.]”

  • Institution decision holding that Unified properly identified itself as the sole RPI considering that neither no members had control of, provided funding or direction to, or received a specific benefit (e.g., to purposefully circumvent the one year time-bar) from the filing of the petition. 

    • Unified Patents Inc. v. Barkan Wireless IP Holdings, LP, IPR2018-01186, Paper 27 at 15-16 (Jan. 8, 2019).

  • Institution decision holding that the general benefit members received from Unified’s common practice of filing IPRs in relevant technology areas was insufficient to demonstrate a specific benefit as discussed in AIT even when combined with evidence that Patent Owner engaged in licensing discussions with the alleged RPIs prior to Unified’s petition. 

  • Institution decision holding that evidence consisting solely of generic statements from Unified’s web page that generally describe its business, but did not refer to any particular member was insufficient to demonstrate that the petition failed to name all RPIs. 

  • Institution decision rejecting Patent Owner’s argument that all members of Unified’s Content Zone are RPIs, explaining that “there is no evidence that any of Petitioner’s members controlled, directed, or directly financed this proceeding.” 

    • Unified Patents Inc. v. Realtime Adaptive Streaming, LLC, IPR2018-00883, Paper 36 at 16-17 (Nov. 27, 2018) (further noting that there was 1) no communication between Unified and any member regarding the petition or underlying litigation involving the patent; 2) no corporate relationships between Unified and members other than the membership agreement; 3) no evidence of a “very significant payment” shortly before Unified filed its IPR; and 4) no evidence that any member desired review of the patent but was time-barred from doing so.).

    • In a precedential decision, the Board has further cited Realtime Adaptive to prohibit overextending AIT to situations that include a general benefit and a relationship with the Petitioner. Ventex Co. v. Columbia Sportswear N. Am., Inc., IPR2017-00651, Paper 152 at 10 (PTAB Jan. 24, 2019) (precedential) (citing Unified Patents, Inc. v. Realtime Adaptive Streaming, LLC, IPR2018-00883, Paper 36 at 14–15 (PTAB Oct. 11, 2018)).  

  • Final decision holding that “the evidence shows that Petitioner makes all decisions regarding any inter partes review proceeding, including which patents to challenge, without input from its members, and that Petitioner alone bears all costs of any such proceeding.” 

  • Unified Patents Inc. v. Plectrum LLC, IPR2017-01430, Paper 30 at 9-10 (Nov. 13, 2018); id., Paper 8 (Nov. 14, 2017) (institution decision holding that “[t]he mere fact that members provide payment to Petitioner for a subscription to Petitioner’s services alone is insufficient to show that these members are funding this particular inter partes review.”).

Pre-AIT Decisions

  • Institution decision holding that Unified’s revenue coming from annual membership subscription fees does not make members an RPI even if timing of some of those funds was used to argue that the funds could have been used to file the IPR. “The evidence does not show an obligation on Unified’s part to file inter partes review proceedings on behalf of any member in return for payment, nor does it show that Unified’s members have any control over when and how Unified spends the revenue received from its members.”

  • Final decision holding that, in view of Petitioner’s identification of itself as the sole RPI,  shifted the burden to the patent owner failed to produce sufficient evidence tending to place the RPI issue in dispute. Patent owner produced no evidence and thus never shifted the burden.  

  • Institution decision finding that Unified’s revenue coming from annual membership subscription fees does not make members an RPI even if timing of some of those funds was used to argue that the funds could have been used to file the IPR.  

  • Institution decision finding that RPI arguments not raising specific evidence of communications or direct funding to challenge any specific patent failed; a “mere possibility” of communications related to the selection of patents did not suffice. 

  • Institution decision holding that there must be actual evidence a member exerted control over a particular IPR, not “mere speculation,” to raise a question as to RPI. 

    • Unified Patents Inc. v. Qurio Holdings, Inc., IPR2015-01940, Paper 7 (Apr. 13, 2016) (claims canceled in response to patent owner’s request for adverse judgment).

  • Institution decision declined to investigate RPI, where Unified’s sworn statements were similar to those in the past and no new issues were raised. 

    • Unified Patents Inc. v. TransVideo Elects., Ltd. IPR2015-01519, Paper 8 (Jan. 15, 2016) (claims canceled in response to patent owner’s request for adverse judgment).

  • Institution decision holding that Unified’s members were not RPIs where there was no funding or control evidence relating to a specific IPR, even where Unified only filed IPRs against member-litigated patents. Distinguished from the adverse institution decisions in RPX . v. VirnetX, IPR2014-00171, -00172, -00173, -00174, -00175, -00176, -00177 (PTAB June 5, 2014)

  • Institution decision distinguished Unified from the In re Guan “Trollbusters” inter partes reexam decision cited in the PTAB Trial Practice Guide because Unified members did not “[pick] the patents to be challenged and [provide] funding for the particular proceedings[.]”  

  • Institution decision holding that the timing of Unified’s filing activities being potentially beneficial to particular members or parties did not make such members RPIs.  

  • Institution decision found that Unified’s members were not RPIs because there was no evidence of funding or control of this particular IPR. 

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With Uncertainty Brings Change: A Q3 Look at Fintiv Denials

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The recent introduction of the Restoring the America Invents Act by Senate IP Subcommittee Chair Senator Patrick Leahy and Senator John Cornyn aims, in part, to remove the uncertainty that the precedential Fintiv orders have caused. Looking at the actual number of denials and frequency of the Board’s use of their discretionary line of cases, though, the consistent takeaway is that Fintiv continues to be used in unpredictable, ever-changing ways to deny otherwise-meritorious, timely challenges.

Despite the slight dip in overall filings (and decisions from last year’s also-down filings) so far in 2021, procedural denials are now used nearly 16% of the time, as compared to just 5% in 2016, before Fintiv and related cases were designated precedential. That is a 220% increase. Even with the uncertainty of Arthex over the first half of the year and the overall dip in filing decisions, the USPTO was still not shy about using procedural denials.

Section 314(a) is still being used 73% of the time for procedural denials.

Interestingly, the use of §§ 314(a) and 325(d) has jumped 6% versus last year. This year has seen these two denials 94.5% of the time in terms of overall procedural denials.

Section 314(a) denials are now 12.4% of denials, a very slight increase from last quarter.

Meanwhile, § 325(d) denials are being used 5.7% of the time, slight increase from last quarter.

The NHK Spring/Fintiv framework continues to be the dominant framework for § 314(a) denials with 77 already, 8 shy of the total last used last year.

Fintiv denials continue to be predominantly used in cases with parallel proceedings in the Eastern District of Texas.

That nearly 63% of all Fintiv-cited denials lead to a settlement begs the question of whether the PTAB might have been more effective at resolving unnecessary litigations; it would appear that, by and large, courts are being used to force settlements rather than address the merits of a patent claim.

Even despite the strategy of a given plaintiff, cases in Fintiv-cited denials are averaging almost two years (700 days) for a case to be terminated, no matter the outcome.

Relevantly, comparing the caseload of the PTAB judges versus the Western District of Texas and Judge Albright’s court docket—inarguably the single biggest patent docket for a U.S. district court judge—it becomes apparent that PTAB dockets are far less crowded and the Board has the necessary resources to hear cases efficiently while giving each cases its due attention; for instance, the highest-docketed PTAB judges have around 100-200 cases on their docket currently (with many having just a handful of PTAB cases balanced with ex parte appeals), whereas Albright has had roughly 700 patent and 1,250 total civil cases on his docket—and growing. See Ryan Davis, Albright Says He’ll Very Rarely Put Cases on Hold for PTAB, Law360, May 11, 2021 (6:50 PM EDT) https://www.law360.com/articles/1381597/albright-says-he-ll-very-rarely-put-cases-on-hold-for-ptab (Judge Albright, noting as of may that he has his civil docket has 1,250 cases, roughly 60% of which were patent cases).

This accounts for both having a certain rate of settlement and new filings, and shows a snapshot in time of the total docket of active patent cases. This suggests that even the most favorable comparisons of dockets indicate the PTAB three-APJ panels can devote much more time and many more resources to each individual ground—an observation only magnified by the myriad other issues attendant on a Federal District court judge’s docket in any particular case.

Unified Files Amicus Addressing Manipulation of Venue Rules

On September 28, 2021, Unified filed an amicus curiae brief with the U.S. Court of Appeals for the Federal Circuit in support of a mandamus petition related to what it views as systemic delays in decisions on venue in patent-heavy District Court dockets, and how they are frustrating the Congressional intent of the America Invents Act. The writ, In re: Netflix, was filed by Mark Lemley of Durie Tangri.

Unified is represented by Bill Jenks of Jenks IP and in-house by Jonathan Stroud. Read the amicus below: