[00:00:28] Speaker 01: Yeah. [00:00:32] Speaker 04: The next case before the court, applications in internet time versus RPX Corporation, 171698. [00:00:38] Speaker 04: Mr. [00:00:56] Speaker 04: Saraboff, did I pronounce that correctly? [00:00:58] Speaker 04: Yes, Your Honor. [00:00:59] Speaker 04: You are hoping for a five minute rebuttal. [00:01:02] Speaker 04: We'll see. [00:01:03] Speaker 04: Again, we'll see how that goes based on how much questioning you get. [00:01:06] Speaker 04: But we'll try to reserve that. [00:01:09] Speaker 02: Thank you. [00:01:11] Speaker 04: OK. [00:01:12] Speaker 04: You may proceed. [00:01:13] Speaker 02: Your Honor, we have three important issues here of public policy that impact more than just our case alone, but probably a lot of other cases. [00:01:26] Speaker 02: The first issue is standing. [00:01:29] Speaker 02: But quite frankly, I think that issue is pretty well-sailed. [00:01:32] Speaker 02: After our briefing was completed, the court's decision in personal audio came down. [00:01:39] Speaker 02: And it seems that we don't have much of an issue to argue today. [00:01:43] Speaker 04: You can preserve your objection to personal audio, but we're bound by that. [00:01:48] Speaker 02: Yeah. [00:01:49] Speaker 02: I mean, if we had 15 of your colleagues here today, we could talk about it. [00:01:53] Speaker 02: But it's not worth spending time on that. [00:01:56] Speaker 02: The more interesting issue that's related is real party and interest, proxy, and privilege. [00:02:02] Speaker 02: As the court recognized about a month ago in the Wi-Fi One case, and clearly we're very honored today to have the three of you in this panel because Judge Raina authored the opinion, Judge Amal and you authored a concurrency. [00:02:19] Speaker 04: It's still the court's opinion. [00:02:20] Speaker 02: Of course. [00:02:21] Speaker 02: But we certainly have three experts on this issue today. [00:02:25] Speaker 03: And I think it's interesting. [00:02:25] Speaker 03: It's probably better to get to your argument. [00:02:27] Speaker 03: You don't have that much time. [00:02:29] Speaker 02: Thank you, Your Honor. [00:02:31] Speaker 02: So I think it's pretty clear that this is an issue that is both important and one where the Patent Office has been handling it improperly and consistently improperly. [00:02:43] Speaker 02: When you look at the record of decisions that the Patent Office has made on this issue, and we address that in our reply, [00:02:51] Speaker 02: You know, 178 decisions that were all. [00:02:55] Speaker 03: Can you just address, I know you cited a lot of decisions. [00:02:58] Speaker 03: I certainly didn't read every single one of them. [00:03:00] Speaker 03: It wasn't very helpful. [00:03:02] Speaker 03: Address what the legal error in the board's standard is. [00:03:05] Speaker 02: Your Honor, the legal error is that they fail to even consider that a party may be a privy [00:03:21] Speaker 02: and not just a real party in interest. [00:03:23] Speaker 04: Did you argue that to the board? [00:03:25] Speaker 02: So we argued that Salesforce was a proxy to RPX and that in general at that stage, at the petition stage, the only question was whether there was a real party in interest properly named or not. [00:03:43] Speaker 02: The board's opinions were consistently that the only opportunity to challenge real party in interest or privy [00:03:50] Speaker 02: Nobody even challenged Privy at that point because the issue had only been developed as something where either the petition had properly named real party in interest. [00:03:59] Speaker 02: That's what the rules said. [00:04:00] Speaker 02: Did you name all of the real parties in interest? [00:04:03] Speaker 02: There's nothing in the rules that require a petitioner. [00:04:07] Speaker 04: Well, there is no actual rule, is there? [00:04:10] Speaker 04: And no, I believe there is a rule that requires that there's a rule that talks about what needs to be disclosed, but there's no rule that defines what any of these statutory terms mean. [00:04:21] Speaker 02: Is there correct? [00:04:23] Speaker 04: Correct. [00:04:23] Speaker 04: Okay. [00:04:23] Speaker 04: So you spend a lot of your time arguing about what the guide says or doesn't say and how you fit in the guide or don't fit in the guide, but I don't see much discussion of what the statute says. [00:04:34] Speaker 02: It's because I don't think that the statute says much here. [00:04:37] Speaker 01: Well, the three 15 B does say, [00:04:40] Speaker 01: real part of interest, comma, privy. [00:04:44] Speaker 01: So it mentions privy there. [00:04:47] Speaker 01: And I guess what you are arguing is if you're a proxy, you're in privity. [00:04:54] Speaker 01: There's privy there. [00:04:56] Speaker 02: You know, honestly, Judge Oriana, I don't know that it's entirely clear. [00:05:02] Speaker 02: Similar to the issue that we have on the difference between in light of and consistent with. [00:05:08] Speaker 02: There isn't a lot of legal precedent on this issue of what the difference is between a real party interest and what a privy is. [00:05:16] Speaker 04: Well, isn't that because before Wi-Fi 1 we weren't allowed to look at it? [00:05:21] Speaker 02: Exactly, yes. [00:05:23] Speaker 04: But now we are allowed to look at it, right? [00:05:24] Speaker 04: Correct. [00:05:25] Speaker 04: So of course there's not any legal authority for the proposition yet. [00:05:29] Speaker 04: That's what I'm trying to fair it out. [00:05:31] Speaker 02: Right. [00:05:31] Speaker 04: What's the legal issue? [00:05:33] Speaker 02: So the legal issue is what [00:05:36] Speaker 02: How much of a relationship does there have to be for a unnamed party to actually be a real party in interest? [00:05:43] Speaker 02: Right. [00:05:44] Speaker 04: So the question is, what did Congress contemplate in the statute, right? [00:05:50] Speaker 02: Exactly. [00:05:50] Speaker 02: Thank you, Judge O'Malley. [00:05:53] Speaker 02: I think the congressional record is pretty clear that Congress did not intend parties to have a second bite at the apple. [00:06:01] Speaker 02: Salesforce clearly had a first bite at the apple. [00:06:03] Speaker 02: They filed their petitions for CBM. [00:06:06] Speaker 02: The petitions for CBM were denied. [00:06:08] Speaker 03: But they only had a second bite at the apple if they're a proxy or a privity or a real party at interest. [00:06:15] Speaker 03: You're not answering the question. [00:06:16] Speaker 03: What legal standard do you think we should apply in determining whether somebody's a real party in interest via this proxy or privy theory? [00:06:26] Speaker 02: I think Judge Houston's a great question. [00:06:28] Speaker 02: I think that if a petitioner is a membership organization, [00:06:34] Speaker 02: and any of its members has an interest in the outcome, a direct interest, that sure looks like a privy to me. [00:06:41] Speaker 02: It looks like a real party and interest to me. [00:06:42] Speaker 03: But what legal authority for that is there? [00:06:46] Speaker 03: I mean, you're just giving anecdotal evidence saying, this is a privy, this is not. [00:06:50] Speaker 03: What standard should we apply? [00:06:53] Speaker 02: You know, this is an opportunity to make new law, Your Honor. [00:06:56] Speaker 02: I don't think that there is. [00:06:57] Speaker 03: But you're not telling me what law to make. [00:07:00] Speaker 03: What law do you want me to make? [00:07:02] Speaker 03: What definition of proxy or privy should I apply in this statute, and where should I draw it from? [00:07:08] Speaker 02: So I think that when there is a contractual relationship between the petitioner and the unnamed party, that suggests that there is some measure of, you know, that the petitioner is acting on behalf of the unnamed party. [00:07:24] Speaker 03: In the litigation. [00:07:26] Speaker 02: Exactly, in the litigation, even outside of the litigation. [00:07:30] Speaker 03: Why outside of litigation? [00:07:31] Speaker 03: What does that have to do with it? [00:07:32] Speaker 02: Because there are certainly instances where an unnamed party might have a direct interest in the outcome. [00:07:39] Speaker 03: So for example, is a direct interest in the outcome enough? [00:07:45] Speaker 02: I would think so, yes. [00:07:47] Speaker 03: So if Uber institutes an IPR on a patent that relates to its self-driving cars and loses, [00:07:59] Speaker 03: In Waymo, it tries to institute another. [00:08:03] Speaker 03: Are they barred because Uber is really a real party in interest because they would also benefit from having that same patent invalidated? [00:08:10] Speaker 03: Even though there is no contractual relationship, they're actually opposing companies trying to develop that car? [00:08:18] Speaker 03: I mean, it can't just be that you have an interest in getting the patent invalidated. [00:08:22] Speaker 03: because lots of unconnected parties that aren't proxies or privies would have an interest in getting a patent validated after they'd already lost. [00:08:31] Speaker 02: Absolutely, and that's why I think a contractual relationship is something that's pretty important. [00:08:36] Speaker 03: A contractual relationship to do what? [00:08:39] Speaker 02: Where there is a, I would say maybe not necessarily just a contractual, because there could be a legal relationship as between a parent and a child [00:08:50] Speaker 02: or affiliated corporations. [00:08:52] Speaker 02: But where the petitioner is acting on behalf of the unnamed party. [00:09:01] Speaker 03: And how do we determine that? [00:09:02] Speaker 02: Well, it could be that, like I said, there is a corporate relationship, affiliated. [00:09:08] Speaker 02: Or an agency relationship. [00:09:09] Speaker 02: Or an agent, exactly, an agency relationship. [00:09:12] Speaker 04: Did you do any discovery as it relates to RPX other than that declaration? [00:09:20] Speaker 02: You know, Your Honor, we tried to do more discovery than what the PTAB allowed us. [00:09:25] Speaker 02: And this is part of how the board has been shutting patent owners down, is that when a patent goes to the board and asks for discovery, the standard that the board has basically, the patent owner has to effectively prove that there is an unnamed real party in interest just to get discovery. [00:09:47] Speaker 03: Did you argue that it was error for the board to deny you the additional discovery you saw? [00:09:52] Speaker 02: No, I didn't. [00:09:53] Speaker 03: Well, then how is that relevant? [00:09:55] Speaker 03: I mean, if you had preserved an objection and said the board gave us some discovery, we found it insufficient, we asked for more, it was necessary, and it was an abuse of discretion to deny that, we could consider it. [00:10:07] Speaker 03: But how can you now complain about insufficient discovery when you haven't argued that the board erred? [00:10:14] Speaker 02: You know what, Your Honor? [00:10:16] Speaker 02: There is a limited point of futility in some cases. [00:10:22] Speaker 02: So, you know, this is an issue where the board consistently was being just stonewalling patent owners. [00:10:32] Speaker 03: Well, isn't that precisely why you tell us that the board is improperly applying its discovery rules and asked us to correct it? [00:10:40] Speaker 03: I mean, I know it's a high standard, but if the board's not allowing discovery when it should, [00:10:46] Speaker 03: That's something we can say, but we can't reach that issue if you haven't preserved it for appeal. [00:10:51] Speaker 02: I agree. [00:10:51] Speaker 02: Now, we do believe that there's enough evidence in the record that you can decide that there is an unnamed real party in interest or a privy here. [00:11:02] Speaker 02: We believe that we should have gotten more discussion. [00:11:07] Speaker 03: There is some evidence, but I don't think that's the strongest evidence. [00:11:21] Speaker 02: of board members has some, but that's not really what I was getting at when I was talking. [00:11:24] Speaker 03: Lots of corporations have overlapping board members that aren't related. [00:11:28] Speaker 04: And you've got, you know, you point out that, do you know whether RPX gets funding from anyone other than those members it purports to represent? [00:11:38] Speaker 01: Before you answer that, I do want to get something clear. [00:11:42] Speaker 01: Some of this information is more confidential and we need to make sure that we can ask you the right questions. [00:11:50] Speaker 01: And because this is an open court, but a lot of information, the stuff we're talking about now, is more confidential. [00:11:59] Speaker 01: Are we able to discuss this now? [00:12:02] Speaker 02: You know what, Your Honor? [00:12:04] Speaker 02: I think that the confidentiality restrictions are pretty tight. [00:12:08] Speaker 01: And rather than- I mean, you can waive it for your information. [00:12:12] Speaker 01: I'm wondering about the appellee for purposes of the argument. [00:12:17] Speaker 01: I mean, because the record and the things we're talking about [00:12:21] Speaker 01: blocked out in yellow. [00:12:23] Speaker 02: Absolutely. [00:12:25] Speaker 02: What I can tell you is in advance of this hearing, the appellee did let us know that they feel very strongly that all of the confidentiality that they claim should be retained. [00:12:39] Speaker 04: So then how do we determine what facts are relevant if we're not allowed to know what the facts are or discuss what the facts are? [00:12:47] Speaker 02: I would imagine, Your Honor, that the facts could be discussed amongst yourselves or we could discuss things in more hypothetical terms. [00:12:55] Speaker 01: Or we can seal the courtroom, but you should have notified the court. [00:12:59] Speaker 01: We should have gotten some sort of notice about this, I think. [00:13:04] Speaker 04: Or objected to the breadth of the confidentiality. [00:13:08] Speaker 02: Well, you know, as far as what's confidential, there were primarily two items that were [00:13:15] Speaker 02: probably that I recall are indicated as confidential. [00:13:19] Speaker 02: I think that those two items are pretty compelling. [00:13:23] Speaker 02: Without me identifying what those are, I think that between us, we can all say that those are some pretty compelling facts. [00:13:32] Speaker 02: And that if you just look at those facts alone, along with the public statements made by RPX about, you know, acting on behalf of its members, [00:13:43] Speaker 02: and acting as an extension of the in-house legal department, helping its members to control their patent liabilities. [00:13:53] Speaker 02: It starts to make a pretty compelling case here that RPX was not just some lone vigilante, but they were actually acting on behalf of Salesforce. [00:14:04] Speaker 03: Were they acting at the direction of Salesforce? [00:14:07] Speaker 03: Were they an agent of Salesforce? [00:14:10] Speaker 02: We believe so, Your Honor. [00:14:11] Speaker 03: And what evidence is there to show that? [00:14:14] Speaker 02: You know what? [00:14:14] Speaker 02: There is no evidence because... Well, then you can't argue it. [00:14:16] Speaker 03: I know that you wanted more discovery. [00:14:18] Speaker 03: You didn't get it. [00:14:19] Speaker 03: You didn't appeal it. [00:14:20] Speaker 03: You can't surmise what happened. [00:14:22] Speaker 03: You have to rely based on the evidence. [00:14:26] Speaker 03: And so I think you just conceded, and I didn't see any evidence, that there's anything that would establish a specific agency relationship. [00:14:36] Speaker 02: So that's a good question. [00:14:38] Speaker 02: So what is the scope of the agency here? [00:14:42] Speaker 02: I think it's pretty clear that by contract, an organization such as RPX could be acting as the agent of others. [00:14:51] Speaker 03: And the evidence of record shows that... Is that because these people pay in money to RPX and then RPX makes a decision [00:15:04] Speaker 03: Let's assume it's an independent decision to go file an IPR. [00:15:08] Speaker 03: Is that enough for an agency relationship in your view? [00:15:12] Speaker 02: I'm sorry. [00:15:12] Speaker 02: So if the IPR is for a member? [00:15:18] Speaker 03: It's not for a member. [00:15:19] Speaker 03: That's the whole point. [00:15:20] Speaker 03: They pay in money. [00:15:22] Speaker 03: RPX decides which patents IPR or not. [00:15:25] Speaker 03: It's not at the direction. [00:15:26] Speaker 03: It may tangentially or directly benefit them, but there's no connection. [00:15:31] Speaker 03: Is that enough for a real party in interest [00:15:33] Speaker 03: privy determination. [00:15:34] Speaker 02: Why? [00:15:38] Speaker 03: Let me ask you this. [00:15:39] Speaker 03: Suppose you have a non-profit entity that at least its mission statement is purported to be for the public good. [00:15:49] Speaker 03: It gets donations from a lot of sources, including the industry, but it makes independent determinations about which patents to IPR or not. [00:15:57] Speaker 03: are companies that will benefit from those IPRs, real parties and interests to that public interest organization? [00:16:07] Speaker 02: Yes, I think so. [00:16:09] Speaker 03: You think Congress had that broad meaning of a, isn't that just virtual representation? [00:16:15] Speaker 03: Isn't that the point though? [00:16:16] Speaker 03: Well, isn't that what the Supreme court rejected in Taylor versus Sturges? [00:16:20] Speaker 03: That virtual representation was not good enough to find a unaffiliated party [00:16:27] Speaker 03: and has stopped them. [00:16:28] Speaker 03: Well, so again, it seems... Have you read Taylor versus Sturges? [00:16:32] Speaker 03: I mean, I don't understand why we're not talking about Taylor versus Sturges, which seems to me to be the most relevant precedent from the Supreme Court. [00:16:40] Speaker 03: Sorry, I've taken that too long. [00:16:42] Speaker 04: Do you concede that Taylor should control here? [00:16:45] Speaker 02: You know, Your Honor, I can't say that I'm familiar enough with the case to say, but... Your time's up. [00:16:50] Speaker 04: We'll give you three minutes for rebuttal. [00:16:52] Speaker 02: Thank you, Your Honor. [00:17:05] Speaker 00: Thank you, Your Honors, and may it please the Court. [00:17:08] Speaker 00: I'd like to address, if I can, both the claim construction issue and the real party in interest issue. [00:17:13] Speaker 00: I'd like to just start. [00:17:15] Speaker 04: We're interested in the real party in issue, and you didn't. [00:17:18] Speaker 04: There was no discussion of claim construction from the other side, so we're going to stick with the issue that was actually addressed in argument. [00:17:25] Speaker 04: So let me begin where we left off. [00:17:28] Speaker 04: I have a real problem with the notion that the PTO decided in its guide that Taylor is [00:17:36] Speaker 04: the mantra that it should follow, putting aside whether the PTO is even interpreting its own guide in this case properly, because I think there's a good argument that they're not. [00:17:46] Speaker 04: But Taylor is in a totally different context. [00:17:52] Speaker 04: Congress, when it discussed RPI, cited California positions. [00:17:57] Speaker 04: It did not cite Taylor. [00:17:59] Speaker 04: So why aren't those cases that Congress actually pointed to [00:18:04] Speaker 04: the cases that we should be looking at to determine what the scope of RPI is here. [00:18:10] Speaker 00: I think it was clear from the Congressional history that what Congress intended generally was that the common law would apply and would control, would inform the real cardian interest. [00:18:22] Speaker 04: But there was a discussion in the legislative history that we should be assessing this question broadly. [00:18:29] Speaker 04: And there were actual cases cited that talk about [00:18:32] Speaker 04: how broadly this should be assessed. [00:18:34] Speaker 04: Not one of them. [00:18:36] Speaker 04: Taylor was never cited. [00:18:38] Speaker 04: So why are we focusing on Taylor? [00:18:44] Speaker 00: For our part, what we're focused on are all of the factors that came out of all of those decisions as reflected in the PTEP trial guide, which cites Taylor, cites California physicians and other cases, as well as has been applied to... Where does it cite California physicians? [00:18:59] Speaker 04: And what does it say? [00:19:01] Speaker 04: It says, basically, Taylor controls. [00:19:07] Speaker 00: In the PTAP Trial Guide, Your Honor, in the Federal Register, it's page 48759, the PTAP Trial Guide says, in discussion of privity and real party interests, the concept refers to a relationship [00:19:29] Speaker 00: between the party to be stopped and the unsuccessful party in the prior litigation, which is sufficiently close so as to justify application of the doctrine of collateral estoppel and then cites California positions. [00:19:40] Speaker 00: So the way I interpreted this is that you have two doctrines and they're basically flowing in different directions. [00:19:47] Speaker 00: Real party and interest refers to does the unnamed party, Salesforce, was the IPR essentially filed at their behest? [00:19:55] Speaker 00: And then there's a list of factors that go into that funding, control, direction, [00:19:59] Speaker 00: strategy, et cetera. [00:20:01] Speaker 00: On the other side, the way I understand the privity inquiry is whether RPX, for its part, was insufficient, which it wasn't, of course. [00:20:10] Speaker 00: It was in sufficiently close activity in the litigation. [00:20:17] Speaker 04: Of course, RPX wasn't involved at all in the litigation, such that a determination on- But was discussing matters with Salesforce during the course of the litigation. [00:20:28] Speaker 00: There was no discussion whatsoever about the IPRs. [00:20:31] Speaker 00: The discussion, as reflected in the declaration of RPX's executive about the litigation, was basically limited to the fact that the litigation had been filed. [00:20:39] Speaker 04: And discussing also the CBN. [00:20:42] Speaker 00: Well, Salesforce filed its CBN with no involvement whatsoever in RPX. [00:20:46] Speaker 00: I'm not aware of any discussion between RPX and Salesforce about the CBN. [00:20:52] Speaker 01: Would you categorize the services that you provide similar to that of an insurance company? [00:20:58] Speaker 00: There is, so there is an insurance component to it. [00:21:01] Speaker 00: The primary. [00:21:03] Speaker 01: So, and you're the insured. [00:21:05] Speaker 01: Let's say there's a, you're the insured, there's an insurer. [00:21:11] Speaker 01: In this case, Salesforce would be the insurer, or the insured. [00:21:15] Speaker 01: You're the insurer, correct? [00:21:17] Speaker 00: Well, it's actually, that's a separate line of business that I don't believe Salesforce participates in. [00:21:22] Speaker 00: The primary business of RPX. [00:21:24] Speaker 01: But let's stay with this line of business here. [00:21:27] Speaker 01: You're the insurer, Salesforce is the insured. [00:21:31] Speaker 01: Doesn't that give rise to fiduciary obligations? [00:21:36] Speaker 00: So in this case, RPX's primary line of business, which we're getting into the confidential information, but I want to make sure I answer your question. [00:21:46] Speaker 00: So RPX's primary line of business for which it has many clients, I can say that, is that it acquires patents and then it offers its members a license to its entire portfolio [00:21:57] Speaker 00: to, in an overall sense, reduce their patent risk. [00:22:01] Speaker 00: It separately has a business. [00:22:03] Speaker 01: That's my point. [00:22:03] Speaker 01: And so your services are designed to reduce risk on behalf of your customers. [00:22:11] Speaker 01: That's correct. [00:22:12] Speaker 01: And that's the basic model that an insurance company operates under, correct? [00:22:18] Speaker 01: That's correct. [00:22:19] Speaker 01: And so as the insurer, you have an obligation to take action if certain circumstances arise [00:22:27] Speaker 01: that a factor will create risk to the insurer. [00:22:35] Speaker 00: In this case, there's, RPX had absolutely, the record is clear, had absolutely no obligation to Salesforce with respect to these pets. [00:22:42] Speaker 00: That's crystal clear from the record and the declaration of Mr. Chuang, RPX's executive who was involved in the filing of these IPRs, which by the way, it's very important to get this out. [00:22:54] Speaker 01: Are you familiar with the subrogation [00:22:57] Speaker 01: aspect of an insurance claim? [00:23:01] Speaker 00: Not particularly, Your Honor. [00:23:02] Speaker 00: OK. [00:23:02] Speaker 00: I'm pretty much a patent litigator. [00:23:06] Speaker 00: OK. [00:23:07] Speaker 00: But what I can say, what I want to be right clear, two things. [00:23:10] Speaker 00: One, there was extensive discovery on real party interest in this case. [00:23:13] Speaker 00: It wasn't like Wi-Fi 1 and some of the prior cases where the board had denied discovery. [00:23:17] Speaker 00: And it can be sometimes difficult to get discovery from the board. [00:23:20] Speaker 00: Here, AIT got extensive discovery from the board on real party interest. [00:23:24] Speaker 00: The board reviewed it all. [00:23:26] Speaker 00: And two things came out of it. [00:23:28] Speaker 00: One, Mr. Chuang submitted a 21-page declaration explaining exactly all of the reasons why RPX chose to file these IPRs for its own benefit. [00:23:38] Speaker 00: And then AIT decided not to cross-examine him. [00:23:44] Speaker 00: So I realized they also waived any objection, as Your Honor Judge Hughes said, to any alleged lack of discovery, but they also made a choice [00:23:54] Speaker 00: not even to cross-examine the witness who put in that evidence. [00:23:57] Speaker 00: So his declaration itself, which explains the reasons why RPX filed these for its own benefit and not for Salesforce's benefit, it constitutes substantial admonition. [00:24:08] Speaker 00: Here's my problem with this. [00:24:10] Speaker 03: I mean, look, you can all arrange your business in a very clever way to suggest that you're not doing this on the behalf of certain specific members, and the evidence may just not be there. [00:24:23] Speaker 03: isn't the understanding that in addition to the cross licensing you get by paying dues or whatever you call them, I assume you call them licensing fees, but also that RPX will now, because it's able to, file IPRs against patents that the invalidation of which will further members' interests. [00:24:47] Speaker 00: So it is true that any time an IPR is filed and is successful in invalidating a patent, [00:24:53] Speaker 00: Some parties will benefit, as you noted. [00:24:54] Speaker 03: In fact, this court... Have you ever filed IPRs against patents that didn't affect a single one of your members' interests? [00:25:02] Speaker 00: Yes. [00:25:03] Speaker 00: In fact, in Mr. Chuang's declaration, he specifically listed one such case. [00:25:10] Speaker 00: And I believe there are more cases than that, but he did specifically list one case. [00:25:14] Speaker 04: What are we to make of the fact that you were negotiating for more money from Salesforce at the same time you filed this IPR? [00:25:22] Speaker 00: I don't think that's correct, Your Honor. [00:25:24] Speaker 00: There was an issue raised below that was not argued on appeal about the rate of payment for this particular client. [00:25:35] Speaker 00: And that was set in a 2012 agreement before even the lawsuit had been filed against Salesforce. [00:25:41] Speaker 00: It was totally independent. [00:25:42] Speaker 00: It had nothing to do with this. [00:25:44] Speaker 03: So you have, on the one hand, a direct... I don't want to delve into confidential information. [00:25:48] Speaker 03: So if you can't answer this, don't. [00:25:51] Speaker 03: And I suspect you can't. [00:25:53] Speaker 03: But does the funding work in terms of general licensing fees and support? [00:25:59] Speaker 03: Or is there any sense that this is divided up into a payment for cross licensing and a payment for IPR services? [00:26:07] Speaker 00: I think I can answer that unequivocally. [00:26:09] Speaker 00: There is no payment for IPR services. [00:26:13] Speaker 04: Well, there's payment for services generally, right? [00:26:16] Speaker 00: Generally. [00:26:16] Speaker 04: Which would necessarily include IPR services. [00:26:19] Speaker 00: What RPX does is it [00:26:22] Speaker 00: as a general matter is it seeks to, first of all, reputational benefits to itself, as well as to lower risk overall across the industry, including but not limited to for its clients, by attacking facially embattled patents. [00:26:36] Speaker 01: The payments are to lower risk on behalf of the clients. [00:26:40] Speaker 04: I think that's fair to say. [00:26:41] Speaker 04: OK. [00:26:42] Speaker 04: Let's get back to first principles for a minute. [00:26:45] Speaker 04: So do you agree with me that we are undertaking a statutory analysis here? [00:26:52] Speaker 00: Section 315B uses the phrase real party in interest and privy, so obviously we need to have an understanding of what those terms mean. [00:27:00] Speaker 00: I agree. [00:27:01] Speaker 04: Okay. [00:27:01] Speaker 04: And the guide is not a rule. [00:27:03] Speaker 04: I mean, there were comments asking the PTO to establish a regulation or a rule defining what those terms mean, and the PTO did not do so. [00:27:13] Speaker 04: Instead, it just created a guide. [00:27:15] Speaker 04: Right? [00:27:17] Speaker 00: I'm not familiar with that level of detail of the PTO's rulemaking. [00:27:21] Speaker 04: So the PTO would not be entitled to chevron deference with respect to the guide. [00:27:26] Speaker 04: The guide at best is entitled to skidmore deference. [00:27:31] Speaker 00: If that's the way it played out. [00:27:33] Speaker 04: Well, these are important issues. [00:27:35] Speaker 04: I mean, this is an administrative body. [00:27:38] Speaker 00: I think, Your Honor, what I would focus on is that all of the factors, no matter which case or which common law you look to, all of the relevant factors only come out one way here. [00:27:50] Speaker 00: So funding, it's unequivocal in the record. [00:27:53] Speaker 00: Salesforce provided no funding for these IPRs. [00:27:56] Speaker 00: Direction, they didn't have any input into counsel, into prior art, into experts. [00:28:00] Speaker 04: Well, you don't have to be paying for the IPR to fall within the privy language, do you? [00:28:05] Speaker 00: I'm not saying you have to be. [00:28:07] Speaker 00: It certainly would be a significant factor. [00:28:10] Speaker 04: But it's not a determinate factor. [00:28:11] Speaker 00: I'm not suggesting that it's determinate. [00:28:13] Speaker 04: And you don't have to be in an agency relationship in order to fall within the privy language, do you? [00:28:20] Speaker 00: Well, the way it's been articulated to date, and obviously the report may put a finer point on it, it's a totality of the circumstances test and the circumstances that have been looked at are funding, direction, control, involvement, and whether an IPR was filed essentially at the behest of a party. [00:28:38] Speaker 00: None of those, not one of those things is the case here. [00:28:40] Speaker 00: In fact, the record is clear, the sales force did not even know these IPRs were being filed until afterwards when they had to be notified. [00:28:47] Speaker 00: because of the instilling discovery activity. [00:28:51] Speaker 00: So there was absolutely no involvement whatsoever. [00:28:54] Speaker 00: And with respect to the privy language that AIT raised, two things. [00:29:00] Speaker 00: One, they never raised it below, so there was absolutely nothing for the board. [00:29:03] Speaker 00: They argued proxy, correct? [00:29:04] Speaker 00: They used the word proxy. [00:29:06] Speaker 00: That's right, not privy. [00:29:07] Speaker 04: But the question was whether or not you satisfied 315B. [00:29:10] Speaker 04: I mean, they don't have to say what every word of the statute is. [00:29:14] Speaker 04: The statute says what it says. [00:29:17] Speaker 04: Right? [00:29:17] Speaker 00: I understand. [00:29:18] Speaker 00: I just wanted to point out that at least the way it's been articulated. [00:29:24] Speaker 01: So isn't it air on behalf of the agency not to address privy under 315B? [00:29:32] Speaker 00: The argument had never been made by AIT. [00:29:34] Speaker 00: There was nothing for them to address. [00:29:36] Speaker 00: They had argued that. [00:29:37] Speaker 00: Well, they argued proxy. [00:29:39] Speaker 00: They argued real party. [00:29:40] Speaker 00: Well, proxy is just a word. [00:29:42] Speaker 00: It's not in the statute. [00:29:43] Speaker 04: But even their own guide talks about how much [00:29:46] Speaker 04: broader the concept of privy is. [00:29:48] Speaker 04: And there's lots of language in the guide that was never even considered in this particular case, isn't that right? [00:29:56] Speaker 00: The board in this case did not, to my recollection, undertake a detailed review of the language in the guide. [00:30:04] Speaker 00: The board, the PTAB has in numerous decisions discussed [00:30:10] Speaker 00: You know, its own view of real party and interest in privy, for example, there's a case that I wanted to call conclusion. [00:30:16] Speaker 04: But its view is either what's in the guide or what's in the statute. [00:30:20] Speaker 04: I mean, we can't say that because they said what they thought in one case that therefore that controls for all cases. [00:30:26] Speaker 00: I'm not suggesting that it does, but in terms of the precedents that we have, since this issue hasn't come to this court, the PTAP's precedent, for example, in Aroo's gaming IPR 2014-01288, [00:30:39] Speaker 00: explained that on the privy side, the question is, was the IPR petitioner involved enough in the litigation that they would be collaterally stopped from... Right. [00:30:48] Speaker 04: And that, and we know that that's, that requiring that as the standard is not right. [00:30:55] Speaker 04: It's not correct, right? [00:30:58] Speaker 04: Even under Taylor, that wouldn't be correct. [00:31:02] Speaker 04: Taylor lists out... So all you're doing is telling us that the PTAB over and over is just picking [00:31:08] Speaker 04: an issue that can't be satisfied and using that as their test. [00:31:12] Speaker 00: Well, Taylor lists a number of factors which include, you know, factors that go to the whole issue of control, direction, funding, et cetera. [00:31:22] Speaker 00: None of that was present here. [00:31:24] Speaker 00: So I understand that this court has to grapple with what the proper test is since so far only the PTAB has addressed that issue. [00:31:33] Speaker 00: What I'm saying is that on the facts here, no matter how you articulate that test, [00:31:37] Speaker 00: in which common law precedents you use, RPX is not going to be found, Salesforce is not going to be found to be a real party in the interest of RPX and RPX will not be found to be a privy of Salesforce. [00:31:48] Speaker 04: So you think we should just say this is a case of first impression and we don't really care what the statute says or what the guide says, we're just going to say that the result would be the same no matter what test it should be? [00:31:59] Speaker 00: I'm not suggesting that you should take a cavalier approach, Your Honor. [00:32:02] Speaker 00: All I'm saying is that [00:32:04] Speaker 00: is that the extensive discovery that occurred didn't turn up any factors that have been listed in any of the precedents that have been applied, at least by the board or in the guide, or cited in the guide, that would suggest a real party. [00:32:21] Speaker 01: Should we just vacate and send this back and have the PTO redo this particular question with a little bit of guidance from us? [00:32:31] Speaker 00: Well, I'm not sure. [00:32:32] Speaker 01: I don't think that you need to do that given the extensive discovery that occurred here and the... Since it looks like the PTAP did not address, as you acknowledge, certain common law principles with respect to privity and real part of it in interest, or even proxy, it's under Taylor. [00:32:55] Speaker 01: Shouldn't we ask the PTAP to address those? [00:33:00] Speaker 00: Well, I think you might need to do that if there were any indications that any of the factors that would be relevant existed here, but it's clear. [00:33:07] Speaker 01: It's not a note that they failed to address these specifically in the final written decision? [00:33:15] Speaker 00: If the final written decision addresses all of the potentially relevant factors, funding, control, direction. [00:33:22] Speaker 04: But no, it doesn't even discuss a lot of the factors that are listed in the guide, does it? [00:33:27] Speaker 00: Those are the primary factors that the guide addresses. [00:33:31] Speaker 00: Funding control, direction, involvement. [00:33:34] Speaker 00: There was none of that. [00:33:35] Speaker 00: There was no evidence that the sales force had any involvement whatsoever, or even knew that these things were being filed. [00:33:42] Speaker 04: All right. [00:33:42] Speaker 04: Time is up. [00:33:43] Speaker 04: Thank you. [00:33:43] Speaker 00: Thank you, Your Honors. [00:33:56] Speaker 02: I've refreshed my memory about Taylor. [00:33:59] Speaker 02: And looking at the appendix page 317, this is the excerpt from the trial practice guide. [00:34:07] Speaker 02: I do agree that Chevron deference is not necessary here. [00:34:12] Speaker 02: I think that Skidmore is the more appropriate standard. [00:34:16] Speaker 02: The trial practice guide was not rule making. [00:34:19] Speaker 02: And what's notable is that the trial practice guide even recognizes [00:34:24] Speaker 02: Quote, the notion of privity is more expansive than real party and interest, encompassing parties that do not necessarily need to be identified in the petition as a real party and interest. [00:34:36] Speaker 02: I think that's really the heart of the issue here. [00:34:38] Speaker 02: And Taylor, even the trial practice guide recognizes that Taylor provides a framework, but it doesn't establish a definitive taxonomy. [00:34:47] Speaker 02: Of course, that doesn't solve the problem for you, Your Honors. [00:34:51] Speaker 02: in what the definitive taxonomy should be here. [00:34:53] Speaker 02: And I know that's what Judge Hughes was struggling with. [00:34:56] Speaker 02: But I think that where there is a clear agency relationship, that the petitioner is acting for the interest, but without the explicit direction of its member, of its client. [00:35:14] Speaker 02: How is that an agency relationship? [00:35:18] Speaker 02: I think it's no different than a law firm acting on behalf of a client. [00:35:22] Speaker 03: You are aware of law firms that independently undertake to do things without the client's specific direction? [00:35:31] Speaker 02: Sure. [00:35:31] Speaker 03: I would like to look at that law firm. [00:35:35] Speaker 02: You know what, Your Honor, I think that's the part. [00:35:37] Speaker 03: Isn't that the whole point? [00:35:38] Speaker 03: The client says, go out and accomplish X goal for me. [00:35:42] Speaker 03: The law firm may exercise some discretion in how it does it. [00:35:45] Speaker 03: But it certainly doesn't go willy-nilly file a lawsuit or something like that without the client's expressed permission. [00:35:52] Speaker 03: I mean, it sounds like that would violate ethical rules. [00:35:56] Speaker 02: So in the appendix of pages 28 to 30, we've got some excerpts from RPX's own literature that talks about what their business is and how they serve their clients, how they serve their members. [00:36:10] Speaker 02: And in excerpts from their own public [00:36:15] Speaker 02: filings, SEC filings. [00:36:18] Speaker 02: You know, our mission is to transform the patent market by establishing RPX. [00:36:22] Speaker 02: Is that in the record? [00:36:23] Speaker 02: I'm sorry? [00:36:24] Speaker 02: Is that? [00:36:24] Speaker 02: Yeah, this is appendix page 31. [00:36:27] Speaker 02: OK. [00:36:28] Speaker 02: It says our strategy. [00:36:29] Speaker 02: It's right in the middle, Your Honor. [00:36:30] Speaker 02: Our mission is to transform the patent market by establishing RPX as the essential intermediary between patent owners and operating companies. [00:36:40] Speaker 02: So when a company hires, excuse me, [00:36:45] Speaker 02: becomes a member of RPX. [00:36:47] Speaker 02: They are hiring RPX to do these things. [00:36:49] Speaker 02: Now, it may not be that they have to specifically ask RPX to do something. [00:36:54] Speaker 02: You know, it's like, look, when my client hires me to do something, I go and I do it. [00:36:59] Speaker 02: And sometimes there are things that I have to go back to my client and ask for permission for, but there's a lot of discretion here. [00:37:06] Speaker 02: Including, if you look at the bottom of that page 31, it says, including the facilitation of challenges to patent validity. [00:37:14] Speaker 02: These are exactly the kinds of things that RPX does for its members. [00:37:22] Speaker 04: Any last words? [00:37:22] Speaker 04: You're out of time. [00:37:24] Speaker 04: Thank you, Your Honor. [00:37:25] Speaker 04: Thank you.