“After November’s Director Review decision in Luminex, requests for indemnification or standard infringement indemnification agreements alone, absent evidence of more…will not be considered by the PTAB as creating RPI or privity relationships, at least for now.”
In 2024, two U.S. Patent and Trademark Office (USPTO) Director Review decisions addressed multi-defendant inter partes review (IPR) petition scenarios before the Patent Trial and Appeal Board (PTAB). These key decisions clarified when a co-defendant relationship is significant enough to constitute a follow-on petition for discretionary denial purposes and when a relationship might rise to the level of real party in interest (RPI) or privy for purposes of applying the IPR time-bar of 35 U.S.C. § 315(b).
First, in March of 2024, the USPTO Director clarified that competitors of a multi-defendant suit do not automatically share a “significant relationship” consistent with PTAB precedent to justify a discretionary denial of an otherwise meritorious IPR petition. American Honda Motor Co. v. Neo Wireless LLC, IPR2023-00797 (Mar. 22, 2024). And in November, the Director assessed customer supplier scenarios. Namely, the degree of contractual interest necessary to create an RPI or establish privity such that a Section 315(b) bar of a customer applies to its supplier. In the second decision, the Director found that standard infringement indemnification agreements alone do not create RPI or privity absent evidence of more, and that a request for indemnification under such standard agreements does not create an RPI or establish privity. Luminex International Co. v. Signify Holdings, IPR2024-00101 (Nov. 21, 2024).
1. Co-defendant Filing or Follow-On Petition?
In March of 2024 the Director vacated IPR denials based on a misapplication of Valve Corp. v. Elec. Scripting Prods., Inc., IPR2019-00062, Paper 11 (Apr. 2, 2019) (precedential). Valve extended the discretionary denial practices of so-called “follow-on” petitions of a party to that of related parties having a “significant relationship.” However, the PTAB had begun applying Valve’s holding to a broader swath of cases where different parties were merely litigating the same patent.
This expansion of Valve ensnared IPR petitioners Honda, GM and Ford due to earlier filings of a co-defendant (Volkswagen). In a March 2024 Director Review Order, the Director made clear that where there are different accused products in different court proceedings, there is not a “significant relationship” between filers outside of “relevant or extenuating facts or circumstances.”
In the two panel decisions reviewed by the Director (Ford Motor Co. v. Neo Wireless LLC, IPR2023-00763 (Nov. 9, 2023), and American Honda Motor Co, Inc. v. Neo Wireless LLC, IPR02023-00797 (Nov. 9, 2023)), the Board denied review because the petitioners were deemed improper “serial petitioners” that had a significant relationship. The panel reasoned that because Volkswagen AG had previously filed a challenge to the patents, and the 21 lawsuits filed against the different auto manufacturers had been consolidated by order of the district court (Volkswagen was a co-party to the later IPR filers), the parties were coordinating their contentions and defenses. The Board also relied on the fact that the response to Volkswagen’s petition, which Volkswagen had filed more than half a year before the statutory deadline, was publicly available at the time that the other defendants filed their petitions.
The Director disagreed, explaining in her March 2024 Order that:
“Upon review, I find that [petitioners] do not have a “significant relationship,” for purposes of the General Plastic analysis. Under existing Office policy and precedent, the Board does not recognize a “significant relationship” between parties having different accused products that merely engage in court-ordered pretrial coordination. In reaching this conclusion, this decision recognizes that existing policy does not support the result reached by the Board in this case.
[Petitioners] and Volkswagen are accused of infringing the challenged patent with different products in different court proceedings, and there is no evidence that they had any interactions or agreements regarding the accused wireless standard or the accused products. In addition, their court-ordered case-management coordination, by itself, does not create the type of “significant relationship” contemplated by Valve.” (Internal citations omitted.)
Consequently, the Director restrained further expansion of Valve to common multi-defendant scenarios where there is no evidence of a significant relationship outside of being grouped in the same litigant’s crosshairs.
2. RPIs + Privity: Customers and Suppliers?
In November 2024, the USPTO Director considered another common multi-party litigation scenario, and explored the degree of interest (the degree of cooperation, contractual obligation, or common purpose) necessary to create an RPI or privity relationship such that a 315(b) bar of one such party applies to the other(s). Specifically, in Luminex International Co. Ltd v. Signify Holdings B.V., the Director considered whether an indemnification obligation, absent more, demonstrates an RPI relationship, or creates privity between a customer and supplier.
In Luminex, customer Menard was served in August of 2022 with a complaint for infringement from Signify. In answering, Menard stated that as a distributor, it would be indemnified by its suppliers. Menard filed a third-party complaint identifying Luminex in October of 2022. Luminex answered the complaint in February of 2023, adding counterclaims of invalidity. Along the way, the Court ordered Menard and Luminex to coordinate. Petitioner Luminex sought IPR alone in October of 2023 and was denied as a result of the August 2022 one-year time bar that applied to Menard. Specifically, the Board found Menard to be an RPI of Luminex, and that service of the original complaint in August 2022 barred the IPR filing under 315(b).
The panel explained that Luminex was obligated to indemnify Menard, the parties were cooperating in court, and the claims were overlapping in the IPR and litigation (where seemingly only Luminex was on the infringement hook). The panel also explained that “from a ‘practical and equitable’ standpoint, Menard will benefit from the redress [of the IPR] because a decision determining that the challenged claims are unpatentable would relieve Menard from liability for infringing the ’336 patent [and] Menard likely prefers relief from infringement liability rather than a liability determination followed by litigation about indemnification.”
In reversing and concluding that no RPI relationship existed, the Director explained that customer Menard was neither an RPI nor privy of supplier Luminex, noting that there was no evidence of control between customer Menard and distributor Luminex, and that the inferential evidence offered (timing of the indemnification demand and the obligation scope) was not enough. In finding that privity also did not exist, the Director again emphasized the standard nature of the indemnity obligation and lack of direct evidence of anything more between the parties.
The Director noted that the issue is a common one:
“This case presents the issue of whether a customer-indemnitee’s request for indemnification by a manufacturer-indemnitor under a standard, non-exclusive, manufacturer-customer indemnification agreement relating to patent infringement can be sufficient to support a finding of real party in interest and trigger the one-year time bar.”
In distinguishing the agreement for RPI purposes, the Director commented on the standard nature of the indemnification clause, which was “typical of those used across industries” and agreed with Luminex that its relationship with Menard was a “standard, non-exclusive, arm’s-length customer manufacturer” relationship. Importantly, she also noted that the standard indemnification language “does not support an inference that the Agreement gives Menard the opportunity or ability to control this IPR proceeding or Petitioner’s filing of the Petition….” The Director also disagreed with the Board’s determination “that Menard’s indemnification requests elevate Menard to a real party in interest of Petitioner. As discussed below, these unilateral requests refer to indemnification under the Agreement as it relates to the district court litigation (without mention of any proceedings before the Office) and do not show that Petitioner filed this IPR as a representative or at the behest of Menard.”
In concluding that no RPI relationship existed, the Director pointed out that there was no evidence of control between customer Menard and distributor Luminex, and that the inferential evidence offered (timing of the indemnification demand and the obligation scope) was not enough. In finding that privity also did not exist, the Director again emphasized the standard nature of the indemnity obligation and lack of direct evidence of anything more between the parties.
After November’s Luminex decision, requests for indemnification or standard infringement indemnification agreements alone, absent evidence of more (like exclusive agreements or those covering PTAB expenses) will not be considered by the PTAB as creating RPI or privity relationships, at least for now.
While Director Vidal recalibrated several aspects of PTAB practice in 2024, this guidance may very well change under the next Director. For example, there were cases under previous Director Iancu holding the exact opposite to Luminex. With the appointment of an interim Director for most (if not all) of 2025, and that temporary leader being unlikely to change policies, stakeholders should consider the potential for changes in PTAB policy starting with mid-2025 petition filings that are set for institution in early 2026.
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