United States: Suggestion Of Control Not Enough For RPI Challenge; Nexus Matters For Commercial Success

Universal Remote Control, Inc. v. Universal Elec.'s Inc.

Addressing the real parties-in-interest (RPI) requirement for inter partes review (IPR) and the "nexus" requirement for commercial success to rebut an obviousness challenge, the Patent Trial and Appeal Board (PTAB or Board), found that the patent owner failed to establish that additional entities should have been named as RPIs on the petitioner side and also failed to establish a nexus between the patent claims and the commercial success of its own and its licensees' products. Universal Remote Control, Inc. v. Universal Elec.'s Inc., IPR2014-01102 (PTAB, Dec. 15, 2015) (Pettigrew, APJ.).

Universal Remote Control (URC) filed an IPR challenging a patent owned by Universal Electronics (the patent owner). As required by 35 U.S.C. § 312(a)(2), URC certified that it is the real-party-in-interest. The patent owner, however, contended that URC should also have named its supplier, Ohsung Electronics, as a RPI. As evidence of the relationship between URC and Ohsung, the patent owner cited that URC and Ohsung share at least one employee, and that URC previously paid for office space for that employee; a 2004 settlement and license agreement between the patent owner and URC over a set of unrelated patents, a provision of which obligates Ohsung to pay royalties to patent owner; and Ohsung and URC shared litigation counsel in a related case. The Board was unpersuaded, finding that none of the evidence suggests that Ohsung actually exercised or could have exercised control over the petitioner's participation in this proceeding.

The Board also addressed the patent owner's claims of commercial success in rebuttal to an obviousness challenge under 35 U.S.C. § 103(a). According to the patent owner, several of its patents, including the patent at issue in the IPR, were licensed by a substantial portion of the industry, which shows commercial acquiesce and competitor acceptance of patent owner's licensed patents. But as the Board explained, the "mere existence of several licenses, without more specific information about the circumstances surrounding the licensing, is not a good indicator of nonobviousness." The patent owner did not provide evidence, for example, regarding whether decisions to take a license were "from acknowledged merits of the claimed invention" and "how many entities refused to take a license or why some entities, if any, refused to take a license."

The patent owner also cited the "tremendous commercial worldwide success" of both its own products and products sold by its licensees. According to the patent owner, it has sold over $1 billion dollars in its own products, and one of its licensees (Logitech) has sold over $100 million dollars in licensed products. The Board was again unpersuaded. With respect to the patent owner's product sales, the Board noted that the record lacks any evidence showing that the sales were a direct result of the unique characteristics of the invention and not a result of economic and commercial factors unrelated to the quality of the patent subject matter. As the Board explained, "absolute sales numbers without market share data do not establish commercial success." As for the sales by Logitech, although the patent owner directed the Board to infringement claim charts prepared during its litigation with Logitech, the Board found such charts insufficient to establish nexus between the alleged commercial success and the claimed invention. Moreover, the Board found that the patent owner failed to provide any context of its litigation with Logitech, including, for example, "whether Logitech agreed to the charge of infringement."

Suggestion of Control Not Enough for RPI Challenge; Nexus Matters for Commercial Success

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