Netlist, Samsung Spar Over RPI Requirements for PTAB Trial Petitions in Requests for Director Review

Last week, consumer electronics giant Samsung filed responses to requests for Director Review by patent owner Netlist in validity proceedings instituted at the Patent Trial and Appeal Board (PTAB). Netlist is contending that the trials should be dismissed because Samsung failed to identify all real parties in interest (RPIs) in the PTAB petitions challenging Netlist patent claims directed to dynamic random access memory (the ‘087 patent) and memory modules for reduced noise in signal transmissions (the ‘731 patent).

Netlist: Corning Optical, Aylo Freesites Require Dismissal for Failure to Name Corporate Affiliate

The RPI issue was raised by Netlist on March 4 when it filed a pair of requests for Director Review of PTAB institution decisions, one for inter partes review (IPR) and another for post-grant review (PGR), following petitions filed by Samsung. The requests for Director Review argued that the IPR and PGR proceedings should both be denied institution due to Samsung Electronics America’s (SEA) co-party status with parent company Samsung in U.S. district court cases where they raised validity challenges against Netlist patent claims.

Netlist argued that SEA’s RPI status is demonstrated by its shared liability with Samsung for infringement of the challenged patents in a Section 337 investigation currently pending at the U.S. International Trade Commission (ITC). Samsung’s invalidation of those patent rights at the PTAB would eliminate SEA’s infringement exposure at the ITC, benefiting SEA by foreclosing the possibility of injunctive relief. Samsung also named SEA as a co-plaintiff in a Delaware district court declaratory judgment action challenging the validity of those same patents, and SEA and Samsung are co-defendants in infringement litigation filed in Texas by Netlist, confirming that SEA expects a controversy as to infringement liability.

Citing to a sua sponte review decision (Aylo Freesites) entered in early February by U.S. Patent and Trademark Office (USPTO) Director John Squires, which vacated a final written decision and dismissed the IPR petition, Netlist argued that the RPI issues between Samsung and SEA are even more apparent. Whereas the petitioner in Aylo Freesites failed to name a mere services affiliate who was also a co-defendant in parallel district court litigation, SEA is a corporate entity existing between Samsung electronics and Samsung Semiconductor Inc. (SSI), the latter of which was named by Samsung as an RPI in both proceedings.

Given Samsung’s failure to address SEA’s RPI status, Netlist argued that both the IPR and PGR proceedings should be dismissed under the PTAB’s 2015 decision granting dismissal in Corning Optical Communications v. PPC Broadband. Netlist argued that dismissal is also appropriate here for Samsung failing to cure its petition despite being on notice for several months. Netlist further argued that a stipulation entered by Samsung in the ITC proceedings does not mitigate the concerns of duplicative proceedings because that stipulation is not binding on ITC respondents Google and Super Micro.

Specific to the ‘731 patent at issue in Samsung’s IPR, Netlist’s request for Director Review further argued its settled expectations in patent rights that issued in 2018 and were previously licensed both by SK Hynix and IPR petitioner Samsung. In Netlist’s request for Director review of the PGR proceedings, which target the ‘087 patent, Netlist added that SEA had its own license to parent patents in the same patent family and was found to willfully infringe those patent rights in a separate case.

Samsung: Netlist Didn’t Properly Argue RPI Issue Under AIT for Discretionary Denial

On March 12, Samsung filed responsive briefing in both the IPR and PGR proceedings, countering that the USPTO Director already considered and rejected Netlist’s RPI arguments when instituting both proceedings. Samsung characterized SEA as a mere purchaser that focuses on commercializing consumer electronic products that are not accused of infringing the asserted patents. Samsung charges Netlist with including SEA in the Eastern Texas district court infringement case as a token defendant to establish jurisdiction, explaining why SEA is joined as a plaintiff in the declaratory judgment action in Delaware district court seeking to invalidate Netlist’s patents.

In 15 petitions filed by Samsung for PTAB validity proceedings across four years, Netlist hasn’t raised an RPI argument regarding SEA under Applications in Internet Time v. RPX Corp. (AIT) Further, the PTAB has separately rejected arguments under AIT that a customer becomes an RPI simply by being named as a defendant in related district court litigation.

Responding to Netlist’s challenge to Samsung’s ITC stipulation, Samsung noted that the stipulation was not untimely to the ITC action and that it hasn’t raised validity or claim construction arguments against Netlist’s patents in that forum. The non-binding nature of Samsung’s stipulation on Google or Super Micro is irrelevant, Samsung argued, because Netlist never mentioned either Google or Super Micro in its previous briefs on discretionary denial, thus waiving the argument.

Specific to Netlist’s ‘731 patent, Samsung argued that the USPTO Director has already considered and rejected any settled expectations in those patent rights. Samsung also noted a series of examiner mistakes during the prosecution of the ‘731 patent, including failure to search the prior art for a key limitation because the examiner improperly spelled “impedance” and failed to search for “banks.” Samsung argued its own settled expectations in products that are again accused by Netlist of infringing patents related to others that have repeatedly been invalidated at the PTAB.

The RPI issues in this case were recently highlighted by a policy brief published by the Alliance of U.S. Startups & Inventors for Jobs (USIJ) about PTAB cases creating inconsistencies that benefit foreign infringers. The USIJ also faulted the PTAB for failing to conduct a proper analysis under Corning Optical, which was designated precedential by Director Squires last October. Samsung’s status as the top PTAB petitioner between 2019 and 2024 itself raises questions about the extent to which the company pursues additional challenges through proxies, the USIJ brief stated.

In a statement sent to IPWatchdog, Netlist CEO Chuck Hong said: “Strict enforcement of the statutory RPI requirement is needed to prevent large technology firms from using their affiliates or proxies to launch repeated AIA challenges against patents protecting the innovation by their smaller competitors.”

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Author: donscarpo
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