Forced Cooperation Between Rivals Does Not Create a “Significant Relationship”

By Sarah Geers and Daniel Sloan –

Director Vidal recently vacated three discretionary denials of institution after finding that the three petitioners did not have a “significant relationship” with a prior petitioner.  American Honda Motor Co., Inc. v. Neo Wireless LLC, IPR2023-00797, Paper 27 (Mar. 22, 2024); see also IPR2023-00962; IPR2023-00763.  The PTAB applies seven non-exclusive factors from General Plastic Indus. Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (PTAB Sept. 6, 2017) to determine whether to discretionarily deny serial petitions from the same petitioner.  Valve Corp. v. Elec. Scripting Prods., Inc., expands General Plastic to apply to unrelated subsequent petitioners if they have a “significant relationship” with the prior petitioner.  IPR2019-00062, Paper 11 (Apr. 2, 2019).  Director Vidal’s decisions clarify that the PTAB does not recognize a “significant relationship” between parties having different accused products, litigating in different district courts, and “merely engag[ing] in court-ordered pretrial coordination” in multi-district litigation.  IPR2023-00763, Paper 28 at 3.

Honda, as a representative example, petitioned the PTAB to institute review of the ’302 patent, owned by Neo Wireless, which a competitor previously challenged at the PTAB.  Honda asserted that it had no relevant relationship with the previous challenger that would justify discretionary denial, to which Neo Wireless responded by pointing out that Honda and its competitor were co-defendants in district court following an MDL consolidation.  Neo Wireless also argued that Honda used earlier petitions as a roadmap for its own petition, creating an implicit relationship sufficient to deny institution.  The PTAB agreed with Neo Wireless and discretionarily denied institution, finding a “significant relationship” in view of the MDL district court’s instructions that Honda and its competitor prepare joint claim constructions and invalidity contentions.

Honda requested Director Review, arguing that the PTAB abused its discretion because, unlike the petitioners in Valve, Honda and its direct competitor only became co-defendants based on MDL consolidation and its petition relied on completely separate prior art, claim constructions, and priority dates. Neo Wireless countered, arguing Valve applies broadly to address unfair harassment and inefficient serial petitioning and that petitioner coordination need not be explicit to support discretionary denial.

Director Vidal granted Director Review and distinguished this type of involuntary cooperation between competitors from the relationship in Valve.  Unlike in Valve, there was no evidence of any contractual relationship between the petitioners or of any interaction when they implemented the accused technology into their products.  Also unlike in Valve, the petitioner coordination was court-ordered, rather than voluntary.  Without other facts, Director Vidal was unpersuaded that petitioners having different accused products with the same allegedly infringing technology had a “significant relationship.”  Director Vidal therefore vacated the PTAB’s decisions and remanded with instructions to address the merits of the petitions.

Takeaways:

The Director has made clear that Valve does not apply broadly to allow discretionary denials under General Plastic in situations where serial petitions are simply alleged to be “unfair harassment” by unrelated parties.  Even where a tenuous relationship may exist, such as the court-ordered cooperation between competitors found here, the relationship may not be “significant” enough to warrant discretionary denial absent other evidence of more closely aligned interests in the challenged patent (such as contractual rights or joint development activity).