The Patent Trial and Appeal Board (PTAB) recently denied three Petitions for Inter Partes Review filed by VMWare because it acquired AirWatch LLC, which was sued over the subject patents more than one year before VMWare’s petitions. (e.g., IPR2015-00027 Decision.) At the time of filing and service of the suit against AirWatch, VMWare had not yet acquired the company and had no other relationship that would establish privity.

35 U.S.C. § 315(b) of the America Invents Act requires inter partes reviews to be filed within one year of when the Petitioner, or a party in privity with the Petitioner, was served with a complaint for infringement. The patent owner sued AirWatch over the patents in November 2012. VMWare acquired AirWatch for $1.5 billion in February 2014. VMWare filed inter partes review petitions challenging the validity of the challenged patents in October 2014.

The parties did not dispute that, except for the acquisition, there was no evidence of privity between VMWare and AirWatch. Further, VMWare acknowledged that, as a result of the acquisition, it became a privy of AirWatch. Noting that the analysis under §315(b) is a highly fact-dependent question, the PTAB held that the relationship forming a basis for privity, the acquisition in this case, can involve events after the complaint was served.

… we do not conclude that privity under § 315(b) is determined only at the time of service of a complaint alleging infringement of the challenged patent. Because AirWatch, a privy of Petitioner, was served with the Complaint alleging infringement of the ’386 patent more than a year before the Petition challenging the ’386 patent was filed, we are persuaded on this record that the Petition is not timely under § 315(b).

This decision telegraphs that the PTAB is more than willing to take a very broad view of the concept of privity and use it to deny institution of trials. Practitioners should be aware of this and take the same into account when advising clients on post grant challenges as well as in conducting due diligence for a transaction or acquisition. It is very likely that VMWare had no reason to believe that they were waving rights to challenge the patents in suit when they acquired AirWatch. Any previous, current, or potential future relationships with parties should be evaluated for potential issues under § 315(b).

The cases are VMWare Inc. v. Good Technology Software Inc., case numbers IPR2015-00027, IPR2015-00030 and IPR2015-00031, before the Patent Trial and Appeal Board.