PTAB Applies Collateral Estoppel to Exclude Purported Patent Owner

Written by Scott Raevsky and David Schmidt, Ph.D.

The PTAB issued an order applying collateral estoppel to determine that one purported owner of U.S. Patent 7,215,752 and U.S. Patent 7,844,041 (the “challenged patents”) had no authority to act as the patent owner in Microsoft Corp. v. Global Technologies, Inc., IPR2016-00663 and IPR2016-00669 (P.T.A.B. March 21, 2017).

Microsoft filed IPR petitions on the challenged patents, naming Global Technologies Inc. (“GTI”) as Patent Owner based on the Patent Office’s records. Petitioner served GTI, a dissolved company, but also served Kenneth A. Raniere, the plaintiff in the underlying district court litigation involving the challenged patents. After the petitions were filed, Mr. Raniere recorded an earlier executed assignment transferring ownership from GTI to Mr. Raniere, allegedly as part of GTI’s dissolution. The Board accepted this assignment as prima facie evidence of Mr. Raniere’s ownership of the patents.

Separately, the district court determined that Mr. Raniere was not the owner of the challenged patents, finding that the assignment was not effective to transfer ownership of the challenged patents to Mr. Raniere. Among other issues, the district court found Mr. Raniere’s testimony to be “wholly incredible” and “untruthful.” The district court dismissed the suit with prejudice and the Federal Circuit later affirmed on January 18, 2017.

After the district court litigation was dismissed, Microsoft filed a motion in the IPR proceedings to expunge all documents filed by Mr. Raniere, while Mr. Raniere filed a brief asserting that he is the owner of the challenged patents. Applying the four factors of issue preclusion (collateral estoppel), the Board found: (1) the district court’s determination regarding ownership is the same issue as found here, (2) the ownership issue was already litigated, (3) the ownership issue was essential to the district court judgement, and (4) Mr. Raniere already had a full and fair opportunity to litigate the issue of ownership at the district court level. Therefore, Mr. Raniere was precluded from asserting the assignment as evidence of ownership. 

Additionally, the PTAB ordered Schmeiser, Olsen & Watts LLP (“SOW”), counsel representing both GTI and Mr. Raniere, to obtain a new Power of Attorney not signed solely by Mr. Raniere in order to continue participating in the proceedings. The Board further noted potential conflict of interest issues in SOW representing both GTI and Mr. Raniere based on allegedly false documents prepared by SOW. Accordingly, since Microsoft served documents only on SOW, the Board ordered that Microsoft serve copies of the Petition documents on several other parties related to GTI. The Board also held Microsoft’s motion to expunge documents in abeyance until GTI has a chance to appear in the proceeding.

Even though collateral estoppel is not explicitly referred to in the IPR statute, this case helps clarify that it is still available for parties in IPRs. Parties and counsel should also diligently attempt to determine the true patent owner and scrutinize purported assignments carefully prior to filing or responding to IPR petitions.