The Duty to Indemnify Does Not Create Privity


Apple Inc. v. Achates Reference Publishing, Inc.

In the final written decisions of two related inter partes reviews (IPRs) concerning patents in the same family, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) sided with the petitioner, canceling all claims under review.  Apple Inc. v. Achates Reference Publishing, Inc., Case Nos. IPR 13-00080 and IPR 13-00081 (PTAB, June 2, 2014) (Arbes, APJ).

The key ruling of the decisions concerns the one-year rule of 35 USC § 315(b).  Achates argued that the IPR petition was time barred because it had asserted the patent against an iPhone application developer, QuickOffice Inc., more than a year prior to the filing.  Achates argued that QuickOffice was a privy of Apple’s because the companies had likely entered into a software development agreement that required QuickOffice to indemnify Apple for third party patent infringement claims.

The PTAB held that QuickOffice was not in privity with Apple, because QuickOffice had no role in instituting the IPR and could not control Apple’s legal strategy.  In short, the PTAB concluded that indemnification is not a “substantive legal relationship[.]”  Additionally, the PTAB held that Achates, by its own admission, had grounds to sue Apple that were distinct from any liability flowing from the actions of its developers.

The PTAB also made an evidentiary ruling concerning 37 C.F.R § 42.64(b)(1), which provides that “[a]ny objection to evidence submitted during a preliminary proceeding must be served within ten business days of the institution of the trial.”  Achates sought to exclude the expert declaration filed with Apple’s petition for IPR.  However, the PTAB held that such evidence fell within the ambit of § 42.64(b)(1).  The PTAB stressed the importance of § 42.64(b)(1) and § 42.64(b)(2) with respect to motion to exclude, noting that a party submitting evidence must be provided with notice and an opportunity to correct its submission, i.e., in the form of a supplemental submission before an opposing party may file a motion to exclude.

Alex Grabowski also contributed to this article.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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