USPTO Director Vacates PTAB Decision Over Privity Discovery Denial in Semiconductor Patent Dispute

In a significant ruling that could impact patent dispute procedures, Acting United States Patent and Trademark Office (USPTO) Director Coke Morgan Stewart has vacated a Final Written Decision by the Patent Trial and Appeal Board (PTAB) and remanded multiple cases back for further proceedings. The April 24 order addresses procedural issues in a dispute between semiconductor manufacturers and a patent owner that highlight important aspects of inter partes review (IPR) proceedings.

Case Background

The dispute involves petitions filed by Semiconductor Components Industries (doing business as onsemi) and Texas Instruments against patents held by Greenthread LLC. At issue were semiconductor patents (11,121,222 B2 and 10,510,842 B2) being challenged through IPR proceedings IPR2023-01242, IPR2023-01243, and IPR2023-01244.

Director Identifies Key Procedural Errors

Director Stewart’s order identifies several procedural errors that necessitated intervention:

“I agree with Patent Owner that the Board abused its discretion in denying the discovery motions,” Stewart wrote in the order. The Director found that the Board improperly denied Greenthread’s discovery requests related to potential privity between the petitioner and Intel Corporation, then unfairly cited this lack of evidence against Greenthread.

The ruling further states: “The Board abused its discretion by not fully addressing the arguments,” referring to the PTAB erroneously claiming certain technical arguments were untimely when Greenthread had in fact timely presented them.

Additionally, the Director determined that “the refusal to admit and consider the claim construction orders was legally erroneous because the orders were not ‘evidence,'” clarifying that legal rulings from other tribunals should not be subject to the same evidence admissibility standards.

The Critical Privity Issue

The privity question stands at the heart of this dispute and carries significant implications for patent litigation strategy. Under 35 U.S.C. § 315(b), IPR petitions are time-barred when filed more than one year after the petitioner, real party in interest, or privy of the petitioner is served with a patent infringement complaint.

In this case, Greenthread argued that the petitions were untimely because Intel Corporation — allegedly a privy of the petitioner — had been served with a district court complaint more than one year before the petitions were filed. This supplier-customer relationship between Semiconductor Components Industries and Intel raised important questions about when such business relationships create privity for IPR timing purposes.

The Director’s order specifically acknowledges the significance of this relationship, noting that “Patent Owner raised more than a mere possibility that discovery would yield useful information on the privity issue given that Petitioner was a supplier of a time-barred party, Intel.”

This supplier-customer dynamic is particularly important in the semiconductor industry, where chip manufacturers often supply components to larger technology companies. The ruling suggests that such relationships merit careful scrutiny when determining whether petitions are time-barred. Director Stewart’s remand instructions specifically target evidence that could establish privity, including “any indemnification agreements between Petitioner and Intel and the terms and conditions of sale agreements between Petitioner and Intel related to products accused of practicing the challenged claims.” This focus highlights how indemnification provisions and sale conditions can create legal relationships sufficient to establish privity for IPR purposes.

The order also clarifies the burden-shifting framework for privity challenges, citing Federal Circuit precedent from Worlds Inc. v. Bungie, Inc.: “although it is a petitioner’s burden to show that its petition is not time-barred, a ‘mere assertion that a third party is an unnamed real party in interest, without any support for that assertion, is insufficient to put the issue into dispute.'”

Implications for Patent Practitioners

This ruling reinforces several key principles important to patent practitioners:

1. Discovery Rights: The Director affirmed that patent owners should have reasonable discovery opportunities regarding privity relationships, particularly when a petitioner is a supplier to a time-barred party.
2. Burden of Proof: The order clarifies proper burden allocation, noting that while petitioners bear the burden of showing petitions are not time-barred, patent owners must produce some evidence to put the issue into dispute.
3. Consideration of District Court Decisions: The ruling emphasizes that district court claim construction orders are legal authority, not evidence, and should be considered by the PTAB when properly submitted.
4. Timely Arguments: The Director reinforced that the Board must fully address arguments timely presented in responses, not incorrectly characterize them as newly raised in later filings.
5. Strategic Consequences: Companies must carefully consider their business relationships and potential privity connections when planning IPR challenges, as supplier-customer relationships might create time-bar issues.

Key Takeaways

This Director Review underscores the USPTO’s commitment to procedural fairness in patent disputes and establishes important precedent for PTAB proceedings:

• Patent owners deserve reasonable discovery opportunities to support time-bar arguments
• Legal rulings from district courts are not “evidence” and should be considered when relevant
• The Board must consider timely filed arguments even when they are subsequently expanded
• Director Review remains a powerful tool for correcting procedural errors in PTAB proceedings
• Privity relationships between suppliers and customers warrant careful scrutiny for IPR timing purposes
• Indemnification agreements and sales conditions may establish privity relationships sufficient to trigger time-bar provisions

Patent practitioners should take note of these procedural clarifications as they navigate IPR proceedings before the USPTO, particularly when dealing with potential privity relationships in complex supply chains.

The case was originally decided before the Patent Trial and Appeal Board with Administrative Patent Judges Easthom, Chism, and Stewart presiding. The Final Written Decision that was vacated had been authored by Judge Easthom and joined by the other panel members. Following the Director’s review and remand, the case (IPR2023-01242, IPR2023-01243, and IPR2023-01244) will return to the same panel of judges for further proceedings as instructed in the April 24, 2025 order.  Semiconductor Components Industries, LLC, d/b/a onsemi and Texas Instruments Incorporated v. Greenthread, LLC, Paper 94 (USPTO Apr. 24, 2025).

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Greg Cordrey at 949.623.7236 or GCordrey@jmbm.com.