Continental Automotive GmbHv.Netlatch, LLC

Patent Trial and Appeal Board

Mar 8, 2016

08420019 (P.T.A.B. Mar. 8, 2016)

Trials@uspto.gov Paper 22
571-272-7822 Entered: March 8, 2016

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

CONTINENTAL AUTOMOTIVE GMBH,
KIA MOTORS CORPORATION, AND
KIA MOTORS AMERICA, INC.,
Petitioner,

v.

NETLATCH, LLC,
Patent Owner1.
____________

Case IPR2015-00481
Patent 5,530,431
____________

Before KEN B. BARRETT, JAMES P. CALVE, and
BART A. GERSTENBLITH, Administrative Patent Judges.

BARRETT, Administrative Patent Judge.

JUDGMENT AND FINAL WRITTEN DECISION2
Request for Adverse Judgment
35 U.S.C. § 318(a) and 37 C.F.R. § 42.73

1 The use of labels, reflecting the originally-captioned status of the parties,
to identify the parties is for purposes of convenience only.
2 A similar decision is being filed concurrently in IPR2015-00473.
IPR2015-00481
Patent 5,530,431

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I. BACKGROUND
A. Procedural Posture
On December 23, 2014, Petitioners in IPR2015-00481, Continental
Automotive GmbH, Kia Motors Corporation, and Kia Motors America, Inc.
(collectively, “Continental”) filed a Petition (Paper 4, “Pet.”) for an inter
partes review of U.S. Patent No. 5,530,431 B2 (“the ’431 patent”). The
Petition challenged the patentability of claims 14, 17, 31, and 33 of the
’431 patent. Pet. 3–4. On the Petition’s caption, Continental named as
patent owners “Netlatch LLC, Peter F. Wingard, The Bankruptcy Estate of
Peter F. Wingard, and/or The Wingard Co.,” and indicated the following:
Netlatch, LLC is the assignee in the assignment most recently
filed with the U.S. Patent and Trademark Office. (Ex. 1007
at 3-4.) But ownership of the 431 patent has been contested in
litigation. (E.g., Ex. 1008.) Out of an abundance of caution, all
possible owners of record are named.
Pet. 1 n.1. According to the certificate of service, the Petition was served on
the above-identified possible patent owners, including the Bankruptcy
Trustee. Netlatch, LLC (“Netlatch”), filed a Power of Attorney in this
matter indicating it is the “[a]ssignee of record of the entire interest” in the
’431 patent. Paper 5.
On July 15, 2015, we instituted an inter partes review of claims 14,
17, 31, and 33 of the ’431 patent. Paper 10. Netlatch filed a response to the
Petition on October 28, 2015. Paper 15.
In an email on December 21, 2015 (2:53 PM), Continental requested,
on behalf of all petitioners in this case, IPR2015-00481, and related case
IPR2015-00473, a teleconference with the Board. Continental represented
in that email that the Bankruptcy Court recently had decided the ownership
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Patent 5,530,431

3
issue and that the ownership of the ’431 patent had been assigned to
Continental. By that email, a teleconference was requested “to discuss the
issue and the best way to move forward with the IPRs in view of the present
ownership status and ruling about the past ownership.”
In a responsive email on December 21, 2015 (4:21 PM), Netlatch
asserted that the Bankruptcy Court’s Order did not change the ownership of
the ’431 patent, as recorded in the USPTO, and specifically that “the
Bankruptcy Court only granted the motion ‘to sell personal property of the
Debtor [Mr. Peter Wingard][;]’[] however, this did not deal with the proper
assignment to Netlatch.” Netlatch further stated in the email:
There is no court order reversing the assignment to Netlatch.
The proper course of action by the Trustee should have been to
file an adversary proceeding against Netlatch.[3] The Trustee
did not file an action against Netlatch. Accordingly, Netlatch,
as shown by the assignment record is still the current owner
pursuant to 35 U.S.C. 261. There has been no ruling against
Netlatch as to its ownership of the patent and no ruling
directing Netlatch to transfer the ’431 patent. In fact, there has
been a complete disregard for 35 U.S.C. 261 and no due
process, adversary proceeding to deal with Netlatch’s proper
ownership of the ’431 patent as properly recorded with the
USPTO.
On January 13, 2016, a conference call was held between respective
counsel for the parties to IPR2015-00473 and IPR2015-00481 and

3 Netlatch’s current counsel in these subject IPRs proposed in certain
district court litigations “to re-open Plaintiff’s bankruptcy case to have the
Bankruptcy Court explicitly consider the patent-at-issue to bring finality and
certainty to the ownership of the patent-at-issue in the future in this and
other cases.” Ex. 1020, 1; see also Ex. 1026, 1 (motion to join Netlatch as
co-plaintiff with Mr. Wingard and referencing the ’431 patent).
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Patent 5,530,431

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Administrative Patent Judges Calve, Gerstenblith, and Barrett. During the
conference call, the bankruptcy and ownership issues were explored and
potential disposition of the two cases was discussed, with all parties being
heard. The Board indicated that it would like briefing on the issues and an
Order establishing a briefing schedule was issued. Paper 16. In due course,
Continental filed its Statement Regarding the Ownership of U.S. Patent
No. 5,530,431. Paper 18 (hereinafter Continental’s Ownership Statement”).
Netlatch did not file a paper to address the ownership issues, although it was
authorized to do so. See Paper 16, 3.
B. The Bankruptcy Proceedings
The named-inventor of the ’431 patent is Peter F. Wingard.
Ex. 1001, [76]. In June of 2010, Mr. Wingard filed for Chapter 7
bankruptcy. Ex. 1018, 4.4 Mr. Wingard purportedly assigned the
’431 patent to the Wingard Company in November 2007 and prior to the
bankruptcy filing. See id. at 3–4. At some point thereafter, the Wingard
Company purportedly assigned the patent back to Mr. Wingard, who then
purportedly assigned the patent to Netlatch in exchange for a sixty percent
interest in Netlatch. See Paper 5 (listing the alleged chain of title); see also
Ex. 1007, 3 (assignment to Netlatch). Netlatch’s ownership claim in the
’431 patent rests on the existence of the purported assignment from
Mr. Wingard to the Wingard Company in November 2007. See Ex. 1018, 3–

4 Exhibit 1018 is the transcript of a telephonic ruling by the Bankruptcy
Court on the Trustee’s motion for authorization to sell the ’431 patent. The
Court’s findings of fact and conclusions of law were placed on the record
during that ruling. Exhibit 1028 is the Bankruptcy Court’s Order granting
the motion for the reasons stated during the telephonic hearing.
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4. Before the Bankruptcy Court, Mr. Wingard was unable to produce the
assignment that allegedly occurred in November 2007. Id. at 6.
On August 4, 2015, the Bankruptcy Trustee filed a motion in the
Bankruptcy Court for authorization to sell the ’431 patent. See id. at 2;
Ex. 1027 (motion). In the bankruptcy proceedings, counsel for Netlatch
entered an appearance as counsel of record for “the third parties, James H.
Muhl Jr. and NetLatch LLC.” Ex. 1025. Additionally, Netlatch filed an
objection to the Trustee’s proposed sale (Ex. 1022), and a witness and
exhibit list (Ex. 1019). A full evidentiary hearing was conducted by the
Bankruptcy Court to determine whether the Wingard Company or
Mr. Wingard held title to the ’431 patent at the time of the bankruptcy filing.
See Ex. 1018, 2. In ruling on the motion, the Bankruptcy Court summarized
the key issue as follows:
Mr. Muhl formed the Netlatch Company in 2014, and the
431 patent[] was assigned to him on July 28, 2014, but if the
Court finds that Mr. Wingard owned the patent [at the time of
the bankruptcy filing], that assignment is totally void because
he [Mr. Muhl and Netlatch] couldn’t have gotten it from the
[Wingard] company since it was owned by Mr. Wingard.
Id. at 8 (emphasis added). The Court evaluated the circumstantial evidence
and the credibility of Mr. Wingard regarding the alleged November 2007
assignment, and found that neither weighed in favor of Mr. Wingard. Id.
at 9–10. The Court ultimately found, “at the time of the [bankruptcy] filing,
that the patent was owned by Mr. Wingard personally, and, therefore,
became part of the [Bankruptcy] Estate,” and the Court granted the Trustee’s
motion to sell the patent. Id. at 10, 11; see also Ex. 1020 (Order granting the
motion). The time to appeal the order has expired and no appeal was sought.
Ex. 1017, 2 (citing Fed. R. Bankr. P. 8002).
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In an assignment dated December 17, 2015, the Bankruptcy Trustee
assigned to Continental the entire right, title, and interest in the ’431 patent.
Ex. 1017. An assignment from the Trustee to Continental Automotive
GmbH is recorded in the USPTO at Reel/Frame 37329/544. Ex. 3001.
II. ANALYSIS
In light of the Bankruptcy Court’s Order and the authorized sale of the
’431 patent, we recognize Continental as the current owner of the
’431 patent for purposes of this inter partes review proceeding. Continental
asserts: “because Continental is now the patent owner and has represented
that the 431 patent claims are invalid, the claims should be found
unpatentable either by way of a final determination or in response to a
request for adverse judgment.” Continental’s Ownership Statement 5.5
Continental also indicates that the same request for relief applies in the
related case, IPR2015-00473. Id. at 5 n.4.
A party may request judgment against itself at any time during a
proceeding. 37 C.F.R. § 42.73(b). Pursuant to 37 C.F.R. § 42.73(b)(3),
“[c]oncession of unpatentability” may be construed as a request for adverse
judgment.

5 Continental also asserts that Netlatch should be dismissed as a party and
that all papers filed by Netlatch expunged. Continental’s Ownership
Statement 5. Continental does not persuade us that those steps are
necessary. See 37 C.F.R. § 41.14 (“The record of a proceeding, including
documents and things, shall be made available to the public, except as
otherwise ordered.”); Office Patent Trial Practice Guide, 77 Fed. Reg.
48,756, 48,760 (Aug. 14, 2012) (referring to “the public’s interest in
maintaining a complete and understandable file history”).
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We understand Continental to expressly request entry of adverse
judgment against itself as the current patent owner. Continental’s
Ownership Statement 5. Additionally, we treat Continental’s concession
that the challenged claims are unpatentable (id. at 5; see Pet. 3–4) as a
request for adverse judgment. 37 C.F.R. § 42.73(b)(3). Under these
circumstances, entry of judgment adverse to Patent Owner Continental is
appropriate.
III. ORDER
In consideration of the foregoing, it is
ORDERED that, for purposes of this proceeding, Continental is
recognized as the Patent Owner;
FURTHER ORDERED that Patent Owner Continental’s request for
adverse judgment under 37 C.F.R. § 42.73(b) with respect to claims 14, 17,
31, and 33 of U.S. Patent No. 5,530,431 B2 is granted; and
FURTHER ORDERED that, because this is a Final Written Decision,
parties to the proceeding seeking judicial review of this Decision must
comply with the notice and service requirements of 37 C.F.R. § 90.2.

For PETITIONER:
Ralph Gabric
Robert Mallin
BRINKS GILSON & LIONE
rgabric@brinksgilson.com
rmallin@brinksgilson.com

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Patent 5,530,431

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For PATENT OWNER:
Vivek Ganti
HILL, KERTSCHER & WHARTON
vg@hkw-law.com

Charlena Thorpe
THE LAW OFFICE OF CHARLENA THORPE
charlena.thorpe@charlenathorpe.com