When You May Stand Out In A Crowd: The Perils of Crowdfunding Inter Partes Reexaminations

Crowdfunding is becoming commonplace these days.  Inventors are using it to bring their products to market and artists are using it as a means to fund movies and even new music platforms. Now, parties are using crowdfunding to combat patent trolls and Adam Carolla is leading the charge.  Although it sounds like an interesting concept, there can be consequences for participating.  Indeed, Personal Audio, the troll that sued Carolla, recently pressed this issue and, for the moment, lost. Last Fall, the Electronic Frontier Foundation (“EFF”) used crowdfunding to initiate an inter partes reexamination request with the USPTO of the patent that Personal Audio claims Carolla and others are infringing over podcasts. Personal Audio subpoenaed the EFF to learn the identities of the 1,000+ donors, arguing that it needed to verify whether any of the defendants, including Carolla, had contributed to the campaign as parties are estopped from making the same prior art arguments in court once pursued in an inter partes reexamination.  Arguing that the Personal Audio’s request was overbroad and that its donors had a first amendment right of privacy, the EFF opposed the subpoena.  It was reported that the assigned magistrate judge deferred on the first amendment issue, but felt that it was premature to seek this information at this point as the “estoppel” issue only arises once a final determination is made during a reexamination proceeding.  For now, the donors’ identities may remain anonymous unless Personal Audio asks the U.S. District Court judge to override the magistrate’s decision and consider the issue. While crowdfunding can be an effective way of pooling resources, there can be consequences.  Interestingly, had the EFF filed an “ex parte” reexamination request, there would have been a different result as “ex parte” reexaminations do not create the same “estoppel” effects as their “inter partes” cousins.