I was pleased to see that in a Memorandum issued on October 28, 2025, USPTO Director Squires has changed the role of real parties in interest (RPI) determinations in inter partes review (IPR) cases at the USPTO.  Director Squires noted that he had raised this issue in his confirmation hearings. He also referred to the May 14, 2025 hearings of the Senate Committee on the Judiciary regarding “Foreign Threats to American Innovation and Economic Leadership” which also identified that “failure to appropriately discharge our duties with respect to properly and accurately identifying RPIs raises significant national-security concerns. Opaque investment structures have been used by foreign adversaries to gain influence over, or access to, U.S. intellectual-property assets and proceedings. State-linked entities have covertly financed or directed U.S. patent challenges, acquisitions, or licensing transactions in sectors such as semiconductors, artificial intelligence, quantum computing, and advanced materials.”

I testified at the May 14, 2025 hearing, and prepared extensive responses to questions thereafter.  In my responses, I drew attention to the risks posed by failing to identify real parties in interest. I noted:

“In many cases it might not be apparent that a party asserting a US patent has links to China’s military-industrial complex. Chinese companies may be reluctant to admit government influence to maintain plausible deniability, for tactical reasons in a litigation or due to the potentially pervasive impact on the types of disclosures it might need to make in other contexts. Networks can be extensive and complex. There are also no unified practices or policies across different US government agencies to assess party or state ownership or control of Chinese enterprises. An understanding of these networks is important to such diverse areas as litigating financing, securities regulation, international trade remedies, export controls, economic espionage, trade sanctions, and Department of Defense procurement.”

The complex relationships between the state and companies are well known to those who have studied China or practiced in China. Among academics, I referred in my testimony to the excellent work of Li-Wen Li and Kurtis Milhaupt, “We are the (National) Champions: Understanding the Mechanisms of State Capitalism in China,” 65 Stan. L. Rev 697 (2013).

I also noted that disclosure of government subsidies involving patent filings from overseas would be useful. For example, the United States requires disclosure under the Bayh-Dole Act of U.S. government funded R&D. We should impose a similar obligation on foreign government funded patent applications before USPTO.

State control and influence take different forms in China, not all of which may involve direct investment. This is an issue which other agencies in the U.S. government, such as the Committee on Foreign Investment in the United States have had to deal with. An example of how Chinese plans could impact US IP litigation occurred several years ago in a PTAB IPR patent dispute (IPR2023-00521) involving a magnesium material used in fracking. I submitted an expert statement on Chinese industrial policies and plans regarding magnesium processing and product development including extensive background on the academic and industrial background to the party challenging the patent.  I described various national and local policies regarding magnesium processing and product development. I noted, for example, that in the complainant’s hometown of Chongqing, magnesium appears 11 times in the “Five-Year Plan … for High Quality Development of Manufacturing Industry (2021-20215).”

While it is possible that litigation funding in most cases in the U.S. has been from private sources, the increasing opacity and complexity of China’s investments and financing underscore the need for greater transparency. In the magnesium case my purpose was to demonstrate how the complainant in that proceeding had deep ties in this industry and technology in both his private commercial affairs and his academic role in Chongqing, China. Paul Morinville wrote an article that was also critical of the USPTO’s approach at the time “China Uses the USPTO to Take a Critical Minerals Market.”  

Given the paucity of information on Chinese and other countries’ real parties in interest, we might be putting our own national security on the line in USPTO IPR and other proceedings in the absence of proper disclosure. Director Squires’ memorandum is a crucial step in the right direction.