November 30, 2014

Proving Real-Party-In-Interest in IPR Remains Elusive

On difficult-to-prove issues in IPR proceedings, it is interesting to watch parties adapt to PTAB decisions, in the hopes of overcoming the long odds of success. One such issue is proving that a third party, whose involvement in the IPR would result in a time bar, is in privity with a petitioner. Few such motions have been granted, but Patent Owners are getting closer. In Sipnet EU S.R.O v. Straight Path IP Group, Inc., IPR2013-00246, involving US Pat. No. 6,108,704, Patent Owner came close, but failed in its attempt to tie a barred-third party to Petitioner.

Patent Owner’s strategy was to argue that third party, Stalker Software, Inc., was a real-party-in-interest that was not named in the Petition. If Stalker were indeed a real-party-in-interest, the petition would have been time-barred, because Stalker was served with a complaint alleging infringement of the ‘704 patent more than one year prior to Patent Challenger filing the petition. Order at 10. In its attempt to prove privity, Patent Owner argued that Petitioner was a reseller of Stalker’s software and that Stalker provided Petitioner with one of the references relied upon in the IPR.  Patent Owner asserted that these acts meant that Stalker exercised control over the proceeding, qualifying Stalker as a real-party under the precedent of In re Guan, Inter Partes Reexamination Proceeding, Control No. 95/001,045, Decision Vacating Filing Date (Aug. 25, 2008). Id. at 10-11

Specifically, Patent Owner presented two types of evidence to bolster its argument Stalker was a real-party-in-interest (Order at 11):

  • testimony of two witnesses regarding a reference relied upon that allegedly have connections to Software (that was not disclosed in the Petition); and
  • the fact that Petitioner maintains no presence in the US and refused Patent Owner’s offer of a license of the ʼ704 patent to expand in to the U.S. market.

Petitioner offered two main counterarguments (Order at 11):

  • Petitioner had no contact with Stalker other than when it contacted Stalker to obtain a reference relied upon in the Petition; and
  • The vendor-seller relationship with Stalker and other evidence presented by Patent Owner were insufficient (either alone or in combination) to show that Stalker had any control over the instant proceeding.

The Board agreed with Petitioner, finding that there was not enough evidence to support Stalker being a real-party-in-interest. The Board agreed with Petitioner’s arguments, above, and further noted that minor participation by a vendor (Stalker, in this case) is not enough to constitute control over the proceeding and Patent Owner’s other assertions were unsupported by evidence. Id. at 12.