Will the Real Party-in-Interest Please Stand Up?

Will the Real Party-in-Interest Please Stand Up?

Anthony-DerosaBy Anthony P. DeRosa

Parties to an inter partes review (IPR) proceeding must identify all the real parties-in-interest.  37 C.F.R. § 42.8(b)(1).  This assists “members of the Board in identifying potential conflicts” and assures “proper application of the statutory estoppel provisions.”  Trial Practice Guide, 77 F.R. 48759 (Aug. 14, 2012).  It is the latter reason that is of real significance because it “seeks to protect patent owners from harassment via successive petitions by the same or related parties, to prevent parties from having a ‘second bite at the apple,’ and to protect the integrity of both the USPTO and Federal Courts by assuring that all issues are promptly raised and vetted.” Id.

A final written decision by the Patent Trials and Appeals Board (PTAB) estops not only the petitioner, but also any “real party-in-interest or privy of the petitioner,” from requesting or maintaining a proceeding before the USPTO “with respect to any ground that the petitioner raised or reasonably could have raised during the inter partes review.”  35 U.S.C. § 315(e)(1).  In addition, estoppel would apply in any related district court proceeding and any proceeding before the International Trade Commission.  35 U.S.C. § 315(e)(2).  This requirement is significant, as several IPRs have raised it as an issue.  See, e.g., Intellectual Ventures Management, LLC v. Xilinx, Inc. (IPR2012-00018); Innolux Corporation v. Semiconductor Energy Laboratory Co., Ltd. (IPR2013-00060) and Syntroleum Corporation v. Neste Oil Oyj (IPR2013-00178).

However, which parties may constitute a “real party-in-interest or privy of the petitioner” is not always clear. The America Invents Act (AIA) does not specifically define a “real party-in-interest” and “whether a party who is not a named participant in a given proceeding nonetheless constitutes a ‘real party-in-interest’ or ‘privy’ to that proceeding is a highly fact-dependent question” which will be handled by the Board on a case-by-case basis.  77 F.R. 48759 (Aug. 14, 2012) (citing Taylor v. Sturgell, 553 U.S. 880 (2008).  “Courts and commentators agree that there is no ‘bright-line test’ for determining the necessary quantity or degree of participation to qualify as a ‘real party-in-interest’ or ‘privy’…” See Message from Chief Judge James Donald Smith, here.

The USPTO has provided some guidance in the Practice Guide, however.  First, with respect to “real parties-in-interest,” since any entity (other than the patent owner) may file a petition for IPR; the “real party-in-interest” is the party that desires review of the patent.  In this regard, one can look to the Office’s prior application of similar principles in the pre-AIA inter partes reexamination context.  77 F.R. 48759 (Aug. 14, 2012).  On the other hand, the notion of “privy of the petitioner” is more expansive, and the Office intends to evaluate this question “in a manner consistent with the flexible and equitable considerations established under federal case law.”  Id.  There are “multiple factors relevant to the question of whether a non-party may be recognized as a ‘real party-in-interest’ or ‘privy,’” which include the non-party’s “relationship with the petitioner”; the non-party’s “relationship to the petition itself, including the nature and/or degree of involvement in the filing” (i.e., the amount of control and/or funding of the proceeding); and “the nature of the entity filing the petition.”  Id. at 48759-48760.

The bottom-line is petitioners should pay close attention to this “real party-in-interest” requirement.  Although it may seem to be straightforward, in most cases, it will be closely analyzed by the patent owner; as it is one of the arguments that may effectively be raised by a patent owner in challenging a petition.

The IPR papers are all available through the Patent Review Processing System (PRPS).