Source: http://www.jdsupra.com/legalnews/privity-and-its-strategic-implications-i-18554/
Timestamp: 2014-08-01 03:52:25
Document Index: 530359731

Matched Legal Cases: ['§ 315', '§ 4451', '§ 315', '§ 315', '§ 18', '§ 42', '§ 325', '§ 42', '§ 315', '§ 325', '§ 18', '§ 42', '§ 42', '§ 315', '§ 325', '§ 18', '§ 4451']

Privity and Its Strategic Implications in PTAB Trials | Baker Botts - JDSupra
John Gaustad, Eliot Williams | Baker Botts
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A party is served with a complaint alleging patent infringement.
The party and those who are privy with that party will be barred from instituting an IPR of that patent unless the entity (1) petitions for review within one year of service of complaint on the party, or (2) requests joinder with a pending IPR within one month of its institution.
A party is charged with infringement.
The party and those who are privy with that party will have standing to file a petition for CBMR.
A party files an IPR/PGR petition that is granted or joins a pending IPR/PGR.
The party and those who are privy with that party will be estopped,15 once the IPR/PGR proceeding reaches a final written decision, from raising in the district courts, ITC, or PTO any grounds of unpatentability that were raised or reasonably could have been raised in the IPR/PGR proceeding.
A party files a CBMR petition that is granted or joins a pending CBMR.
The party and those who are privy with that party will be estopped, once the CBMR proceeding reaches a final written decision, from raising in the PTO any grounds of unpatentability that were raised or reasonably could have been raised in the CBMR proceeding.
Other factors recognized by the Supreme Court as relevant to deciding privity in the res judicata context, which serves as the rationale for the bar and estoppel provisions,30 include (1) agreements to be bound;31 (2) pre-existing “substantive legal relationships;” (3) adequate representation by parties with the same interests; (4) relitigating through proxies; and (5) special statutory schemes that “expressly foreclose successive litigation by nonlitigants.”32 Although the PTAB has opined on each of these factors, it has stated that neither indemnity agreements nor joint-defense groups (together or by themselves) are sufficient produce “substantive legal relationships.”33
1Data compiled from here (petitions filed through 12/31/2013). Approximately 8200 patent litigations were filed in the district courts over the same period. See here (NOS=830).
2In the context of inter partes review and post-grant review proceedings, “at a general level, the ‘real party-in-interest’ is the party that desires review of the patent. . . . Similar considerations apply to [covered business method review] proceedings . . . . Office Patent Trial Practice Guide; Rule, 77 Fed. Reg. 48,756, 48,759 (Aug. 14, 2012) [hereinafter “Trial Practice Guide”].
335 U.S.C. § 315(a)(1).
4With regard to IPR and PGR proceedings, “at a general level, the ‘real party-in-interest’ is the party that desires review of the patent. Thus, the ‘real party-in-interest’ may be the petitioner itself, and/or it may be the party or parties at whose behest the petition has been filed. . . . Similar considerations apply to CBM proceedings . . . .” Trial Practice Guide at 48,759. Although “[t]he notion of ‘privity is more expansive,” a common factor in evaluating privity and real party-in-interest relationships is “whether the non-party exercised or could have exercised control over a party’s participation in a proceeding.” Id. (citing Taylor v. Sturgell, 553 U.S. 880, 895 (2008); 18A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE & PROCEDURE § 4451 (2d ed. 2011)). The PTO has indicated, however, that there may be situations in which a party is not in privity with a petitioner but is a real party-in-interest. See id. at 48,760 (“For example, a party that funds and directs and controls an IPR or PGR petition or proceeding constitutes a ‘real party-in-interest,’ even if that party is not a ‘privy’ of the petitioner.”). Although this article focuses on determining whether one party is in privity with another, whether the party is a real party-in-interest is an important and closely-related consideration.
5The PTAB has strictly interpreted the statutory language of the “filed” provision applicable to defendants and the “served” provision applying to patent owners. See Anova Food, LLC v. Sandau, Case IPR2013-00114, Paper No. 17, at *5-6 (P.T.A.B. Sept. 13, 2013) (Decision, Denying Inter Partes Review). Dismissal of the original district court action without prejudice, however, resets the bar provision. Compare BAE Sys. Info. v. Cheetah Omni, LLC, Case IPR2013-00175, Paper No. 15, at *3 (P.T.A.B. July 3, 2013) (Decision, Institution of Inter Partes Review) (“[A] voluntary dismissal of an infringement action nullifies the effect of the alleged service of the complaint on the petitioner.” (citations omitted)), with Universal Remote Control, Inc. v. Universal Electronics, Inc., Case IPR2013-00168, Paper No. 9, at *5-6 (P.T.A.B. Aug. 26, 2013) (Decision, Denying Inter Partes Review) (denying review because a complaint served on the petitioner more than one year before the filing date of the petition had been dismissed with prejudice, despite service of a second, pending complaint).
6St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., Case IPR2013-00258, Paper 29, at *3 (P.T.A.B. Oct. 16, 2013) (Decision, Denying Institution of Inter Partes Review).
735 U.S.C. § 315(b).
835 U.S.C. § 315(b); 37 C.F.R. 42.122(b); see also Apple, Inc. v. Grobler, Case IPR2014-00061, Paper No. 10 (P.T.A.B. Oct. 29, 2013) (denying petitioner’s motion for joinder after the one month window had passed).
9See America Invents Act of 2011, Pub. L. 112-29 (hereinafter “AIA”) § 18(a)(1)(B); 37 C.F.R. § 42.302.
10See 35 U.S.C. § 325(a)(1). The party is also barred from filing a PGR petition if the party’s real party-in-interest, or privy of the party “is estopped from challenging the claims on the grounds identified in the petition.” 37 C.F.R. § 42.201(b).
1135 U.S.C. § 315(e)(1) (IPR); 35 U.S.C. § 325(e)(1) (PGR); AIA § 18(a)(1) (CBM); 37 C.F.R. § 42.73(d)(1) (estoppel before the Patent Office). However, “estoppel shall not apply to a petitioner, or to the real party in interest or privy of the petitioner who has settled under 35 U.S.C. 317 or 327.” 37 C.F.R. § 42.73(d)(1). The PTAB has declined to review some asserted grounds of invalidity as cumulative, despite arguments that this could result in future estoppel against the petitioning party. See Amkor Tech., Inc. v. Tessera, Inc., Case IPR2013-00242, Paper 82, at *4 (P.T.A.B. Jan. 10, 2014) (Decision, Request for Rehearing).
1335 U.S.C. § 315(e)(2) (inter partes review); id. § 325(e)(2) (post-grant review). 14See AIA § 18(a)(1)(D).
15Assignor estoppel, which “‘prohibits an assignor of a patent or patent application, or one in privity with [the assignor], from attacking the validity of that patent when [the assignor] is sued for infringement by the assignee[,]’” is not a defense to inter partes review. Redline Detection, LLC v. Star Envirotech, Inc., Case IPR2013-00106, Paper 31, at *4 (P.T.A.B. Aug. 27, 2013) (Decision, Motion for Additional Discovery) (quoting Semiconductor Energy Lab. Co. v. Nagata, 706 F.3d 1365, 1369 (Fed. Cir. 2013)).
16Trial Practice Guide at 48,759. Although the PTAB looks to Federal caselaw in deciding whether parties are in privity, it looks to state law to decide issues of successor liability. See Anova Food, LLC v. Sandau, Case IPR2013-00114, Paper No. 17, at *7 (P.T.A.B. Sept. 13, 2013) (Decision, Denying Inter Partes Review).
17Id. (citing 154 CONG. REC. S9987 (daily ed. Sept. 27, 2008) (statement of Sen. Kyl)).
18Id. (citing Taylor v. Sturgell, 553 U.S. 880, 893-95 & n.6 (2008)). 19Id. at 48,760.
20Id. These facts include a party’s “relationship with the petitioner; [a party’s] relationship to the petition itself, including the nature and/or degree of involvement in the filing; and the nature of the entity filing the petition.” Id.
21Id. at 48,759 (citing Taylor, 553 U.S. at 893-95; 18A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE & PROCEDURE § 4451 (2d ed. 2011)).
22See, e.g., Innolux Corp. v. Semiconductor Energy Lab. Co., IPR2013-00028, Paper 27, at *4 (P.T.A.B. Apr. 30, 2013) (Decision, Request for Rehearing) (noting that, in response to a patent owner’s argument that the one-year bar applied to a petitioner, the patent owner had failed to establish privity “on the date of service of the complaint”); Synopsys, Inc. v. Mentor Graphics Corp., Case IPR2012-00042, Paper 16, at *16 (P.T.A.B. Feb. 22, 2013) (Decision, Institution of Inter Partes Review) (noting that the petitioner had not acquired a defendant in prior district court litigation at the time the complaint was served and that there was insufficient evidence demonstrating the one-year bar applied to the petitioner); Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc., Case IPR2013-00453, Paper 31, at *15 (P.T.A.B. Jan 22, 2014) (Decision, Institution of Inter Partes Review) (refusing to reach the question of control because the petitioner’s basis for privity, “provisions of [a] supply agreement, did not go into effect until service was effected on Petitioner[.]”).
23See Synopsys, Case IPR2012-00042, Paper 16, at *17 (citing Int’l Nutrition Co. v. Horphag Research, Ltd., 220 F.3d 1325, 1329) (Fed. Cir. 2000)).
24See Chi Mei Innolux Corp. v. Semiconductor Energy Lab. Co., Case IPR2013-00028, Paper No. 14, at *6-7 (P.T.A.B. Mar. 21, 2013) (Decision, Institution of Inter Partes Review); see also Innolux Corp, Case IPR2013-00028, Paper No. 27, at *4-5 (citing Int’l Nutrition, 220 F.3d at 1329).
25See BAE Info. & Electr. Sys. Integration, Inc. v. Cheetah Omni, LLC, Case IPR2013-00175, Paper 15, at *5 (P.T.A.B. July 3, 2013) (Decision, Institution of Inter Partes Review) (citing Int’l Nutrition, 220 F.3d 1325 at 1329; Shamrock Techs., Inc. v. Med. Sterilization, Inc., 903 F.2d 789, 793 (Fed. Cir. 1990)); Broadcom Corp. v. Telefonaktiebolaget LM Ericsson (PUBL), Cases IPR2013-00601, IPR2013-00602, IPR2013-00636, Paper 23, at *7-8 (P.T.A.B. Jan. 24, 2014) (Decision, Ericsson’s Motion for Additional Discovery) (citing Bros, Inc. v. W.E. Grace Mfg. Co., 261 F.2d 428, 429 (5th Cir. 1958)).
26See Hewlett-Packard Co. v. MCM Portfolio, LLC, Case IPR2013-00217, Paper 10, at *8 (P.T.A.B. Sept. 10, 2013) (citing Synopsys, Case IPR2012-00042, Paper 16, at *17; see also Hewlett-Packard Co. v. Tech. Props. Ltd. LLC, Case IPR 2013-00217, Paper 19, at *2-3 (P.T.A.B. Oct. 10, 2013) (Decision, Request for Rehearing). The customer-petitioner, HP, was reselling products made by the manufacturer-defendant Pandigital, Inc., whom the patent owner alleged was a privy of HP by virtue of that relationship. See id.
27See BAE Info. & Electronic Sys. Integration, Inc., Case IPR2013-00175, Paper 15, at *5 (citing Int’l Nutrition, 220 F.3d at 1329).
28See Broadcom Corp., Cases IPR2013-00601, IPR 2013-00602, IPR 2013-00636, Paper 23, at *7-13.
29See Id. at *13. The PTAB found that these facts failed to demonstrate anything more than the “mere possibility” of privity, which is an insufficient basis for a discovery request in PTAB trials. See id. at *6 (citing Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-000001, Paper 20, at *2-3 (P.T.A.B. Jan. 24, 2014) (Order, Authorizing Motion for Additional Discovery).
30See generally Trial Practice Guide at 48,759.
31Several district courts have granted stay requests related to pending PTAB trials when the requesting party agrees to be bound by arguments actually raised during those proceedings. See, e.g., Comcast Cable Commc’ns, LLC v. Bear Creek Techs., Inc. (In re Bear Creek Techs. Inc.), MDL No. 12-md-2344 (GMS), 2013 WL 3789471, at *4 (D. Del. Jul. 17, 2013) (order granting motion to stay); eWatch, Inc. v. Lorex Canada, Inc., No. H-12-3314, 2013 WL 5425298, at *4 (S.D. Tex. Sept. 26, 2013) (same); eWatch Inc. v. Avigilon Corp., No. H-13-0347, 2013 WL 6633936, at *2 (S.D. Tex. Dec. 17, 2013) (same); AIP Acquisition LLC v. Level 3 Commc’ns, LLC, No. 12-617-GMS, at *5 (D. Del. Jan. 9, 2014) (same). At least one district court, however, has imposed a broader estoppel provision than originally proposed by a party requesting a stay. The party expressed a willingness to be estopped “on the same grounds and based on the same combinations of prior art asserted by [the petitioner in a PTAB trial] and used by the USPTO in its findings[,]” but the court estopped the requesting party from arguing any ground that the petitioner “raised or reasonably could have raised[.]” See e-Watch, Inc. v. FLIR Sys., Inc., No. 4:13-00638, at *2 (S.D. Tex. Aug. 8, 2013) (order granting motion to stay); see also e-Watch, Inc. v. FLIR Sys., Inc., No. 4:13-00638, at *1 (S.D. Tex. Sept. 27, 2013) (order denying motion for clarification of the order granting the stay).
32See Taylor v. Sturgell, 553 U.S. 880, 893-95 (2008). These factors, however, to not “establish a definitive taxonomy.” See id. at 893 n.6.
33Broadcom Corp., Cases IPR2013-00601, IPR 2013-00602, IPR 2013-00636, Paper 23, at *7-11 (PTAB Jan. 24, 2014).
34Outside of the context of PTAB trials, one district court has stated that, “[t]o the [c]ourt’s knowledge, no court has held that the existence of a joint defense agreement, as a matter of law, establishes privity.” Universal Engraving, Inc. v. Metal Magic, Inc., No. CV-08-1944-PHX-GMS, 2010 WL 4922703, at *18 (D. Ariz. Nov. 29, 2010). That decision did note at least one other case, however, in which privity was found where a “defendant and a third-party were parties to an Indemnification Agreement that gave the third-party ‘ample incentive to defend their joint interest vigorously[,]” and the defendant and third-party shared counsel. Id. (citing Asahi Glass Co v. Toledo Eng’g Co., 505 F. Supp. 2d 423, 434-35 (N.D. Ohio 2007)).
Topics: Patent Litigation, Patent Trial and Appeal Board, Patents, Privity of Contract, USPTO
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