In IPR2014-01201, Patent Owner ThermoLife International, LLC sought discovery regarding whether Purus Labs, Inc., a company related to the Petitioner John's Lone Star Distribution, Inc., should have been identified as a real party-in-interest. Specifically, the Patent Owner sought documents:
- "showing the corporate and management structure of Purus Labs, including any Lone Star personnel who participate in the management or corporate decision-making of Purus Labs,"
- "identifying the persons who provided direction to, or had the authority to provide direction to, Lone Star's counsel in this IPR, including the persons who reviewed, or were given the opportunity to review, the papers filed in this IPR," and
- "showing communications by or to directors, officers, or executives of Purus Labs and Lone Star regarding this IPR, including any Purus Labs Board minutes regarding such communications."
As explained below, the Board ultimately granted limited documentary discovery of Petitioner on this issue, but denied for the time being any depositions.
The Board began its analysis by discussing the limited nature of discovery in IPR proceedings:
Certain discovery is available in inter partes review proceedings. 35 U.S.C. § 316(a)(5); 37 C.F.R. §§ 42.51-53. Such discovery, however, is less than what is normally available in district court patent litigation, as Congress intended inter partes review to be a quick and cost-effective alternative to litigation. See H. Rep. No. 112-98, at 45-48 (2011). A party seeking discovery beyond what is expressly permitted by rule must do so by motion, and must show that such additional discovery is "necessary in the interest of justice." 35 U.S.C. § 316(a)(5); 37 C.F.R. § 42.51(b)(2)(i). The legislative history of relevant statutes clarifies that additional discovery should be confined to "particular limited situations, such as minor discovery that PTO finds to be routinely useful, or to discovery that is justified by the special circumstances of the case." 154 Cong. Rec. S9988 (daily ed. Sept. 27, 2008) (statement of Sen. Kyl). In light of this, and given the statutory deadlines required by Congress for inter partes review proceedings, we are conservative in authorizing additional discovery.
The Board cited the following facts in support of its decision granting the additional discovery into the real party-in-interest:
- That, according to the Texas Secretary of State documents, Petitioner's President, CEO and Founder acts one of three Directors for its related company
- That, according to the Texas Secretary of State documents, Petitioner's CFO acts as one of one of three Directors for its related company
- That Petitioner and its related company share the same business address
- That the Petitioner's President is the registered owner of the commercial property at the common business address
- That Petitioner and its related company use the same attorney for their agent for service of process and this attorney is also Petitioner's general counsel
- That Petitioner and its related company and have used the same counsel in litigation involving the patent at issue
In opposing the motion, the Petitioner pointed out that:
- Patent Owner has not provided any evidence that Petitioner's related company controls the IPR proceeding
- The related company's president and CEO has no involvement with or control over the management of Petitioner
- The Petitioner's president does not control the management of the related company, other than in his role as a director
- Petitioner has other office space not shared with its related company
Notably, the Petitioner relied on a declaration from its President to support its opposition. However, when the Board indicated that he could be deposed over his declaration as part of routine discovery, the Petitioner indicated that it would not make him available for deposition. As a result, the Board granted the Patent Owner's motion to strike the declaration and expunged it from the record.
In view of these facts, the Board granted discovery regarding "documents that indicate a corporate structure that differs from that presented in Ex. 2005...as well as documents that indicate the duties and responsibilities of the President and Directors of [the related company] as of the Petition filing date of July 23, 2014."
The Board reasoned that:
The corporate and management structure of Purus is relevant to an inquiry regarding the company's status as a real party-in-interest, as the structure may provide information regarding the relationship of Purus management to the Petition. See ZOLL Lifecor Corp. v. Philips Elec. N. Am. Corp., Case IPR2013-00606, slip op. at 8 (PTAB Mar. 10, 2014) (Paper 13) (indicating that relevant factors regarding real party-in-interest include a non-party's relationship with petitioner; the non-party's relationship to the petition itself, including nature and/or degree of involvement in filing; and nature of the entity filing petition) (citing Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,760 (Aug. 14, 2012));Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc., Case IPR2013-00453, slip op. at 11 (PTAB Jan. 6, 2015) (Paper 88) (determining that "[r]ather than maintaining well-defined corporate boundaries, [the parent and its subsidiaries] are so intertwined that it is difficult for both insiders and outsiders to determine precisely where one ends and another begins").
The Board also granted discovery "in the form of a list, to be prepared by Petitioner, identifying persons who provided direction to, or had the authority to provide direction to, Petitioner or its counsel in relation to this proceeding, including persons who reviewed, or were given the opportunity to review, papers filed in this proceeding."
Finally, the Board authorized discovery "in relation to documents in Petitioner's possession showing communications between (i) [Petitioner's owners], other employees of Petitioner, or Petitioner's counsel, and (ii) [related company's president] and/or any other Directors, officers, or executives of [the related company] other than [its directors who also serve as Petitioner's President and CFO], regarding the current proceeding."
Perhaps ominously foreshadowing the possible result of this discovery, the Board authorized that "[w]ithin one week thereafter, e.g., two weeks from the date of this Order, Patent Owner may, if it wishes, request authorization to file a motion to dismiss the Petition for failure to name all real parties-in-interest."
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This decision highlights that under certain circumstances the Board will allow discovery into the real party-in-interest. In this case, the number of common or overlapping ties between the Petitioner and its related company were enough that the Board determined that the additional discovery was warranted. In other proceedings, other PTAB panels have denied such discovery where the patent owner was not able to provide any evidence of the overlapping management of the petitioner and an unnamed party other than the patent owner's speculation. John's Lone Star Distribution, Inc. v. Thermolife International, LLC, Case IPR2014-01201 (PTAB May 13, 2015) (Paper 29) (A.P.J. Bonilla)