Elekta, Inc. v. Varian Medical Systems, Inc., IPR2015-01401, Institution Decision, December 31, 2015.
On New Year’s Eve, the PTAB opted to permit petitioner Elekta to adjust the real parties in interest identified in its Petition without adjusting the filing date of the petition. This decision is in direct conflict with several other Board decisions that denied institution or otherwise terminated proceedings (e.g., Amazon v. Appistry, IPR2015-00480, July 13, 2015) based on real party in interest errors by petitioners. The Elekta decision recognizes that “[p]atent owners have capitalized on the rule [i.e., 35 U.S.C. § 312(a)] as a means for having petitions denied on a basis unrelated to the merits presented in the petitions.” Thus, the decision may signal a relaxation of the hardline stance taken by many panels on real party in interest issues over the last year.
As to the specifics in Elekta, Elekta’s petition named Elekta Ltd. And Elekta AB as the real parties in interest. Elekta Ltd. is a subsidiary of Elekta Holdings, which is wholly owned by Elekta AB. Thus, Elekta named the child and grandparent entities, but failed to name the intervening holding company Elekta Holdings as a real party in interest. As you may recall, this is almost exactly the issue that resulted in Amazon’s petition being dismissed in IPR2015-00480. Patent owner Varian argued in its Preliminary Response that the petition should be denied for not naming Elekta Holdings, as well as district court co-defendant William Beaumont Hospital, as real parties in interest. Following the Preliminary Response, Elekta requested leave to add Elekta Holdings as a real party in interest, and the Board granted that leave.
In the Institution Decision, the Board panel argued that 35 U.S.C. § 312(a) does not define jurisdiction with respect to IPR proceedings. (35 U.S.C. 312(a) states: A petition… may only be considered if… the petition identifies all real parties in interest.) The Board cited to the Supreme Court’s recognition of “untoward” and “drastic” consequences of characterizing a rule as jurisdictional and the Supreme Court’s desire to “bring some discipline to the use of the term jurisdiction.” The Board cited to Supreme Court language that stated that absent a Congressional statement that a rule is jurisdictional, “courts should treat the restriction as nonjurisdictional in character.” The Board stated that because “Congress has not clearly stated that it is jurisdictional, we treat § 312(a)’s ‘Requirements of the Petition’ as nonjurisdictional in character.”
Having found that they could permit a petition filing date to be maintained despite a real party in interest adjustment by the petitioner, the Board analyzed whether they should be so kind in the present case. The Board cited the Trial Practice Guide’s list of the core functions of the real party in interest requirement as: “to assist members of the Board in identifying potential conflicts, and to assure proper application of the statutory estoppel provisions.” The Board stated that “[a]bsent any indication of an attempt to circumvent estoppel rules, a petitioner’s bad faith, or prejudice to a patent owner caused by the delay, permitting a petitioner to amend challenged RPI disclosures while maintaining the original filing date promotes the core functions described in the Trial Practice Guide, while promoting also the ‘just, speedy, and inexpensive resolution of our proceedings.'” Finding no deceit by Elekta or prejudice to Varian, the Board permitted Elekta to add Elekta Holdings as a real party in interest without loss of the petition filing date. The Board further found that William Beaumont Hospital’s status as a codefendant in a district court proceeding where Elekta and the hospital shared counsel was, consistent with prior decisions, not sufficient to require the hospital to be added as a real party in interest.
This decision identifies continued conflict at the PTAB with regard to real party in interest issues. Real party in interest has been a mechanism for patent owners to avoid PTAB trials without addressing the merits of the case brought by the petitioner. Some have seen this as a loop hole that should be addressed by Congress. In the meantime, real party in interest issues will continue to be unpredictable, at least until the Board issues a precedential decision that clarifies the ongoing conflict across Board panels. For petitioners faced with real party in interest challenges, the Elekta decision provides a road map and precedent to cite in arguing that permission to adjust real parties in interest named in the Petition should be granted.