35 USC § 312(a)(2) requires that petitions for inter partes review (“IPR”) must identify all real parties in interest (“RPIs”). The Patent Trial and Appeal Board (“Board”) addressed this requirement in three recent decisions in Valeo North America etc. v. Magna Electronics, Inc., Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc., andAruze Gaming Macau, Ltd., v. MGT Gaming Inc.
In Valeo North America, a number of entities, including Valeo, Inc., filed an IPR petition against U.S. Patent No. 7,877,175, owned by Magna Electronics, Inc.1 In response, Magna argued that the petition was fatally deficient because it failed to identify all RPIs as required by 35 USC § 312(a)(2).2 In particular, Magna noted that about seven months prior to the petition being filed, Valeo, Inc. ceased to exist as a result of merger into Valeo North America, Inc.3 However, Valeo North America, Inc. was not named as a real party by the petitioners. Magna contended that at the time the petition was filed, the petitioners knew or should have known that Valeo, Inc. no longer existed.4 The petitioners responded that they were not aware of the name change at the time the petition was filed and promptly amended the petition.5 The petitioners also argued that this was a minor error “because the current entities are legal successors to their original entities.”6 Magna contended that neither the patent owner nor the public “should face an IPR filing by a non-existent party.”7 The Board acknowledged the petition “was technically in error in that it named Valeo, Inc., when at that time the correct name of the entity was Valeo North America, Inc.”8 The Board, however, held that “because Valeo North America, Inc. is the legal successor to Valeo, Inc., the Petition was correct substantially, in that it identified the real party of interest.”9 The Board ultimately declined to institute on substantive grounds.10
In Aruze, Aruze Gaming Macau, Ltd (“AGM”) filed an IPR petition challenging certain claims of U.S. 7,892,088 (the “‘088 patent”), which is owned by MGT Gaming, Inc. (“MGT”).11 The ‘088 patent was asserted against Aruze Gaming America, Inc. (“AGA”) in an action in the U.S. District Court for the Southern District of Mississippi, and the complaint was served on AGA more than one year prior to the filing of the IPR petition.12 MGT argued that AGA is either an RPI or a privy of AGM, and since AGA was served with the District Court action more than one year prior to the filing of the IPR petition, AGM’s IPR petition is barred by 35 U.S.C. §315(b).13
The Board first summarized the concepts of RPI and privity. Regarding RPI, the Board highlighted that “RPI is the relationship between a party and a proceeding; RPI does not describe the relationship between parties. . . . the Board’s focus was on the degree of control of the nonparty could exert over the inter partes review, not the petitioner.”14 The Board therefore held that the inquiry in determining whether a nonparty is an RPI is whether someone other than the named petitioner is litigating through a proxy.15 Regarding privity, the Board stated that, in contrast to the RPI inquiry, the privity inquiry focuses on the relationship between parties during the prior lawsuit, e.g., whether the IPR petitioner and the prior litigant’s relationship is sufficiently close that it can be fairly said that the petitioner has a full and fair opportunity to litigate the validity of the patent in the lawsuit.16
Next, the Board turned to MGT’s assertion that AGA was an RPI to the IPR petition at issue.17 According to the Board, MGT’s arguments for RPI fell into three categories. MGT’s first RPI argument related to the statements made by AGA in the District Court actions. There, AGA had stated that there were no known interested parties other than AGA and MGT; and AGA did not deny that it was the RPI in the infringement actions.18 In response, the Board commented that whether AGM is an RPI in the District Court action is not determinative of the question whether AGA is an RPI in this IPR petition. The Board noted that unless AGA controlled or otherwise influenced AGM’s IPR petition, AGA is not an RPI.19 MGT’s second argument focused on the corporate relationship between AGA and AGM. In particular, MGT argued that both AGM and AGA were wholly-owned and controlled by the same individual.20 The Board held that common ownership was irrelevant, as it did not prove that AGA could exercise control over AGM for purposes of filing the IPR petition. MGT’s final argument focused on a common corporate consciousness of AGA and AGM, e.g., on Aruze Gaming website, AGA and AGM are both listed as “Global Branches,” and AGM is referred to as an affiliate of AGA in a press release.21 The Board opined that neither the list of “Global Branches” nor the statement that AGM is AGA’s affiliate establish anything more than they are sister corporations.22 Hence, the Board determined the failure to name AGA as an RPI did not preclude institution of AGM’s petition.23
The Board then analyzed whether AGA and AGM are privies. MGT again focused on the common corporate consciousness.24 The Board found that the Aruze entities had not ignored the corporate form.25 Additionally, MGT relied upon the fact that AGM is represented by the same law firm in the IPR that represents AGA in the District Court action.26 In response, the Board held that there is no evidence showing that the common representation permits AGM to exercise control over the lawsuit.27 Based on the above, the Board concluded that AGM’s relationship with AGA is not sufficiently close with respect to the District Court action, and thus there is a reasonable likelihood that AGM is not a privy of AGA.28 The Board therefore held that the prior lawsuit served on AGA more than one year prior to the filing of the AGM’s IPR petition did not trigger the statutory bar of §315(b).29
Compared to the petitioners in Valeo North America and Aruze, the Board in Atlanta Gas Light Co. was not so accommodating, and arrived at a different outcome. InAtlanta Gas Light Co., the patent owner of U.S. Patent No. 5,810,029 (the “‘029 patent”), served Atlanta Gas Light Co. (“AGL”) with a lawsuit alleging patent infringement of the ‘029 patent.30 On July 3, 2013, the U.S. District Court dismissed AGL as a defendant for lack of personal jurisdiction.31 AGL filed an IPR petition challenging certain claims of the ‘029 patent on July 18, 2013, exactly one year after having been served in the related litigation.32 The petitioner identified AGL as an RPI. In a preliminary response, the patent owner contended that the petition failed to identity all RPIs, e.g., AGL’s parent company – AGL Recourses, Inc. (“AGLR”) and a sister company – AGL Services Co. (“AGLS”).33 The patent owner thus argued that the petition should be barred by 35 USC § 315(b), which bars petitions filed “more than 1 year after the date on which the petitioner, RPI, or privy of the petitioner is served with a complaint alleging infringement of the patent.”34 Despite the patent owner’s argument, the Board instituted the IPR contending that “the patent owner provides no persuasive evidence that the petitioner could have exercised control over the third party’s participation in the inter partes review at the time of service of the complaint upon the third party.”35 Even though it instituted the proceeding, the Board allowed discovery into the RPI issue.
AGL described itself as a direct, wholly owned subsidiary of AGLR and identified AGLR as “a holding company that does not have employees and conducts substantially all of its operations through its subsidiaries.”36 AGL also contended that “AGLR does not control the day-to-day activities of its subsidiaries and holds separate corporate books and meetings.”37 AGL contended that AGLS provides support services, and AGL dictates “‘what they want and what they need’ in the form of support services from AGLS.”38 Despite the fact that “certain functions are assigned to the different entities,” the Board found that “they are referred to casually, both internally and externally, by the umbrella designations ‘AGL’ or ‘AGL Resources.’”39 The Board stated this was an example of “corporate blurring.”40 The Board also considered evidence showing the involvement of AGLR and AGLS in AGL’s licensing negotiations with McJunkin Red Man Corporation (“MRMC”) as relevant to the question of privity.41 For example, the Board considered correspondence exchanged between MRMC and Mr. Schnorr, who AGL identified as the Vice President Supply Chain and Fleet for AGL and other AGLR subsidiaries.42 This correspondence was written on AGLR letterhead, even though the body of the correspondence identified AGL as the party with whom MRMC was negotiating.43 During his deposition, Mr. Schnorr testified that he had access to AGL letterhead but did not know specifically whether he had written letters on AGL letterhead, arguing that it would depend on what company he was representing at the time.44 The Board also considered the title of Mr. Schnorr on social media as relevant to the question of privity. Mr. Schnorr identified himself as Vice President, Supply Chain & Fleet at AGLR on LinkedIn as well as on his business cards – including an email address with “@aglrescources.com.”45 Other facts considered by the Board included that Mr. Schnorr testified that his paycheck comes from AGLR46 and that an employee of AGLS and an officer of AGLR assisted the preparation of a letter, signed by Mr. Schnorr, which included statements supporting AGL’s sole involvement in this petition and which had been drafted in response to a letter addressed to Mr. Schnorr in his capacity at AGLR.47 Finally, the Board also noted that it remains unclear who had paid the filing fees and legal expenses associated with the petition.48
In its decision, the Board defined an RPI in an IPR petition as “a party that ‘desires review’ of the patent at issue, and ‘may be the petitioner itself, and/or it may be the party or parties at whose behest the petition has been filed.’”49 The Board held that the burden is on the petitioner to establish that it has identified all RPIs if a patent owner provides sufficient rebuttal evidence that reasonably raises a question as to the accuracy of identification of RPIs.50 For purposes of this analysis, the panel seems to have adopted the factors set forth in Taylor v. Sturgell,51 as relevant to whether an unnamed entity is an RPI. Those factors include: “(1) whether the third party agrees to be bound by the determination of issues in the proceeding; (2) whether a pre-existing substantive legal relationship with the party named in the proceeding justifies binding the third party; (3) ‘in certain limited circumstances,’ whether the third party is adequately represented by someone with the same interests; (4) whether the third party exercised or could have exercised control over the proceeding; (5) whether the third party is bound by a prior decision and is attempting to rehear the matter through a proxy; and (6) whether a statutory scheme forecloses successive hearing by third parties.”52 While the Board held that the fourth factor, i.e., the “control concept,” is a common focus of inquiry, there is no bright-line test based on the “control concept.”53
Ultimately, the Board held that “[r]ather than maintaining well-defined corporate boundaries, AGLR . . . [ALG,] and AGLS are so intertwined that it is difficult for both insiders and outsiders to determine precisely where one ends and another begins. Indeed, use of the umbrella term ‘AGL Resources’ in referring to AGLR and its subsidiaries – on letterheads, email addresses, website addresses, etc. – encourages the perception that AGLR and its subsidiaries function as a single entity.”54 The Board thus concluded that AGLR is indeed an RPI.55 Accordingly, the Board held that the petition may not be considered as incomplete for failing to identify at least AGLR.56 The Board terminated the proceeding and vacated its institution decision.57
The Board did consider the petitioner’s request to correct the petition pursuant to 37 CFR §42.106(b).58 The Board declined the petitioner’s requested remedy for two reasons. First, the Board was “not aware of any instance in which the Board has granted such an authorization [an authorization to amend an incomplete petition under 37 CFR §42.106(b)] after trial institution.”59 The Board also noted that the petitioner did not request such an authorization to correct its petition before the trial was instituted, even though the petitioner was aware of the patent owner’s challenge on its identification of RPI.60 According to the Board, the petitioner at best has suggested the correction of the petition as a potential remedy after the institution of trial without “actively and affirmatively seeking authorization to make such a correction and while simultaneously resisting acknowledging that AGLR is a real party in interest.”61 Hence, the Board concluded that the petitioner “has failed to take the necessary steps to put the merits of its position squarely before us.”62 Second, the Board opined that since the petition was filed exactly one year after being served, even if a correction of petition under 37 CFR §42.106(b) was allowed and a new filing date was set as of the filing date of the correction, the corrected petition would be barred under 35 USC § 315(b).63
These decisions confirm the importance of identifying all RPIs in the filing of an IPR petition. As shown in Atlanta Gas Light Co., the consequences of misidentification, even if done inadvertently, can have severe repercussions.