Legend3D Inc. v. Prime Focus Creative Services Canada Inc.

Addressing the standing requirement for participating in an inter partes review (IPR), the U.S. Patent Trial and Appeal Board (PTAB or Board) held that, unlike district court, there is no “exclusive ownership” requirement for a patent owner to participate in an IPR proceeding. Legend3D Inc. v. Prime Focus Creative Services Canada Inc., IPR2015-01350 (PTAB, Nov. 19, 2015) (Kinder,  APJ).

The petitioner, Legend3D, filed a petition to institute an IPR, Prime Focus Creative Services Canada (PFCSC) filed a power of attorney designating certain practitioners as counsel of record, along with a statement under 37 C.F.R. 3.73(b) detailing ownership changes of the patent at issue. PFCSC’s preliminary response stated that it is the patent owner and that Legend3D’s petition should be denied or dismissed for failing to identify all of the real-parties-in-interest. Specifically, PFCSC argued that two entities—Northwater Capital and Augustus Ventures – have a substantial financial interest in Legend3D and therefore these companies could have exercised control over the Petition.

As part of its response, Legend3D challenged PFCSC’s standing to participate in the IPR, arguing that a security agreement purportedly transferred title of the patent from PFCSC to a financial institute. According to Legend3D, the conveyed interest is actually a mortgage, which resulted in a full transfer of title and ownership of the patent at issue. Citing Waterman v. Mackenzie, Legend3D argued that because the financial institute is the only rightful patent owner, it must be a party to the IPR, so PFCSC lacks standing to file a preliminary response.

The Board rejected the petitioner’s reliance on Waterman, explaining that Waterman only addresses the issue of standing to bring a patent infringement suit in district court. By contrast, there is no similar exclusive ownership requirement for a patent owner to prosecute an IPR proceeding before the U.S. Patent and Trademark Office (USPTO). Rather, pursuant to 37 C.F.R. §42.9 “[a]n owner of a part interest in the subject patent may move to act to the exclusion of an inventor or a co-owner” where a co-owner is unable or refuses to prosecute the proceeding. The Board determined PFCSC, as the patent owner, met the requirements to participate in the IPR by filing the appropriate notices identifying itself as the patent owner and real-party-in-interest and identifying lead counsel.

The Board also noted the petitioner’s request for additional discovery on the standing issue was “troubling” because discovery for an IPR does not being until a trial is instituted. Any pre-institution discovery must be closely scrutinized. At this point, the petitioner did not persuade the Board, beyond speculation, that additional discovery will establish that PFCSC does not have a right to participate in the proceedings.