Samsung Elecs. Co. v. Black Hills Media, LLC; Medtronic, Inc. v. Robert Bosch Healthcare Sys., Inc.

Two recent decisions from the Patent Trial and Appeal Board (PTAB or Board) clarify the test for identifying the real party in interest.  Both decisions addressed situations in which inter partes review (IPR) petitions supposedly omitted a real party in interest, an error that could be grounds for the PTAB to deny institution.  In Samsung, the PTAB determined that an indemnification clause and a motion to intervene in an International Trade Commission (ITC) proceeding did not show that indemnitor (Google) was a real party in interest.  In Medtronic, the PTAB determined that additional discovery was warranted when earlier IPR proceedings involved the same patents, the same counsel and similar prior art, but those earlier IPR proceedings identified an additional real party in interest.  Together, these two decisions illuminate the PTAB’s views on the strength of various types of evidence, as well as the role of “control,” in identifying real parties in interest.  Samsung Elecs. Co. v. Black Hills Media, LLC, IPR2014-00737 (PTAB, Nov. 4, 2014) (Hulse, APJ); Medtronic, Inc. v. Robert Bosch Healthcare Sys., Inc., IPR2014-00488; -00607 (PTAB, Nov. 5, 2014) (Arbes, APJ).

In Samsung, the patent owner, Black Hills, argued that the PTAB should deny Samsung’s petition for failing to identify Google as the real party in interest.  Black Hills based its argument on two pieces of evidence: a Google and Samsung distribution agreement containing an indemnification clause, under which Google agreed to “defend, or at its option settle, any third party lawsuit or proceeding brought against Samsung”; and Google’s motion to intervene in a related ITC investigation.  As the Board explained, whether a non-party is a real party in interest depends on whether the non-party “exercised or could have exercised control over a party’s participation in a proceeding” and “the degree to which a non-party funds, directs and controls the proceeding.”

Here the Board concluded that neither the distribution agreement or the ITC motion to intervene made Google a real party in interest.  The indemnification clause did not grant Google control over Samsung’s actions in the IPR.  Further, the motion to intervene in the ITC proceeding was a mere “expression of an interest” by Google, and did not show that Samsung and Google’s interests were aligned.  The PTAB therefore determined that the petition had adequately identified all real parties in interest.

In Medtronic, the PTAB addressed a different situation.  Medtronic, the petitioner, named itself as the sole real party in interest, but omitted Cardiocom, one of Medtronic’s subsidiaries.  In two earlier IPR petitions—which were similar to the instant IPR petitions in that they challenged the same patents, shared the same counsel and declarant, and relied on similar prior art and arguments—both Medtronic and Cardiocom were named as real parties in interest.  In order to more fully understand whether Cardiocom should have been identified in the instant petitions, Bosch propounded discovery requests seeking communications between Cardiocom and Medtronic.

The PTAB ultimately granted Bosch’s motion for the additional discovery, citing various factors including whether the additional discovery would be “useful”; i.e., more than merely “relevant” or “admissible,” but “favorable in substantive value.”  Because Cardiocom was identified as a real party in interest in the earlier and similar IPR petitions, the PTAB determined that there was “more than a mere possibility” that the additional discovery would be “useful.”

Practice Note:  These two decisions also reveal the various roles that “control” plays in identifying real parties in interest.  In Samsung, the PTAB relied almost exclusively on a lack of “control” in deciding that Google was not a real party in interest.  In contrast, in Medtronic, the PTAB granted Bosch’s motion for additional discovery despite the fact there was obviously no evidence to the effect that (the subsidiary) Cardiocom controlled (the parent) Medtronic.