Failing to identify all real parties of interest in a petition can have disastrous consequences for an IPR petitioner. Just days after we discussed a case where the Board found that a petitioner identified, in substance, all real parties in interest despite omitting an entity who should have been identified, it appears that the petitioner in another, separate proceeding had a less fortunate fate.
In Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc., petitioner listed Atlanta Gas Light Co. (“AGL”) as a real party in interest. See IPR2013-00453. In its preliminary response, patent owner argued that AGL failed to list all real parties in interest. The PTAB instituted the IPR nevertheless, calling patent owner’s contentions “speculative” and with “insufficient evidence.” See IPR2013-00453, No. 31 Institution Decision at 12 (P.T.A.B. Jan. 22, 2014). The proceeding moved forward but discovery into the issue was allowed.
Over the course of the proceeding it was found that AGL is a subsidiary of a larger company called AGL Resources, Inc. (“AGLR”). According to the filings, AGLR is merely a holding company, with no employees, and which “conducts substantially all of its operations through its subsidiaries.” See IPR2013-00453, No. 62 Reply at 17 (P.T.A.B. Jul. 30, 2014). The holding company also had several other subsidiaries, one of which was AGL Services Company (“AGLS”). See Organization Hierarchy below. According to Petitioner, AGLS merely provided “legal, supply chain, [and] facilities” support services to the subsidiaries. See id. at 17-18.
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Organization Hierarchy of Petitioner in Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc.
However, despite the alleged clean hierarchy and division of responsibilities, the PTAB found that internally, there was a significant amount of “corporate blurring.” See IPR2013-00453, No. 88 Termination (P.T.A.B. Jan. 6, 2015). According to the PTAB, evidence showed that parties from AGLR and AGLS were involved in licensing negotiations over the patent challenged in the proceeding: email addresses of different subsidiaries were used interchangeably; a Vice President had access to both ALGR and AGL’s letterhead, but did not “know specifically” which letterhead he used; and the company listed on the Vice President’s LinkedIn page was ambiguous. Id. at 4.
After reviewing the evidence, the PTAB held that AGLR is a real party in interest. In its decision terminating the proceeding, the Board provided guidance on what constitutes a real party in interest in IPR proceedings. Citing a 2008 Supreme Court decision, the PTAB outlined six factors relevant to the inquiry, focusing largely on factor four “whether the third party exercised or could have exercised control over the proceeding.” See id. at 9 (citingTaylor v. Sturgell, 533 U.S. 880 (2008)). However, the Board made clear that no one factor was outcome determinative. In its analysis, the Board discussed the corporate blurring between the parties:
Rather than maintaining well-defined corporate boundaries, AGLR, [AGL], 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.
See id. at 11.
Ultimately, the Board held that AGLR “possessed sufficient control” over the IPR proceeding, and, applying the Taylor factors, held AGLR is a real party in interest. Id. at 12.1 Accordingly, the Board found that the Petition is incomplete, and, pursuant to 35 U.S.C. § 312(a)(2), may not be considered and thus terminated the proceeding and vacated its institution decision.
The moral of the Atlanta Gas decision is to be careful that you list all real parties in interest in your petition. If a parent or sister company is omitted, even if done inadvertently, the Board has shown that it is willing to shut down the proceeding where there is significant blurring between entities.