35 U.S.C. § 315(b) precludes institution of an inter partes review petition “if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” If the Patent Trial and Appeal Board (“PTAB”) finds that the petitioner has not identified a real party in interest or that the petitioner is a privy of a non-party served with the complaint more than one year before the filing date of the petition, the PTAB can deny institution or terminate an instituted petition.1 Such a finding has dire consequences—the petitioner would be barred from filing a new petition on the challenged patent.2Accordingly, petitioners and patent owners should understand who bears the burden of establishing a real party in interest or privity both pre- and post-institution.
Burden of Establishing that Petitioner Identified All Real Parties in Interest
Early PTAB orders inferentially suggest that the patent owner bears the burden of persuasion to establish that the petitioner failed to name a real party in interest.3In Intellectual Ventures Mgmt., LLC v. Xilinx, Inc., petitioner Intellectual Ventures Management identified itself as the real party in interest, and Xilinx argued in its preliminary response that Intellectual Ventures Management failed to identify all real parties in interest.4 Xilinx based that argument on a certificate of interested entities filed in a district court litigation identifying 63 entities allegedly having an interest in the subject matter or a party in that litigation.5 In a pre-institution order, the PTAB held that “Xilinx has failed to sufficiently demonstrate that [Intellectual Ventures Management] has not named all real parties in interest.”6Throughout the order, the PTAB stated that Xilinx had not shown or demonstrated sufficient facts to justify a finding that Intellectual Ventures Management failed to name all real parties in interest.7 Those repeated statements suggest that the patent owner bears the burden of persuasion to establish that the petitioner did not name all real parties in interest at the pre-institution stage.
Recent PTAB orders, however, have rejected arguments that those early orders suggest that the patent owner bears the burden of persuasion.8 In Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc., the PTAB addressed the petitioner’s request for rehearing of an order allocating the burden of persuasion to the petitioner.9 The petitioner argued that the PTAB’s allocation of the burden to the petitioner was erroneous as a matter of law based on the PTAB’s early orders that inferentially assign the burden to patent owners.10 In rejecting the petitioner’s argument and terminating the instituted proceeding, the PTAB acknowledged the inference in those orders, but “accord[ed] that inference relatively little weight,” because those orders failed to articulate analysis of the allocation of the burden.11
Notably, the Atlanta Gas panel described a framework allocating burdens in the real parties in interest context and reconciled that framework with the PTAB’s early orders.12 In particular, the PTAB noted that 35 U.S.C. § 312(a)(2) places the burden of identifying all real parties in interest on the petitioner.13 Once the petitioner lists the real parties in interest in the petition, the petitioner is entitled to a rebuttable presumption that shifts the burden of production of evidence to the patent owner.14 If the patent owner comes forward with evidence establishing that the petitioner failed to identify all real parties in interest, then the burden of production shifts back to the petitioner.15 The ultimate burden of persuasion, however, always remains with the petitioner.16 The PTAB reconciled this framework with its early orders, reasoning that those orders were addressing the sufficiency of the patent owners’ satisfaction of the intermediate burden of production, not the ultimate burden of persuasion.17 Accordingly, Atlanta Gasestablishes a burden-shifting analysis in the real parties in interest context where the burden of persuasion is fixed on the petitioner and the burden of production shifts between the petitioner and the patent owner.
Burden of Establishing that the Petitioner Is a Privy of a Non-Party
Similar to the PTAB’s early orders on real parties in interest discussed above, the PTAB’s early orders on the burden of establishing privity also inferentially suggest that the patent owner has the burden of persuasion.18 In Synopsys, Inc. v. Mentor Graphics Corp., the patent owner argued that the petitioner was a privy of a non-party because the non-party was a wholly-owned subsidiary of the petitioner.19The PTAB held that the petitioner was not a privy of the non-party.20 In rejecting the patent owner’s arguments, the PTAB stated that the “Patent Owner has not persuasively shown that Petitioner was a privy of EVE in 2006.”21 Additionally, the PTAB repeatedly suggested that the Patent Owner had the burden of persuasion.22For example, the PTAB stated that the “Patent Owner d[id] not provide persuasive evidence that Synopsis and EVE were in privity,”23 “Patent Owner d[id] not direct us to any persuasive evidence that Synopsis and EVE were in privity,”24 and “[Patent Owner] provide[d] no persuasive evidence that at the time of service of the 2006 complaint Synopsis could have exercised control over EVE’s participation in the proceeding.”25
Other early PTAB orders used similar language suggesting that the burden of persuasion is on the patent owner. In Hewlett-Packard Co. v. MCM Portfolio, LLC, the patent owner argued that the petitioner was a privy of a non-party because the petitioner resold the non-party’s products accused of infringement in a district court action.26 The PTAB held that the petitioner was not in privity with the non-party.27 In rejecting the patent owner’s arguments, the PTAB stated that “MCM [the patent owner] d[id] not provide persuasive evidence that HP and Pandigital are privies.”28 As in Synopsis, the PTAB made additional statements suggesting that the burden of persuasion is on the patent owner, including that the patent owner “provide[d] no persuasive evidence that HP could have exercised control over Pandigital’s participation in the Texas Action.”29
Although recent cases have not established a framework for allocating burdens in the privity context, they suggest that the framework would be similar to the framework established in Atlanta Gas with respect to real parties in interest.30 InAruze Gaming Macau, Ltd. v. MGT Gaming, Inc., the patent owner argued that the petitioner was a privy of a non-party based on common ownership and common counsel.31 The PTAB held that there was a reasonable likelihood that the petitioner was not a privy of the non-party.32 In its analysis, the PTAB rejected the petitioner’s argument that “Patent Owner bears the burden of demonstrating privity.”33 The PTAB reasoned that “[w]hen determining whether to institute a trial, the relevant standard is set by statute. We may not institute trial unless ‘there is a reasonable likelihood that the petitioner would prevail.’ 35 U.S.C. § 314(a). The record before us, therefore, must demonstrate that there is a reasonable likelihood that AGM is not barred under 35 U.S.C. § 315(b).”34
In Johnson Health Tech Co. v. Icon Health & Fitness, Inc., the patent owner argued that both petitioners were barred under § 315(b)—one petitioner due to service of a complaint more than a year prior to the petition and the other petitioner due to privity with the petitioner served with the complaint.35 The PTAB held that both petitioners were barred under § 315(b).36 In analyzing the service of complaint issue, the PTAB stated that “[i]n a Preliminary Proceeding, the petitioner bears the burden of showing compliance with the threshold requirement of § 315(b). Specifically, in order to show ‘standing’ to file a petition, the petitioner ‘must certify . . . that the petitioner is not barred or estopped from requesting an inter partesreview . . . . 37 C.F.R. § 42.104(a).”37 Although that statement is arguably broad enough to cover privity based on the reference to § 315(b), the statement only appeared in the section analyzing service of the complaint and not in the separate section analyzing privity.38 Notably, while analyzing privity, the PTAB stated that “[a]fter being afforded the opportunity to rebut Icon’s evidence of privity, Petitioners do not come forward with any evidence in rebuttal.”39
Aruze and Johnson Health collectively suggest that the framework for allocating burdens in the privity context is similar to the framework for allocating burdens in the real parties in interest context. Indeed, Aruze suggests that the petitioner has the burden of persuasion to establish a reasonable likelihood that the petitioner is not a privy of a non-party that is barred under § 315(b).40 Although Aruze did not analyze shifting burdens as in the Atlanta Gas order, Johnson Health suggests that once the petitioner provides evidence of a lack of privity, the burden of production shifts to the patent owner to come forward with evidence of privity.41 And if the patent owner provides that evidence, Aruze suggests that the burden shifts back to the petitioner to rebut that evidence.42 That framework is consistent with the framework explained in Atlanta Gas for real parties in interest.43
Despite the Aruze and Johnson Health orders, petitioners may still have enough ammunition to argue that allocating the burden of persuasion on privity to the petitioner is inconsistent with Supreme Court authority. In Taylor v. Sturgell—the Supreme Court decision cited in the Office Patent Trial Guide as relevant to the privity inquiry—the Court held that claim and issue preclusion are affirmative defenses and thus the burden is on the party raising those defenses to plead and prove those defenses.44 The Court additionally rejected the argument that the burden shifts to the party opposing preclusion once the party raising preclusion initially provides evidence.45 Accordingly, Taylor suggests that the burden of establishing privity, a factor in the Court’s preclusion test, should be on the party raising privity (i.e., the patent owner in inter partes review).
Although the Atlanta Gas panel rejected an argument that allocating the burden to the petitioner in the real party in interest context is inconsistent with Taylor, the PTAB’s rationale is arguably inapplicable in the context of privity.46 In particular, in Atlanta Gas, the PTAB reasoned that the “critical distinction between the Supreme Court’s consideration of common-law preclusion and the issue before us is a controlling statute.”47 The PTAB further stated “[t]he statute setting forth the requirements of a petition . . . unambiguously requires that ‘the petition identifies all real parties in interest' . . . Thus, the identification of all real parties-in-interest is an essential element of a petitioner’s case.”48 However, there is no similar statute requiring the petitioner to identify all privies and thus the PTAB’s reasoning is arguably inapplicable in the context of privity. As such, although petitioners may face an uphill battle against the Aruze and Johnson Health orders, petitioners may still argue that allocating the burden of identifying all privies to the petitioner is improper under Taylor.
One PTAB order suggests that the burden of persuasion to establish a real party in interest or a privy under § 315(b) shifts to the patent owner once an inter partesreview is instituted. In Aruze, as discussed above, the petitioner argued that the “Patent Owner bears the burden of demonstrating privity and real party-in-interest.”49 In rejecting that argument in an institution decision, the PTAB noted that “[w]hile the Patent Owner may bear such a burden once an inter partes review has been instituted, we need not determine this here.”50 Since the status of thatinter partes review was pre-institution, the PTAB likely viewed the issue as one that was not properly before the PTAB and thus declined to hold that the burden of persuasion shifts to the patent owner after institution. Regardless, the PTAB’s statement suggests that the burden of persuasion for real parties in interest and privity may shift to the patent owner after institution. The PTAB, however, will have to resolve that issue in future orders. In the meantime, petitioners may use the PTAB’s statement to defend post-institution privity attacks from the patent owner.
Petitioners should consider anticipating real party in interest and privity issues before filing inter partes review petitions. Because petitioners bear the burden of persuasion as to real parties in interest under Atlanta Gas, petitioners should clearly identify all real parties in interest or explain why certain non-parties do not qualify as real parties in interest in the petition. Although the PTAB may authorize petitioners to file a reply brief if the patent owner raises a real party in interest issue in the preliminary response, the PTAB’s decision is discretionary. Thus petitioners may be better served arguing the issue in the petition. Since the allocation of the burden on privity is less clear, petitioners should consider a similar strategy of addressing why they are not privies of non-parties as petitioners may not have the opportunity to address the issue in a reply brief. Once an inter partes review is instituted, petitioners should consider arguing that the patent owner bears the burden of persuasion on real party in interest and privity as Aruzesuggests.
Patent owners should identify and argue potential real party in interest or privity issues in the preliminary response because of the possibility of avoiding institution under § 315(b). For real party in interest issues, patent owners should include arguments that the burden of persuasion is fixed on the petitioner. And after providing evidence of a real party in interest, patent owners should consider including arguments that the burden of production shifts back to the petitioner. For privity, patent owners should consider providing similar arguments based onAruze and Johnson Health. Patent owners should also be mindful that they may bear the burden of persuasion once an inter partes review is instituted.