Ventex Co., Ltd., v. Columbia Sportswear N. Am., Inc., Case IPR2017-00651, Paper 152
Respondent argued that Petitioner was barred from filing an IPR petition because a non-party that should have been named as a real party in interest was time barred pursuant to 35 U.S.C. § 315(b) (the Respondent filed a complaint against the non-party more than one year before the petition at issue). The PTAB held that the Petitioner was barred from filing the petition, because the time barred non-party was a clear beneficiary to the proceeding and in privy with the Petitioner.
The PTAB clarified that whether a non-party must be identified in a proceeding as a real party in interest is a fact dependent decision. Specifically, the PTAB relied on the Federal Circuit in determining whether a non-party is a real party in interest, which “takes into account both equitable and practical considerations, with an eye toward determining whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner.” Applications in Internet Time, LLC v. RPX Corporation, 897 F.3d 1336, 1351 (Fed. Cir. 2018). The Court explained that “the terms ‘real party in interest’ and ‘privy’ were included in § 315 to serve two related purposes: (1) to ensure that third parties who have sufficiently close relationships with IPR petitioners would be bound by the outcome of instituted IPRs under § 315(e), the related IPR estoppel provision; and (2) to safeguard patent owners from having to defend their patents against belated administrative attacks by related parties via § 315(b).”
Benefit to the non-party: Of particular importance to the PTAB where the circumstances surrounding a “clients’ interest” when a party elects to file an IPR petition.
- Petitioner and non-party had a specifically structured and well established business relationship, including:
- a supplier agreement with an indemnification clause
- an exclusive manufacturing agreement for the allegedly infringing product
- Respondent threatened Petitioners and non-parties’ customers with infringement lawsuits
- The non-party is barred under § 315(b) from filing an IPR
- The PTAB found that:
- Petitioner likely filed the IPR, at least in part, on the behalf of the non-party
- The non-party benefits from Petitioner’s attempt to invalidate Respondents’ patent
Privity: The PTAB referred to the Supreme Court’s non-exhaustive list for examining whether the legal relationship between two parties establishes that one is the privy of the other: “(1) an agreement between the parties to be bound; (2) pre-existing substantive legal relationships between the parties; (3) adequate representation by the named party; (4) the non-party’s control of the prior litigation; (5) where the non-party acts as a proxy for the named party to relitigate the same issues; and (6) where special statutory schemes foreclose successive litigation by the non-party (e.g., bankruptcy and probate).”
- Petitioner and non-party had a preexisting substantive legal relationship in the form of two contracts, a Supplier Agreement with an obligation to indemnify and defend, and an Exclusive Manufacturing Agreement (related to the product accused of infringement)
- The timing, structure, and amounts of payment by the non-party to Petitioner under their agreements (suggesting that the non-party funded the IPR for Petitioners)
- The PTAB found that the pre-existing contractual relationship and Petitioner’s role as a proxy indicates that Petitioner is in privity with the non-party
The PTAB appears lenient with allowing real parties in interest to be added pre or post institution if the omission was inadvertent and there was no bad faith or gamesmanship. However, the PTAB takes a hard line when the omission of a party seems to be intentional and indicates an attempt to circumvent the time bar under § 315(b).