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  • The opinions, commentary and characterizations provided to this online forum by the authors and moderators are provided for encouraging discussion, thought and debate on important post grant issues. These postings are in no way representative of the opinions of Oblon Spivak et al., or its clients.

Lack of PTAB Discovery to Shift Privity Question to District Courts

Posted On: Feb. 4, 2014   By: Scott A. McKeown
privity PTABEvidence of Petitioner Control Critical for PTAB Privity Finding

Under 35 U.S.C. § 315(b) a petitioner, real party-in-interest, or privy of the petitioner must seek Inter Partes Review (IPR) within 12 months of service of a complaint for patent infringement. In an attempt to dodge some IPR filings as time barred, patentees are urging the USPTO Patent Trial & Appeal Board (PTAB) to adopt an expansive interpretation of privy. That is, since parties are often time embroiled in patent suits at different times, expanding the 12 month window to encompass the first filed suit could insulate many patentees from dreaded IPR challenges.

As detailed previously, in Atlanta Gas Light Company v. Bennett Regulator Guards Inc., (IPR2013-00453, Paper 31, January 22, 2014), the PTAB agreed that the existence of an indemnification agreement was probative of the opportunity for control by a supplier of a customer petitioner. However, the PTAB is seeking more than the mere existence of an agreement, but instead, hard evidence of control.

More recently in Broadcom Corp. v. Telefonaktiebolaget LM Ericsson (IPR2013-00601, Paper 23, January 24, 2014) the patentee attempted to present enough circumstantial evidence of privity from public documents to justify additional discovery, the PTAB declined the request for additional discovery, explaining:

Contrary to [patentees] assertion that “[t]he weight of authority strongly supports that an indemnity agreement . . . establish[es] privity,” Mot. 6, Bros. Inc, TRW, Dentsply and other cases noted supra illustrate that more is required. Control of the litigation, or some sort of representation, constitutes a “crucial” factor. . .

The totality of this evidence fails to amount to more than a “mere possibility” that [petitioner] controlled, or could have controlled, the Texas Litigation. Paying for trial expenses pursuant to indemnity normally does not establish privity or control. Therefore, the sought-after indemnity agreements, and the requested discovery items seeking evidence of payment pursuant to indemnity or other agreements, fail to amount to more than a “mere allegation that something useful will be found” to establish privity.

As made clear in this decision, establishment of privity will not be possible absent a smoking gun document (the decision goes through a pile of circumstantial evidence denied as persuasive, worth a read). Since such a smoking gun document will almost never be public, and the PTAB will not grant discovery for uncovering it, patentees would be wise to seek this discovery via the district court at the earliest possible time.

For a co-pending litigation that is facing a motion to stay, despite the long odds, patentees would be prudent to raise the issue of privity in their preliminary response and on teleconferences with the Board (i.e., court reporter) for the purpose of creating a record of the dispute. Thereafter, perhaps the judge on the district court side will permit limited discovery on the issue even if the case is stayed as to the merits, or the record may prove valuable in demonstrating gamesmanship on the part of the patent challengers to avoid estoppel. (a factor considered in a stay analysis). Indeed, the district court’s concept of privity may be quite different than that of the PTAB.

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