Customers of a Defendant Supplier Do Not Have CBM Standing

The Patent Trial & Appeal Board (PTAB) denied institution of a CBM review of Phoenix Licensing, LLC’s (“Phoenix”) 8,352,317 patent in CBM2015-00068, determining that the only remaining Petitioner, Acxiom Corp. (“Acxiom”), lacked standing under § 18(a)(1)(B) of the AIA. (here)

By way of background, the Petition was originally filed by four entities, but the proceeding was terminated with respect to AT&T Mobility LLC, AT&T Services, Inc., and Ford Motor Company (“Ford”), leaving only Acxiom. Under § 18(a)(1)(B), a person may not file a CBM unless the person or the person’s real party in interest or privy has been sued for infringement of the patent or otherwise charged with infringement of the patent. As such, CBM petitions are required to establish that the petitioner meets the standing requirements with sufficient proof. In this case, the Petition merely stated that Acxiom is one of the “real parties-in-interest to and/or privies of one or more parties who have been sued…” without providing any additional explanation or evidence.

The PTAB explained that the allegation that Acxiom is a privy of one or more parties who have been sued for infringement would be insufficient even if supported by evidence. Specifically, under the law, one of the parties sued would have to be a privy of Acxiom, rather than vice versa as Acxiom alleged. The PTAB explained that the fact that Ford had been sued by Patentee does not mean that every privy or customer of Ford has standing to file a request for a CBM. Therefore, since the Petition provided no explanation or evidence that a privy of Acxiom’s had been sued, the PTAB declined to institute trial.

While an interesting decision, in the typical case a supplier steps in to protect its customers from a lawsuit by filing a CBM.  This was the “privity” specifically contemplated in the legislative history. As to the converse, customers that are not sued rarely pick a fight that upstream entities are battling. This appears to be a bit of a corner case.