Indemnification “Significant and Meaningful Relationship”

Extending a trend started last spring, the PTAB is looking more closely at AIA trial petitions coming from separate parties.  For parties seeking to pursue an AIA trial proceeding, this trend should give pause to those considering participation in Joint Defense Groups, or linked to another petitioner by business arrangement or indemnification obligation.

Last week, in PayPal Inc. v. Ioengine LLC, the Board explained that a customer/supplier relationship, together with indemnification obligation is enough to be considered a “same petitioner” in a General Plastic analysis.

Ingenico is a manufacturer of certain Point-of-Service (POS) terminals that include the licensed technology of PayPal.  Ingenico pursued IPR petitions against the patents of IOEngine.  These petitions were instituted while later filed petitions of PayPal remained pending.

Upon considering the PayPal petitions, the Board applied the General Plastic factors under 35 U.S.C. § 314(a) to assess the fairness of instituting a second round of petitions.  In applying the first factor (whether the same petitioner previously filed a petition..) The Board explained that the petitioners in this case (Ingenico and PayPal) were not competitors as is often the case, but were nonetheless a “same petitioner” for purposes of General Plastic, explaining (here):

In this case, there is a significant relationship between [PayPal] and Ingenico. Patent Owner sued [PayPal] for infringing the ’047 patent.  Ingenico supplies products accused of patent infringement in that suit and has an indemnification agreement with [PayPal].  Although [PayPal] and Ingenico are not codefendants in a single patent infringement proceeding, Ingenico filed a declaratory judgment action seeking a declaration that Ingenico and its customers, including [PayPal], do not infringe the ’047 patent and Patent Owner filed patent infringement counterclaims. The two district court actions have been consolidated for pre-trial purposes.  Ingenico’s supplying products to [PayPal] that Patent Owner alleges infringe the ’047 patent, the indemnification agreement between Petitioner and Ingenico, and the consolidated district court proceedings constitute a sufficiently significant relationship between Ingenico and Petitioner for purposes of applying the General Plastic factors.   .   .     .     .

¶ Petitioner and Ingenico are not mere co-defendants who compete in the marketplace. Here, Patent Owner’s evidence shows that Ingenico both supplies Petitioner with products accused of infringing and has an indemnification agreement with Petitioner.  Although Petitioner states that the Petition was prepared “without contribution from Ingenico,” that, by itself, does not contradict the existence of a significant and meaningful relationship between the parties.

(internal citations omitted, emphasis added)

While consolidation of cases would not occur for suits in different courts, a Common Interest/JDG agreement between such parties might be argued as an equivalent to the facts here. Going forward, customer/supplier relationship, the exclusivity of any such arrangement, and indemnification obligations will all be facts considered in such Board analyses.