Ventex Co., Ltd. v. Columbia Sportswear N. Am., Inc.

When a petitioner files an IPR petition more than one year after a non-party was served with a complaint alleging infringement of the patent, and the petitioner cannot show the non-party is neither a real party in interest nor a privy, the Board must find the petition time-barred under 35 U.S.C. § 315(b). It must then dismiss the petition, vacate institution, and terminate the review without a final written decision under § 318(a). The petitioner bears the burden of persuasion on both real party in interest and privity. A non-party is a real party in interest when it is a clear beneficiary with a preexisting, established relationship with the petitioner and the petitioner can be said to represent its interest. Privity is assessed under the Taylor v. Sturgell factors, and any one factor can support it. No prior Board precedent is named in the text as directly addressing this issue. The decision applies the Federal Circuit's recent AIT guidance on real party in interest and extends the Worlds burden allocation from real party in interest to privity. For a petitioner, it means a supplier or indemnitor relationship with a sued customer can bar the petition even after trial has been instituted, argued and nearly finished. The petitioner must prove no served real party in interest or privy exists, and a gap in the evidence counts against the petitioner. For the patent owner, the bar can be raised after institution, and the Board here exercised its discretion under 37 C.F.R. § 42.5(b) to hear a real party in interest argument first raised in post-extension briefing. The Board relied on Applications in Internet Time, LLC v. RPX Corporation, 897 F.3d 1336 (Fed. Cir. 2018), Worlds Inc. v. Bungie, Inc., 903 F.3d 1237 (Fed. Cir. 2018), WesternGeco LLC v. ION Geophysical Corp., 889 F.3d 1308 (Fed. Cir. 2018), and Taylor v. Sturgell, 553 U.S. 880 (2008). LEGAL TEST OR STANDARD: The petitioner bears the burden of persuasion that the petition is not time-barred under § 315(b), for both real party in interest and privity. Real party in interest calls for a flexible approach that takes into account equitable and practical considerations, to determine whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner, and whether the petitioner can be said to represent that interest. Privity is examined using the Taylor v. Sturgell non-exhaustive list: (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. Any one factor can support privity. The two inquiries are separate. TRIGGERING FACTS: Columbia served an amended complaint on Seirus (service waived the next day) more than one year before Ventex filed its petition on January 11, 2017. Seirus never sought IPR within the one-year period. Ventex was Seirus's fabric supplier under a 2013 Supplier Agreement requiring Ventex to indemnify and defend Seirus, and under a 2016 Exclusive Manufacturing Arrangement. The accused Seirus products incorporated Ventex's fabric. Ventex admitted it filed to protect threatened customers and prospective buyers. Seirus's payments under the 2016 agreement correlated in timing and amount with Ventex's IPR legal fees, and Ventex's witnesses could not explain the revised exclusivity payment. Seirus would directly benefit from a finding of unpatentability. KEY QUOTE: "Ventex, therefore, bears the burden of establishing that no real parties in interest or privies were served with a complaint alleging infringement more than one year prior to the filing of Ventex’s petition on January 11, 2017." (Paper 148, p. 5) PRIOR PRECEDENT AFFECTED: No prior Board precedential or informative decision is directly affected. The Board follows Applications in Internet Time, LLC v. RPX Corporation, 897 F.3d 1336 (Fed. Cir. 2018), and extends the burden holding of Worlds Inc. v. Bungie, Inc., 903 F.3d 1237 (Fed. Cir. 2018), to privity. It heeds the caution in Unified Patents, Inc. v. Realtime Adaptive Streaming, LLC, IPR2018-00883, Paper 36 at 14-15 (PTAB Oct. 11, 2018), against overextending AIT to a merely generalized benefit, and distinguishes that situation on the facts. PRACTICE TIP: Before filing, investigate whether any customer, supplier, indemnitee, or funder was served with an infringement complaint more than a year earlier. If so, either name it and address the bar or build a documented record that it is neither a real party in interest nor a privy, including the source and purpose of any payments from it. Patent owners should develop discovery and briefing on the relationship, indemnity terms and funding, and should not assume the issue is waived if it is raised late.