Takeaway: To establish a supplier’s privity for standing purposes in a CBM review in relation to customers that have been sued for infringement, a supplier should present evidence tying the customers’ accused products to the supplier’s products as well as evidence showing the supplier’s obligation to indemnify its customers.

In its Decision, the Board denied institution of any covered business method patent review because Petitioner lacked standing. Petitioner Phoenix Licensing was the sole remaining petitioner after several parties had been terminated from the proceeding.  Because Phoenix Licensing itself did not have standing, the Board denied institution.

According to Section 18(a)(1)(B) of the AIA:

A person may not file a petition for a transitional proceeding with respect to a covered business method patent unless the person or the person’s real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.

It is Petitioner’s burden to establish in the Petition grounds for standing. 37 C.F.R. § 42.304(a).

According to the Petition, Petitioner was a “single legal entity consisting of Acxiom, the Dish Entities, and Advance America.” Thus, at the time the Petition was filed, Acxiom alleged that Petitioner had standing because the “single legal entity” had been sued for infringement of the challenged patent.  The supporting exhibits established that the Dish Entities and Advance America had been sued for alleged infringement of the ’317 patent, but not Acxiom.

Referring to a previous panel decision (“Acxiom 1”) in CBM2015-00068, the Board rejected Acxiom’s argument and held that “each petitioner must have standing at time of filing, and if instituted, the case will proceed procedurally with the multiple petitioners treated as a single entity.”  Because Acxiom, the sole remaining petitioner, was not sued, it did not have standing.

Acxiom also asserted that it had standing by virtue of being a privy because its customers were sued for infringement of the ’317 patent at the time the Petition was filed. The customers had requested indemnification from Acxiom, allegedly making the customers privies of Acxiom such that it has standing.

The Board noted that the jurisprudence for declaratory judgment is helpful in determining whether a party is a privy of a petitioner for standing purposes. “Acxiom must establish more than just the fact that it has sold products to an entity that has been sued for infringement. It must establish that the relationship between itself and a sued customer is sufficient to constitute privity.”  The Board summarized facts, noting that “Acxiom has sold some unspecified software and/or other goods and services to a variety of entities and that some of those entities have approached Acxiom with claims of indemnity.”  The Board was not persuaded that the requests for indemnity “without evidence or an acknowledgement of an obligation to indemnify are sufficient to establish privity.”

The Board cited the two-part test established in the Federal Circuit decision of Arris Group, Inc. v. British Telecomm. PLC, 639 F.3d 1368, 1375 (Fed. Cir. 2011):

where a patent holder accuses customers of direct infringement based on the sale or use of a supplier’s equipment, the supplier has standing to commence a declaratory judgment action if (a) the supplier is obligated to indemnify its customers from infringement liability, or (b) there is a controversy between the patentee and the supplier as to the supplier’s liability for induced or contributory infringement based on the alleged acts of direct infringement by its customers

As to the first part of the test, the Board cited to other panel decisions that based their findings on standing according to whether a petitioner was obligated to indemnify its customers, not only whether a demand for indemnification had been made. SeeCBM2014-00101; CBM2015-00069; CBM2015-00134 (“Acxiom 2”).

As to the second part of the test, the Board noted that there was no persuasive evidence of a controversy as to Acxiom’s alleged “liability for induced or contributory infringement.” Thus, the focus of the Board’s analysis was on the first part of the test related to any potential obligation for Acxiom to indemnify its customers.

Acxiom relied upon a declaration from Michael Lloyd, who testified regarding the customer lawsuits and Acxiom’s apprehension of “financial and business-related risks surrounding these patents.” However, Mr. Lloyd did not testify as to Acxiom’s obligation to indemnify customers and the apprehension of risks were not found to establish standing.

Acxiom also relied upon a letter from counsel for Advance America and a Limited Data Agreement between Acxiom and Advance America. The letter from Advance America, Acxiom’s customer, informed Acxiom of a patent infringement suit by Patent Owner and demanded that Acxiom indemnify Advance America.  The letter also suggested that Acxiom could be found liable to Patent Owner for infringement.  However, the Board noted that no evidence was provided for how Acxiom responded to the letter nor whether Advance America’s accused products were products provided by Acxiom.  The Board also found that the letter itself did not establish any obligation of indemnification.

The Limited Data Agreement contained provisions related to indemnification, but as the Board found, the Agreement was not tied to Advance America’s accused products and was insufficient to show an obligation on the part of Acxiom to indemnify Advance America.

Acxiom relied upon a similar letter and agreement with its customers Amica and American Express, and the Board found the evidence did not establish Acxiom’s obligation to indemnify for similar reasons.

Finally, Acxiom argued that it would have standing in federal court to bring a declaratory judgment action. The Board disagreed, again noting that any standing that its customers may have had could not be conferred upon Acxiom by virtue of being a co-petitioner with the customers.

Accordingly, the Board found that Acxiom lacked standing and denied institution.

Acxiom Corp. v. Phoenix Licensing, LLC, CBM2015-00180
Paper 18: Decision Denying Institution of Inter Partes Review
Dated: March 21, 2016
Patent: 8,352,317 B2
Before: Barry L. Grossman, Stacey G. White, and Peter P. Chen
Written by: Grossman
Related Proceedings: Several district court proceedings; several reexaminations; CBM2015-00068; CBM2015-00134 through 00140