Takeaway: The Board may grant a request to file a motion for additional discovery regarding Petitioner’s alleged privity with a party involved in litigation where the authorization is warranted by allegations that Petitioner’s SEC filings and standard terms of sale reveal an indemnification obligation to that party.

In its Order, the Board granted Patent Owner’s request to file a motion for additional discovery regarding its allegations that Petitioner is in privity with a third party in a proceeding in federal district court in Texas.  The Board also authorized Petitioner to file an opposition to Patent Owner’s motion, and further authorized Patent Owner to file a reply to Petitioner’s opposition if necessary.

Patent Owner asserted that additional discovery was proper because Petitioner’s standard terms of sale, as displayed on its website, stated that it would indemnify customers against litigation related to Petitioner’s sale of Patent Owner’s products.  According to Patent Owner, the terms further specified that Petitioner would exercise “sole control” over the litigation.  The third party allegedly had purchased the products at issue from Petitioner, making it likely, in Patent Owner’s view, that an agreement existed under which Petitioner was obligated to indemnify the third party against costs associated with the Texas district court litigation and that Petitioner consequently had the right to control that litigation.  Additionally, Patent Owner alleged that Petitioner’s SEC disclosures indicated that Petitioner had agreed to pay indemnification claims related to the third party’s alleged use of the products implicated in the Texas proceeding.

Petitioner countered that the indemnification information in the SEC filing does not rise to the inference of control over the Texas litigation.  Petitioner argued that the inference of control based on Petitioner’s standard terms was speculative.  Petitioner further alleged that the discovery request was not in the interest of justice because the requested documents would not yield useful information.  Moreover, Petitioner asserted that the documents, if they exist, would include confidential terms that are irrelevant to the sought-after indemnification provision.

At the Board’s request, the parties conferred but were unable to reach an agreement regarding disclosure of the contested information.  The Board concluded that authorization to file the motion for additional discovery was warranted under the circumstances.  It reminded Patent Owner that its motion should explain why it believes discovery of the information is necessary in the interest of justice.  The Board also authorized Petitioner to file an opposition to Patent Owner’s motion, and authorized Patent Owner to file a reply to Petitioner’s opposition if necessary.  The Board advised both parties that, if either believed their filings contained confidential information, they could file a redacted version and a motion to seal along with the standard version of the filing.  Finally, the Board encouraged the parties to agree on the terms of a proposed protective order that, if entered, would provide appropriate protections to ensure the confidentiality of the information contained in their respective filings.

Arris Group, Inc. v. C-Cation Technologies, LLC, IPR2014-00746
Paper 9: Order on Conduct of the Proceedings
Dated: July 2, 2014
Patent 5,563,883
Before: Kristen L. Droesch, Kalyan K. Deshpande, and Miriam L. Quinn
Written by: Droesch
Related Proceeding: C-Cation Techs., LLC v. Comcast Corp., No. 2:11-cv-00030 (E.D. Tex.)