Takeaway: When determining whether a non-party is a real party-in-interest, the Board considers the relationship between the petitioner and the non-party during the events that led to the filing of the petition, not just their relationship when the petition was filed.

In its Decision, the Board denied a Petition to institute inter partes review of claims 1-17 on the grounds that a non-party is a real party-in-interest, that the non-party was served with a complaint alleging infringement of the ’945 patent more than a year before the petition was filed, and that the Petition did not identify “all the real parties in interest” as required by 35 U.S.C. § 312(a).

The Board began its legal analysis by reiterating that its determination of whether a third, unnamed party constitutes a “real party-in-interest” is a “highly fact-dependent question” and that, at a general level, the real party-in-interest is “the party that desires review of the patent.” Multiple factors are relevant to this inquiry, including whether the non-party exercised or could have exercised control over a party’s participation in the proceeding.

After considering the evidence presented by the Petitioner and Patent Owner concerning the relationship between the Petitioner and the non-party, the Board was persuaded that the non-party is a real party-in-interest. The Board’s decision was based on its determination that the non-party desires review of the patent because it is indemnifying Petitioner for certain claims in related litigation and also is appealing to the Federal Circuit an earlier adverse decision concerning the validity of the ’945 patent. After review of agreements between the Petitioner and the non-party, the Board concluded that the non-party has controlled, and/or has had an opportunity to control, the events leading up to the filing of the Petition.

According to the Board, the indemnity agreement provided that the non-party had the right to “employ counsel . . . to defend against Claims that [it] is responsible for . . . and to compromise, settle and otherwise dispose of such Claims” and an addendum indicated that the IPR would be included under the agreement. In addition, the non-party’s counsel communicated with counsel for Petitioner concerning what prior art to assert in the IPR and the non-party is funding the Petition under an indemnity agreement with Petitioner.

Petitioner argued that the “sole and exclusive control over this petition rests solely with [Petitioner]” based on the terms of the addendum to the indemnity agreement, which was entered into two days before the Petition was filed. The Board, however, was not persuaded that the non-party lacked control or the opportunity to control Petitioner’s participation in the proceeding, stating that it was “of no moment” that Petitioner had sole control as of two days before the filing date because, presumably, most of the work on the Petition had been done by Petitioner and the non-party.

After concluding that the non-party was a real party-in-interest, the Board determined that the Petition was untimely because the non-party had been served with a complaint more than one year before the filing of the Petition and that the Petition also was incomplete because it did not identify “all real parties in interest.” The Board therefore denied the Petition. Notably, contrary to its usual practice, the Board did not give Petitioner the opportunity to cure the incompleteness of its Petition because, even if corrected, the earliest filing date that could be accorded to the Petition would not fall within the one-year filing period.

First Data Corp. v. Cardsoft (Assignment for the Benefit of Creditors), LLC, IPR2014-00715
Paper 9: Decision Denying Institution of Inter Partes Review
Dated: October 17, 2014
Patent 6,934,945 B1
Before: Sally C. Medley, Meredith C. Petravick, and James P. Calve
Written By: Per Curiam
Related Proceedings: Cardsoft (Assignment for the Benefit of Creditors) LLC v. First Data Corp., Civil Action No. 2:13-cv-290 (E.D. Tex.) and Cardsoft, Inc. v. VeriFone Systems, Inc., Civil Action No. 2:08-cv-00098 (E.D. Tex.)