Takeaway: The corporate and management structure of a non-party company may be relevant to the issue of that company’s status as a real party-in-interest and may be a basis for additional discovery.

In its Order, the Board granted-in-part Patent Owner’s Motion for Additional Discovery – as to Requests (1), (2), and (3) – and denied Patent Owner’s Motion for Additional Discovery as to all other requests. In this connection, the Board ordered Petitioner to produce and serve the documents associated with Requests (1), (2), and (3) within one week (or by a date agreed upon by the parties).

Patent Owner had filed a Board-authorized Motion for Additional Discovery, which Petitioner had opposed. The Motion related to the issue of whether an entity known as Purus Labs, Inc. should have been identified as a real party-in-interest in the Petition.

The Motion included three Requests, namely, (1) a Request for information on the corporate and management structure of Purus Labs, specifically, information on “any [of Petitioner’s] personnel who participate in the management or corporate decision-making of Purus Labs,” (2) a Request for information on the identity of the persons controlling the IPR, and (3) a Request for information on “communications by or to directors, officers, or executives of Purus Labs and Lone Star regarding this IPR.” Patent Owner had also sought the deposition of Mr. Hoffmann and/or Mr. Letchman, who were individuals acting both as “executives or officers of both Petitioner and Purus.”

Considering the additional discovery factors set forth in Garmin v. Cuozzo (IPR2012-00001), the Board began by noting that Purus is a manufacturer, and Petitioner a distributor, of sports nutrition supplements, “including those manufactured by Purus.” The Board further noted “that Petitioner and Purus share overlapping management personnel, with two out of the three corporate managers of Purus acting in top management positions for Petitioner.” The Board also noted other factors relating to Petitioner and Purus, including the sharing of a common business address and common litigation counsel.

Petitioner had argued in its Opposition that control of the instant proceeding rested solely with Petitioner and that Patent Owner’s Motion did not include “evidence that Purus did or could control the IPR.” Petitioner’s Opposition relied on the Declaration of Mr. Hoffmann, but after the Opposition was filed, “Petitioner indicated during a recent conference call that it would not make Mr. Hoffman available for cross-examination by deposition, despite [the Board’s] indication to the parties that such cross-examination constitutes routine discovery under 37 C.F.R. § 51(b)(1)(ii).” In view of these factors, the Board authorized the filing of a Motion to Strike Mr. Hoffman’s Declaration, which Patent Owner then filed, and the Board then granted. This led to Mr. Hoffman’s Declaration being expunged from the record.

In granting Discovery Request (1), the Board found that “[t]he corporate and management structure of Purus is relevant to an inquiry regarding the company’s status as a real party-in-interest, as the structure may provide information regarding the relationship of Purus management to the Petition.” In granting Discovery Request (2), the Board “[authorized] discovery in the form of a list, to be prepared by Petitioner, identifying persons who provided direction to, or had the authority to provide direction to, Petitioner or its counsel in relation to this proceeding, including persons who reviewed, or were given the opportunity to review, papers filed in this proceeding.” In granting Discovery Request (3), the Board “[authorized] discovery in relation to documents in Petitioner’s possession showing communications between (i) John Hoffmann, Chuck Letchman, Frank Fenimore, Jr., Frank Fenimore, other employees of Petitioner, or Petitioner’s counsel, and (ii) Mr. Brandon Smith and/or any other Directors, officers, or executives of Purus other than Mr. Hoffman and Mr. Letchman, regarding the current proceeding.”

Patent Owner’s request to depose either or both of Mr. Hoffmann and Mr. Letchman was denied by the Board as being “overly broad and/or unnecessary in view of evidence already of record and/or other authorized discovery requests.” Moreover, although Petitioner had relied upon Mr. Hoffmann’s Declaration in support of its Opposition to the Motion for Additional Discovery, Petitioner had declined to make Mr. Hoffman available for cross-examination. Thus, the Board decided that it would strike Mr. Hoffmann’s Declaration from the record rather than compelling Petitioner to produce either of Messrs. Hoffman or Letchman as a witness.

The Board then went on to state that it would “likely give little to no weight to mere attorney argument pertaining to the real party-in-interest issue, especially given the ‘highly fact-dependent’ nature of the inquiry.” Moreover, the Board indicated that Patent Owner was allowed to request “authorization to file a motion to dismiss the Petition for failure to name all real parties-in-interest” after Petitioner had produced the documents associated with Requests (1), (2), and (3).

John’s Lone Star Distribution, Inc. v. Thermolife International, LLC, IPR2014-01201
Paper 29: Order Granting-in-Part Patent Owner’s Motion for Additional Discovery
Dated: May 13, 2105
Patent: 8,455,531 B2
Before: Jacqueline Wright Bonilla, Sheridan K. Snedden, and Zhenyu Yang
Written by: Bonilla