Takeaway: A parent-subsidiary relationship alone is not sufficient to establish that a party is a real party-in-interest. However, a party that represents the “unified interests” of itself and a petitioner with respect to the proceeding will likely be considered a real party-in-interest.

In its Decision, the Board denied Petitioner’s Request for Rehearing of the Board’s Decision denying institution of inter partes review. A request for rehearing may be granted where the Board abused its discretion in its decision on institution. The moving party “must specifically identify all matters the party believes the Board misapprehended or overlooked.”

Petitioner argued that the Board’s determination that the unidentified entity, Paramount Pictures Corporation, was a real party-in-interest “was clearly erroneous.” In response to Petitioner’s argument that the record did not contain evidence that would “rebut[] the presumption of corporate separateness for Paramount Pictures Corporation and Paramount Home Entertainment Inc.,” the Board stated that its Decision outlined the “substantial evidence” presented by Patent Owner.

Petitioner also argued that “[t]he Board repeatedly mistook Paramount Pictures Corporation’s interest in invalidating the ’715 patent and its participation as a plaintiff in a related declaratory judgment action as an ability to control these proceedings.” Petitioner specifically addressed the evidence provided by Patent Owner and relied upon by the Board in deciding the real party-in-interest issue – “namely, four actions taken by a vice president of Paramount Pictures Corporation in connection with the dispute with Patent Owner.” The Board noted that no “bright-line test” exists for “determining the necessary quantity or degree of participation to qualify as a ‘real party-in-interest’ . . . based on the control concept,” and that the inquiry is based upon “consideration of the totality of the circumstances.” The Board found Petitioner’s arguments addressed each fact individually, and therefore failed to consider the totality of the circumstances.

Furthermore, Petitioner argued that the Board’s Decision was in conflict with other panel decisions. The Board was not persuaded, stating that the cited decisions are not binding and were factually distinguishable from the present case. Petitioner relied mostly upon Butamax Advanced Biofuels LLC v. Gevo, Inc., Case IPR2013-00215 (PTAB Sept. 23, 2014) (Paper 47), in which, according to Petitioner, “the Board ruled that an entity’s interest in invalidating a patent through inter partes review proceedings did not make the entity a real party-in-interest to the proceedings, even though the entity was affiliated with the petitioner and had joined the petitioner as plaintiff in a declaratory judgment lawsuit against the patent owner.” The Board was not persuaded, however, noting that the determination of whether a party is a real party-in-interest is “highly fact-dependent.” Unlike Butamax, Petitioner is a “wholly-owned subsidiary” of the un-named entity, rather than a joint venture as in Butamax.

In addition, the Board was not persuaded by Petitioner’s argument that the Board erroneously relied upon a conclusion that the alleged real party-in-interest exercised control “over the dispute involving the ’715 patent.” However, the Board was not persuaded, noting that its decision was “based on the finding that Patent Owner presented evidence sufficient to persuade us that Paramount Pictures Corporation represented the ‘unified interests’ of itself and Petitioner Paramount Home Entertainment Inc. in the parties’ dispute, including this proceeding.”

Petitioner also argued that it was denied due process because it was denied the right to submit evidence after the issue of real party-in-interest was raised. In this regard, the Board authorized Petitioner to file a Reply in response to Patent Owner’s Preliminary Response, but did not authorize the submission of “any testimonial evidence not already of record,” consistent with limitations on preliminary responses under 37 C.F.R. § 42.107(c). Thus, Petitioner was not precluded from submitting any evidence. In addition, the Board noted that the rules do not provide express authorization for replies to a preliminary response, but that the Board exercised its discretion in allowing a reply. For these reasons, the Board was “not persuaded that the evidentiary limitation placed on Petitioners violated their due process rights.” Accordingly, the Requests for Rehearing were denied.

Paramount Home Entertainment Inc., Twentieth Century Fox Home Entertainment LLC, and Universal Studios Home Entertainment LLC v. Nissim Corp., IPR2014-00961, IPR2014-00962
Paper 13: Decision on Request for Rehearing
Dated: March 19, 2015
Patents: 6,304,715 B1; 7,054,547 B1
Before: Patrick R. Scanlon, Michael J. Fitzpatrick, and Brian P. Murphy
Written by: Scanlon