In its Decision, the Board denied Patent Owner’s Request for Rehearing of the Board’s Decision instituting trial.  Patent Owner argued in its Preliminary Response, and again in its Request for Rehearing, that the Petition was barred under 35 U.S.C. § 315(b) because Petitioner’s privies were served with a complaint alleging infringement of the ’970 patent more than one year before the Petition was filed.

The Board stated that the dissatisfied party must specifically identify “all matters the party believes the Board misapprehended or overlooked, and the place where each matter was addressed previously.”  The Board then reviewed the Decision on Institution for an abuse of discretion.

Patent Owner argued that the Board overlooked or misapprehended three issues, which the Board addressed in turn.

First, Patent Owner argued that “privity need not be assessed at the time the third parties were served with infringement complaints,” but that the relationship of the parties until the Petition is filed should be considered.  The Board noted that Patent Owner did not identify where it previously made this argument, but nevertheless found the arguments not persuasive.  In particular, the Board noted that its Decision on Institution addressed the parties’ relationships after the complaints were served.

Second, Patent Owner argued that the Board “misapprehended or overlooked legal authority for finding preclusion based on privity in the absence of control, and instead focused only on evidence of control.”  In its Preliminary Response, Patent Owner had argued, citing Asahi Glass, that privity existed based on “an indemnification agreement, retention of shared counsel, and a joint defense agreement.”  The Board stated that it had found Patent Owner’s contentions and supporting evidence insufficient with respect to at least the joint defense agreement requirement of Asahi Glass.  In this regard, the Board had found that Patent Owner’s evidence (Petitioner’s objections in the related litigation to document requests based on joint defense and common interest privilege and Petitioner’s failure to deny the existence of an agreement) did not support a finding of an admission to the existence of an agreement.  Also, Patent Owner did not previously argue “preclusion based on privity in the absence of control,” so the Board could not have overlooked or misapprehended the argument.

The Board also noted that although the Cal. Physicians case cited in the Trial Practice Guide holds that control is not necessary for a finding of preclusion, the Trial Practice Guide still “retains an emphasis on control.”

The Board then addressed the evidence of privity.  At the time of serving the complaints, the existence of indemnitee-indemnitor relationships was found to be insufficient; it was not established when Petitioner agreed to indemnify the third parties and when those third parties “accepted the defense.”  With respect to the relationships post-service of the complaint and pre-filing of the Petition, Patent Owner argued that Petitioner exercised control over the third parties in their related litigations, Petitioner’s counsel entered appearances on behalf of the third parties, the parties accepted the indemnity obligations, and the parties were operating pursuant to a joint defense agreement.  However, the Board indicated that Patent Owner did not identify where in the Preliminary Response these points were argued, and that Patent Owner disregarded portions of the Institution Decision where several of the arguments were already addressed.  “A request for rehearing is not an opportunity to express disagreement with the Decision.”  Finally, the Board found Patent Owner’s evidence unpersuasive, stating the evidence did not establish that the third parties “accepted the defense” prior to the Petition filing.  In any case, the “acceptance of the defense,” the appearance of counsel at a settlement conference, and Petitioner’s obligation to pay the fees of any of the third parties’ settlements did not amount to “acceptance of an obligation to control the defense of each customer.”

Wavemarket Inc. d/b/a Location Labs v. LocatioNet Systems Ltd., IPR2014-00920
Paper 23: Decision on Request for Rehearing
Dated: January 22, 2015
Patent: 6,771,970 B1
Before: Kristen L. Droesch, Glenn J. Perry, and Sheridan K. Snedden
Written by: Droesch