June 5, 2015

Board Denies Petition For Failure to Identify All Real Parties-In-Interest

By Matthew L. Cutler, Principal

Many Patent Owners have attempted to divert IPR challenges by arguing that all real parties-in-interest were not identified in the Petition. Almost all of those efforts have failed. That is what makes Paramount Home Entertainment Inc., et al. v. Nissim Corporation, (IPR2014-000962) an interesting case because the Board dismissed the Petition because Petitioner’s parent company was not named as a real-party-in-interest (“RPI”), when it should have been.

The two parties at issue were Petitioner Paramount Home Entertainment and its parent company, Paramount Pictures Corporation. In its Patent Owner Preliminary Response, Patent Owner presented arguments and evidence that supported a conclusion that Paramount Pictures was an RPI, including that:

(1) Paramount Pictures was a co-plaintiff with its subsidiary (Petitioner) in a co-pending declaratory judgment (“DJ”) lawsuit relative to the patent-in-suit;

(2) Paramount Pictures and the Petitioner shared the same counsel in the pending DJ action;

(3) Petitioner was a wholly-owned subsidiary of Paramount Pictures and both parties were listed in the “Notice of Interested Parties” filed in the DJ action and, per Patent Owner, this demonstrates that Paramount Pictures has “total financial control” over the Petitioner;

(4) Paramount Pictures has exercised control over the dispute with Patent Owner since it arose, including that:

a) Paramount Pictures responded to Patent Owner’s license offer letter without referring Patent Owner to the subsidiary (Petitioner);

b) Paramount Pictures indicated that it engaged in numerous communications with Patent Owner;

c) Paramount Pictures referred to the counsel providing representation in this proceeding and multiple declaratory judgment actions (involving same group of parties as the instant petition) as “my counsel”; and

d) Paramount Pictures traveled to the office of Patent Owner’s attorney to view Patent Owner’s settlement agreement with a third party.  Decision at 8-9.

The Board also noted that Petitioner had not taken any action regarding issues relating to this proceeding independent from its parent company, Paramount Pictures.

Petitioner countered by arguing that the parent, Paramount Pictures, could not have hypothetically infringed the ‘547 and therefore was not a RPI. The Board rejected this argument, noting that standard for whether an entity is an RPI is whether the entity exercises control over a party’s participation in the proceeding, not whether the entity could have hypothetically infringed.  Id. at 10.  Petitioner also argued that Paramount Pictures is already estopped from filing further petitions for IPR under 35 U.S.C. § 315(a)(1).  The Board also rejected this argument, noting that Section 312(a)(2) requires identification of all RPIs, not only ones not estopped from filing petitions. Id. at 10.

Concluding its analysis, the Board determined that substantial evidence supported a conclusion that Paramount Pictures was an RPI. Because Paramount Pictures was an RPI not identified in the Petition, the Petition was deemed non-compliant under 35 U.S.C. § 315(a)(2) (requiring identification of all RPIs) and denied. Id. at 11.