The Software IP Report

Investors in a Separate Corporation that Files an IPR Petition Are Not Real-Parties-in-Interest

Clouding IP is the assignee of U.S. Patent No. 6,738,799 (the ‘799 patent).  The ‘799 patent is related to a method of file synchronization using a signature list.  Clouding asserted the ‘799 patent in a host of lawsuits, including one against Google.  More than one year after the Google case was filed, Unified Patents filed a petition to institute Inter Partes Review (IPR) of certain claims of the ‘799 patent.  In granting the petition, the Patent Trial and Appeals Board (PTAB) rejected the patent owner’s argument that Google was a real-party-in-interest.  Unified Patents, Inc. v. Clouding IP, LLC, Case IPR2013-00586, (PTAB March 21, 2014 (decision on institution of Inter Partes Review).

Clouding had submitted a Patent Owner Preliminary Response, arguing that the IPR should not be instituted because Google, not Unified Patents, was the “real party in interest” under 35 U.S.C. § 312(a)(2).  Because Clouding sued Google more than one year before the Petition was filed, Clouding argued that the Petition was barred under 35 U.S.C. § 315(b).

In support of its argument, Clouding pointed to a Bloomberg Online article identifying Google as a founding member of Unified Patents. Clouding also pointed to another article claiming that Unified Patents “counters the risk and cost of patent troll litigation by protecting strategic technologies.”  Relying on this evidence, Clouding asked the Board to conclude that the real party in interest was Google, not Unified Patents.

The Board looked to the Office Patent Trial Practice Guide to determine how to identify the real party in interest.  The Guide states: “Whether a party who is not a named participant in a given proceeding nonetheless constitutes a ‘real party-in-interest’ or ‘privy’ to that proceeding is a highly fact-dependent question.”  In concluding that the petition was not barred under 35 U.S.C. § 315(b), the Board held that Clouding’s evidence was insufficient.  In so doing, the Board suggested that the necessary evidence must more concretely demonstrate control of the IPR, as well as direct funding of the IPR.  Here, Clouding demonstrated neither.

It remains to be seen whether in the underlying case, Clouding will seek discovery from Google relating to Google’s relationship with Unified Patents, and more particularly, to the IPR at issue.  Thus, while the issue may not be closed, round one certainly went to Unified Patents.