Life of the (Not So) Real Party in Interest

The Board in Nokia of America Corp. v. TQ Delta, LLC [1] instituted Nokia’s petition and rejected Patent Owner’s, real party in interest and privity arguments attempting to time-bar Nokia under 35 U.S.C. § 315(b).

Nokia filed a petition challenging TQ Delta’s U.S. Patent No. 7,836,381 (the ’381 patent) which relates to “memory sharing in communication systems.” TQ Delta had asserted an infringement lawsuit against Nokia asserting another patent with claims similar to the ’381 patent, but not asserting the ’381 patent itself. In its preliminary response, TQ Delta argued that Nokia was time-barred under § 315(b), and asked the Board to deny institution. Under § 315(b), the Board must deny a petition when it “is filed more than 1 year after which [a] . . . real party in interest[] or privy of the petitioner is served with a complaint alleging infringement of the [challenged] patent.” In invoking § 315(b), TQ Delta argued that nonparties 2Wire, Inc. (“2Wire”) and its successor-of-interest, CommScope Holding Company, Inc. (“CommScope”), were real parties in interest or privies with Nokia such that Patent Owner’s 2014 patent infringement complaint asserting the ’381 patent against 2Wire satisfied the requirements of § 315(b) and time-barred Nokia from filing the petition at issue. The Board rejected both arguments.

Determining whether a party is a real party in interest is “highly fact dependent” and looks to “the party’s relationship with the petitioner [and] to the petition,” as well as “the nature of the entity filing the petition.” TQ Delta alleged that nonparties 2Wire and CommScope were real parties in interest because they were “featured partners” with Nokia and had a “joint strategy” for challenging the ’381 patent. Specifically, TQ Delta argued that, despite not asserting the ’381 patent against Nokia, Nokia filed this petition to benefit the nonparties because they were “unquestionably time-barred.” In exchange, CommScope filed petitions against other patents that Nokia was accused of infringing. The Board disagreed, noting that TQ Delta sent ’381 patent infringement charts to Nokia, filed a lawsuit against Nokia asserting patents similar to the ’381 patent, and continues to demand a portfolio license, which would include the ’381 patent. The Board concluded that Nokia directly benefited from this petition, undermining TQ Delta’s arguments that this filing was done at the direction of 2Wire and CommScope, requiring them to be real parties in interest.

Like a real party in interest analysis, privity is a “highly fact-dependent question” that looks to whether the parties are sufficiently linked “such that both should be bound by the trial outcome and related estoppels.”[2] TQ Delta alternatively argued that the nonparties 2Wire and CommScope were in privity with Nokia based on their “preexisting, established relationship” as “featured partner[s] in business” and Nokia acting as a proxy for the nonparties. The Board noted, however, that “business partnership alone” is not sufficient for a privity finding and TQ Delta’s proxy argument fails for the same reasons as noted above. Thus, TQ Delta’s alternative argument also failed to establish the requirements to invoke § 315(b).

Take Away

Showing that a nonparty is a real party of interest or in privity with a petitioner requires a highly factual analysis. Therefore, parties must consider all facts, including communications with opposing parties and nonparties that are directly or indirectly connected to the relevant issues or patents.

Endnotes

[1] No. IPR2022-00665, Pap. No. 10 (P.T.A.B. Oct. 3, 2022).

[2] The Supreme Court has provided “six categories” in which privity with a party results in nonparty preclusion: (1) when “[a] person . . . agrees to be bound by the determination of issues in an action between others”; (2) “based on a variety of pre-existing ‘substantive legal relationship[s]’ between the person to be bound and a party to the judgment”; (3) when “a nonparty . . . was ‘adequately represented by someone with the same interests who [wa]s a party’”; (4) when “a nonparty . . . ‘assume[d] control’ over the litigation in which [the] judgment was rendered”; (5) when a nonparty acts as “a proxy” to relitigate for a party; and (6) when “a special statutory scheme may ‘expressly foreclos[e] successive litigation by nonlitigants.’”