An important aspect of inter partes review is how the PTAB identifies real parties-in-interest for each petition. For instance, petitioners that fail to properly identify each real party-in-interest at the time of filing risk their petitions being denied. Also, a real party-in-interest cannot institute an IPR proceeding if it has filed a civil action challenging the validity of the patent, and a petition will be denied if it is filed more than one year after the real party-in-interest is served with a complaint alleging infringement of the patent.

Proving a third party is actually a real party-in-interest, however, requires substantial evidence of that party’s control over the petitioner’s actions. The USPTO’s Office Patent Trial Practice Guide and related decisions describe a highly fact-specific inquiry into whether the nonparty exercised or could have exercised control over a party’s participation in a proceeding. The inquiry focuses on the third party’s behavior rather than its status relative to the petitioner. See Paramount Home Entertainment Inc. v. Nissim Corporation, Dec. 29, 2014 (holding that neither the third party’s status as a parent corporation, nor its status as co-party in the underlying litigation, qualified it as a de facto real party-in-interest; instead the evidence showing specific instances of the parent corporation’s vice president controlling the patent dispute was dispositive).

Challenges to a petitioner’s identification of real parties-in-interest must be made in a relatively short amount of time. If the patent owner hopes to block institution of the IPR on real party-in-interest grounds, the patent owner must submit its challenge before or with the filing of its preliminary response, which is due no later than three months after the petition is filed. In practice, however, a patent owner often has little more than a suspicion that a third party is controlling the IPR when a petition is filed, and normal discovery is not available to the patent owner until after the board’s decision to institute the IPR.

Further complicating the matter is the PTAB’s reluctance to grant additional discovery solely to identify real parties-in-interest. The board requires concrete evidence suggesting a nonparty’s influence in the IPR beyond mere allegation and speculation to grant such a request. The patent owner essentially has to prove the existence of evidence of control before being allowed to obtain it through discovery. See Zerto, Inc. v. EMC Corp., Nov. 21, 2014 (granting request for additional discovery of a nonparty’s organizational structure when the nonparty’s website and public statements held itself out as a single entity with the petitioner, which implied the nonparty had control over the petitioner.)

Moreover, the longer the patent owner waits to request additional discovery, the less likely the board will grant it. So a patent owner must be able to point to concrete evidence suggesting a third party’s influence soon after the petition is filed if it hopes to gain access to further evidence substantial enough to meet the real party-in-interest standard of direct control.

The standards may relax or at least gain some clarity, however, as the USPTO is expected to issue the first of two rounds of changes to PTAB current trial practices expected this year. Included in the first round of changes is “identifying additional factors to consider for assessing the need for additional discovery in real-party-in-interest disputes.”

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