In several recent decisions, the PTAB has clarified the standing required to file petitions seeking Covered Business Method review. Under the AIA, standing to seek Covered Business Method review is limited to those charged with infringement and their “privies.” “Privies,” however, do not encompass merely any party with whom the petitioner is in “privity.” “Privies” is effectively synonymous with “customers”– and, not merely any customers, but customers who the petitioner is legally obligated to indemnify for their alleged infringement.
Earlier this year, in Texas Association of Realtors v. Property Disclosure Technologies, LLC, the PTAB observed that under Section 18(a) (1)(B) of the AIA, a person may not file a CBM petition “unless the person or the person’s real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.”
Noting that “charged with infringement” means “a real a substantial controversy regarding infringement” such that the petitioner “would have standing to bring a declaratory judgment action in Federal court,” the PTAB discussed two instances in which such standing would exist. First, where a supplier is obligated to indemnify its accused customers from infringement liability. Second, where a controversy exists between the patentee and the supplier with respect to the supplier’s liability for inducing or contributing to the alleged direct infringement of the patent by its customers.
Having offered no facts establishing the first (i.e. an obligation to indemnify), the PTAB examined whether the Realtor’s petition sufficiently established the second: a controversy concerning liability for indirect infringement. The PTAB concluded that such a showing demanded allegations of direct contact between the petitioner and the patent owner concerning the asserted patent, before the suppliers could assert standing—allegations absent from the petition under review.
More recently, in Acxiom Corp v. Phoenix Licensing, LLC, the PTAB examined what was meant by “privity” between the petitioner and parties charged with infringement. In doing so, the PTAB highlighted the importance of precise allegations that included detailed explanations supportive of standing.
Acxiom’s petition asserted that Patent Owner Phoenix Licensing had filed suit against co-petitioners Ford Motor Company and AT&T Mobility, LLC, but did not allege that Acxiom had been charged with infringement of U.S. Patent No. 8,352,317. In support of its standing, Acxion stated only that it was a “real party-in-interest to and/or privy of one or more parties who have been sued for infringement[.]”
Holding that the petition must show that petitioner meets the standing requirements through “sufficient proof, ” the PTAB declined to institute the requested review. A petitioner bears the burden of establishing standing. At minimum, this requires the petitioner “to certify with explanation” that the petitioner meets these eligibility requirements.
The PTAB found Acxiom’s petition lacking. Acxiom’s allegation that it was a privy of one or more sued parties was deemed irrelevant. As the PTAB observed, the statute and implementing rules require that the party sued be the privy of the petitioner (i.e. Acxiom), “not the converse.” Thus, for example, while customers of Ford may be privies of that car company, a suit against Ford does not confer standing on each of these customers to file a request for covered business method review.
Under the applicable statute and rules discussed above, in order to confer standing on Acxiom, the party sued must be a privy of Acxiom, not the converse.
The PTAB further observed that debates during passage of the AIA made clear that the term “privy” did not encompass any party with whom the petitioner was “in privity.” The term “privy” effectively meant “customers of the petitioner.”
Where CBM review is sought by parties who themselves have not been charged with infringement, care must be exercised to carefully detail the grounds upon which standing is premised. Relying upon the statute’s extension of standing to privies of those sued will, in general, necessitate an allegation that the parties sued are customers of the petitioner to whom the petitioner owes an indemnity obligation.