Paper No. 17
`Trials@uspto.gov
`571-272-7822
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`Date Entered: September 13, 2013
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`_____________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________
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`ANOVA FOOD, LLC.
`Petitioner
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`v.
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`LEO SANDAU and WILLIAM R. KOWALSKI
`Patent Owner
`____________
`
`Case IPR2013-00114
`Patent 5,972,401
`____________
`
`
`Before SALLY C. MEDLEY, LORA M. GREEN, and
`MICHAEL J. FITZPATRICK, Administrative Patent Judges.
`
`GREEN, Administrative Patent Judge.
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`
`
`DECISION
`Denying Inter Partes Review
`37 C.F.R. § 42.108
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`IPR2013-00114
`Patent 5,972,401
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`I. BACKGROUND
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`Anova Food, LLC (“Anova LLC”) filed a petition (“Pet.”) requesting inter
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`partes review of claims 2-66 and 68-75 of U.S. Patent No. 5,972,401 (the “’401
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`patent”; Ex. 1001) on January 17, 2013. Paper 1. Patent Owner, William R.
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`Kowalski, filed a Preliminary Patent Owner Response on June 17, 2013.1 Paper 8.
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`We have jurisdiction under 35 U.S.C. §§ 6(b) and 314.
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` The standard for instituting an inter partes review is set forth in 35 U.S.C.
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`§ 314(a), which states:
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`THRESHOLD. -- The Director may not authorize an inter partes review
`to be instituted unless the Director determines that the information
`presented in the petition filed under section 311 and any response
`filed under section 313 shows that there is a reasonable likelihood that
`the petitioner would prevail with respect to at least 1 of the claims
`challenged in the petition.
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`
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`For the reasons set forth below, the Board determines that the petition was
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`not filed timely within the statutory period of 35 U.S.C. § 315(a)(1) and, therefore,
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`the petition requesting inter partes review is denied.
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`A. Related Proceedings
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`The ’401 patent is involved in litigation styled William R. Kowalski, Hawaii
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`International Seafood, Inc. v. Anova Food, LLC; Anova Food, Inc.; Clearsmoke
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`Technologies, Ltd., Case No. CV11-00795 (D. Haw.), filed on March 2, 2012.
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`Pet. 1.
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`1 Patent Owner filed a Reformatted Preliminary Response on June 24, 2013. Paper
`10. All further references to the Preliminary Response (“Prelim. Resp.”) are to the
`Reformatted Preliminary Response.
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`Patent 5,972,401
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`B. Earlier Proceedings Involving the ’401 Patent
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`Anova Food, Inc. (“Anova Inc.”), filed three civil actions challenging the
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`validity of the ’401 patent. Prelim. Resp. 1. The three civil actions were Anova
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`Food, Inc. v. Hawaii Int’l Seafood & Kowalski, 1:03-CV-0815 (N.D. Ga.), filed
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`March 25, 2003; Anova Food, Inc. v. Hawaii Int’l Seafood & Kowalski, 1:03-CV-
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`2325 (N.D. Ga.), filed August 1, 2003; and Anova Food, Inc. v. Hawaii Int’l
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`Seafood & Kowalski, 1:04-CV-0775 (N.D. Ga.), filed March 18, 2004. Id.
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`According to Patent Owner, all three actions (collectively, “the Anova Inc.
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`actions”), were dismissed, with the last filed action being dismissed with prejudice.
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`Id.
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`Section 315 of title 35 proscribes the relation of other proceedings or actions
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`II. STANDING
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`to inter partes review proceedings. 35 U.S.C. § 315(a)(1) states:
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`Inter partes review barred by civil action.—An inter partes review
`may not be instituted if, before the date on which the petition for such
`review is filed, the petitioner or real party in interest filed a civil
`action challenging the validity of a claim of the patent.
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`The language of 37 C.F.R. § 42.101 mirrors the language of the statute,
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`stating:
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`A person who is not the owner of a patent may file with the
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`Office a petition to institute an inter partes review of the patent
`unless:
`(a) Before the date on which the petition for review is filed, the
`petitioner or real party-in-interest filed a civil action
`challenging the validity of a claim of the patent.
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`Patent Owner asserts that Anova LLC is the same entity as Anova Inc., and
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`thus is barred from bringing an inter partes review under 35 U.S.C. § 315(a)(1)
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`and 37 C.F.R. § 42.101 because of the filing of the three Anova Inc. actions, and
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`the dismissal with prejudice of the last Anova Inc. action. Prelim. Resp. 1-2.
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`Petitioner raises two issues in response. The first issue is whether “filed” as
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`used in 35 U.S.C. § 315(a)(1) and 37 C.F.R. § 42.101(a) should be interpreted as
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`requiring “filed and served.” If the answer to the first inquiry is “no,” the second
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`issue raised by the Petitioner is whether Anova LLC is the same entity as Anova
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`Inc., such that Anova LLC is barred from filing a petition for inter partes review of
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`the ’401 patent based on the filing by Anova Inc. of the three Anova Inc. actions.
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`A. Background
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`As to standing to bring the instant inter partes proceeding, Anova LLC
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`certified in its petition “that the ’401 Patent is available for inter partes review and
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`that the Petitioner is not barred or estopped from requesting an inter partes review
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`challenging the patent claims on the grounds identified herein.” Pet. 3. Anova
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`LLC did not mention the Anova Inc. actions in its petition requesting inter partes
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`review of the ’401 patent.
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`In the preliminary response, Patent Owner raised the issue of the Anova Inc.
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`actions, and presented evidence that Anova LLC is the same entity as Anova Inc.
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`Prelim. Resp. 1-9. A phone conference was held on June 20, 2013, between the
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`Board and the parties, in which Anova LLC’s standing to request inter partes
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`review was discussed. See Paper 11. Anova LLC requested permission to file a
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`reply addressing the issue of standing. Id. at 4. In that call, the Board authorized
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`Petitioner’s request to file a reply (“Pet. Reply;” Paper 13), and also authorized
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`Patent Owner to file a sur-reply (“Sur-reply;” Paper 14). Paper 11 at 5. Thus,
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`Petitioner has had ample opportunity to address the issue of standing under
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`35 U.S.C. § 315(a)(1).
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`IPR2013-00114
`Patent 5,972,401
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`B. Whether “filed” as used in 35 U.S.C. § 315(a)(1) should be interpreted as
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`“filed and served.”
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`Anova LLC contends that “‘filed’ must mean ‘filed and served.’” Pet.
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`Reply. 1-2. According to Anova LLC, the purpose of the bar is to prevent
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`harassment of the Patent Owner, and such harassment could not have occurred as
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`none of the Anova Inc. actions was ever served on Patent Owner. Id. at 2.
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`Statutory construction “begins with ‘the language of the statute.’ And where
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`the statutory language provides a clear answer, it ends there as well.” Hughes
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`Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999) (citations omitted).
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`“Beyond the statute’s text, [the ‘traditional tools of statutory
`construction’] include the statute’s structure, canons of statutory
`construction, and legislative history.” Timex V.I. v. United States, 157
`F.3d 879, 882 (Fed.Cir.1998) (quoting Chevron U.S.A., Inc. v. Natural
`Res. Def. Council, Inc., 467 U.S. 837, 843 n. 9 (1984)). “If a court,
`employing traditional tools of statutory construction, ascertains that
`Congress had an intention on the precise question at issue, that
`intention is the law and must be given effect” Chevron, 467 U.S. at
`843 n. 9. . . .
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`Bull v. U.S., 479 F.3d 1365, 1376 (Fed. Cir. 2007) (parallel citations omitted).
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`“It is well settled law that the plain and unambiguous meaning of the words
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`used by Congress prevails in the absence of a clearly expressed legislative intent to
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`the contrary.” Hoechst Aktiengesellschaft v. Quigg, 917 F.2d 522, 526 (Fed. Cir.
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`1990). When there is no ambiguity in the words of the statute, “we turn to the
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`legislative history to see if Congress meant something other than what it said
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`statutorily.” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988).
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`In 35 U.S.C. § 315(a)(1), the statute states that inter partes review may not
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`be instituted “if, before the date on which the petition for such review is filed, the
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`petitioner or real party-in-interest filed a civil action challenging the validity of a
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`claim.” Thus, section 315(a)(1) refers only to filing, and Anova LLC does not
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`point us to any legislative history to demonstrate that the legislative intent was in
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`fact that “filed” be read as “filed and served.”
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`Moreover, we contrast the section 315(a)(1) bar with the section 315(b) bar.
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`35 U.S.C. § 315(b) states, in relevant part:
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`Patent Owner’s Action.—An inter partes review may not be
`instituted if the petition requesting the proceeding is filed more than 1
`year after the date on which the petitioner, real party in interest, or
`privy of
`the petitioner
`is served with a complaint alleging
`infringement of the patent.
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`Section 315(b) requires that the petitioner be “served,” whereas section
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`315(a)(1) only requires that the civil action be “filed.” Thus, based on the plain
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`words of the statute, it appears that when Congress meant for service to be
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`required, it included it in the statute. We, therefore, decline to read “served” into
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`35 U.S.C. § 315(a)(1).
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`C. Whether Anova LLC has demonstrated it is not the same entity as Anova Inc.
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`for purposes of 35 U.S.C. § 315(a)(1).
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`Patent Owner asserts that Anova LLC and Anova Inc. are in fact the same
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`entity. Patent Owner thus contends that Anova LLC is precluded from instituting
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`inter partes review of the ’401 patent because of the filing by Anova Inc. of an
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`action challenging the validity of the claims in the ’401 patent before the date of
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`filing of the petition.
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`The issue is, therefore, whether Anova LLC is the successor of Anova Inc.,
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`such that the filing of the Anova Inc. actions by Anova Inc. may be imputed to
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`Anova LLC.2 In determining successor liability between a predecessor corporation
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`and a successor corporation, the Court of Appeals for the Federal Circuit looks to
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`state law. Funai Elec. Co., Ltd. v. Daewoo Eletronics Corp., 616 F.3d 1357, 1379-
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`1380 (2010). Quoting Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010), the court
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`noted “that for diversity jurisdiction the “‘principal place of business’” is ‘the place
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`where a corporation’s officers direct, control, and coordinate the corporation’s
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`activities,’ from which it follows that the laws of the principal place of business
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`should normally apply to transactions flowing from the corporation’s ‘nerve
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`center.’” Id. at 1380. Following that principle, Anova LLC’s principal place of
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`business is Florida3, and thus we will apply Florida law to the issue of corporate
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`successor liability.
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`Florida honors the “traditional corporate law rule,” in which the liabilities of
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`a predecessor corporation are not imposed on a successor corporation unless:
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`1) the successor expressly or impliedly assumes obligations of the
`predecessor, (2) the transaction is a de facto merger, (3) the successor
`is a mere continuation of the predecessor, or (4) the transaction is a
`fraudulent effort to avoid liabilities of the predecessor.
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`Bernard v. Kee Mfg. Co., 409 So.2d 1047, 1049 (Fla.1982). The tests for
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`determining the existence of a de facto merger or a mere continuation in business
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`are:
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`[W]hen one corporation is absorbed by another, i.e., there is a
`continuity of the selling corporation evidenced by such things as the
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`2 Anova LLC argues that it was not in privity with Anova Inc. under the factors set
`forth by the Supreme Court in Taylor v. Sturgell, 553 U.S. 880, 898 (2008). Pet.
`Reply 2-5. As noted by Patent Owner, however, that argument is irrelevant as
`Patent Owner is not arguing that Anova LLC is barred from seeking inter partes
`review based on privity with Anova Inc. Sur-reply 2.
`3 See declaration of Darren Zobrist, President of Anova LLC (Ex. 2008), stating
`that Anova LLC has its principal place of business in Tampa, Florida.
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`same management, personnel, assets, location and stockholders . . . .
`“The bottom-line question is whether each entity has run its own race,
`or whether, there has been a relay-style passing of the baton from one
`to the other.” (citations omitted.)
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`Amjad Munim, M.D., P.A., v. George Azar, M.D. 648 So. 2d 145, 154 (Fla. Dist.
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`
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`Ct. App. 1994) (quoting 300 Pine Island Assoc.v. Steven L. Cohen & Assoc., 547
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`So.2d 255, 256 (Fla. Dist. Ct. App. 1989)); see also Lab. Corp. of America v.
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`Prefessional Recovery Network, 813 So.2d 266, 270 (Fla. Dist. Ct. App. 2002).
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`We note that Anova LLC asserts, without citation, that the “burden of proof
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`for an ‘estoppel’ under § 42.101(c) is on [Patent Owner].” Pet. Reply 2. This is
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`not an issue of estoppel under 37 C.F.R. § 42.101(c), however, but is an issue of
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`whether Anova LLC is barred from pursuing inter partes review under 35 U.S.C.
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`§ 315(a)(1) and 37 C.F.R. § 42.101(a) because of the filing of the Anova Inc.
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`actions.
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`Patent Owner contends that declarations from corporate officers refer to
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`Anova Inc. and Anova LLC as the same business, with “people, customers,
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`products, procedures, etc.—switching to the new corporate form in the same
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`location.” Prelim. Resp. 4-5 (citing Exs. 2008-2012); see also Sur-Reply at 2
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`(citing Ex. 2040). Patent Owner further contends that Anova LLC stated on its
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`website that its inception was in 1996, which is the year of incorporation of Anova
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`Inc., whereas Anova LLC was incorporated in 2010. Prelim. Resp. 5 (citing Ex.
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`2013).
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`In the Declarations of Darren Zobrist, Mr. Zobrist states that he is both the
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`President of Anova LLC and interim CEO of Anova Inc. Ex. 2008, 2009. Mr.
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`Zobrist declared further that Douglas Brinsmade, who was the former president of
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`Anova Inc., has an agreement with both Anova Inc. and Anova LLC “to return all
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`company documents when he left their employment, but he kept a group of them
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`pending resolution of his employment claim.” Ex. 2009 at 3.
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`In the Declaration of Scott Purinton, Mr. Purinton states that at the time of
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`the Declaration, he was Vice President of Sales of Anova LLC, and that when
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`Anova Inc. was operational, he had been Vice President of National Sales of
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`Anova Inc. Ex. 2010, ¶ 1. Mr. Purinton declares that Performance Food Group
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`(“PFG”) is a customer of Anova LLC, and also was a customer of Anova Inc. Id.
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`at ¶¶2 and 3; see also Ex. 2012 (Declaration of Performance Food Group
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`Customized, stating that PFG was a past customer of Anova Inc., and was a
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`customer of Anova LLC at the time of the Declaration). Mr. Purinton notes that in
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`order to shorten his Declaration, “because of the amount of overlap between the
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`two Anova companies, I will refer to both Anova LLC and Anova Inc. as
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`‘Anova.’” Ex. 2010 at ¶ 3. Patent Owner submits the “LinkedIn” page4 of Mr.
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`Purinton. Ex. 2040. Mr. Purintin states under “Experience” that he has been the
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`Vice President of Anova Food, LLC, from March 1998 to the present, for a total of
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`15 years, 5 months. Id.
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`Patent Owner submits Exhibit 2013, which it states is a December 23, 2011,
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`copy of a webpage from the website http://anovafoodgroup.com/About.html,
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`which Anova LLC does not dispute on this record. According to the webpage,
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`“Anova Food, LLC” is headquartered in Tampa, Florida, and has, “[s]ince its
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`inception in 1996, . . . grown from a small, single-species importer to an industry
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`leading multinational company offering a full line of frozen seafood products.”
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`Ex. 2013 at 1.
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`Anova LLC responds that Anova Inc. was incorporated in 1996 in Georgia
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`(citing Ex. 1028), and was owned by, and was a fully controlled subsidiary of,
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`4 http://www.linkedin.com/pub/scott-purinton/73/b59/372.
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`Anova Holding, BV (“Anova BV”), a Dutch company, when the Anova Inc.
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`actions were filed. Pet. Reply 1. Anova LLC, however, does not direct us to
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`evidence to substantiate that statement. Anova LLC asserts next that one hundred
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`percent of the shares of Anova Inc. were transferred to Anova Holding USA, LLC
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`(“Anova Holding”). Id. (citing Ex. 1029).
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`Anova LLC was organized on May 26, 2010, as a Virginia Limited Liability
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`Company, as a “wholly owned and controlled subsidiary of Holding USA,” and
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`capitalized with certain assets from Anova Holding, subject to defined liabilities.
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`Id. (citing Ex. 1029 and Ex. 1030). According to Petitioner, “Anova LLC was
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`never owned or controlled by the Dutch Anova BV that controlled Anova Inc.
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`during the 2003-2004 lawsuits.” Id.
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`Exhibit 1028 is the Certificate of Incorporation of Anova Food, Inc., as a
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`Georgia corporation, and Exhibit 1029 is the certificate of organization of Anova
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`Food, LLC., as a Virginia corporation. Exhibit 1030 is a Certificate of Manager,
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`transferring undefined capital assets having a book value of approximately $14
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`million dollars to its wholly owned subsidiary, Anova Food LLC, “subject to
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`certain defined liabilities.”
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`Anova LLC contends further that Patent Owner unsuccessfully attempted to
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`argue in the Hawaii action “that Anova LLC was the alter ego of Anova Inc.” Pet.
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`Resp. 4 (citing Ex. 1033). Patent Owner responds that it did not argue alter ego in
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`the Hawaii action, and also is not arguing alter ego in this proceeding. Sur-reply 2.
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`We agree with Patent Owner that Exhibit 1033 is not probative on the issue as to
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`whether Anova LLC is the continuation of Anova Inc. The United States District
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`Court for the District of Hawaii only stated that plaintiffs (including Patent
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`Owner), “have not argued that the Defendants [including both Anova LLC and
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`Anova Inc.] are all alter egos of each other or cited authority that show their
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`separate actions can otherwise be imputed to each other.” Ex. 1033 at 12.
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`Upon consideration of the arguments of both Anova LLC and Patent Owner,
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`as well as weighing the evidence that has been made of record, we conclude that
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`Anova LLC has not established that it is not barred under 35 U.S.C. § 315(a)(1).
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`Specifically, Anova LLC has not presented rebuttal evidence sufficient to outweigh
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`Patent Owner’s evidence showing that, in essence, Anova Inc. and Anova LLC
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`operated as one continuous entity. The evidence submitted by Patent Owner
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`suggests that there was merely a “passing of the baton” from Anova Inc. to Anova
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`LLC. Munim, 648 So. 2d at 154. In that regard, we note the evidence of record
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`supports a conclusion that Anova Inc. and Anova LLC shared the same officers
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`and same customers. For example, we find it probative that two top officials of
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`Anova Inc. maintained their top status in Anova LLC. Mr. Purinton, one of those
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`top officials, specifically states on his LinkedIn page that he has been a Vice
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`President at Anova LLC, from March 1998 to the present. Ex. 2008-2010, 2040.
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`Moreover, the page from the website of Anova LLC (Ex. 2013), which Anova
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`LLC does not address in its response, specifically states that the year of inception
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`of Anova LLC was 1996, thus implicitly portraying Anova Inc. and Anova LLC as
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`one continuous entity, in business since 1996, when “the company” first began as
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`Anova Inc.
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`Accordingly, based on the totality of the evidence, including the fact that
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`Anova Inc. and Anova LLC held themselves out to the public as one continuous
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`entity, we conclude that the filing of the Anova Inc. actions are acts imputed to
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`Anova LLC. Anova LLC is, therefore, barred from filing an inter partes review,
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`because Anova Inc. “filed a civil action challenging the validity of a claim” of the
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`’401 patent before Anova LLC filed its petition for inter partes review. 35 U.S.C.
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`§ 315(a)(1).
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`III. CONCLUSION
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`We have considered Petitioner’s arguments, but Petitioner has not identified
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`any authority requiring that the Board deviate from the plain language of 35 U.S.C.
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`§ 315(a)(1). We also conclude that Anova LLC has not established that it has
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`standing under that section of the statute such that inter partes review may be
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`instituted. Thus, we are not persuaded that the petition for an inter partes review
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`of U.S. Patent 5,972,401 was filed timely within the statutory period of 35 U.S.C.
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`§ 315(a)(1) and, therefore, the petition is denied.
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`IV. ORDER
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`In consideration of the foregoing, it is hereby
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`ORDERED that the petition is denied as to all challenged claims and no trial
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`is instituted.
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`For Petitioner:
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`Dale R. Jensen
`djensen@zoblaw.com
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`Scott B. Dahlquist
`sdahlquist@zoblaw.com
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`For Patent Owner:
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`Martin E. Hsia
`mhsia@cades.com
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`Keri Ann Krzykowski
`kkrzykowski@cades.com
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