Trials@uspto.gov
`Tel: 571-272-7822
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`
`
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`Paper 13
`Entered: March 20, 2014
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`
`ZOLL LIFECOR CORPORATIOIN
`Petitioner,
`
`v.
`
`PHILIPS ELECTRONICS NORTH AMERICA CORP. and
`KONINKLIJKE PHILIPS ELECTRONICS N.V.
`Patent Owner.
`
`_______________
`
`Case IPR2013-00606
`Patent 5,593,427
`_______________
`
`
`
`
`Before SALLY C. MEDLEY, MIRIAM L. QUINN, and GREGG I. ANDERSON,
`Administrative Patent Judges.
`
`QUINN, Administrative Patent Judge.
`
`
`DECISION
`Denying Institution of Inter Partes Review
`37 C.F.R. § 42.108
`
`
`
`
`
`
`
`

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`I.
`
`Case IPR2013-00606
`Patent 5,593,427
`
`INTRODUCTION
`On September 23, 2013, ZOLL Lifecor Corporation (“Petitioner” or “ZOLL
`Lifecor”) filed a Petition to institute an inter partes review of all the claims, claims
`1-18 (the “challenged claims”), of U.S. Patent No. 5,593,427 (“the ’427 patent”).
`Paper 1 (“Pet.”). Koninklijke Philips Electronics N.V. (“Patent Owner”) timely
`filed a Preliminary Response. Paper 7 (“Prelim. Resp.”). The Board authorized
`the Petitioner to file a brief addressing the privity and real party-in-interest issues
`raised in the Preliminary Response. Paper 10. Petitioner filed a brief addressing
`those issues. Paper 11 (“Brief”). We have jurisdiction under 35 U.S.C. § 314.
`After consideration of all the arguments and evidence presented by
`Petitioner and Patent Owner, we are persuaded that the Petition does not identify
`“all the real parties in interest,” as required by 35 U.S.C. § 312(a).
`The instant Petition is denied under 35 U.S.C. § 315(b) for the reasons that
`follow.
`
`Related Proceedings
`The ’427 patent is the subject matter of pending district court litigation, filed
`against Petitioner on September 21, 2012 and captioned Koninklijke Philips N.V. v.
`ZOLL Lifecor Corp., No. 12-cv-1369 (W.D. Pa.) (“the Pennsylvania Action”). The
`Pennsylvania Action also involves seven other patents, all related to the ’427
`patent. Prelim. Resp. 7. Each of these patents, including the ’427 patent, claims
`priority to the same application, No. 08/103,837, filed on August 6, 1993. Id.
`A district court case filed by Patent Owner, captioned Koninklijke Philips
`N.V. v. ZOLL Med. Corp., No. 10-cv-11041 (D. Mass.) (“the Massachusetts
`Action”), involves the parent company, ZOLL Medical Corporation (“ZOLL
`Medical”). Prelim. Resp. 6-7. In the Massachusetts Action, Patent Owner sued
`ZOLL Medical for infringement of six of the eight patents-at-issue in the
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`Case IPR2013-00606
`Patent 5,593,427
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`Pennsylvania Action. The ’427 patent, although related to the other asserted
`patents, is not involved in the Massachusetts Action.
`Petitioner has filed eight petitions (including the instant case) for inter partes
`review involving the patents in the Pennsylvania Action. Pet. 2. The Petition
`identifies as a related matter the Pennsylvania Action (involving Petitioner), but
`not the Massachusetts Action (involving the parent, ZOLL Medical). Pet. 2. On
`January 3, 2004, after Patent Owner filed its Preliminary Response, Petitioner
`amended its Mandatory Notice to list, as a related matter, the Massachusetts
`Action. Paper 9.
`
`II. DISCUSSION
`
`Factual Background
`A.
`ZOLL Medical is a manufacturer of resuscitation devices and related
`software solutions. Ex. 2010. On April 10, 2006, ZOLL Medical announced that
`it had acquired the assets and business of Lifecor, Inc., a privately held company
`that designs, manufactures, and markets a wearable external defibrillator system.
`Ex. 2010. At the time ZOLL Medical acquired Lifecor, Inc., ZOLL Medical
`announced that it would operate the Lifecor, Inc. business through the ZOLL
`Lifecor subsidiary, based in Pittsburgh, Pennsylvania. Id. It is undisputed that
`ZOLL Lifecor, Petitioner, is a wholly-owned subsidiary of ZOLL Medical.
`Prelim. Resp. 1; Brief 1.
`After the acquisition, ZOLL Medical referred to itself and Petitioner
`collectively as “ZOLL.” Ex. 2011 (ZOLL Medical’s Annual Report, Form 10-K,
`dated Dec. 15, 2006). In filed public financial statements, ZOLL Medical asserted
`that it “now manufactures and markets [a] wearable external defibrillator system
`[i.e., LifeVest] through its subsidiary, ZOLL Lifecor Corporation.” Ex. 2011 at 10.
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`Case IPR2013-00606
`Patent 5,593,427
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`Under the ZOLL brand, ZOLL Medical used a dedicated sales force to sell the
`Petitioner’s LifeVest product. Ex. 2011 at 19. In 2008, ZOLL Medical asserted in
`public financial documents that ZOLL was conducting clinical trials related to the
`LifeVest product. Ex. 2013 at 27.
`The LifeVest is Petitioner’s only product, which is marketed on the ZOLL
`Medical website. Ex. 2014.
`Petitioner sought a stay of the Pennsylvania Action based on the overlap
`with, and the impact of, the Massachusetts Action. Ex. 2005 at 5. Petitioner took
`the position that issues of invalidity addressed in the Massachusetts Action would
`be directly applicable to the eight patents involved in the Pennsylvania Action. Ex.
`2005 at 2. The district court granted a stay of the Pennsylvania Action, and
`required the parties to mediate. Exs. 2007-08. Three officers of ZOLL Medical,
`which is not a party to the Pennsylvania Action, attended the mediation on behalf
`of Petitioner. Ex. 2018 at 6-7, 9; Ex. 2006 at 1. Petitioner also was represented at
`the mediation by Mr. Grossman, its Secretary, who provides legal guidance for
`both ZOLL Medical and Petitioner. Brief 5.
`To maintain the stay, Petitioner again relied on the “high degree of overlap
`between this [Pennsylvania Action] and the Massachusetts [Action],” and that
`resolution of the parties’ negotiations with Patent Owner involved a “global
`resolution” that included both pending Actions. Ex. 2006 at 1, 6. Petitioner
`argued against ramping up activity in the Pennsylvania Action because the parties
`were focusing on preparing for the trial in the Massachusetts Action. Ex. 2006 at
`3-4.
`
`The instant Petition for inter partes review was filed on September 23, 2013.
`Paper 1. The petitions rely on declarations from the same expert witness disclosed
`in the Massachusetts Action on behalf of ZOLL Medical. Exs. 1004 and 2022.
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`Case IPR2013-00606
`Patent 5,593,427
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`
`Arguments Presented
`B.
`Patent Owner argues that the relationship between Petitioner and ZOLL
`Medical supports its contention that ZOLL Medical is a real-party-in-interest.
`Prelim. Resp. at 16-19.
`Patent Owner further argues that ZOLL Medical’s close involvement in the
`Pennsylvania Action shows control of Petitioner in the Pennsylvania Action and
`this proceeding. Prelim. Resp. 20-22.
`Furthermore, Patent Owner argues that ZOLL Medical could have controlled
`Petitioner’s involvement in this proceeding because:
`(1) ZOLL Medical has the legal right of a parent corporation to control its
`wholly-owned subsidiary when there are common interests and the relationship
`justifies the parent’s control, id.at 23 (citing Copperweld Corp. v. Independence
`Tube Corp., 467 U.S. 752, 771-72 (1984)); and
`(2) the Federal Circuit has recognized the legal right of a parent corporation
`to control an administrative proceeding, id. at 24 (citing Dalton v. Honda Motor
`Co., 425 F. App’x 886, 890 (Fed. Cir. 2011) (dealing with standing by a parent
`corporation having a “real interest” in a TTAB proceeding)); and
`(3) a favorable outcome in this proceeding would directly benefit ZOLL
`Medical, id. at 23 (citing Ex. 2010 at 1, 10).
`In response, Petitioner argues that Petitioner is the real party-in-interest.
`Brief 3. Petitioner contends that it, not ZOLL Medical, has the greater liability for
`infringement of the patents for which inter partes review is requested, and that
`Petitioner is paying for and supervising the inter partes reviews and district court
`litigation without compensation from ZOLL Medical. Brief 3-5 (citing Exs. 1015-
`18).
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`Case IPR2013-00606
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`Petitioner further argues that had the Board allowed testimonial evidence,1
`Petitioner would have established facts that show: (1) Petitioner’s management
`develops the plans and budget for Petitioner’s business, which are presented to
`ZOLL Medical for approval, as is typical in a parent-subsidiary relationship, but
`the direction is provided from ground up, not top down; (2) ZOLL Medical does
`not hold the LifeVest regulatory approval, does not control LifeVest research,
`development, and manufacture, and does not control LifeVest marketing, sales,
`leasing, and revenue collection; (3) Petitioner is paying the costs of the litigation
`and the IPRs, and is not being compensated by ZOLL Medical for those costs; and
`(4) Petitioner’s management is supervising the conduct of the IPRs and the
`litigation against Petitioner. Brief 4-5.
`Petitioner disputes Patent Owner’s assertion of control by ZOLL Medical
`because: (1) Petitioner has full control over its hiring, even though Petitioner and
`ZOLL Medical share the Career website; (2) Petitioner was represented at
`settlement by Mr. Grossman, its Secretary, who provides legal guidance for both
`companies; (3) the use of common counsel is not evidence of control; (4) the use of
`“we” in an SEC filing is not evidence of control; and (5) the LifeVest facility is
`subject to an obligation to ZOLL Medical, but not to its control. Brief 5-6 (citing
`Exs. 1016, and 1019-20).
`C.
`35 U.S.C. § 312(a)(2) and 37 C.F.R. § 42.8
`Patent Owner urges the Board to vacate the Petition because Petitioner failed
`to identify ZOLL Medical as a real party-in-interest. Prelim. Resp. 15-27.
`
`1 We note that the Board’s authorization to file a brief on the issue of privity and
`real party-in-interest gave Petitioner discretion to file all evidence supporting
`Petitioner’s arguments. Petitioner did not request authorization to file testimony
`and such a request was not precluded. See Paper 10.
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`Case IPR2013-00606
`Patent 5,593,427
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`Section 312(a) of Title 35 of the United States Code provides:
`(a) REQUIREMENTS OF PETITION.—A petition filed under
`section 311 may be considered only if—
`(1) the petition is accompanied by payment of the fee
`established by the Director under section 311;
`(2) the petition identifies all real parties in interest;
`(3) the petition identifies, in writing and with particularity,
`each claim challenged, the grounds on which the challenge to each
`claim is based, and the evidence that supports the grounds for the
`challenge to each claim, including—
`
`(A) copies of patents and printed publications that the
`petitioner relies upon in support of the petition; and
`
`(B) affidavits or declarations of supporting evidence
`and opinions, if the petitioner relies on expert opinions;
`(4) the petition provides such other information as the
`Director may require by regulation; and
`(5) the petitioner provides copies of any of the documents
`required under paragraphs (2), (3), and (4) to the patent owner or,
`if applicable, the designated representative of the patent owner.
`
`For a petition to receive a filing date, the petition must satisfy section 312(a)
`statutory requirements. See, e.g., 37 C.F.R. § 42.106; 77 Fed. Reg. 48,689 (Aug.
`14, 2012). The mandatory notices included in the petition must, therefore, include
`the identification of “each real party-in-interest for the party.” 37 C.F.R.
`§§ 42.8(a)(1), (b)(1). The Board generally accepts the petitioner’s identification at
`the time of filing the petition. 77 Fed. Reg. at 48,695.
`The Board accords a filing date and generally accepts minor deficiencies that
`do not impact the Board’s ability to determine whether to institute the review or
`the patent owner’s ability to file a preliminary response. Id. at 48,700-01. The
`Board, however, relies on petitioner’s identification of the real party-in-interest to
`determine conflicts of interest for the Office, the credibility of evidence presented
`in a proceeding, and standing of a party that previously has filed a civil action
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`involving a patent for which an inter partes review is requested. Id. at 48,617.
`The failure to identify all the real parties-in-interest impedes the Board’s ability to
`determine whether a request for inter partes review is timely. This is so because
`an inter partes review may not be instituted if the petition is filed more than one
`year after the date on which the petitioner, the real party-in-interest, or privy of the
`petitioner is served with a complaint alleging infringement of the patent. 35 U.S.C.
`§ 315(b). Further, the failure to identify the real parties-in-interest impedes the
`Board’s ability to determine whether inter partes review may be barred under 35
`U.S.C. § 315(a)(1), or whether a real party-in-interest or privy of the petitioner is
`estopped from requesting review under 35 U.S.C. § 315(e).
`Rule 42.106(a) provides petitioners a one-month time frame to correct
`defective petitions. 37 C.F.R. § 42.106(b). This rule is consistent with the
`requirement of 35 U.S.C. § 312(a) that the Board may not consider a petition that
`fails to meet the statutory requirements for a petition. 77 Fed. Reg. at 48,689.
`A threshold issue for the Board is to determine whether ZOLL Medical is a
`real party-in-interest under 35 U.S.C. § 312(a) and 37 C.F.R. § 42.8(b)(2). That
`determination follows.
`Real Party-in-Interest Analysis
`D.
`Patent Owner contends that ZOLL Medical controls and could have
`controlled both the business and legal proceedings of its wholly-owned subsidiary
`Zoll Lifecor. Prelim. Resp. 16, 22. In response, Petitioner argues that: (1) control
`is the wrong standard to apply in the real party-in-interest determination; (2)
`Petitioner is the sole real party-in-interest; and (3) Petitioner is not estopped
`because the parties, the accused products, and the asserted claims are different in
`the Pennsylvania and Massachusetts Actions. Brief 1.
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`“Whether a party who is not a named participant in a given proceeding
`nonetheless constitutes a ‘real party-in-interest’ . . . to that proceeding is a highly
`fact-dependent question.” 77 Fed. Reg. at 48,759. “[T]he spirit of that formulation
`as to IPR . . . proceedings means that, at a general level, the ‘real party-in-interest’
`is the party that desires review of the patent. Thus, the ‘real party-in-interest’ may
`be the petitioner itself, and/or it may be the real party or parties at whose behest the
`petition has been filed.” Id. (emphasis added). “Courts invoke the terms ‘real
`party-in-interest’ and ‘privy’ to describe relationships and considerations sufficient
`to justify applying conventional principles of estoppel and preclusion.” Id. The
`determination of whether a non-party is a real party-in-interest involves a
`consideration of “control.” Id.
`Factors for determining actual control or the opportunity to control include
`existence of a financially controlling interest in the petitioner. 77 Fed. Reg. at
`48,617 (discussing the mandatory notice codified in 37 C.F.R. § 42.8). Additional
`relevant factors include: the non-party’s relationship with the petitioner; the non-
`party’s relationship to the petition itself, including the nature and/or degree of
`involvement in the filing; and the nature of the entity filing the petition. 77 Fed.
`Reg. at 48,760.
`The non-party’s participation may be overt or covert, and the evidence may
`be direct or circumstantial—but the evidence as a whole must show that the non-
`party possessed effective control from a practical standpoint. Gonzalez v. Banco
`Cent. Corp., 27 F.3d 751, 759 (1st Cir. 1994). The inquiry is not based on isolated
`facts, but rather must consider the totality of the circumstances. Id.
`After considering the evidence presented by Petitioner and Patent Owner we
`are persuaded by the evidence presented that ZOLL Medical is a real party-in-
`interest for purposes of 35 U.S.C. § 312(a)(2) and 37 C.F.R. § 42.8(b)(2), because
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`it “‘has the actual measure of control or opportunity to control that might
`reasonably be expected between two formal coparties.’” 77 Fed. Reg. at 48,759
`(quoting Wright & Miller § 4451). We are persuaded that the evidence presented
`by Patent Owner shows sufficiently that ZOLL Medical and Petitioner have a very
`close parent and wholly-owned subsidiary relationship with aligned interests and
`sufficient opportunity for ZOLL Medical to control the challenge to the
`patentability of the patent-at-issue in the instant petition.
`Petitioner acknowledges that ZOLL Medical controls 100% of Petitioner and
`authorizes its budget and plans. Brief 4. Although Petitioner asserts that it is
`paying the costs and supervising the conduct of the IPRs, and that Petitioner’s
`management is held responsible for its performance, Petitioner also acknowledges
`that its budgets and plans are approved by ZOLL Medical. Id. What Petitioner
`does not state affirmatively also is telling—that neither Mr. Grossman, who by
`admission provides legal counsel for both ZOLL Medical and Petitioner, nor legal
`counsel for ZOLL Medical provided input into the preparation of the IPRs filed by
`Petitioner.
`The circumstantial evidence shows unified actions by Petitioner and ZOLL
`Medical in the “multi-state patent war” (Ex. 2006, 2)—of which the instant IPR is
`a part—with Patent Owner. We also are persuaded that Petitioner’s actions have
`blurred sufficiently the lines of corporate separation with its parent, ZOLL
`Medical, such that ZOLL Medical could have controlled the filing and
`participation of the IPRs. For example, the absence of Petitioner’s management
`team and presence of ZOLL Medical’s management team at the court-ordered
`mediation in the Pennsylvania Action suggest an involved and controlling parent
`corporation representing the unified interests of itself and Petitioner.
`The Board provided Petitioner with an opportunity to rebut Patent Owner’s
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`Patent 5,593,427
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`assertions that ZOLL Medical is a real party-in-interest that should have been
`identified in its petition in accordance with 37 C.F.R. § 42.8 and 35 U.S.C.
`§ 312(a). Petitioner argued, unpersuasively, that control is not the legal standard
`and that its relationship with ZOLL Medical is like that of co-defendants who face
`the same plaintiff. Brief 5. We disagree that control is not a factor. See 77 Fed.
`Reg. at 48,759. We also are not persuaded that the relationship between ZOLL
`Medical and Petitioner merely is one of co-defendants who face the same plaintiff.
`Petitioner does not rebut the other indicia of control over its legal proceedings,
`such as ZOLL Medical’s management team representing the Petitioner in the
`court-ordered mediation in the Pennsylvania Action, and Petitioner’s arguing for a
`stay in district court on the basis that the parties (ZOLL Medical and Petitioner)
`would be busy with the ZOLL Medical trial. Further, we are not persuaded by
`Petitioner’s argument that it is not estopped because of the differences between the
`Pennsylvania and Massachusetts Actions. Differences between the actions do not
`overcome the Board’s determination that a non party is a real party-in-interest
`because of considerations of control.
`Based on the foregoing, we determine that the failure to identify the parent
`corporation, ZOLL Medical, violates the statutory and regulatory requirements that
`the petition identify all real parties-in-interest. 35 U.S.C. § 312(a); 47 C.F.R.
`§ 42.8(b)(1). To comply with these provisions the Petition should have identified
`ZOLL Medical as a real party-in-interest.
`E.
`Compliance With 35 U.S.C. § 312(a) and 37 C.F.R. § 42.8
`Having determined that the petition does not identify each real party-in-
`interest, the Board determines that the Petition is incomplete.
`Section 42.106(b) of Title 37 of the Code of Federal Regulations provides:
`(b) Incomplete petition. Where a party files an incomplete
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`Case IPR2013-00606
`Patent 5,593,427
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`petition, no filing date will be accorded, and the Office will
`dismiss the petition if the deficiency in the petition is not
`corrected within one month from the notice of an incomplete
`petition.
`
`Ordinarily, because the Petition is incomplete, the Board would give
`Petitioner one month from the date of this decision to correct the deficiency and
`list ZOLL Medical as a real party-in-interest. In this instance, however, curing the
`omission of ZOLL Medical as a real party-in-interest would be futile because, even
`if corrected, the earliest filing date that could be accorded to the Petition would not
`fall within the one-year period specified by 35 U.S.C. § 315(b).2 Accordingly, we
`deny this petition as untimely.
`
`
`III. ORDER
`After due consideration of the record before us, it is
`
`ORDERED that the petition is denied and no trial is instituted.
`
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`
`2 Petitioner was served with a complaint alleging infringement of the ’427 patent
`on September 21, 2012. Thus, the one year period expired on September 21, 2013.
`See 35 U.S.C. § 21(b).
`
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`Case IPR2013-00606
`Patent 5,593,427
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`
`PETITIONER:
`John C. Phillips (Lead Counsel)
`Dorothy P. Whelan (Backup Counsel)
`FISH & RICHARDSON P.C.
`60 South Sixth Street, Suite 3200
`Minneapolis, MN 55402
`IPR38855-007IP1@fr.com
`Phillips@fr.com
`Whelan@fr.com
`
`
`
`
`
`PATENT OWNER:
`J. Michael Jakes (Lead Counsel)
`901 New York Avenue, NW
`Washington, DC 20001-4413
`Two Seaport Lane, 6th Floor
`Boston, MA 02210-2001
`Denise W. DeFranco (Backup Counsel)
`FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, L.L.P.
`mike.jakes@finnegan.com
`denise.defranco@finnegan.com
`
`
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