Trials@uspto.gov
`571.272.7822
`
`
`Paper No. 11
`
` Entered: September 4, 2015
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`BUNGIE, INC.,
`Petitioner,
`
`v.
`
`WORLDS INC.,
`Patent Owner.
`____________
`
`Case IPR2015-01264, Patent 7,945,856 B21
`Case IPR2015-01268, Patent 7,181,690 B1
`Case IPR2015-01269, Patent 7,493,558 B2
`Case IPR2015-01319, Patent 8,082,501 B2
`Case IPR2015-01321, Patent 8,145,998 B2
`Case IPR2015-01325, Patent 8,145,998 B2
`____________
`
`Before KARL D. EASTHOM, KERRY BEGLEY, and JASON J. CHUNG,
`Administrative Patent Judges.
`
`EASTHOM, Administrative Patent Judge.
`
`
`
` ORDER
`Patent Owner’s Motion for Routine or Additional Discovery
`37 C.F.R. § 42.51
`
`
`
`1 This Decision is filed in each of the listed cases. The parties are not
`authorized to use this heading style. Paper and Exhibit numbers herein refer
`to Case IPR2015-01264, which is representative of the other cases for the
`issues addressed in this Decision.
`
`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`
`Patent Owner (“Worlds”) filed a motion for routine or additional
`
`discovery in the instant proceedings (Paper 9, “Mot.” or “Motion”), and
`
`Petitioner (“Bungie”) filed an opposition (Paper 10, “Opp.” or
`
`“Opposition”).
`
`In Patent Owner’s view, the requested discovery may lead to evidence
`
`showing that Activision Publishing, Inc. (“Activision”) is an unnamed real
`
`party-in-interest (“RPI”) in this proceeding—preventing institution of inter
`
`partes review (“IPR”) under 35 U.S.C. § 312(a)(2) and 35 U.S.C. § 315(b).
`
`Mot. 2–4. Patent Owner asserts that it filed a complaint alleging
`
`infringement of its patents by Activision (“Worlds/Activision Lawsuit”)
`
`over a year prior to the filing of the instant Petitions challenging the patents.
`
`Id. at 4.
`
`Petitioner describes Activision as a software publisher and distributer
`
`that publishes third-party video games, including a videogame that Petitioner
`
`created, Destiny, pursuant to an “Agreement” (Ex. 2002) discussed further
`
`below. Opp. 3 (citing Ex. 2002, 9–10; Ex. 1031 ¶¶ 6–15). Petitioner
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`describes itself as “a private, independent video game developer in the
`
`business of designing and creating video games.” Opp. 3 (citing Ex. 2002,
`
`7–8). According to Petitioner, it has a duty to indemnify Activision only if a
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`third party (such as Patent Owner) serves a complaint asserting that Destiny
`
`infringes a patent. See Opp. 7–8; Ex. 2002 §§ 15.1–15.2. Even in that
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`instance, Petitioner asserts that it would be “solely responsible” for all costs
`
`of defense, and “has the right to assume control of any such defense, which
`
`2
`
`
`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`would encompass both invalidity and noninfringement defenses.” Opp. 7
`
`(citing Ex. 2002, 21).2
`
`The record indicates that Patent Owner wrote a letter (on November
`
`13, 2014) to Activision’s counsel identifying Destiny as “an intended
`
`product-at-issue” in the Worlds/Activision lawsuit, and “[Petitioner]’s IPR
`
`petitions followed in 2015.” Mot. 4 (citing Ex. 2004). Petitioner counters
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`that “[n]either Destiny nor any other [Petitioner] product has ever been
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`added to that lawsuit.” Opp. 3 (emphasis omitted). Patent Owner and
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`Petitioner, therefore, agree that Patent Owner did not serve a complaint
`
`alleging that Petitioner’s Destiny product infringes a patent (in the
`
`Worlds/Activision lawsuit or otherwise).
`
`We deny the Motion for the reasons stated below.
`
`
`
`
`
`
`
`BACKGROUND
`
`
`
` According to Patent Owner:
`
`On April 16, 2010, Activision Publishing, Inc. and
`[Petitioner] entered into a Software Development and
`Publishing Agreement (“Agreement”), under which [Petitioner]
`developed a game (Destiny) published by Activision. Ex. 2002.
`Under this Agreement, [Petitioner] is obligated to conduct
`“legal reviews of the Products to ensure that all Intellectual
`Property and other rights are fully cleared for use.”
`Mot. 2–3 (quoting Ex. 2002, 10, § 7A.15j).
`
`
`
`In other words, Patent Owner contends that the Agreement obligates
`
`Petitioner to perform “legal reviews for IP clearance” that are subject to
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`Activision’s “prior review and approval.” Id. (citing Ex. 2002 §§ 7A.15,
`
`14.1.2). Patent Owner also contends that the Agreement shows that
`
`
`2 Page 21 of the Agreement, Exhibit 2002, includes the Indemnity
`provisions, §§ 15.1–15.3.
`
`3
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`
`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`Petitioner and Activision agreed that Activision would advance payments to
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`Petitioner to develop Petitioner’s products, including “‘operations directly
`
`related to the development of the Products’” and that “[t]hese operations
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`include the legal reviews required under Sec. 7A.15(j).” Mot. 3 (quoting
`
`Ex. 2002 § 10.1). According to Patent Owner, “legal reviews” include the
`
`filing of the instant IPRs. Mot. 4–5.
`
`
`
`Regarding the letter asserting infringement (Ex. 2004), Patent Owner
`
`contends that “after litigation counsel notified Activision that Destiny was
`
`an intended product-at-issue in the litigation, [Petitioner]’s obligation to
`
`conduct legal reviews was triggered. Further, there is no dispute that
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`[Petitioner] possesses an indemnification obligation under the Agreement.”
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`Id. at 9. Patent Owner also contends that “[t]he Agreement conditions
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`[Petitioner]’s indemnification of Activision on notice and an opportunity for
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`[Petitioner] to control the litigation.” Id. (citing Ex. 2002 § 15.3).
`
`
`
`Patent Owner reasons that the Agreement, letter, and other evidence
`
`show that Petitioner must provide routine or additional discovery because
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`Activision has “the ability to exercise control over the IPR proceedings”;
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`and therefore, Petitioner’s RPI assertions are inconsistent with the record,
`
`and/or the record shows that there is “more than a possibility” that discovery
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`will lead to evidence of actual “exercise of control.” See Mot. 8.
`
`
`
`Accordingly, Patent Owner identifies five discovery categories, which
`
`it summarizes as
`
`discovery directed toward Activision’s actual exercise of
`control over [Petitioner]’s legal reviews and IPR petitions by
`way of correspondence about [Petitioner]’s legal reviews of
`[Patent Owner’s] patents, [Petitioner]’s preparation of the IPR
`petitions, [Petitioner]’s direct or indirect use of Activision’s
`Development Advances, and Activision’s demand for
`
`4
`
`
`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`
`indemnification by [Petitioner]. Each of these categories
`indicates actual control, and is inconsistent with [Petitioner]’s
`position that it is the sole RPI (i.e. the sole party having
`opportunity or actual control of the IPR petitions)
`Id. at 5.
`
`Based on its showing, Patent Owner lists the following requests for
`
`production (“RFP”):
`
`RFP NO. 1 - Documents identifying the [Petitioner] account(s)
`from which payment was tendered for all legal reviews
`associated with [Patent Owner’s] Patent(s), including legal
`analysis of [Patent Owner’s] Patent(s), drafting the [Petitioner]
`IPR petitions, and paying the USPTO filing fees for the IPRs.
`
`RFP NO. 2 - Documents identifying all [Petitioner] account(s)
`into which Activision’s Development Advances are or were
`held or deposited, directly or indirectly, for the purpose of
`developing the Destiny Products.
`
`RFP NO. 3 - Documents showing that funds received from
`Activision were used, directly or indirectly, to pay for, or co-
`mingled with funds used to pay for [Petitioner]’s legal
`review(s) relating to any [of Patent Owner’s] Patent(s).
`
`RFP NO. 4 - Communications between [Petitioner] and
`Activision concerning legal review of any [of Patent Owner’s]
`Patent(s), including Activision’s review or approval, or
`opportunity to review or approve [Petitioner]’s legal reviews of
`any [of Patent Owner’s] Patent(s) or any version(s) of an IPR
`Petition associated with any of [Patent Owner’s] Patent(s).
`
`RFP NO. 5 - Communications between [Petitioner] and
`Activision related to [Petitioner]’s indemnification of or
`obligation to indemnify Activision based on any of [Patent
`Owner’s] Patent(s).
`
`RFP NO. 6 - For all Communications/Documents responsive to
`RFPs Nos. 1–5 but withheld on privilege, a privilege log
`
`5
`
`
`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`
`identifying the Communication/Document being withheld, the
`author or sender, recipient(s), subject matter, date, and the RFP
`to which the Communication/Document is responsive.
`Id. at 1–2.
`
`By way of summary, the first three requests seek discovery involving
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`account and payment information for legal reviews and/or the development
`
`of Destiny products. The fourth request seeks discovery concerning legal
`
`review of any of Patent Owner’s patents,” the fifth request seeks discovery
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`related to indemnification based on the patents, and the last request seeks
`
`privilege logs related to the first five requests.
`
`Petitioner acknowledges that it “is responsible for defense of
`
`intellectual property claims against Destiny,” but contends that Destiny was
`
`never added to the Worlds/Activision Lawsuit. Opp. 1. Petitioner also
`
`asserts that the Agreement does not “allow[] any other party other than
`
`[Petitioner] to control these IPR proceedings” and that Petitioner “is solely
`
`responsible for the cost and control of the IPRs.” Id. at 1–2.
`
`Petitioner also contends that Patent Owner’s motion “is premised on a
`
`faulty assumption, namely that this IPR is a ‘legal review’ under Section
`
`7A.15(j) of the . . . Agreement.” Id. at 6. According to Petitioner, “the
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`subject of these IPRs is P[atent] O[wner]’s patents, not any Destiny
`
`product.” Id. at 7. As noted above, Petitioner also asserts that absent a
`
`complaint asserting infringement by the Destiny product, Petitioner has no
`
`indemnity obligation, and even if it did, the Agreement makes Petitioner
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`solely responsible for costs and control of any defense. See id.
`
`
`
`The record shows Petitioner’s position is more persuasive than Patent
`
`Owner’s––Patent Owner has not met its burden on the Motion. As
`
`Petitioner contends, Patent Owner’s theory hinges on the assertion that the
`
`6
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`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`Agreement allows Activision to control the IPRs, because “legal reviews for
`
`IP clearance” and a “warranty of non-infringement,” as set forth in the
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`Agreement, include the filing of IPRs. See Mot. 4. As Petitioner also
`
`contends, Section 7A.15(j) of the Agreement specifies that Patent Owner
`
`may review Petitioner’s “legal reviews of the Products to ensure that all
`
`Intellectual Property and other rights are fully cleared for use.” Ex. 2002
`
`(emphasis added); Opp. 7.
`
`A legal review of a “Product” under the Agreement and other
`
`provisions do not specify, require, or necessarily include filing an IPR
`
`against a patent. In addition, Patent Owner did not file a complaint asserting
`
`that Destiny infringes its patents; therefore, even if the indemnity provisions
`
`(§§ 15.1–15.3) somehow relate to the legal review provisions (§ 7A.15) of
`
`the Agreement, Patent Owner fails to explain persuasively how the
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`Agreement requires either indemnity or the filing of IPRs. In other words,
`
`that the Agreement requires Petitioner to conduct legal reviews to ensure
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`that Destiny does not infringe a patent, trademark, copyright, and the other
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`listed intellectual property rights in Section 6.1 of the Agreement, does not
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`rise to more than a mere possibility that such a legal review includes filing
`
`IPRs that Activision could or does control.
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`Patent Owner also alleges discovery would show that Petitioner
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`“commingled” or used some of its advances from Activision to “pay for
`
`[Petitioner]’s legal reviews related to [Patent Owner’s] Patents(s)” with
`
`funds for development of Destiny. Mot. 2. Patent Owner reasons that
`
`because the Agreement obligates “financial support from Activision to
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`[Petitioner] for development of Destiny,” this “development” includes “legal
`
`reviews” under § 7A.15j of the Agreement.
`
`7
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`
`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`
`Patent Owner’s theory for discovery to show control by Activision of
`
`the IPRs makes several assumptions under the Agreement: 1) Petitioner
`
`treated the filing of IPRs as legal reviews subject to Activision’s review;
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`2) Petitioner treated legal reviews as product development funded by
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`advances from Activision; 3) the letter by Patent Owner to Activision’s
`
`counsel discussing Destiny (Ex. 2004) triggered the indemnity provisions;
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`and 4) indemnity somehow relates to control by Activision of the IPRs.
`
`Based on the foregoing discussion, there is insufficient or no evidence on
`
`this record to support any of the assumptions. In addition, Patent Owner
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`characterizes advances by Activision as “co-mingled” by Petitioner, and at
`
`the same time, characterizes the Agreements as requiring Activision to make
`
`the advances to Petitioner for legal reviews as product development. See
`
`Mot. 2–3. Both cannot be correct, and it is not clear how product
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`development includes legal reviews under the Agreement. For its part,
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`Petitioner counters that “development advances to [Petitioner] funded the
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`development of the Destiny videogame, not these IPRs.” Opp. 8.
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`It follows that Patent Owner has not shown more than a mere
`
`allegation that something useful will be found or that Petitioner’s RPI
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`positions are inconsistent with record evidence that would justify additional
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`or routine discovery on this record. See Garmin Int’l, Inc. v. Cuozzo Speed
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`Techs. LLC, Case IPR2012-00001, slip op. at 6–7 (PTAB Mar. 5, 2013)
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`(Paper 26) (informative) (explaining that “[t]he mere possibility of finding
`
`something useful, and mere allegation that something useful will be found,
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`are insufficient to demonstrate that the requested discovery is necessary in
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`the interest of justice”). We are not persuaded that Patent Owner has shown
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`that Petitioner failed to comply with “routine discovery” under 37 C.F.R.
`
`8
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`
`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`§ 41.51(b)(1), or that the requested discovery is “in the interests of justice,”
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`as required for additional discovery under 37.C.F.R. § 42.51(b)(2)(i).
`
`According to long-standing persuasive precedent, Bros, Inc. v. W.E.
`
`Grace Mfg. Co., 261 F.2d 428, 429 (5th Cir. 1958), when a patent holder
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`sues a dealer, seller, or distributer of an accused product, as is the case with
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`Activision (i.e., the World/Activision lawsuit), indemnity payments and
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`minor participation in a trial are not sufficient to bind (by estoppel) a non-
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`party manufacturer of the accused device:
`
`While the mere payment of counsel fees or participation in a
`trial by one not a named party to it would not alone be
`sufficient, cf. I.T.S. Rubber Co. v. Essex Co., [] 272 U.S. 429
`[(1926)]. . . Restatement, Judgment § 84, comment e (1942),
`the extent and nature of that participation may completely alter
`the consequences. This is particularly so in patent infringement
`cases in which, from tactical or strategic considerations relating
`to venue, desirability of a particular forum and the like, such
`cases are so often filed and tried against a dealer, a seller, a
`distributor, or a user of the accused device manufactured by
`another. If the manufacturer stands aloof, he risks a judgment
`adverse to his interest resulting perhaps from inadequate or
`incompetent defense by one who has a secondary interest. Such
`judgment, to be sure, would normall[y] not be binding by
`estoppel or res judicata, but it would take its place in the
`jurisprudence where its practical effect as stare decisis might be
`as decisive. The alternative, of course, is to jump in and give
`the case full and active defense as though the manufacturer
`were the real named party. This assures that the issues will be
`presented and contested in a way deemed most effective by the
`nominally remote, but practically immediate, party at interest.
`
`261 F.2d at 429 (emphasis added); cited with approval by Emerson Elec. Co.
`
`v. Black and Decker Mfg. Co., 606 F.2d 234, 242, n. 20 (8th Cir. 1979) (“If
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`Emerson does control the Maryland suit, the outcome will be binding on, or
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`inure to the benefit of, Emerson under principles of res judicata.”); see also
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`9
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`
`

`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`United States v. Webber, 396 F.2d 381, 387 (3d Cir.1968) (finding that
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`appellants were “privies” because of their “control over and interest in the
`
`earlier litigation”).
`
`
`
`In contrast to the manufacturer and distributor relationship as
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`described supra in Bros, Inc., Destiny is not an accused product in any
`
`litigation Patent Owner identifies. Even if Activision has an interest in the
`
`IPR outcome, the Worlds/Activision lawsuit shows that Activision
`
`distributes multiple software products, including Destiny. The evidence
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`asserted does not arise to more than a mere allegation that something useful
`
`to establishing that Activision controlled or even could have controlled the
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`IPRs that Petitioner filed.
`
`Accordingly, the Motion is denied.
`
`ORDER
`
`10
`
`
`
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`
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`

`
`11
`
`
`IPR2015-01264, -01268, -01269,
`-01319, -01321, and -01325
`
`
`
`PETITIONER:
`
`Michael Rosato
`mrosato@wsgr.com
`
`Matthew Argenti
`margenti@wsgr.com
`
`
`PATENT OWNER:
`
`Wayne Helge
`whelge@dbjg.com
`
`Michael Casey
`mcasey@dbjg.com