`571-272-7822
`
`Paper 9
`Date: October 17, 2014
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`FIRST DATA CORPORATION,
`Petitioner,
`
`/
`
`V.
`
`CARDSOFT (ASSIGNMENT FOR THE
`BENEFIT OF CREDITORS), LLC,
`Patent Owner.
`
`Case IPR2014-00715
`Patent 6,934,945 B1
`
`Before SALLY C. MEDLEY, MEREDITH C. PETRAVICK,and
`JAMESP. CALVE, Administrative Patent Judges.
`
`PER CURIAM.
`
`DECISION
`DenyingInstitution of Jnter Partes Review
`37 CFR. § 42.108
`
`
`
`IPR2014-00715
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`I.
`
`INTRODUCTION
`
`First Data Corporation (“Petitioner”) filed a Petition (“Pet.”) seeking
`
`inter partes review (“IPR”) of claims 1-17 of U.S. Patent No. 6,934,945 B1
`(“the 945 patent”) pursuant to 35 U.S.C. §§ 311-319 on April 30, 2014.
`Paper 1. Petitioner filed a Corrected Petition (“Corr. Pet.”) on May 20,
`2014.” Paper 5. Cardsoft (Assignmentfor the Benefit of Creditors), LLC
`
`(“Patent Owner”) filed a Preliminary Response (“Prelim. Resp.”) on August
`
`7, 2014. Paper 8. We havejurisdiction under 35 U.S.C. § 314.
`| Upon consideration ofthe Petition, we determinethata third party,
`VeriFone,Inc. (“VeriFone”), is a real party-in-interest that was served with a
`
`complaintalleging infringement ofthe °945 patent more than one year
`before the filing of this Petition. The Petition is, therefore, untimely under
`35 U.S.C. § 315(b). Moreover, because the Petition does not identify
`
`VeriFone as a real party-in-interest; the Petition fails to identify “all the real
`
`partiesin interest,” as required by 35 U.S.C. § 312(a). Accordingly, the _
`
`Petition is denied.
`
`Related Proceedings
`A.
`Petitioner identifies the following related district court proceedings
`
`that involve the ’945 patent: Cardsoft (Assignmentfor the Benefit of
`Creditors) LLC v. First Data Corp., Civil Action No. 2:13-cv-290 (E.D.
`
`' Petition for Inter Partes Review Under 35 U.S.C. §§ 311-319 and 37
`C.F.R. § 42.100 et. seg. Paper 1. All references to Petition and citations to
`“Pet.” are to the initial petition that was filed on April 30, 2014, as Paper 1.
`? Corrected Petition for Inter Partes Review Under 35 U.S.C. §§ 311-319
`and 37 C.F.R. § 42.100 et. seq. Paper 5. All references to Corrected
`Petition and citations to “Corr. Pet.” are to the Corrected Petition, filed on
`May 20, 2014, as Paper5.
`,
`
`
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`IPR2014-00715
`Patent 6,934,945 B1
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`Tex.) (‘the 2013 Litigation”) and Cardsoft, Inc. v. VeriFone Systems, Inc.,
`Civil Action No. 2:08-cv-00098 (E.D. Tex.) (“the 2008 Litigation’). Corr.
`
`Pet. 5-6.
`
`B.
`
`Real Party-in-Interest
`
`Patent Ownerargues that VeriFoneis a real party-in-interest to this
`
`proceeding, and becausethe Petition was filed more than one yearafter the
`
`date on which VeriFone was served with a complaint alleging infringement
`
`of the patent, an inter partes review maynot beinstituted due to the time
`
`limitation set forth in 35 U.S.C. § 315(b). Prelim. Resp.7.
`|
`Facts
`
`Patent Ownerinitiated the 2008 Litigation by filing and serving a
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`complaint in 2008 accusing VeriFone, VeriFone Systems,Inc., and others of
`
`infringing the °945 patent. Corr. Pet. 5-6; Prelim. Resp. 7. On June 8,
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`2012, a jury rendered a verdict that the 945 patent was valid and infringed
`byVeriFoneand others. Ex. 1007 8. VeriFone has appealedthat decision
`to the U.S. Court of Appeals for the Federal Circuit. See Ex. 2004.
`Patent Ownerinitiated the 2013 Litigation by filing a complaint in the
`Eastern District of Texas and serving the complaint on Petitioner on May2,
`
`2013. Exs. 1006, 1007. Patent Owneralleged that Petitioner and First Data
`
`MerchantServices. Corporation infringed the 945 patent. Ex. 1007 4 7;
`
`Corr. Pet. 5. Patent Owneralleged that Petitioner infringed the °945 patent
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`by selling Petitioner’s products. Ex. 1007 § 7. Patent Owneralso alleged
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`that Petitioner willfully infringed the °945 patent by continuing tosell
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`VeriFone products that were foundto infringe the 945 patent in the 2008
`
`litigation. Jd. 4.9. Patent Owner sought enhanced damagesandassociated
`
`attorneys’ fees and costs. Jd.
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`VeriFoneis indemnifying Petitioner regarding certain claimsin the
`2013 Litigation. Ex. 1011, 1. As part ofthe indemnification, VeriFone can
`choose counsel to defend Petitioner. /d., 3. Petitioner is represented in the
`
`2013 Litigation by the same counsel whorepresented VeriFonein the 2008
`Litigation,first the law firm of Jones Day andlater the law firm of Orrick,
`
`Herrington & Sutcliffe. Exs. 2002, 2005, 2006. Counsel representing
`Petitionerin this proceedingare registered practitioners from the law firm of
`Kilpatrick Townsend & Stockton. Corr. Pet. 2, 51.
`|
`VeriFone sought unsuccessfully to invalidate the ’945 patent in the —
`2008 Litigation. Ex. 1007 { 8; see Corr. Pet. 2. VeriFone provided copies
`of prior art from the 2008 Litigation to Petitioner for this IPR and consulted
`
`with Petitioner’s counsel aboutprior art that may invalidate the 945 patent.
`
`Corr. Pet.2.
`
`.
`
`VeriFone agreed to fund this IPR. /d. at 1; Ex. 1011, 1. VeriFone’s
`funding covers attorney’s fees and costs associated with this IPR. Ex. 1011,
`
`1.
`
`The Petition is fifty-one pages in length and includesthirteen exhibits.
`Pet. The exhibits to the Petition include lengthy priorart references and
`declarations ofStephen Gray and Lawrence Forsely. Exs. 1002-1004, 1009,
`1010, 1012, 1013.
`.
`
`-
`
`On April 28, 2014, Petitioner and VeriFone signed a letter agreement.
`
`Ex. 1011 (“the Letter Addendum”). The Letter Addendum states that
`VeriFonecurrently is indemnifying Petitioner in relation to certain claims
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`
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`asserted in the 2013 Litigation per a “Master Engagement Agreement.”
`
`The Letter Addendum describes that VeriFone has agreed to indemnify
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`Petitioner for the attorney’s fees and costs associated with this IPR,citing a
`
`provision of the Master Engagement Agreement, that VeriFone“shall have
`
`the right at its expense to employ counsel .
`
`.
`
`. to defend against Claimsthat
`
`VeriFoneis responsible for .
`
`.
`
`. and to compromise,settle and otherwise
`
`dispose of such claims.” Ex. 1011, 1. The Letter Addendumalsostates that:
`
`While VeriFone has agreed to this associated indemnification
`as to the IPR, the purpose of this Letter Addendumisto clarify
`that notwithstanding any language contained in the Agreement
`or elsewhere concerning VeriFone and First Data’s rights and
`obligations
`pursuant
`to
`any
`provision
`providing
`for
`indemnification, First Data shall have the exclusive and sole
`right to control any andall actions taken in connection with or
`related to the IPR, including but not in any waylimited to the
`choice of counsel for preparing any IPR, and that VeriFone
`shall have no suchright of control.
`Id. The Letter Addendum bearsthe signature of VeriFone’s Executive Vice
`
`President of Corporate Development and General Counsel, and a Senior
`Counsel of Petitioner. Jd.
`
`|
`
`On April 30, 2014, two days after the Letter Addendum wasexecuted,
`
`Petitionerfiled the Petition for this IPR and identified itself as the sole real
`party-in-interest. Pet. 1; Paper4.
`
`> Sections of the Master Engagement Agreementare attached to, and are
`part of, the Exhibit 1011 Letter Addendum. Jd. at 24.
`
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`Patent 6,934,945 B1
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`Principles ofLaw
`Section 315(b) of Title 35 of the United States Code provides:
`
`(b) PATENT OWNER’S ACTION.—Aninter partes review
`maynot beinstituted 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.
`The time
`limitation set forth in the preceding sentence shall not apply to a
`request for joinder undersubsection (c).
`“Whethera party who is not a namedparticipant ina given
`proceeding nonetheless constitutes a ‘real party-in-interest’ .
`.
`. to that
`
`proceedingis a highly fact-dependent question.” Office Patent Trial Practice
`
`Guide, 77 Fed. Reg. 48,756, 48,759 (2012) (citations omitted).
`
`. proceedings means
`.
`[T]he spirit of that formulation as to IPR .
`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 party
`or parties at whose behest the petition has been filed.
`Id. (emphasis added).
`
`Multiple factors are relevant to the issue of whether a non-party may
`be recognized as a “real party-in-interest” or “privy.” Jd. (citing Taylor v.
`Sturgell, 553 U.S. 880, 893-895, 893 n.6 (2008)). A commonconsideration
`
`is whether the non-party exercised or could have exercised control over a
`
`party’s participation in a proceeding. Jd. (citing Taylor, 553 U.S.at 895).
`The concept of control generally meansthat “it should be enoughthat the
`nonparty has the actual measure of control or opportunity to control that
`
`might reasonably be expected between two formal coparties.” Jd. (citation
`
`omitted). The non-party’s participation may be overt or covert, and
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`evidence ofthat participation may be direct or circumstantial, but the
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`evidence as a whole must showthat the non-party possessed effective
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`6
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`control from a practical standpoint. Gonzalez v. Banco Cent. Corp., 27 F.3d
`751, 759 (1st Cir. 1994). The inquiry is not based onisolated facts, but
`rather must considerthe totality of the circumstances. Id.
`|
`
`Analysis
`
`After considering the evidence presented by Petitioner and Patent
`
`Owner, we are persuaded that VeriFoneis a real party-in-interest. The
`
`evidence demonstrates that VeriFone desires an inter partes review ofthe
`
`’945 patent and has controlled, and/or has had an opportunity to control, the
`events leading upto thefiling ofthe Petition. Petitioner acknowledges that
`“VeriFone, per an indemnity with [Petitioner], is providing the funding for
`
`this petition.” Corr. Pet. 1. Per the Letter Addendum, we understand this
`
`“funding” to include Petitioner’s attorney fees andat least the nearly
`$24,000 petition fees associated with filing the Petition. Ex. 1011, 1; Master
`Engagement Agreement, Section 6.1. We find that per this same indemnity
`agreement VeriFone had an opportunity to controlall of the events leading
`up to the filing ofthe Petition. In particular, Section 6.1.3 ofthe Master
`
`Engagement Agreementindicates that VeriFone “shall have the right at its
`
`expense to employ counsel. .
`. to defend against Claims that VeriFoneis
`responsible for .
`.
`. and to compromise, settle and otherwise dispose of such
`Claims.” Jd., 3. The Letter Addendum indicates that “VeriFone has agreed
`
`to this associated indemnification as to the IPR.” Jd., 1. Thus, up to
`
`April 28, 2014 (i.e., two daysprior to the Petition being filed), VeriFone had
`every opportunity and right,per the indemnification agreement, to control
`the filing of the Petition and pursue an inter partes review ofthe challenged
`
`patent. That the opportunity to control ended just two daysprior to filing the
`
`Petition, does not negate the control or opportunity to control the events
`
`7
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`leading up to the filing ofthe Petition. By Petitioner’s own admission, and
`during the period leading upto the filing of the Petition, counsel for
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`VeriFone communicated with counsel for Petitioner aboutinitiating an IPR,
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`including discussing whatpriorart to assert. Corr. Pet. 2. Moreover,
`
`VeriFone agreed to, and did, pay for all costs associated with thefiling of
`the Petition. We have considered Petitioner’s argumentsthat it alone
`decidedto use different prior art for this proceeding comparedto the prior
`art that VeriFone asserted in the 2008 Litigation. See id. Petitioner,
`however, does not provide sufficient evidencethat would support this
`assertion, and in any event, eveniftrue, that alone would not outweigh the
`
`other evidence of record that tends to show that VeriFone controlled and/or
`
`had the opportunity to control the filing of the Petition.
`
`Moreover, we find that VeriFonehas an interest in the review of the
`’945 patent in this proceeding. VeriFone was found to haveinfringed the
`"945 patent in the 2008 Litigation and was unable to invalidate the
`’945 patent in that proceeding. See Ex. 100798. VeriFone also must
`
`defend and indemnify Petitioner in the 2013 Litigation for Petitioner’s
`
`alleged willful infringement of the 945 patent from the sale of VeriFone
`products that were found to have infringed the ’945 patent in the 2008
`Litigation. Invalidity of the °945 patent has been asserted in the 2013
`Litigation that VeriFone is defending underits indemnity agreement with
`First Data Merchant Services. Ex. 2003, 3 (second affirmative defense).
`
`VeriFonehas aninterest in an inter partes review of the 945 patentat least
`
`equalto that of Petitioner. The record evidence establishes, however, that
`
`VeriFone could not have pursued an inter partes review on its own or in
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`conjunction with the Petitioner, because VeriFone would have been barred
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`from doing so pursuant to 35 U.S.C. § 315(b).
`
`Wealso have considered Petitioner’s argumentthat “sole and
`
`exclusive control over this petition rests entirely with [Petitioner].” Pet. 1.
`In support of that argument, however, Petitioner refers to the April 28, 2014
`
`Letter Addendum. Per the Letter Addendum,the indemnification (pursuant
`
`to the Master Engagement Agreement) from VeriFoneto Petitioner gave
`
`VeriFone full opportunity to control all aspects of preparing the Petition
`prior to April 28, 2014—just two days prior to the actualfiling of the
`Petition. By then, presumably, most of the work had been done by both
`Petitioner and VeriFone in preparation of the 51-page Petition, assemblance
`of prior art, and gathering of witnesses and their declarations, and Petitioner
`
`does not indicate otherwise. That Petitioner and VeriFone agreedthat
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`Petitioner would havetotal control after April 28, 2014 is of no moment. A
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`petition is a petitioner’s main brief in an inter partes review, on which a
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`petitioner relies to persuadeusto institute an inter partes review and
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`eventually to makea final written decision regarding the patentability of
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`challenged claims. See 35 U.S.C. §§ 311, 314, 316. Petitioner, as a party
`
`whocontrolled or had the opportunity to control what wentinto the Petition,
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`is a real party-in-interest despite turning overthe reins to anotherparty after
`all of the work has been done. Forall ofthe above reasons, we conclude
`that VeriFoneparticipated in, controlled, and/or had the opportunity to
`
`control the filing of the Petition in material respects andis a real party-in-
`interest to this proceeding. Because VeriFoneis a real party-in-interest and
`was served with a complaint alleging infringementof the ’683 patent in the
`
`
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`IPR2014-00715 .
`Patent 6,934,945 Bl
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`2008 Litigation more than one yearbeforethe filing of the Petition, the
`
`Petition is untimely under 35 U.S.C. § 315(b).
`
`Moreover, because VeriFoneis a real party-in-interest, the Petition
`does not identify “all real parties in interest” as required by 35 U.S.C.
`|
`§ 312(a). As a result, the Board determinesthat the Petition is incomplete.
`
`Section 42.106(b) of Title 37 of the Code of Federal Regulations
`
`provides:
`
`an
`a party files
`Incomplete petition. Where
`(b)
`incomplete 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 ofthis decision to correct the deficiency
`and list VeriFoneas a real party-in-interest. In this instance, however,
`curing the omission of VeriFoneas a real party-in-interest would befutile
`because, even if corrected, the earliest filing date that could be accordedto
`
`the Petition that identifies VeriFone as a real party-in-interest would notfall
`within the one-yearperiod specified by 35 U.S.C. § 315(b).’
`
`.
`CONCLUSION |
`II.
`The Board denies the Petition because it was notfiled within the time
`"imposed by 35 U.S.C. § 315(b) and does not comply with 35 U.S.C.
`
`§ 312(a).
`
`* Petitioner was served with a complaint alleging infringement of the °945
`patent on May 2, 2013. Thus, the one-year period during which Petitioner
`could file a Petition expired on May 2, 2014. See 35 U.S.C. § 21(b).
`
`-
`
`10
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`III. ORDER
`
`Accordingly, it is
`ORDEREDthatthe Petition is denied andnotrialis instituted.
`
`1]
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`IPR2014-00715
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`For PETITIONER:
`
`Paul C. Haughey
`Darin J. Gibby
`Kilpatrick Townsend & Stockton LLP
`phaughey@kilpatricktownsend.com
`dgibby@kilpatricktownsend.com
`
`For PATENT OWNER
`
`Mark R. Buscher
`D. Richard Anderson
`George Dolina
`Birch, Stewart, Kolasch & Bitch, LLP
`mrb@buscherlaw.com
`dra@bskb.com
`
`