WORLDS INC. V. BUNGIE, INC.

 

Federal Circuit Summary

Before Prost, O’Malley, and Taranto.  Appeal from the Patent Trial and Appeal Board.

Summary: The PTAB may initially accept an IPR petitioner’s identification of real-parties-in-interest, but if and when a patent owner produces evidence disputing the identification, the burden is on the petitioner to demonstrate that the correct real-parties-in-interest were identified.

During district court litigation, Plaintiff Worlds informed Defendant Activision that it intended to add a video game developed by non-party Bungie and published by Activision as an accused product.  In response, more than one year after the filing of the complaint against Activision, Bungie filed IPR petitions against all five patents at issue in the district court case.  In its petitions, Bungie represented that it was the sole real-party-in-interest.

Worlds moved for discovery regarding the real-party-in-interest, citing a Software Publishing and Development Agreement between Bungie and Activision. The agreement provided that Activision would review and approve of legal reviews conducted by Bungie, included indemnification provisions, and contemplated financial support from Activision to Bungie for video game development.  The Board denied the motion for discovery, and in both the institution and final written decisions, determined that Worlds had not demonstrated that Activision was an unnamed real-party-in-interest.

Worlds appealed, arguing that the petitions were time-barred because the alleged real-party-in-interest, Activision, was served with a complaint alleging infringement of the patents more than a year prior to the filing of the IPR petition, and that the board improperly placed the ultimate burden of persuasion on the patent owner.  First, the Federal Circuit reiterated that the petitioner bears the ultimate burden of persuasion to show that a petition is not time-barred based on a complaint served on a real-party-in-interest.   Next, the Federal Circuit examined and rejected the PTAB’s practice of treating the petitioner’s identification of real-parties-in-interest as a rebuttable presumption, shifting the burden to patent owner to prove that a third-party was an unnamed real-party-in-interest.  The Federal Circuit held that the PTAB may accept the petitioner’s identification of the real-parties-in-interest unless and until the patent owner decides to raise the issue.  In order to raise the issue, the patent owner must provide some evidence to show that a particular third party should be named a real-party-in-interest.  Using this burden-shifting framework, the Federal Circuit held that Worlds had provided sufficient evidence to dispute Bungie’s identification of the real-parties-in-interest.  Because it was unclear whether the Board placed the burden of persuasion on Worlds or Bungie, the Federal Circuit vacated and remanded the IPRs.

This case is: WORLDS INC. V. BUNGIE, INC.

Edited by: Paul Stewart

Written by: Daniel Kiang & Karen M.Cassidy