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Worlds Inc. v. Bungie, Inc.

Fed Cir Clarifies Framework for IPR Real-Party-in-Interest Analysis

Worlds Inc. v. Bungie, Inc., __ F.3d __, 2018 WL 4262564 (Fed. Cir. Sept. 7, 2018) (PROST, O’Malley, Taranto) (PTAB) (4 of 5 stars)

Fed Cir vacates IPR cancellation of three Worlds patents due to errors in real-party-in-interest analysis. Worlds had argued that Bungie’s petitions for IPR should have been held time-barred due to Worlds’ prior assertion of the patents against Activision, a third party that had contracted to distribute Bungie’s videogame Destiny. The opinion holds that the PTAB’s real-party-in-interest analysis failed to lay out a clear structure that was being applied, and uses the opportunity to clarify such structure, relying in part on Atlanta Gas Light, IPR2013-00453, Paper 88 (PTAB Jan. 6, 2015). The opinion describes how the Board should accept an IPR petitioner’s identification of the real parties in interest unless and until that is disputed by the patent owner. It rejects calling this a “rebuttable presumption.” To dispute identification of the real party in interest, the patent owner must come forth with “some evidence that tends to show that a particular third party should be named a real party in interest.” Op. at 11–12.

The opinion reasons that Worlds, by pointing to the existence of a “DevPub Agreement” between Bungie and Activision, had presented sufficient evidence to put Bungie’s identification of the real-parties-in-interest into dispute. It expresses concern that, in evaluating Worlds’ arguments, the Board failed to state which party had the burden of persuasion, and may have treated the patent owner as having that burden. Said burden is with the IPR petitioner. The opinion also expresses concern about the Board’s possible reliance “on attorney argument as evidence that Activision was not controlling or funding these IPRs.” Op. at 16. The case is remanded for further analysis of the real-party-in-interest issue.

The opinion declines to take up Bungie’s argument that Worlds should be estopped from contesting the real-party-in-interest issues by Worlds’ decision not to appeal three other IPRs that presented the same issue in essentially the same manner. Noting that neither Bungie nor Worlds devoted much briefing or argument to this issue, the opinion finds the limited record insufficient to decide whether issue preclusion should apply. On remand, the Board should also consider whether issue preclusion should apply based on Worlds’ decision not to appeal the other cases.

The opinion declines to take up Worlds’ arguments on the merits of the Board’s invalidity analysis.

KEYWORDS: INTER PARTES REVIEW; REAL PARTY IN INTEREST; ISSUE PRECLUSION