NYZ AB

Patent Trials and Appeals Board

Aug 5, 2021

IPR2021-00480 (P.T.A.B. Aug. 5, 2021)

Trials@uspto.gov Paper 28
571-272-7822 Entered: August 5, 2021

UNITED STATES PATENT AND TRADEMARK OFFICE

BEFORE THE PATENT TRIAL AND APPEAL BOARD

KRETEK INTERNATIONAL, INC., DRYFT SCIENCES LLC, AND
MODORAL BRANDS INC.,
Petitioner,
v.
NYZ AB AND WM17 HOLDING GMBH,
Patent Owner.

IPR2021-00480
Patent No. 9,161,908 B2

Before ZHENYU YANG, ROBERT A. POLLOCK, and
DEVON ZASTROW NEWMAN, Administrative Patent Judges.
NEWMAN, Administrative Patent Judge.
DECISION
Denying Petitioner’s Request for Rehearing
37 C.F.R. § 42.71

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Patent 9,161,908 B2

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I. INTRODUCTION
On June 1, 2021, Co-Petitioner Modoral Brands Inc., (“Modoral”)
filed a Request for Rehearing (Paper 23, “Reh’g Req.”) under 37 C.F.R.
§ 42.71(d) to seek reconsideration of the Board’s Decision Denying
Modoral’s Motion to Withdraw and Terminate (Paper 22, “Decision” or
“Dec.”). The Request is denied.
II. STANDARD OF REVIEW
When rehearing a decision on institution, we do not review the merits
of the decision de novo, but instead review the decision for an abuse of
discretion. 37 C.F.R. § 42.71(c). An abuse of discretion occurs when a
“decision was based on an erroneous conclusion of law or clearly erroneous
factual findings, or . . . a clear error of judgment.” PPG Indus. Inc. v.
Celanese Polymer Specialties Co., 840 F.2d 1565, 1567 (Fed. Cir. 1988)
(citations omitted). The party requesting rehearing has the burden to show
that the decision should be modified. 37 C.F.R. § 42.71(d). Additionally,
the request for rehearing “must specifically identify all matters the party
believes the Board misapprehended or overlooked, and the place where each
matter was previously addressed in a motion, an opposition, or a reply.” Id.
III. ANALYSIS
Modoral’s Motion to Withdraw and Terminate (Paper 7, “Motion”)
was denied after consideration of the facts presented by the parties in
Modoral’s Motion, Patent Owner’s Response to Modoral’s Motion to
Withdraw and Terminate (Paper 10, “Resp.”), a joint response (Paper 14,
“Kretek Resp.”) to Co-Petitioner Modoral’s Motion by Co-Petitioners
Kretek International, Inc. (“Kretek”), Dryft Sciences LLC (“Dryft”), a reply
by Modoral in support of its Motion (Paper 16, “Reply”), and Patent
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Owner’s Sur-Reply to Modoral’s Motion (Paper 17, “Sur-reply”). The facts
as presented by the parties are summarized at pages 2–4 of the Decision.
After review of the record and the arguments made by the parties, we
concluded that the evidence showed that Modoral:
(1) joined with Kretek and Dryft as a petitioner due to Modorals
similar interest in challenging the patentability of certain claims
of the ’908 patent, and (2) participated in, however minimally,
shaping the Petition in which it listed itself as an RPI. . . . It is
undisputed that Modoral’s actions to date are the actions of a
petitioner and RPI [real party in interest]. We need not decide
whether Modoral might be an RPI with respect to Kretek and
Dryft in an IPR filed without Modoral as it is clear that
Modoral has participated as a petitioner in the proceeding as
filed.
Dec. 7 (citations omitted). Citing PNC Bank N.A. v. Maxim Integrated
Prods., Inc., CBM2014-00041, Paper 19 at 4 (PTAB June 3, 2014), we
further found that “Modoral’s actions to date constitute control over the
Petition as an RPI and that granting Modoral’s request to withdraw would
not obviate the control that Modoral has already exerted in this proceeding
by its filing of the Petition.” Id. Having found that Modoral is an RPI that
exerted control over the proceedings as a co-petitioner, we denied the
Motion. Id. at 8.
Modoral raises four arguments in support of its request for rehearing,
each seeking to persuade us that our conclusion was legal error that should
be modified by granting the Motion. Reh’g. Req. 2–9. We address each
argument in turn.
Modoral first argues that we applied an incorrect standard of law in
our determination that Modoral is a real party-in-interest (RPI) and could not
be permitted to withdraw. Id. at 2. Citing the Board’s Trial Practice Guide,
Modoral identifies four factors that should be considered in determining
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whether an entity is an RPI, and argues that we ignored the “fundamental
question underlying the RPI analysis: ‘whether a non-party exercises control
over a petitioner’s participation in a proceeding.” Id. at 2–3.
According to Modoral, the central question in our analysis should
have been whether Modoral exercised any control over Co-Petitioners
Kretek and Dryft in their participation in the proceeding. Id. at 3. Modoral
argues that the record does not show it exercised any such control over
Kretek and Dryft, and states that Modoral will not exert any future control
over Kretek and Dryft, nor provide any funding for the IPR or further
participate if Modoral is allowed to withdraw. Id. Modoral argues that we
erred in overlooking the exercise-of-control factor and instead applied “an
unsupported bright-line standard where anyone who participates in an IPR,
however minimally, is a RPI,” (citing Dec. at 7) which Modoral alleges was
error as a matter of law. Id. at 4.
Modoral further argues that our approach failed to account for our
own determination that Modoral was “only ‘minimally’” involved with the
Petition, and that its “only involvement with the Petition was to review and
comment on drafts prepared by its Co-Petitioners in order to protect its own
separate interests related to the ’908 patent,” while Dryft and Kretek
“drafted the Petition, paid the Petition filing fees, and hired the expert to
prepare a supporting declaration.” Id. at 4–5. Modoral avers that its
minimal participation should have weighed in favor of granting the motion
to withdraw and that it was legal error to ignore this evidence.
Modoral additionally argues that our evaluation of whether Modoral
exercised or could have exercised control over its Co-Petitioner’s
participation in the IPR was “based on legal error” because we found that
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minimal participation in the petition made Modoral an RPI. Id. at 5.
According to Modoral, this analysis “improperly conflated Factor one (i.e.,
involvement with the filing) with Factor two (i.e., control)” and ignored
Board precedent finding that collaboration alone was insufficient evidence
that a party was an RPI. Id.
We are not persuaded that our reasoning was legal error. As found by
our reviewing court in Applications in Internet Time, LLC v. RPX
Corporation, 897 F.3d 1336, 1350 (Fed. Cir. 2018):
the terms ‘real party in interest’ and ‘privy’ were included in
§ 315 to serve two related purposes: (1) to ensure that third
parties who have sufficiently close relationships with IPR
petitioners would be bound by the outcome of instituted IPRs
under § 315(e), the related IPR estoppel provision; and (2) to
safeguard patent owners from having to defend their patents
against belated administrative attacks by related parties via
§ 315(b).
See also Consolidated Trial Practice Guide (2019) at 14:
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.
Here, Modoral is not a third party with a sufficiently close relationship
to an IPR petitioner or a party on whose behest the petition has been filed;
Modoral is a petitioner, by its own actions. Modoral admits that its
involvement with the Petition was “in order to protect its own separate
interests related to the ’908 patent.” Reh’g Req. at 4–5. Modoral is thus a
party desiring review of the ’908 patent.
The four-factor analysis cited by Modoral (id. at 2) does not apply
here because it relates to whether a non-party is an RPI. We are not
persuaded that it was legal error to decline to evaluate Modoral’s actions as
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it if had been a non-party, using the factors for non-party RPI analysis, as
Modoral urges. We do not need to assess Modoral’s relationship with
respect to Kretek and/or Dryft because Modoral is not a non-party, but rather
elected to participate as a petitioner in this proceeding and to name itself as
an RPI. See Dec. 2–4. Modoral has provided no authority or persuasive
reasoning as to why a self-identified petitioner should not be viewed a real
party-in-interest.
Modoral next argues that we erred in failing to address each prong of
the multi-factor RPI test. Reh’g Req. at 5–7. According to Modoral, a
proper evaluation of the factors, including Modoral’s lack of corporate
relationship with Kretek and Dryft and that Modoral’s involvement was not
an effort to circumvent the Board’s RPI case law, would have resulted in a
determination that Modoral’s Motion should have been granted. Id.
As discussed above, we concluded that the multi-factor analysis for
whether a non-party is an RPI does not apply here, where Modoral’s actions
to date constitute control over the Petition as an RPI. Dec. 8.
Modoral’s third argument is that we did not consider the purpose of
the RPI analysis in our evaluation of Modoral’s Motion. Reh’g Req. 7.
Modoral argues that the RPI inquiry should be approached by considering
the purposes of the inquiry as rooted in the legislative history, which is:
to preclude parties from getting ‘two bites at the apple’ by: (1)
ensuring that third parties who have sufficiently close
relationships with IPR petitioners are bound by the outcome of
instituted IPRs in final written decisions under 35 U.S.C. §
315(e), the IPR estoppel provision; and (2) safeguarding patent
owners from having to defend their patents against belated
administrative attacks by related parties via 35 U.S.C. § 315(b).
Id. (citing RPX, IPR2015-01750, Paper 128 at 2).
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Once again, we are not persuaded that our analysis is in error. As the
citation above shows, the RPI inquiry focuses on the actions and interests of
third parties, which is not the case here, where Modoral participated in this
action of its own volition, in furtherance of “Modoral’s own separate
interest related to Swedish Match’s independent infringement claims against
Modoral.” Reh’g Req. 6. Modoral’s decision to participate as a petitioner
and party was its own.
Finally, Modoral argues that “the Board improperly relied on the
purported “bright-line” test set forth in PNC Bank N.A. v. Maxim Integrated
Prods. Inc., CBM2014-00041, Paper 19 (P.T.A.B. June 3, 2014).” Reh’g
Req. 8–9. Modoral argues that PNC Bank should not control because the
facts in PNC Bank showed a closer relationship of the parties, representation
by the same counsel under a joint defense agreement, and that substantial
control had been exerted over the case by both parties. Id. at 8. Modoral
argues the opposite is true in this case in all regards. Id. at 8–9.
Modoral argues that PNC Bank, which is not a precedential or
controlling decision, was decided before Lumentum Holdings, Inc. v.
Capella Photonics, Inc., Case IPR2015-00739, Paper 38 (P.T.A.B. Mar. 4,
2016) (precedential), in which the Board “found that because the statutory
requirement for RPIs is non-jurisdictional, ‘a lapse in compliance … does
not deprive the Board of jurisdiction over the proceeding, or preclude the
Board from permitting such lapse to be rectified.’” Id. at 9. Modoral argues
that the “bright-line rule” in PNC Bank does not account for Lumentum’s
holding that the RPI requirement is not statutory and permits defects in
naming RPIs to be corrected. Id. According to Modoral, Lumentum makes
clear that “naming Modoral as a RPI in the original Petition does not
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mandate denying institution, especially where the Board has the authority to
terminate the IPR as to Modoral” and requests reanalysis of the Motion. Id.
We are not persuaded that the holding in Lumentum applies to these
facts or shows that we erred in denying the Motion. In Lumentum, Petitioner
JDS Uniphase Corporation (“JDSU”) filed as a petitioner and real party-in-
interest. Lumentum, Paper 38 at 2. Subsequently, as part of a corporate
reorganization, JDSU was renamed Viavi Solutions Inc. (“Viavi”) and
certain assets, obligations, and business segments of JDSU were vested in or
later transferred to three companies: Lumentum Holdings Inc., Lumentum,
Inc. and Lumentum Operations LLC. Id. More than 21 days after the Board
issued a decision instituting trial, an updated mandatory notice was filed
identifying Lumentum Holdings Inc., Lumentum, Inc. and Lumentum
Operations LLC as the real parties-in-interest in the proceeding. Id. Patent
Owner sought and was granted permission to file a Motion to Terminate the
proceeding based on its argument that Petitioner’s failure to meet its
statutory requirements under § 312(a)(2) to file an updated mandatory notice
within the time limit provided under 37 C.F.R. §42.8(a)(3) divested the
Board of jurisdiction over the proceeding. Id. at 3. The Board denied the
motion, finding that Patent Owner had not demonstrated that § 312(a) was
jurisdictional, and that “a lapse in compliance with those requirements does
not deprive the Board of jurisdiction over the proceeding, or preclude the
Board from permitting such lapse to be rectified.” Id. at 4–5. The Board
observed that
jurisdiction is not “lost” the moment a petition no longer
identifies “all real parties in interest,” as required by
§ 312(a)(2). It is apparent readily that over the course of a trial
the identity of a real party in interest may change. Accordingly,
37 C.F.R. §42.8(a)(3) allows a party 21 days to provide the
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Board notice of a change in its identification of the real party in
interest, without the loss of “jurisdiction” over the proceeding.
Id. at 5.
We do not agree that the holding of Lumentum applies to this case.
The petitioner in Lumentum was the real party-in-interest until it underwent
a corporate reorganization that shifted the assets and obligations relating to
the lawsuit to a different corporate entity, which then became the real party-
in-interest. Id. at 2. Lumentum’s “lapse” was its failure to identify the new
real party-in-interest to the Board within the time period provided. Id. at 5.
Modoral did not miss a deadline to comply; it seeks to be relieved of the
consequences of its compliance. Modoral participated in drafting and filing
the Petition in which it self-identified as an RPI. Modoral has never claimed
that its self-identification as an RPI was incorrect; Modoral has thus
affirmed that its actions were those of an RPI. But because those actions
created a time bar to this proceeding, Modoral asks that we simply excuse its
participation to date and allow it to exit and continue its declaratory
judgment action while its Co-Petitioners continue this proceeding. This we
cannot do. The America Invents Act provided an alternative to parties
seeking to challenge the validity of a patent outside of court. Modoral
attempted to avail itself of both options, and is bound by the consequences.
The Board’s holding in PNC Bank applies because it addresses a party
attempting to withdraw from a proceeding, as is the case here. We maintain
that Modoral’s actions to date constitute control over the Petition as an RPI,
and that granting Modoral’s request to withdraw would not obviate the
control that Modoral has already exerted in this proceeding by its filing of
the Petition. The request is denied.
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IV. CONCLUSION
Modoral does not persuade us that our decision to deny Modoral’s
Motion to Withdraw and Terminate was based on an erroneous conclusion
of law, erroneous factual findings, from overlooking or misapprehending
any matter, or that our decision was an abuse of discretion.
IV. ORDER
It is:
ORDERED that Modoral’s Request for Rehearing is denied.

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Patent 9,161,908 B2

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FOR PETITIONER:
Vivian S. Kuo
Brian J. Prew
GREENBERG TRAURIG, LLP
kuov@gtlaw.com
prewb@gtlaw.com

Gasper J. LaRosa
Lisamarie LoGiudice
JONES DAY
gjlarosa@jonesday.com
llogiudice@jonesday.com

FOR PATENT OWNER:
Bryan C. Diner
Joshua L. Goldberg
Timothy J. May
Caitlin E. O’Connell
FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP
bryan.diner@finnegan.com
joshua.goldberg@finnegan.com
timothy.may@finnegan.com
caitlin.o’connell@finnegan.com

George D. Moustakas
David L. Suter
HARNESS DICKEY & PIERCE PLC
gdmoustakas@HDP.com
dsuter@HDP.com