Worlds Inc. v. Bungie Inc.


Docket No. 2017-1481, -1546, -1583 (IPR2015-01264, -01319, -01321)

PROST, O’MALLEY, TARANTO
September 7, 2018

Brief summary: Board’s IPR invalidation decisions vacated and remanded (“the Board should first address whether Worlds is estopped from arguing the real-party-in-interest issue” and “then reevaluate the merits of the real-party-in-interest issue”).

Summary: Worlds appealed Board invalidation of three patents (US 7,945,856; 8,082,501; and 8,145,998) that “generally relate to the computer-generated display of avatars in a virtual world”. Worlds has asserted these patents against other parties including Activision with respect to its Call of Duty game. This dispute relates to Worlds’s assertion of the patents against Bungie with respect to its Destiny game. The FC panel opinion explains that “Bungie is not a party to the litigation between Worlds and Activision” but “[i]n November 2014…Worlds notified Activision that it intended to add Destiny as an additional accused product in the [DC] litigation.” Six months before that notification to Activision, “Bungie filed six IPR petitions, including the three IPRs at issue in this case”. The FC panel opinion explains that this was “more than one year after Activision had been served with a complaint alleging infringement of the patents challenged in the” IPRs. Under a “DevPub Agreement” between Worlds and Activision, “the Destiny products [were] developed by Bungie and published by Activision” and “Bungie is responsible for conducting ‘legal reviews of the Products to ensure that all Intellectual Property and other rights are fully cleared for use’…‘subject to prior review and approval of Activision’”. Worlds argued in its “pre-institution Preliminary Response…that Bungie should have named Activision as a real party in interest” (§ 312(a)(2); § 315(b)) but the Board disagreed and found the petitions not to be time-barred by the complaint filed against Activision (§ 315(b); decided pre-WiFi One (FC 2018 (en banc), holding that the § 314(d) bar on appeal of institution decisions does not apply to § 315(b) time-bar decisions)). The FC panel explained that under Atlanta Gas Light (PTAB 2015), “the Board generally accepts an IPR petitioner’s identification of the real parties in interest at the time the petition is filed” (which has the “burden of persuasion”), and that while this is a “rebuttable presumption” for the non-petitioner, “this rule does not shift the burden of persuasion” (i.e., the burden of persuasion for § 315(b) time-bar arguments “based on a complaint served on a real party interest more than a year earlier” remains with the IPR petitioner). The FC panel explained that it disagrees that “initial acceptance” of the IPR petitioner’s identification “formally shifts a burden of production to the patent owner” but that “a patent owner must produce some evidence to support its argument that a particular third party should be named a real party in interest” (“an IPR petitioner’s initial identification of the real parties in interest should be accepted unless and until disputed by a patent owner…instead of viewing this a presumption, we simply view this as practical…a mere assertion that a third party is an unnamed real party in interest, with any support…is insufficient”). The FC panel concluded that “Worlds presented sufficient evidence to put Bungie’s identification of the itself as the sole real party in interest into dispute” and, therefore, “the Board was required to make any factual determinations necessary to evaluate whether Bungie had satisfied its burden” and did not do so (e.g., “the Board merely cited attorney argument from Bungie’s briefing”; pointing the Board to Applications in Internet Time (FC 2018) and Wi-Fi One, FC 2018)). The FC panel did not address Bungie’s /collateral estoppel / issue preclusion arguments regarding the other three patents for which IPR final written decisions were issued and not appealed (the “limited record is insufficient for this court to decide, for the first time on appeal, whether issue preclusion should apply”). And the FC panel did not address the invalidity issues because of its decision regarding the real-party-in-interest issue. Thus, the Board’s decision was vacated and remanded (“the Board should first address whether Worlds is estopped from arguing the real-party-in-interest issue” and “then reevaluate the merits of the real-party-in-interest issue”).

This entry was posted in Collateral estoppel, Inter Parties Review (IPR), IPR, Issue Preclusion. Bookmark the permalink.

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