Continuously Keeping Your IPR Ducks in a Row: Sanctions for Failing to Update the PTAB on Changes in Real Parties of Interest

By Jaime D. Choi Ph.D.

IPR petitions are required to identify “all real parties in interest,” among other things because the final written decision of the PTAB prevents the petitioner, the real party in interest, or privy of the petitioner to “request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review.” See 35 U.S.C. § § 312(a)(2) and 325(e)(1).  Conversely, an entity who is not a real party in interest can request another IPR on a ground that was raised, or could have been raised, during a different proceeding.

In Atlanta Gas Light Company v. Bennett Regulator Guards, Inc. (IPR 2015-00826), the PTAB sent an expensive reminder to the petitioner, Atlanta Gas Light Company – and an express warning to others – that there is a continuing obligation to notify the PTAB of any changes in the real parties in interest.  The PTAB’s propensity to issue sanctions may have been amplified in this particular case because it had found in an earlier IPR (IPR2013-00453) that the petitioner, also Atlanta Gas Light Company, had failed to identify its holding company as a real party in interest.  In that proceeding, the PTAB terminated the IPR after briefing and oral argument as a result of the holding company not having been identified, in violation of 35 U.S.C. § 312(a)(2).

Atlanta Gas Light Company tried again, in a new IPR (IPR 2015-00826). When initially filing the new IPR, Atlanta Gas Light Company identified its holding company as being a real party in interest.  However, between when the oral hearing took place, and when the PTAB issued its Final Written Decision in the IPR, the holding company merged with, and became, a wholly owned subsidiary of The Southern Company, and changed its name to Southern Company Gas.  Only after the PTAB issued its Final Written Decision did Atlanta Gas Light Company identify The Southern Company and Southern Company Gas as being real parties in interest, in response to a concern raised by the Patent Owner.

In a Decision issued on December 6, 2016, the PTAB concluded that sanctions were appropriate in light of Atlanta Gas Light Company’s failure to notify the PTAB that The Southern Company became a real party in interest before the Final Written Decision was issued. The PTAB found this failure “especially significant” because the failure to disclose the holding company’s status as a real party had been central to the first IPR.  The Patent Owner alleged that the petitioner had attempted to preserve the ability of The Southern Company to file another IPR petition if the Final Written Decision produced an unfavorable result, and proposed that an appropriate sanction would include expunging the Final Written Decision, dismissing the IPR with prejudice, and awarding compensatory expenses and attorney fees to the Patent Owner.

The PTAB ultimately limited the sanctions to what it deemed would suffice to deter such conduct (whether by the petitioner or by others), and awarded the Patent Owner costs and fees for the time between the Final Written Decision and the Decision of December 6, 2016. Here, it was still possible to prevent The Southern Company from requesting another IPR on a ground that was raised, or could have been raised, during Atlanta Gas Light Company’s IPR, so dismissing the petition would have been more than needed as a deterrent.

Sanctions are rare in IPR proceedings. The PTAB’s award of sanctions in this case should highlight to IPR petitioners their continuing obligation to update the PTAB as to changes in real parties in interest, and the risks of failing to do so.