Reflectix v. Promethean Insulation (IPR2015-00039): An Unnamed Parent as Real Party in Interest

Under 35 U.S.C. § 312(a)(2), an IPR petition may be considered “only if” it identifies all real parties in interest. Reflectix, Inc. v. Promethean Insulation Technology LLC, IPR2015-00039 (Paper 18, April 24, 2015), shows how strictly the Board enforced that requirement in its early years. A single decision resolved five petitions (IPR2015-00039, -00042, -00044, -00045 and -00047) against five related Promethean patents. It is listed here with other key decisions.

Background

Promethean had sued Reflectix, its parent Sealed Air Corporation and Home Depot entities for infringement in the Eastern District of Texas. The parent and one Home Depot entity were later dismissed by stipulation. Reflectix then filed the five petitions naming itself as the only real party in interest (RPI).

Briefing revealed the corporate picture. Reflectix was wholly owned by Sealed Air Corporation (US), which was in turn owned by Sealed Air Corporation. Officers overlapped across the three companies; Reflectix’s president was an employee of the intermediate parent. In-house lawyers employed by the intermediate parent regularly served all three companies, helped outside counsel prepare the petitions, and the intermediate parent funded the work. For about seven months the petitions were drafted with the ultimate parent as petitioner and sole RPI; shortly before filing, Reflectix was substituted. The powers of attorney, signed by Reflectix’s president, still named the ultimate parent as the party appointing counsel.

What the Board decided

The intermediate parent was an RPI

Relying on the Trial Practice Guide and earlier decisions, the Board explained that the RPI is the party that desires review, and that the inquiry focuses on a party’s relationship to the proceeding and its control or opportunity to control it. Funding, provision of in-house counsel to shape the petitions, and blurred corporate lines all pointed one way. The Board found the intermediate parent was an RPI that should have been named.

Reflectix’s argument that the parent had been dismissed from the lawsuit did not help. As the Board put it, RPI describes the relationship between a party and a proceeding, not the relationship between parties.

No good cause to keep the filing date

The only rule for updating RPI information, 37 C.F.R. § 42.8(a)(3), covers changes within 21 days. Under earlier decisions, correcting an RPI omission meant a new filing date. Reflectix asked the Board to excuse the late correction for good cause or in the interests of justice under § 42.5(c)(3). Without deciding whether such relief is ever available, the Board found none here:

• The error came from a misunderstanding of law, not fact, and was not objectively reasonable on this record.
• Board decisions issued while correction was still possible should have prompted a reassessment, but Reflectix sought correction only after Promethean raised the issue.
• That the parent faced no time bar and conceded privity did not matter; RPI disclosure also serves conflict checks and credibility assessments.
• Candor once challenged did not make the original omission reasonable, and the Federal Rules of Civil Procedure do not govern AIA trials.

Because a corrected petition would have received a date more than one year after Reflectix was served in January 2014, correction would be futile under § 315(b). All five petitions were denied.

Why it matters

The case remains a vivid illustration of the facts that tend to make a nonparty an RPI: funding, control over drafting, shared counsel and overlapping management. For background, see who is the real party in interest in an IPR or PGR and beware the real party in interest.

Later developments

The remedy side of Reflectix has softened considerably. In Lumentum v. Capella (2016, precedential), the Board held that § 312(a) is not jurisdictional and accepted a late updated notice. In Wi-Fi One, LLC v. Broadcom Corp. (Fed. Cir. 2018) (en banc), the court observed that the Director can allow a petitioner to add an RPI. In Proppant Express v. Oren Technologies (2019), the Board let a petitioner add RPIs after institution while keeping its original filing date, because none of the added parties would have been time-barred. Meanwhile, Applications in Internet Time, LLC v. RPX Corp. (Fed. Cir. 2018) called for a flexible, broader view of who counts as an RPI. Readers should check current Board precedent and USPTO guidance on RPI disputes.

Key takeaways

• The Board found an unnamed parent that funded the petitions and supplied in-house counsel to be an RPI.
• RPI status turns on a party’s relationship to the proceeding, not its status in the lawsuit.
• In 2015 the Board refused to let Reflectix correct the omission while keeping its filing date, and § 315(b) then barred review.
• Later decisions allow correction more readily when no time bar or gamesmanship is involved.