In Worlds Inc. v. Bungie, Inc., [2017-1481, 2017-1546, 2017-1583] (September 7, 2018), the Federal Circuit vacated the Final Written Decision in three Inter Partes Reviews because the Board erred in its real party in interest analysis, and remanded. The appeal involved three related patents — U.S. Patent Nos. 7,945,856, 8,082,501, and 8,145,998 — relating to the computer-generated display of avatars in a virtual world, including methods and systems to determine which particular avatars are displayed in a given situation.

Worlds had originally sued Activision in 2012 over the patents. While the suit was pending, Worlds indicated that it was going to add products developed by Bungie, but distributed by Activision, to the suit. Bungie filed the three petitions for IPR challenging Worlds’ patents more than a year after Activition was served with the Complaint, and Bungie did not name Activision as a real party in interest.

The Federal Circuit pointedly observed that absent from the Board’s analysis of the real-party-in-interest issue is any clear statement of what, if any, burden framework the Board used to analyze the evidence presented in these IPRs, including an identification of which party the Board viewed as bearing the burden of persuasion.

The Federal Circuit largely agreed with the burden framework used in Atlanta Gas Light, stating that the IPR petitioner bears the burden of persuasion to demonstrate that its petitions are not time-barred under § 315(b) based on a complaint served on a real party in interest more than a year earlier, and the petitioner’s initial identification of the real parties in interest should be accepted unless and until disputed by a patent owner. The patent owner must produce some evidence to support its argument that a particular third party should be named a real party in interest.

The Federal Circuit rejected the Board’s practice of creating a “presumption” that the petitioner’s initial identification of the real parties in interest is correct. While the patent owner must produce some evidence that tends to show that a particular third party should be named a real party in interest, a mere assertion that a third party is an unnamed real party in interest, without any support for that assertion, is insufficient to put the issue into dispute.

The Federal Circuit then turned to the question of who should bear the burden of persuasion, noting a complete absence of any statement as to which party should bear the burden of persuasion. The Federal Circuit could not discern whether the Board placed the burden on Worlds, the patent owner, to persuade the Board that Bungie failed to list a real party in interest that would render the petitions time barred under § 315(b), which would have been improper.  Moreover, the Federal Circuit was concerned that the Board may have relied on attorney argument as evidence that Activision was not controlling or funding these IPRs.

In light of these concerns, the Federal Circuit found it appropriate to remand the case to the Board for further consideration of the real-party-in-interest issue.