Failure to Disclose Relationship with Real Party in Interest Results in Serious Sanctions

Failure to disclose certain relationships with a third party may result in significant consequences from the court. Scott Hervey and Eric Caligiuri talk about this on this episode of The Briefing. Watch this episode on the Weintraub YouTube channel here. Show Notes: Scott: In our last discussion with my colleague Eric Caligiuri, we looked into a case where a federal court denied discovery request aimed at uncovering details surrounding the financing of a plaintiff's patent litigation case. Today, we are going to discuss a case where a failure of one party to disclose certain relationships with a third party resulted in significant consequences. On this installment of The Briefing by Weintraub Tobin. Welcome to another installment of The Briefing. I'm Scott Hervey. I'm joined today by my colleague, Eric Caligiuri. Eric, thank you for joining us. Eric: Thanks, Scott. Great to be here. Scott: So, Eric, you wrote an interesting article on the case of Ventex versus Columbia Sportswear of North America. Similar to the last case we discussed, go to Streaming versus Netflix. This case, the Ventex case, deals with litigation financing and how the failure to disclose or possibly the attempt to hide critical information showing a financial relationship between two parties interested in the outcome of a certain proceeding can impact that legal proceeding. Eric, can you break down the key details of the case? Eric: Yes, absolutely. In this case, we have ventex comp versus Columbia Sportswear of North America. It centers around an inner parties dispute filed by Ventex. An inner parties dispute, or an IPR, is a proceeding before the Patent Trial and Appeal Board of the USPTO. Basically, it's an administrative proceeding similar to a district court litigation similar to litigation, except a little more streamlined and presided over by an administrative law judge at the PTAB. And basically, the only remedy is to consider the validity of a patent. So, essentially, what happens is someone who may think that either a patent is invalid or patent has been asserted against them, they can file a challenge to that patent at the PTAB, and that dispute is called an IPR. In this case, the PTAB found that Ventex failed to disclose a variety of information asserting Ventex's relationship with a company called Sirius Innovative Accessories, Inc. In response to discovery request by Columbia, the PTAB found that this failure to disclose led to unnecessary delays in the proceeding. As a result, the PTAB dismissed the proceeding and awarded over $32,000 in sanctions to Columbia, who was the patent owner. Columbia's motions for sanctions was based on a contention that Ventex petitions were time-barred, meaning they didn't file the IPRs in time, and therefore the PTAB should not have initiated the IPRs to begin with. Scott: So, Columbia's argument revolved around Ventex's nondisclosure of its relationship with Serious Innovative Accessories, which Columbia argued was both a proxy of Ventex and a real party in interest. The board agreed with Columbia, leading to dismissal of Ventex's petitions and the termination of the IPRs and sanctions against Ventex. So what was the crux of Columbia's argument in terms of the relationship between Ventex and Sirius? Eric: Yeah. So Columbia relied heavily on two prior agreements, a supplier agreement from 2013 and a 2016 exclusive manufacturing agreement. These documents illustrated a preexisting business relationship between Ventex and Sirius, suggesting that they shared a mutual interest in invalidating the ...