Last week, the U.S. Court of Appeals for the Federal Circuit issued a precedential, modified order in Mojave Desert Holdings, LLC v. Crocs, Inc., No. 2020-1167 (April 21, 2021). The order granted a motion to substitute Mojave as U.S.A. Dawgs’s successor-in-interest in U.S.A. Dawgs’s appeal of the Patent Trial and Appeal Board’s decision on the patentability of a Crocs design patent.
Crocs sued U.S.A. Dawgs for infringement of a design patent, which included a single claim to an “ornamental design for footwear.” U.S.A. Dawgs requested inter partes reexamination, and the litigation was stayed. During reexamination, the examiner rejected the claim as anticipated. Crocs appealed to the Board. While the appeal was pending, U.S.A. Dawgs filed for bankruptcy and sold its assets to Mojave. Later, Mojave filed a petition with the Board to substitute in as the real-party-in-interest. The Board expunged and dismissed the request. Subsequently, the Board overturned the examiner’s claim rejection. U.S.A. Dawgs appealed the Board’s substantive decision to the Federal Circuit, and U.S.A. Dawgs and Mojave moved to substitute Mojave as the real party-in-interest.
The Federal Circuit granted the motion. The Court first rejected Crocs’s argument that Mojave was not the successor-in-interest. Distinguishing the Agilent Technologies case, the Court explained that here “all,” rather than “substantially all,” of U.S.A. Dawgs’s interests were transferred. That broad language, the Court explained, includes U.S.A. Dawgs’s interest as the reexamination requester. The Court next rejected Crocs’s argument that the motion was untimely in view of 37 C.F.R. § 41.8(a), which requires identification of a “real party-in-interest” within 20 days of any change during a contested proceeding. The Court concluded § 41.8(a) is designed to detect conflicts of interest and does not permit the Board to ignore a transfer of interest in the context of substitution. The Court next held that, under 35 U.S.C. § 141, a “reexamination requester’s right (including its right to appeal) may be transferred at least when it occurs as part of the transfer of the requester’s past infringement liability.” Finally, the Court held Mojave has standing. Specifically, the Court noted Mojave suffers Article III injury because success on Crocs’s infringement claim directed at U.S.A. Dawgs in the stayed litigation would reduce the amount of damages recoverable on false advertising counterclaims pending in that suit, and Mojave held U.S.A. Dawgs’s interest in those claims.