Anova Food, Llc.v.Leo Sandau and William R. Kowalski

Patent Trial and Appeal Board

Sep 13, 2013

08980392 (P.T.A.B. Sep. 13, 2013)

Trials@uspto.gov Paper No. 17
571-272-7822 Date Entered: September 13, 2013

UNITED STATES PATENT AND TRADEMARK OFFICE
_____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

ANOVA FOOD, LLC.
Petitioner

v.

LEO SANDAU and WILLIAM R. KOWALSKI
Patent Owner
____________

Case IPR2013-00114
Patent 5,972,401
____________

Before SALLY C. MEDLEY, LORA M. GREEN, and
MICHAEL J. FITZPATRICK, Administrative Patent Judges.

GREEN, Administrative Patent Judge.

DECISION
Denying Inter Partes Review
37 C.F.R. § 42.108

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I. BACKGROUND
Anova Food, LLC (“Anova LLC”) filed a petition (“Pet.”) requesting inter
partes review of claims 2-66 and 68-75 of U.S. Patent No. 5,972,401 (the “’401
patent”; Ex. 1001) on January 17, 2013. Paper 1. Patent Owner, William R.
Kowalski, filed a Preliminary Patent Owner Response on June 17, 2013.
1
Paper 8.
We have jurisdiction under 35 U.S.C. §§ 6(b) and 314.
The standard for instituting an inter partes review is set forth in 35 U.S.C.
§ 314(a), which states:
THRESHOLD. -- The Director may not authorize an inter partes review
to be instituted unless the Director determines that the information
presented in the petition filed under section 311 and any response
filed under section 313 shows that there is a reasonable likelihood that
the petitioner would prevail with respect to at least 1 of the claims
challenged in the petition.

For the reasons set forth below, the Board determines that the petition was
not filed timely within the statutory period of 35 U.S.C. § 315(a)(1) and, therefore,
the petition requesting inter partes review is denied.

A. Related Proceedings
The ’401 patent is involved in litigation styled William R. Kowalski, Hawaii
International Seafood, Inc. v. Anova Food, LLC; Anova Food, Inc.; Clearsmoke
Technologies, Ltd., Case No. CV11-00795 (D. Haw.), filed on March 2, 2012.
Pet. 1.

1 Patent Owner filed a Reformatted Preliminary Response on June 24, 2013. Paper
10. All further references to the Preliminary Response (“Prelim. Resp.”) are to the
Reformatted Preliminary Response.
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B. Earlier Proceedings Involving the ’401 Patent
Anova Food, Inc. (“Anova Inc.”), filed three civil actions challenging the
validity of the ’401 patent. Prelim. Resp. 1. The three civil actions were Anova
Food, Inc. v. Hawaii Int’l Seafood & Kowalski, 1:03-CV-0815 (N.D. Ga.), filed
March 25, 2003; Anova Food, Inc. v. Hawaii Int’l Seafood & Kowalski, 1:03-CV-
2325 (N.D. Ga.), filed August 1, 2003; and Anova Food, Inc. v. Hawaii Int’l
Seafood & Kowalski, 1:04-CV-0775 (N.D. Ga.), filed March 18, 2004. Id.
According to Patent Owner, all three actions (collectively, “the Anova Inc.
actions”), were dismissed, with the last filed action being dismissed with prejudice.
Id.

II. STANDING
Section 315 of title 35 proscribes the relation of other proceedings or actions
to inter partes review proceedings. 35 U.S.C. § 315(a)(1) states:
Inter partes review barred by civil action.—An inter partes review
may not be instituted if, before the date on which the petition for such
review is filed, the petitioner or real party in interest filed a civil
action challenging the validity of a claim of the patent.

The language of 37 C.F.R. § 42.101 mirrors the language of the statute,
stating:
A person who is not the owner of a patent may file with the
Office a petition to institute an inter partes review of the patent
unless:
(a) Before the date on which the petition for review is filed, the
petitioner or real party-in-interest filed a civil action
challenging the validity of a claim of the patent.

Patent Owner asserts that Anova LLC is the same entity as Anova Inc., and
thus is barred from bringing an inter partes review under 35 U.S.C. § 315(a)(1)
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and 37 C.F.R. § 42.101 because of the filing of the three Anova Inc. actions, and
the dismissal with prejudice of the last Anova Inc. action. Prelim. Resp. 1-2.
Petitioner raises two issues in response. The first issue is whether “filed” as
used in 35 U.S.C. § 315(a)(1) and 37 C.F.R. § 42.101(a) should be interpreted as
requiring “filed and served.” If the answer to the first inquiry is “no,” the second
issue raised by the Petitioner is whether Anova LLC is the same entity as Anova
Inc., such that Anova LLC is barred from filing a petition for inter partes review of
the ’401 patent based on the filing by Anova Inc. of the three Anova Inc. actions.

A. Background
As to standing to bring the instant inter partes proceeding, Anova LLC
certified in its petition “that the ’401 Patent is available for inter partes review and
that the Petitioner is not barred or estopped from requesting an inter partes review
challenging the patent claims on the grounds identified herein.” Pet. 3. Anova
LLC did not mention the Anova Inc. actions in its petition requesting inter partes
review of the ’401 patent.
In the preliminary response, Patent Owner raised the issue of the Anova Inc.
actions, and presented evidence that Anova LLC is the same entity as Anova Inc.
Prelim. Resp. 1-9. A phone conference was held on June 20, 2013, between the
Board and the parties, in which Anova LLC’s standing to request inter partes
review was discussed. See Paper 11. Anova LLC requested permission to file a
reply addressing the issue of standing. Id. at 4. In that call, the Board authorized
Petitioner’s request to file a reply (“Pet. Reply;” Paper 13), and also authorized
Patent Owner to file a sur-reply (“Sur-reply;” Paper 14). Paper 11 at 5. Thus,
Petitioner has had ample opportunity to address the issue of standing under
35 U.S.C. § 315(a)(1).
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B. Whether “filed” as used in 35 U.S.C. § 315(a)(1) should be interpreted as
“filed and served.”
Anova LLC contends that “‘filed’ must mean ‘filed and served.’” Pet.
Reply. 1-2. According to Anova LLC, the purpose of the bar is to prevent
harassment of the Patent Owner, and such harassment could not have occurred as
none of the Anova Inc. actions was ever served on Patent Owner. Id. at 2.
Statutory construction “begins with ‘the language of the statute.’ And where
the statutory language provides a clear answer, it ends there as well.” Hughes
Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999) (citations omitted).
“Beyond the statute’s text, [the ‘traditional tools of statutory
construction’] include the statute’s structure, canons of statutory
construction, and legislative history.” Timex V.I. v. United States, 157
F.3d 879, 882 (Fed.Cir.1998) (quoting Chevron U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 843 n. 9 (1984)). “If a court,
employing traditional tools of statutory construction, ascertains that
Congress had an intention on the precise question at issue, that
intention is the law and must be given effect” Chevron, 467 U.S. at
843 n. 9. . . .

Bull v. U.S., 479 F.3d 1365, 1376 (Fed. Cir. 2007) (parallel citations omitted).
“It is well settled law that the plain and unambiguous meaning of the words
used by Congress prevails in the absence of a clearly expressed legislative intent to
the contrary.” Hoechst Aktiengesellschaft v. Quigg, 917 F.2d 522, 526 (Fed. Cir.
1990). When there is no ambiguity in the words of the statute, “we turn to the
legislative history to see if Congress meant something other than what it said
statutorily.” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988).
In 35 U.S.C. § 315(a)(1), the statute states that inter partes review may not
be instituted “if, before the date on which the petition for such review is filed, the
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petitioner or real party-in-interest filed a civil action challenging the validity of a
claim.” Thus, section 315(a)(1) refers only to filing, and Anova LLC does not
point us to any legislative history to demonstrate that the legislative intent was in
fact that “filed” be read as “filed and served.”
Moreover, we contrast the section 315(a)(1) bar with the section 315(b) bar.
35 U.S.C. § 315(b) states, in relevant part:
Patent Owner’s Action.—An inter partes review may not be
instituted if the petition requesting the proceeding is filed more than 1
year after the date on which the petitioner, real party in interest, or
privy of the petitioner is served with a complaint alleging
infringement of the patent.

Section 315(b) requires that the petitioner be “served,” whereas section
315(a)(1) only requires that the civil action be “filed.” Thus, based on the plain
words of the statute, it appears that when Congress meant for service to be
required, it included it in the statute. We, therefore, decline to read “served” into
35 U.S.C. § 315(a)(1).

C. Whether Anova LLC has demonstrated it is not the same entity as Anova Inc.
for purposes of 35 U.S.C. § 315(a)(1).
Patent Owner asserts that Anova LLC and Anova Inc. are in fact the same
entity. Patent Owner thus contends that Anova LLC is precluded from instituting
inter partes review of the ’401 patent because of the filing by Anova Inc. of an
action challenging the validity of the claims in the ’401 patent before the date of
filing of the petition.
The issue is, therefore, whether Anova LLC is the successor of Anova Inc.,
such that the filing of the Anova Inc. actions by Anova Inc. may be imputed to
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Anova LLC.
2
In determining successor liability between a predecessor corporation
and a successor corporation, the Court of Appeals for the Federal Circuit looks to
state law. Funai Elec. Co., Ltd. v. Daewoo Eletronics Corp., 616 F.3d 1357, 1379-
1380 (2010). Quoting Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010), the court
noted “that for diversity jurisdiction the “‘principal place of business’” is ‘the place
where a corporation’s officers direct, control, and coordinate the corporation’s
activities,’ from which it follows that the laws of the principal place of business
should normally apply to transactions flowing from the corporation’s ‘nerve
center.’” Id. at 1380. Following that principle, Anova LLC’s principal place of
business is Florida
3
, and thus we will apply Florida law to the issue of corporate
successor liability.
Florida honors the “traditional corporate law rule,” in which the liabilities of
a predecessor corporation are not imposed on a successor corporation unless:
1) the successor expressly or impliedly assumes obligations of the
predecessor, (2) the transaction is a de facto merger, (3) the successor
is a mere continuation of the predecessor, or (4) the transaction is a
fraudulent effort to avoid liabilities of the predecessor.

Bernard v. Kee Mfg. Co., 409 So.2d 1047, 1049 (Fla.1982). The tests for
determining the existence of a de facto merger or a mere continuation in business
are:
[W]hen one corporation is absorbed by another, i.e., there is a
continuity of the selling corporation evidenced by such things as the

2 Anova LLC argues that it was not in privity with Anova Inc. under the factors set
forth by the Supreme Court in Taylor v. Sturgell, 553 U.S. 880, 898 (2008). Pet.
Reply 2-5. As noted by Patent Owner, however, that argument is irrelevant as
Patent Owner is not arguing that Anova LLC is barred from seeking inter partes
review based on privity with Anova Inc. Sur-reply 2.
3 See declaration of Darren Zobrist, President of Anova LLC (Ex. 2008), stating
that Anova LLC has its principal place of business in Tampa, Florida.
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same management, personnel, assets, location and stockholders . . . .
“The bottom-line question is whether each entity has run its own race,
or whether, there has been a relay-style passing of the baton from one
to the other.” (citations omitted.)

Amjad Munim, M.D., P.A., v. George Azar, M.D. 648 So. 2d 145, 154 (Fla. Dist.
Ct. App. 1994) (quoting 300 Pine Island Assoc.v. Steven L. Cohen & Assoc., 547
So.2d 255, 256 (Fla. Dist. Ct. App. 1989)); see also Lab. Corp. of America v.
Prefessional Recovery Network, 813 So.2d 266, 270 (Fla. Dist. Ct. App. 2002).
We note that Anova LLC asserts, without citation, that the “burden of proof
for an ‘estoppel’ under § 42.101(c) is on [Patent Owner].” Pet. Reply 2. This is
not an issue of estoppel under 37 C.F.R. § 42.101(c), however, but is an issue of
whether Anova LLC is barred from pursuing inter partes review under 35 U.S.C.
§ 315(a)(1) and 37 C.F.R. § 42.101(a) because of the filing of the Anova Inc.
actions.
Patent Owner contends that declarations from corporate officers refer to
Anova Inc. and Anova LLC as the same business, with “people, customers,
products, procedures, etc.—switching to the new corporate form in the same
location.” Prelim. Resp. 4-5 (citing Exs. 2008-2012); see also Sur-Reply at 2
(citing Ex. 2040). Patent Owner further contends that Anova LLC stated on its
website that its inception was in 1996, which is the year of incorporation of Anova
Inc., whereas Anova LLC was incorporated in 2010. Prelim. Resp. 5 (citing Ex.
2013).
In the Declarations of Darren Zobrist, Mr. Zobrist states that he is both the
President of Anova LLC and interim CEO of Anova Inc. Ex. 2008, 2009. Mr.
Zobrist declared further that Douglas Brinsmade, who was the former president of
Anova Inc., has an agreement with both Anova Inc. and Anova LLC “to return all
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company documents when he left their employment, but he kept a group of them
pending resolution of his employment claim.” Ex. 2009 at 3.
In the Declaration of Scott Purinton, Mr. Purinton states that at the time of
the Declaration, he was Vice President of Sales of Anova LLC, and that when
Anova Inc. was operational, he had been Vice President of National Sales of
Anova Inc. Ex. 2010, ¶ 1. Mr. Purinton declares that Performance Food Group
(“PFG”) is a customer of Anova LLC, and also was a customer of Anova Inc. Id.
at ¶¶2 and 3; see also Ex. 2012 (Declaration of Performance Food Group
Customized, stating that PFG was a past customer of Anova Inc., and was a
customer of Anova LLC at the time of the Declaration). Mr. Purinton notes that in
order to shorten his Declaration, “because of the amount of overlap between the
two Anova companies, I will refer to both Anova LLC and Anova Inc. as
‘Anova.’” Ex. 2010 at ¶ 3. Patent Owner submits the “LinkedIn” page
4
of Mr.
Purinton. Ex. 2040. Mr. Purintin states under “Experience” that he has been the
Vice President of Anova Food, LLC, from March 1998 to the present, for a total of
15 years, 5 months. Id.
Patent Owner submits Exhibit 2013, which it states is a December 23, 2011,
copy of a webpage from the website http://anovafoodgroup.com/About.html,
which Anova LLC does not dispute on this record. According to the webpage,
“Anova Food, LLC” is headquartered in Tampa, Florida, and has, “[s]ince its
inception in 1996, . . . grown from a small, single-species importer to an industry
leading multinational company offering a full line of frozen seafood products.”
Ex. 2013 at 1.
Anova LLC responds that Anova Inc. was incorporated in 1996 in Georgia
(citing Ex. 1028), and was owned by, and was a fully controlled subsidiary of,

4 http://www.linkedin.com/pub/scott-purinton/73/b59/372.
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Anova Holding, BV (“Anova BV”), a Dutch company, when the Anova Inc.
actions were filed. Pet. Reply 1. Anova LLC, however, does not direct us to
evidence to substantiate that statement. Anova LLC asserts next that one hundred
percent of the shares of Anova Inc. were transferred to Anova Holding USA, LLC
(“Anova Holding”). Id. (citing Ex. 1029).
Anova LLC was organized on May 26, 2010, as a Virginia Limited Liability
Company, as a “wholly owned and controlled subsidiary of Holding USA,” and
capitalized with certain assets from Anova Holding, subject to defined liabilities.
Id. (citing Ex. 1029 and Ex. 1030). According to Petitioner, “Anova LLC was
never owned or controlled by the Dutch Anova BV that controlled Anova Inc.
during the 2003-2004 lawsuits.” Id.
Exhibit 1028 is the Certificate of Incorporation of Anova Food, Inc., as a
Georgia corporation, and Exhibit 1029 is the certificate of organization of Anova
Food, LLC., as a Virginia corporation. Exhibit 1030 is a Certificate of Manager,
transferring undefined capital assets having a book value of approximately $14
million dollars to its wholly owned subsidiary, Anova Food LLC, “subject to
certain defined liabilities.”
Anova LLC contends further that Patent Owner unsuccessfully attempted to
argue in the Hawaii action “that Anova LLC was the alter ego of Anova Inc.” Pet.
Resp. 4 (citing Ex. 1033). Patent Owner responds that it did not argue alter ego in
the Hawaii action, and also is not arguing alter ego in this proceeding. Sur-reply 2.
We agree with Patent Owner that Exhibit 1033 is not probative on the issue as to
whether Anova LLC is the continuation of Anova Inc. The United States District
Court for the District of Hawaii only stated that plaintiffs (including Patent
Owner), “have not argued that the Defendants [including both Anova LLC and
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Anova Inc.] are all alter egos of each other or cited authority that show their
separate actions can otherwise be imputed to each other.” Ex. 1033 at 12.
Upon consideration of the arguments of both Anova LLC and Patent Owner,
as well as weighing the evidence that has been made of record, we conclude that
Anova LLC has not established that it is not barred under 35 U.S.C. § 315(a)(1).
Specifically, Anova LLC has not presented rebuttal evidence sufficient to outweigh
Patent Owner’s evidence showing that, in essence, Anova Inc. and Anova LLC
operated as one continuous entity. The evidence submitted by Patent Owner
suggests that there was merely a “passing of the baton” from Anova Inc. to Anova
LLC. Munim, 648 So. 2d at 154. In that regard, we note the evidence of record
supports a conclusion that Anova Inc. and Anova LLC shared the same officers
and same customers. For example, we find it probative that two top officials of
Anova Inc. maintained their top status in Anova LLC. Mr. Purinton, one of those
top officials, specifically states on his LinkedIn page that he has been a Vice
President at Anova LLC, from March 1998 to the present. Ex. 2008-2010, 2040.
Moreover, the page from the website of Anova LLC (Ex. 2013), which Anova
LLC does not address in its response, specifically states that the year of inception
of Anova LLC was 1996, thus implicitly portraying Anova Inc. and Anova LLC as
one continuous entity, in business since 1996, when “the company” first began as
Anova Inc.
Accordingly, based on the totality of the evidence, including the fact that
Anova Inc. and Anova LLC held themselves out to the public as one continuous
entity, we conclude that the filing of the Anova Inc. actions are acts imputed to
Anova LLC. Anova LLC is, therefore, barred from filing an inter partes review,
because Anova Inc. “filed a civil action challenging the validity of a claim” of the
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’401 patent before Anova LLC filed its petition for inter partes review. 35 U.S.C.
§ 315(a)(1).

III. CONCLUSION
We have considered Petitioner’s arguments, but Petitioner has not identified
any authority requiring that the Board deviate from the plain language of 35 U.S.C.
§ 315(a)(1). We also conclude that Anova LLC has not established that it has
standing under that section of the statute such that inter partes review may be
instituted. Thus, we are not persuaded that the petition for an inter partes review
of U.S. Patent 5,972,401 was filed timely within the statutory period of 35 U.S.C.
§ 315(a)(1) and, therefore, the petition is denied.

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IV. ORDER
In consideration of the foregoing, it is hereby
ORDERED that the petition is denied as to all challenged claims and no trial
is instituted.

For Petitioner:

Dale R. Jensen
djensen@zoblaw.com

Scott B. Dahlquist
sdahlquist@zoblaw.com

For Patent Owner:

Martin E. Hsia
mhsia@cades.com

Keri Ann Krzykowski
kkrzykowski@cades.com