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Uncertainty Regarding the Scope of IPR Estoppel – Part I

When the America Invents Act (“AIA”) first went into effect, it was widely believed by practitioners that the scope of the estoppel provisions under 35 U.S.C. § 315(e) was very broad.  Essentially, an IPR petitioner whose petition resulted in a final written determination would be estopped from arguing in district court any §§ 102 and/or 103 challenge based on prior art patents or publications.  This belief was argued to courts in motions to stay pending resolution of inter partes review proceedings, and district court litigations were routinely stayed based on this broad interpretation of the IPR estoppel provision.  See, e.g., Evolutionary Intelligence, LLC v. Facebook, Inc, No. C 13-4202 SI, 2014 WL 261837, at *2 (N.D. Cal. Jan. 23, 2014); Norman IP Holdings, LLC v. TP-Link Techs., Co., No. 6:13-CV-384-JDL, 2014 WL 5035718, at *3 (E.D. Tex. Oct. 8, 2014); Princeton Digital Image Corp. v. Konami Digital Entm’t Inc., No. CV 12-1461-LPS-CJB, 2014 WL 3819458, at *2 (D. Del. Jan. 15, 2014).

In the last year, it has become clear that the scope of IPR estoppel is likely not as broad as once believed.  On March 23, 2016, in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016), the Federal Circuit concluded that IPR estoppel generally applies only to grounds on which an IPR is instituted.  The Court reasoned that an IPR does not begin until it is instituted, and thus, any ground raised in a petition on which institution is denied was not raised—nor could it have been reasonably raised—during the IPR.  Id. at *1300.

Ever since, district courts, practitioners and other Federal Circuit panels (the panel in Shaw consisted of Judges Moore, Reyna and Wallach) have been revisiting the once seemingly clear estoppel provision of § 315(e).

Below is an overview of the current state of the law on the issue of IPR estoppel.

The plain language of the IPR estoppel provision states:

Estoppel.—

(1)Proceedings before the office.—

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

(2)Civil actions and other proceedings.—

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

Importantly, both § 315(e)(1) and (2) contain the language “in a patent under this chapter that results in a final written decision under section 318(a)” and “may not [request or maintain a proceeding before this Office…/assert either in a civil action…] on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”  This is important because one of the potentially most instructive opinions regarding the scope of the IPR estoppel provisions is Apotex Inc. v. Petitioner, IPR2015-00873, 2015 WL 5523393 (Sept. 16, 2015), a PTAB opinion interpreting § 315(e)(1) that determined back in 2015—pre-Shaw—that estoppel does not apply to a ground raised in a petition but on which IPR was not instituted because of redundancy, but estoppel does apply to a ground not raised in a petition.  Id. at *3-5.

Five months after Apotex, the Federal Circuit decided Synopsys, Inc. v Mentor Graphics, Corp., 814 F.3d 1309 (Fed. Cir. 2016).  Synopsys was not an IPR estoppel case—it was a case concerning whether the PTAB’s final decision in an IPR was required to address every claim raised in a petition.  And the Federal Circuit majority (Judges Dyk and Wallach) determined that 35 U.S.C. § 318(a) only requires the Board to address claims as to which review was granted.  Id. at *1316-17.  Judge Newman’s dissent, however, made the connection between this ruling and the IPR estoppel provision.  In her dissent, Judge Newman pointed out that “the estoppel provision … is undermined by partial decision [to institute IPR], for estoppel is effective only when validity is resolved by the PTAB.”  Id. at *1337.  In other words, so long as the PTAB can issue partial institution decisions and address only some of the grounds raised in a petition in a final written decision, then the rest of the grounds raised in the petition—for which institution was denied—would be preserved for re-argument (either in subsequent IPRs or in civil litigation).  .

The following month, on March 23, 2016, the Federal Circuit (Judges Moore, Reyna and Wallach) issued the Shaw opinion.  817 F.3d at 1300.  Therein, arguably in dicta, the PTO’s argument that estoppel does not apply to a ground raised in a petition but on which IPR was not instituted because of redundancy was adopted.  Shaw, 817 F.3d at 1300 (“Shaw raised its Payne-based ground in its petition for IPR.  [T]he PTO denied the petition as to that ground, thus no IPR was instituted on that ground.  The IPR does not begin until it is instituted.  Thus, Shaw did not raise—nor could it have reasonably raised—the Payne-based ground during the IPR.”) (internal citation omitted).  This was the same outcome as Apotex on similar facts.

On April 5, 2016, three different Federal Circuit Judges (Judges Lourie, Schall and Hughes) issued an opinion in HP Inc. v. MPHJ Technology Investments, LLC, affirming the PTAB’s determination and finding that the PTAB fulfilled its APA obligations even though it did not address all of the grounds in the petition in its final decision.  817 F.3d 1339, 1346-47 (Fed. Cir. 2016).  In dicta, the Court addressed HP’s policy argument that, notwithstanding the Board’s failure to address all of the grounds in its petition in the final decision, HP would be estopped from challenging claim 13 in a future proceeding.  Id. at 1347.  It explained: “[T]he noninstituted grounds do not become part of the IPR.  Accordingly, the noninstituted grounds were not raised and, as review was denied, could not be raised in the IPR.  Therefore, the estoppel provisions of § 315(e) do not apply.”  Id. (citing Shaw, 817 F.3d at 1299-1300).

On June 10, 2016, Judges Newman, Chen and Stoll issued opinions in SAS Institute, Inc. v. ComplementSoft, LLC, 825 F.3d 1341 (Fed. Cir. 2016).  The majority (Judges Chen and Stoll) again found that the Board did not need to address non-instituted claims in its final written decision.  825 F.3d at 1343.  Judge Newman wrote a separate opinion, dissenting on that issue for the same reasons she set forth in her dissenting opinion in Shaw.  SAS Institute, Inc., 825 F.3d at 1356-1359.  Judge Newman walked through the legislative history of the America Invents Act, explaining how it purportedly supports her view that final written decisions must address all of the claims in a petition because otherwise the estoppel provision does not carry out its intended purpose—which was to “completely substitute” the same issues in litigation.  Id. at 1358 (“The ‘complete substitution’ for section 102 and 103 issues cannot occur unless all the claims challenged in the petition are included when post-grant review is accepted.  Challengers may choose between the IPR proceeding and district court litigation on the same issues, but Congress restricted the repetitive validity proceedings of the past.”).

Since the four aforementioned Federal Circuit opinions, at least two district courts (Delaware and the Northern District of California) have issued opinions regarding the scope of the IPR estoppel provisions.  Two of these opinions have come out of the same District of Delaware case, Intellectual Ventures I LLC v. Toshiba Corp. et al., No. 13-453, 2016 WL 7341713 (D. Del. Dec. 19, 2016) and 2017 WL 107980 (D. Del. Jan. 11, 2017) (Judge Robinson).  In Intellectual Ventures, Judge Robinson called Intellectual Ventures’ position that Toshiba should be estopped from asserting in litigation invalidity grounds that were raised in its IPR petition but were not instituted “perfectly plausible.”  Intellectual Ventures, 2016 WL 7341713 at *13.  Nevertheless, she concluded that, based on the Federal Circuit’s decision in Shaw which she was bound to follow (“the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw”), Toshiba was not estopped from raising these grounds.  Id.  In the same opinion, but without any reasoning, Judge Robinson ruled that Toshiba was not estopped from litigating grounds that were never raised in an IPR petition.  Id.  In a subsequent opinion, Judge Robinson revisited the second part of her decision in Intellectual Ventures (estoppel of invalidity grounds not in an IPR petition).  While ultimately Judge Robinson did not change her decision on this issue from her first opinion, this time around Judge Robinson stated that there are competing policy considerations at play and it is “not [her] place to make policy decisions”; thus, she “hopes that an appeal may clarify the issue for future judges and future cases.”  Id. at *2.  The two competing policy considerations identified by Judge Robinson are: estoppel should apply to grounds not raised in IPR petitions because the PTAB is meant to be the patentability arbiter of first resort vs. estoppel should not apply to grounds not raised in IPR petitions because otherwise companies can play games between the PTAB and the courts, asserting some references in connection with the IPR but leaving some for litigation.  Id.

A Northern District of California case, Verinata Health, Inc. v. Ariosa Diagnostics, Inc., No. 12-5501, 2017 WL 235048 (N.D. Cal. Jan. 19, 2017), is also on point.  This case, like the Federal Circuit opinions, addressed the issue of estoppel as it relates to unpatentability grounds that were raised in an IPR petition but denied institution because of redundancy.  Id. at *2-3.  However, here the Court reached a different result.  The N.D. Cal. court distinguished Shaw and concluded that under the present facts—because the PTAB’s institution decision explained that the denied grounds were redundant because they were a subset of the instituted grounds—estoppel did apply.  Id.at *3 (“Ariosa is estopped, however, from raising the obviousness combination of Dhallan and Binladen.  Because the PTAB did not institute on this exact ground, instead finding it redundant in light of the instituted grounds of Shoemaker, Dhallan, and Binlader, the question is whether defendants “raised reasonably could have raised” obviousness over Dhallan and Binladen during the IPR proceedings.  The Court finds that the defendants raised, or could have raised, these grounds in the IPR proceedings, as the combination is Dhallan and Binladen is simply a subset of the instituted grounds.”).

A Northern District of Illinois case, Clearlamp, LLC v. LKQ Corp., No. 12 C 2533, 2016 WL 4734389 (N.D. Ill. Mar. 18, 2016), is also relevant.  Here the court considered the scope of the “could have raised” estoppel vis-à-vis grounds that were never raised in an IPR petition.  In particular, LKQ had brought an IPR that successfully challenged some but not all of the claims of the patent-in suit.  Id. at *2.  In litigation, with regard to the claims that remained at issue, LKQ asserted a new secondary reference which it obtained in discovery and argued was unavailable to it when it filed the IPR.  Clearlamp contended “that unavailable prior art that is cumulative of available prior art is estopped by § 315(e)(2)….”  Id. at *8.  The court disagreed, relying in part on the PTAB’s decision in Apotex (discussed above).  Id.  The court found that the new reference could be used “only if it could not have been found by a skilled searcher performing a diligent search.”  Id. at *9.  Further, the court found that the party asserting estoppel has the burden of establishing that a diligent search would have found the reference.  Id.  One way to do so, the court said, would be “(1) to identify the search string and search source that would identify the allegedly unavailable prior art and (2) present evidence, likely expert testimony, why such a criterion would be part of a skilled searcher’s diligent search.”  Id.  Because Clearlamp had not met this burden, the court allowed the new reference to be used.  Id.

In a subsequent post, we will analyze possible outcomes of the IPR estoppel issue and the practical effects of those outcomes vis-à-vis co-pending district court litigations.