July 16, 2015
Law360
Authored by Arpita Bhattacharyya, Ph.D. and Barbara Clarke McCurdy
When the America Invents Act legislation was first proposed, many thought its broad estoppel provisions might be a deterrent for parties considering post-grant proceedings. The high success rate for petitioners in inter partes reviews has lessened would-be petitioners' concerns about the risks of estoppel, and the volume of IPR petitions continues to grow. There also has been some clarity from the Patent Trial and Appeal Board and the district courts about the scope of the estoppel provisions, which provides some good news for petitioners. This article discusses recent decisions that shed some light on the scope of the AIA estoppel provisions.
IPR includes an estoppel provision that prohibits an IPR petitioner from later raising before the patent office, a district court, or the U.S. International Trade Commission any ground of invalidity that the petitioner "raised or reasonably could have raised" during the IPR. 35 U.S.C. § 315(e). Estoppel from an IPR attaches when the PTAB issues a final written decision—i.e., before the Federal Circuit has decided any appeals from the final PTAB decision. Thus, the timing of IPR estoppel differs significantly from that of inter partes re-examination (which was displaced by IPR under the AIA), because estoppel from an inter partes re-examination takes effect after all appeal rights have been exhausted. See Bettcher Indus Inc. v. Bunzl USA Inc., 661 F.3d 629, 648 (Fed. Cir. 2011).
The scope of IPR estoppel also differs from that of inter partes re-examination. IPR estoppel applies to invalidity grounds that the petitioner raised or "reasonably" could have raised in the initial petition. In contrast, re-examination estoppel applies to any invalidity ground that a third-party requester "raised or could have raised" during an inter partes re-examination. 35 U.S.C. § 315(c) (pre-AIA). The inter partes re-examination statute also explicitly states that estoppel does not attach to invalidity arguments based on "newly discovered" prior art unavailable to the requester or the USPTO at the time of the re-examination. Id.
Although the IPR statute does not include such language, the term "reasonably" in the IPR statue could be interpreted by the PTAB and courts to mean that IPR estoppel does not apply to prior art that was discovered after the filing of the initial IPR petition. Indeed, the legislative history of the AIA supports the interpretation that the standard "reasonably could have raised" means that IPR petitioners are estopped from raising prior art that a "skilled searcher conducting a diligent search reasonably could have been expected to discover," as opposed to "a scorched-earth search around the world [that] would have uncovered the prior art in question." 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl). The question of what constitutes "skilled searcher" and "diligent search" remains open to interpretation by the PTAB and the courts. It is, however, clear that as long as a prior art reference was available to the petitioner, the PTAB would consider any ground of invalidity involving that prior art as "reasonably could have [been] raised" in the earlier petition. See Dell Inc. v. Electronics & Telecommunications Research Institute, IPR2015-00549 (PTAB March 26, 2015).
In the Dell case, the petitioners had filed an IPR petition challenging claims 1-9 of the patent at issue under 35 U.S.C. § 103(a) based on a prior art reference, Mylex, in view of other prior art. Claims 1-3 and 5-8 were also challenged under 35 U.S.C. § 102(b) as anticipated by a prior art reference Hathorn. The PTAB instituted trial only on the 102(b) ground, denying all other grounds on the merits. Subsequently, the PTAB entered a final written decision finding claims 1-3 and 5-8 not anticipated by Hathorn. The petitioners filed a second IPR petition challenging claims 1-9. As to claims 1-3 and 5-8, which were addressed in the final written decision of the first IPR, the PTAB held that the petitioners were estopped under 35 U.S.C. § 315(e)(1) from requesting or maintaining the second IPR.
The PTAB explained that the petitioners were relying on the same prior art (Mylex and Hathorn) that they had previously asserted in the first IPR petition, and therefore, the invalidity grounds in the second IPR petition could have been raised in the first petition. The PTAB specifically noted that the differences in how the prior art references were applied in the two IPR proceedings carried no weight in its determination of whether the invalidity grounds raised in the second petition could have been raised in the first petition. Thus, the availability of a prior art reference triggers the estoppel, and not how a reference is interpreted or asserted by the petitioner. As to noninstituted claims 4 and 9, the PTAB determined that §315(e)(1) operates as an estoppel only for those claims that result in a final written decision. Since trial was not instituted on claims 4 and 9, they were not addressed in the final written decision of the first IPR, and accordingly, claims 4 and 9 were not precluded by the estoppel provision. The second petition, however, was time-barred under 35 U.S.C. § 315(b) and could not proceed even as to claims 4 and 9.
Thus, the Dell decision clarifies that if a challenged claim is not addressed in the final written decision of an IPR, the petitioner is not statutorily precluded from filing a subsequent IPR on that claim using the same prior art and arguments, provided there is no §315(b) time bar. This view was further confirmed by the PTAB in Westlake Services LLC v. Credit Acceptance Corp. In this case, the PTAB denied a patent owner's motion to terminate a covered business method review proceeding, holding that estoppel under 35 U.S.C. § 325(e)(1) does not apply to claims that were denied institution. CBM2014-00176, Paper 28 (May 14, 2015). The petitioner in Westlake Services had previously filed a petition for CBM review of claims 1-42 of the patent at issue. The PTAB instituted trial for only claims 1-9, 13 and 34-42.
Petitioner subsequently filed a second petition for noninstituted claims 10-12 and 14-33. The PTAB issued a final written decision on the first CBM, finding the instituted claims unpatentable under 35 U.S.C. § 101. Patent owner then filed a motion to terminate the second CBM proceeding. Specifically, patent owner argued that pursuant to 35 U.S.C. § 328(a), the PTAB's final written decision in the first CBM proceeding applied to all the challenged claims (i.e., the instituted and non-instituted claims), and therefore, the second CBM proceeding was estopped under § 325(e)(1). The PTAB disagreed and held that the final written decision in the first CBM proceeding applied only to the instituted claims, and on that basis denied patent owner's motion to terminate the second proceeding. The PTAB further noted that any concerns about harassment or abuse of patent owners through serial petitions are addressed under 35 U.S.C. § 325(d), which grants the PTAB discretion to reject IPR, post-grant review and CBM petitions if they involve "the same or substantially the same prior art or arguments previously presented to the Office."
Thus, the PTAB's interpretation of the estoppel provisions in Dell and Westlake Services take the sting out of noninstitution of trial for challenged claims, because at the very least petitioner is not statutorily estopped under §315(e)(1) from filing another IPR petition on the noninstituted claims. There may, however, be a practical estoppel unless petitioner presents different prior art, claim construction or arguments for the noninstituted claims in the subsequent petition.
Despite the similarity in language between §§ 315(e)(1) and (2), it is unclear whether district courts will interpret the estoppel provision under § 315(e)(2) in the same way as the PTAB. Guidance from the district courts has been sparse thus far. Notably, in Nat'l Oilwell Varco LP v. Omron Oilfield & Marine Inc., the PTAB denied institution for all challenged claims, and the district court subsequently held that "the statutory doctrine of estoppel DOES NOT APPLY to this case," thus suggesting that estoppel would not apply to noninstituted claims. No. 1:12-cv-773-SS, Dkt. 62 (W.D. Tex. Dec. 2, 2013). In large part, the uncertainty surrounding the estoppel provision is driven by the PTAB's practice of partially granting IPR petitions and not addressing the noninstituted claims in the final written decision. The merits of this practice have been appealed to the Federal Circuit by Synopsys Inc. (appeal from Synopsys Inc. v. Mentor Graphics Corp., IPR2012-00042). The Federal Circuit's decision will likely bear heavily on the application of estoppel to noninstituted claims.
As to the metes and bounds of "reasonably could have raised" estoppel under § 315(e)(2), the safest course for district court litigants who are also IPR petitioners is to rely in the district court on invalidity grounds based on patentable subject matter under 35 U.S.C. § 101, or written description, enablement, and definiteness requirements under 35 U.S.C. § 112, because these invalidity grounds are not available to IPR petitioners.
Moreover, petitioners likely can raise invalidity grounds based on prior use/sale of physical products or systems, because IPR petitions can only be based on patents or printed publications. This issue was addressed in Star Envirotech Inc. v. Redline Detection LLC., 8-12-cv-01861 (CACD Jan. 29, 2015). The plaintiff contended that the defendants should be estopped from relying on a physical machine as part of its invalidity contentions, because the defendants could have raised the machine's owner's manual in a related IPR proceeding. The physical machine was used in combination with six other prior art references, each of which was raised during the IPR proceeding. The district court disagreed and found that the physical machine embodied claimed features that were not disclosed in the instruction manual, and therefore, the machine was "a superior and separate reference."
Thus, the Star Envirotech decision suggests that physical machines/systems could be used alone, or in combination with prior art references asserted in an earlier IPR, to create new grounds of invalidity that could not have been presented in the IPR. Likewise, courts may allow invalidity grounds based on a combination of patents/printed publication if at least one of the asserted patent/publication is found to have been "reasonably" unavailable prior to the filing of the IPR petition.
More guidance from the district courts and the Federal Circuit is required to fully understand the reach of estoppel to noninstituted claims, as well as the breadth of "reasonably could have raised" estoppel. In the meantime, petitioners should earnestly consider the potential estoppel issues stemming from an IPR that fails to invalidate all of the challenged claims.
Originally printed in Law360 (www.law360.com). Reprinted with permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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