Accused Infringer May Seek an IPR Despite Patent Owner's Inability to Raise an Assignor Estoppel Defense in the IPR

Authored by D. Brian Kacedon, Matthew J. Luneack, and John C. Paul

Abstract

Recently, a patent owner argued it would be irreparably harmed if a district court did not bar the accused infringer from seeking IPR because it would be unable to raise assignor estoppel as a defense during IPR. The court refused to bar the IPR, finding the alleged irreparable harm too speculative and noting that multiple contingencies would need to occur before an IPR petition would injure the patent owner, including institution of IPR and determination of unpatentability.

A common defensive tactic against an allegation of patent infringement is to file a petition for inter partes review (IPR) at the United States Patent and Trademark Office (USPTO) and seek a stay of infringement litigation pending the result of the IPR. Wary of such defensive tactics, patent owners may use creative arguments to try and prevent a potential petition for IPR from derailing infringement litigation.

Recently, in IGT v. Aristocrat Technologies, Inc.,¹ a patent owner asked a court to issue a preliminary injunction preventing the accused infringer from seeking IPR of certain patents-in-suit on the basis that it would be irreparably harmed because it would be unable to raise assignor estoppel as a defense during IPR. Assignor estoppel is an equitable doctrine that prevents an assignor of a patent from later contesting the validity or enforceability of the patent as an affirmative defense to patent infringement. The District Court of Nevada denied the patent owner's motion, finding the alleged irreparable harm too speculative. Multiple contingencies, the court explained, would need to occur before an IPR petition would injure the patent owner, including institution of IPR and determination of unpatentability.

Background

IGT brought a patent infringement suit against Aristocrat Technologies, Inc. in the District of Nevada alleging infringement of 10 patents. In addition to the infringement claims, IGT sought declaratory judgment relief that Aristocrat was precluded from challenging the validity of four of the 10 asserted patents under the assignor estoppel doctrine. Contending that Aristocrat implied its intention to petition for IPR, IGT also moved for a preliminary injunction, asking the court to prevent Aristocrat from seeking IPR or reexamination of the same four asserted patents.

The IGT Decision

To obtain a preliminary injunction, IGT was required to show 1) a likelihood of success on the merits; 2) a likelihood of irreparable harm in the absence of preliminary relief; 3) that the balance of equities tipped in IGT's favor; and 4) that an injunction is in the public interest. In denying IGT's requested preliminary injunctive relief, the court focused on only one of the required showings: whether IGT showed there is a likelihood it would suffer irreparable harm absent the relief sought. According to the court, if the alleged harm depends on the occurrence of multiple contingencies, the injury is too speculative to demonstrate a likelihood of irreparable harm.

IGT argued it would be irreparably harmed if the court did not enjoin Aristocrat from seeking reexamination or IPR at the USPTO for two reasons: 1) the assignor estoppel defense would not be available to IGT during an IPR and 2) Aristocrat might succeed in having one or more claims in the asserted patents cancelled. The court, however, rejected these reasons, finding IGT's alleged injury too speculative and dependent upon multiple contingencies. The court reasoned that for IGT to suffer an injury, the USPTO would first need to institute IPR and then reach a finding of unpatentability. Because the court could not predict whether the USPTO would institute IPR, it found IGT's alleged injury too contingent to satisfy the likelihood of irreparable harm standard. The court also added that IPR is a statutorily permitted procedure and that IGT had not identified any case where an accused infringer was enjoined from petitioning for IPR under the same circumstances.

Strategy and Conclusion

This case illustrates that courts may be unwilling to preliminarily enjoin an accused infringer from seeking reexamination or IPR where the patent owner's alleged injury is perceived as too contingent to satisfy the likelihood of irreparable harm standard. As a result, patent owners may face the prospect of defending the validity of their patents in IPRs without the benefit of defenses—in this case assignor estoppel—that are otherwise available in district court litigation.

Endnotes

¹ The IGT opinion can be found at http://www.finnegan.com/files/upload/LES_Insights_Column/2015/nvd-2-15-cv-00473-70-IGT_v_Aristocrat-Techs.pdf.