May/June 2016
IP Litigator
By Jason E. Stach; David C. Reese
Authored by David C. Reese and Jason E. Stach
The Patent Trial and Appeal Board (PTAB) is the busiest patent tribunal in the United States, with parties flocking to take advantage of post-grant patent review mechanisms such as inter partes review (IPR). The popularity of IPR proceedings is not surprising. As compared with district court actions, attacking patent claims in IPR generally is cheaper, requires a challenger to meet a lower burden of proof, and subjects the claims to a potentially broader claim construction, which may make the claims easier to cancel. IPR proceedings also enjoy advantages over other post-grant review mechanisms, such as ex parte reexamination, because they offer greater third-party control, allow discovery (although it usually is narrowly confined), potentially shorter timelines, a lower likelihood that a patent owner will successfully amend the challenged claims, and a greater likelihood of obtaining a litigation stay.
Along with these advantages come some disadvantages. Perhaps the most notable disadvantage is that a petitioner may be estopped from raising a ground in a later Patent Office proceeding or court case if it loses its challenge. The specific language of the estoppel is in 35 U.S.C. § 315(e), which in part prohibits a "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)" to: (1) "request or maintain a proceeding before the [Patent] Office with respect to that claim;" or (2) "assert in either 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."
The IPR estoppel provision remains fairly new and untested. But we now have decisions from the PTAB, the Court of Appeals for the Federal Circuit, and a district court that are shedding light on how the estoppel provision will apply in several contexts.
The PTAB was one of the first tribunals to provide estoppel guidance. In Apotex Inc. v. Wyeth LLC,1 the petitioner presented several grounds of unpatentability, two of which are relevant here. The first of the two grounds relied on prior art that the same petitioner had used to challenge the same patent in an earlier IPR. In the earlier IPR, however, the PTAB had denied the ground relying on that art as being redundant of other instituted grounds. The second of the two grounds relevant here relied on art that was known to the petitioner when it filed the earlier IPR against the same patent. In that earlier IPR, however, the petitioner chose not to propose any ground of unpatentability based on that art. The earlier IPR concluded with a final written decision, triggering the IPR estoppel provision.
In the later IPR, the patent owner asserted that the petitioner was estopped from asserting both grounds because the prior art relied on in those grounds was the same art that was raised or could have been raised in the earlier IPR petition.
The PTAB found that the petitioner was not estopped from asserting the grounds that had been denied as redundant in the earlier IPR. The PTAB first noted that the IPR estoppel provisions apply only to grounds that an IPR petitioner "‘raised or reasonably could have raised’ during [the] inter partes review," and that an IPR "does not begin until the [Patent] Office decides to institute review; prior to that point, [the PTAB’s] Rules refer to a ‘preliminary proceeding’ that begins with the filing of a petition and ends with a decision whether to institute trial. 37 C.F.R. § 42.2."2
The PTAB then determined that "grounds raised during the preliminary proceeding, but not made part of the instituted trial, are not raised ‘during’ an inter partes review and cannot be the basis for estoppel under 35 U.S.C. § 315(e) (1)."3 The PTAB also found that these denied grounds were not ones that "‘reasonably could have been raised during’ the review, because once denied, the Board’s decision on institution prevents Petitioner from raising that ground during the trial."4 Applying this view, the PTAB found no estoppel for the first ground, as that ground "was never raised during the [earlier] IPR . . . and Petitioner could not have raised [the ground] again once institution was denied as to that ground."5
The second ground, which relied on prior art known to the petitioner but that the petitioner chose not to assert in the earlier IPR, met a different fate. The PTAB found that the petitioner was estopped from asserting it in the later IPR. The PTAB did not explain its conclusion other than to state that the prior art was known to the petitioner "and therefore [the petitioner] reasonably could have raised it during the [earlier] IPR proceeding."6
Although some have agreed that the PTAB reached the correct result on both issues, some have questioned its logic. If the estoppel only attaches to instituted grounds because everything else is only part of the preliminary proceeding, then some have wondered how estoppel could attach to a ground never raised in the petition, which is part of the preliminary proceeding as opposed to the trial. The PTAB never grapples with this issue in its decision.
The Federal Circuit also has addressed IPR estoppel in light of non-instituted, redundant grounds. In Shaw Industries Group, Inc. v. Automated Creel Systems, Inc.7, the PTAB denied an IPR ground as redundant of another ground. In a final written decision, the PTAB found the claims patentable over the instituted ground, but declined to revisit the ground it previously had found redundant. The petitioner sought a writ of mandamus to compel the PTAB to reinstate the IPR based on the denied redundant ground. The petitioner claimed that it would be estopped from raising the redundant ground in the future, so the PTAB should be forced to evaluate it on the merits.
The court disagreed and denied the requested writ. It found that the plain language of Section 315(e) "prohibits the application of estoppel under these circumstances." 8 The court applied a similar rationale as the one the PTAB applied to the redundant ground in Apotex. It drew the same distinction between preliminary proceedings and the IPR trial, finding that "[t]he IPR does not begin until it is instituted." It then found that the denied redundant ground "never became part of the IPR."9 Thus, Section 315(e) "would not estop [Petitioner] from bringing its … arguments in either the PTO or the district courts."10
In Clearlamp, LLC v. LKQ Corporation,11 a district court provided guidance on a few IPR estoppel issues: (1) how to show that a petitioner "reasonably could have raised" prior art in a prior IPR proceeding; (2) who bears the burden of proving whether the estoppel applies; and (3) whether a petitioner is estopped from raising prior art that was not reasonably available during a prior IPR proceeding, even if the art is cumulative of prior art previously used in the IPR proceeding.
Regarding the meaning of "reasonably could have raised," the court determined that an IPR petitioner "is estopped from relying on any ground that could have been raised based on prior art that could have been found by a skilled searcher’s diligent search."12 Noting that the issue was one of first impression, the court turned to the legislative history of Section 315(e), finding Senator Kyl’s floor statement particularly instructive: "[a]dding the modifier ‘reasonably’ ensures that could-have-raised estoppel extends only to that prior art which a skilled searcher conducting a diligent search reasonably could have been expected to discover. 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl)."13
On the burden-of-proof issue, the court determined that it is the "proponent of the estoppel argument, and thus not the Petitioner, who must bear the burden of showing that a skilled searcher’s diligent search would have found the prior art in question."14 One way in which the estoppel proponent may show what a skilled search would have found 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."15 The court found that the patent owner failed to make this showing, so the IPR estoppel did not apply.
The court also disagreed with the patent owner’s argument that unavailable prior art that is cumulative of available prior art is estopped under Section 315(e)(2). The court relied, in part, on the PTAB’s Apotex reasoning. It noted that Section 315(e) (1) and Section 315(e) (2) share this same IPR estoppel standard, and determined that "the relevant inquiry, therefore, is not whether the ground is redundant of a ground that was asserted but, rather, whether the ground reasonably could have been raised."16 In the court’s view, the question turns on the availability of the reference as opposed to how similar the reference is to one that was raised during an IPR.
A common theme in these estoppel decisions is that an IPR does not begin until institution, so only instituted grounds can meet the "raised or reasonably could have raised during [the] inter partes review" threshold that triggers the estoppel. It is not yet clear how far the courts are willing to take this logic. At the extreme, it may suggest that the estoppel does not apply to known grounds that were not raised in the IPR petition, as the petition is only part of the preliminary proceeding. The PTAB’s Apotex decision applies the estoppel to these types of grounds anyway, but the PTAB does not reconcile this conclusion with its own rationale that only instituted grounds are "raised or reasonably could have been raised" sufficiently to trigger the estoppel. Some think the PTAB reached the right result, but the PTAB and the courts seem to be struggling to articulate a rationale to support it.
It also is an open question whether courts will follow the Clearlamp court’s conclusions that estoppel does not apply to cumulative grounds, that the patent owner bears the burden of proving the estoppel, and that the patent owner must present specific types of evidence to demonstrate that a prior art reference was available to the petitioner and reasonably could have been raised. In many ways this first wave of estoppel decisions provides more questions than answers. It will be important for practitioners to follow the estoppel law closely as it continues to develop over the coming months and years.
1 Apotex Inc. v. Wyeth LLC, IPR2015-00873, Paper No. 8 (Sept. 16, 2015).
2 Id. at 8.
3 Id. at 8-9.
4 Id. at 9.
5 Id.
6 Id. at 8.
7 Shaw Indus. Group, Inc. v. Automated Creel Sys., Inc., Nos. 2015-1116, 2015-1119 (Fed. Cir. Mar. 23, 2016).
8 Id. at 11
9 Id.
10 Id.
11 Clearlamp, LLC v. LKO Corp., 1-12-cv-02533 (N.D. Ill. Mar. 18, 2016).
12 Id. at 15 (emphasis added).
13 Id. at 14 (emphasis omitted).
14 Id. at 18 (citing Kennedy v. United States, 965 F.2d 413, 417 (7th Cir. 1992) ("The burden of proof is on the party claiming estoppel.").
15 Id.
16 Id. at 16.
Reprinted with permission from the IP Litigator, published by Wolters Kluwer. 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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