Fed. Circ. Clarifies Scope of IPR Petitioner Estoppel

Authored by Arpita Bhattacharyya, Ph.D. and Barbara C. McCurdy

In our Law360 article titled "Recent Decisions Shed Some Light on Scope of AIA Estoppel," published in July 2015, we discussed how the Patent Trial and Appeal Board’s practice of only addressing instituted claims in the final written decision was adding uncertainty to the scope of inter partes review estoppel under 35 U.S.C. § 315(e). In Synopsys Inc. v. Mentor Graphics Corp., No. 2014-1516, slip op. (Feb. 10, 2016), the Federal Circuit provides some clarity on the merits of this PTAB practice and its effect on the estoppel provision.

To recap, §315(e) precludes 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. The estoppel attaches when the PTAB issues a final written decision in the IPR.

Two PTAB decisions issued last year—Dell Inc. v. Electronics & Telecommunications Research Institute, IPR2015-00549 (March 26, 2015) and Westlake Services LLC v. Credit Acceptance Corp., CBM2014-00176, (May 14, 2015) (designated as precedential on Jan. 13, 2016)—held that §315(e)(1) (and similarly § 325(e)(1) for covered business method review) operates as an estoppel only for those claims that are addressed in a final written decision of an IPR/CBM. The final written decision, however, only addresses those claims on which trial has been instituted. Under this practice, no estoppel applies to noninstituted claims as they are not addressed in the final decision. This lack of estoppel allows petitioners to file a subsequent IPR on noninstituted claims—perhaps using the same prior art and arguments—provided there is no §315(b) time bar. This outcome had led some to question the PTAB’s practice of not addressing all of the challenged claims in the final decision. The validity of this PTAB practice, among other issues, was appealed by Synopsys to the Federal Circuit.

On appeal, Synopsys argued that the PTAB erred by not issuing a final decision that addressed the validity of all claims challenged in its IPR petition against one of Mentor’s patent (Synopsys Inc. v. Mentor Graphics Corp., IPR2012-00042). Synopsys relied largely on the text of 35 U.S.C. § 318(a)—which directs the patent office to issue a final written decision "with respect to the patentability of any patent claim challenged by the petitioner"—to argue that the PTAB was statutorily required to issue a final decision covering all of the challenged claims. A split panel of the Federal Circuit disagreed. Pointing to the difference in statutory language between 35 U.S.C. §§ 318(a) and 314(a) (which deals with IPR institution), the panel majority (Judges Timothy Dyk and Evan Wallach) held that that there is no statutory requirement that the final decision address every claim raised in a petition, and further, that § 318(a) only requires the PTAB to address claims as to which trial was granted. Synopsys, slip op. at 12. The panel majority also noted that requiring the PTAB to enter final decision on noninstituted claims would "make very little sense" because the final decision is based on a full record developed during the trial phase, but the same would not be available for non-instituted claims. Id., slip op. at 9-10.

Importantly, the panel majority stated that there was no inconsistency between the PTAB’s practice of only addressing instituted claims in its final decision and the estoppel provision, noting in particular that the validity of non-instituted claims can be litigated in a district court. Id., slip op. at 11-12.

In a lengthy dissent, Judge Pauline Newman argued that § 318(a) requires the PTAB to address all challenged claims in the final written decision, and further noted that the practice of partial decisions by the PTAB leads to duplicative proceedings before the PTAB and district courts, and frustrates Congress’ intent to replace costly district court validity litigations with the post-grant proceedings. See generally id., slip op. at 4-11 (Newman, J., dissenting).

Unless the case is reviewed en banc or further appealed, it is now settled that estoppel under §315(e)(1) extends only to those claims for which trial was instituted. The practice of petitioners filing subsequent IPRs on noninstituted claims will continue, provided there is no §315(b) time bar. Although there is no statutory estoppel against filing subsequent petitions on noninstituted claims, petitioners should continue to consider the effect of a practical estoppel under 35 U.S.C. § 325(d), which gives the PTAB discretion to deny a petition that raises substantially the same prior art or arguments previously presented to the patent office. See. e.g., Whole Space Industries Ltd. v. Zipshade Industrial (B.V.I.) Corp., IPR2015-01632 (paper 10) (Jan. 29, 2016) (the PTAB exercised its discretion under § 325(d) to deny a subsequent IPR petition because the same or substantially the same prior art was presented in a previous petition). Therefore, petitioners should carefully consider distinguishing a subsequent IPR petition from an earlier petition by using different prior art, claim construction or invalidity arguments to avoid denial of the subsequent petition under §325(d).

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.