IPR Estoppel Based on System Prior Art

Inter partes review (IPR) is an expedited procedure before the Patent Trial and Appeal Board (PTAB) that allows a party to challenge the patentability of a U.S. patent. While an IPR may provide an accelerated process for challenging a patent, IPRs also carry estoppel provisions. Specifically, under 35 U.S.C. § 315(e), IPR petitioners are estopped from asserting in other forums “that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” [1]

Background

In an IPR, petitioners may only raise unpatentability challenges “under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.” [2] A petitioner cannot use non-publication system prior art—a system, device, or product that practices the invention described in a challenged patent—in an IPR. However, system prior art can be used to argue patent invalidity in district court proceedings. While petitioners are estopped from re-litigating grounds that were raised or reasonably could have been raised in the IPR, district courts, and even judges within districts, are split on how to apply IPR estoppel to system prior art. Some district courts have found that system prior art is a distinct ground from a patent or printed publication related to the system prior art, and therefore IPR estoppel does not apply. Other district courts have found that a petitioner may be estopped from using system prior art in certain circumstances.

District of Delaware

The District of Delaware is split on the issue of IPR estoppel based on system prior art.

In Wasica Finance GmbH v. Schrader International, Inc., [3] Judge Stark addressed whether an obviousness combination that included a physical product “where all the relevant features of that physical product had been disclosed in a patent or printed publication that reasonably could have been raised during the IPR” is estopped under 35 U.S.C. § 315(e). [4] While Judge Stark found “both parties’ interpretations of the statutory scheme reasonable,” he ultimately held that IPR estoppel applied to the physical product being used in the obviousness combination. [5] Judge Stark reasoned that 35 U.S.C. § 312(a)(3) “distinguishes between grounds and evidence” and because the estoppel provision of § 315(e) applies to grounds, a petitioner “is estopped from proceeding in litigation on those grounds, even if the evidence used to support those grounds was not available to be used in the IPR.” [6] Accordingly, Judge Stark ruled that IPR estoppel applied to the prior art products asserted by Schrader.

In Chemours Co. v. Daikin Ind. Ltd., [7] Chemours argued that the prior-art products raised by Daikin were “cumulative” of the paper art that was asserted during corresponding IPR proceedings, and therefore IPR estoppel applied. [8] Judge Noreika, unlike Judge Stark, found that “[a]s a matter of statutory interpretation, estoppel does not apply to [] prior art products.” [9] Judge Noreika reasoned that “Congress could have broadened the categories of prior art on which IPR could be requested” or “could have dictated that estoppel applies to products covered by the paper art underlying the IPR,” but Congress did not do so. [10] Accordingly, Judge Noreika found that IPR estoppel did not apply to the prior-art products asserted by Daikin.

Judge Andrews, agreeing with Judge Noreika’s position in Chemours, “interpret[ed] ‘ground,’ as that term is used in 35 U.S.C. § 315(e)(2), to mean the specific piece of prior art or combination of prior art that a petitioner raised, or could have raised, to challenge the validity of a patent claim during an IPR” and has held that § 315(e) does not estop a litigant from raising invalidity theories that rely on system prior art. [11] Judge Williams has similarly found that IPR estoppel does not apply to system prior art, citing Judge Noreika’s reasoning in Chemours. [12]

Eastern District of Texas

The Eastern District of Texas has generally aligned with Judge Noreika’s decision in Chemours. In Biscotti Inc. v. Microsoft Corp., [13] the court found that IPR estoppel did not apply to the system prior art asserted by Microsoft. The court reasoned that Microsoft could not have raised the system prior art asserted in the district court litigation during the corresponding IPR because § 311(b) limits IPR challenges to patents and printed publications. [14] However, the court noted that if the “purported system prior art relies on or is based on patents or printed publications that Microsoft would otherwise be estopped from pursuing at trial” then Microsoft may be otherwise estopped from presenting those patents or printed publications at the district court. [15]

The Eastern District of Texas court further expanded on this point in General Access Solutions, Ltd. v. Sprint Spectrum. [16] While the court noted that IPR estoppel applies only to invalidity defenses based on patents or printed publications, it also explained that if a petitioner “is using its system prior art as a Trojan horse for printed subject matter” then they may be estopped under § 315(e). [17] The court warned that when “a party asserts a prior art system and relies exclusively on printed subject matter that it could have raised in IPR, it is not asserting a system at all.” [18]

Central District of California

The Central District of California has considered whether IPR estoppel applies to system prior art using different approaches.

In Star Envirotech, Inc. v. Redline Detection, LLC, [19] the court applied a “superior and separate” analysis. Here, Plaintiffs argued that Defendants were estopped from asserting system prior art because they could have used the system’s owner’s manual during the corresponding IPR. [20] The Court found that Defendants were not estopped from asserting the system prior art because “the physical machine itself discloses features . . . that are not included in the instruction manual, and it is therefore a superior and separate reference.” [21]

In California Institute of Technology v. Broadcom Ltd., [22] the court similarly found that IPR estoppel did not apply to system prior art, but used a different approach. [23] Here, the court found that the “superior and separate” analysis “would likely extend the reach of statutory IPR estoppel beyond its intended scope.” [24]

Instead, the court found that IPR estoppel would apply “if a patent challenge is simply swapping labels for what is otherwise a patent or printed publication invalidity ground in order to ‘cloak’ its prior art ground and ‘skirt’ estoppel.” [25]

Conclusion

The Federal Circuit has not yet provided guidance on the scope of estoppel under § 315(e) as it applies to system prior art. Because district courts, and judges within district courts, are split on the scope of IPR estoppel, litigants should carefully consider relying on patents or printed publications in a corresponding IPR that relate to products or systems that may be used in the district court.

Endnotes

1. 35 U.S.C. § 315(e)(2).
2. 35 U.S.C. § 311(b).
3. 432 F. Supp.3d 448 (D. Del. 2020).
4. Id. at 453.
5. Id. at 453-54.
6. Id.
7. 2022 WL 2643517, No. 17-1612 (MN) (D. Del. July 8, 2022).
8. Id.
9. Id. at *1.
10. Id. at *2.
11. IPA Techs. Inc. v. Microsoft Corp., 2024 WL 1797394, No. 18-1-RGA, at *4-7 (D. Del. April 25, 2024).
12. EIS, Inc. v. IntiHealth GmbH, 2023 WL 6797905, No. 19-1227-GBW, *5-6 (D. Del. Aug. 30, 2023).
13. 2017 WL 2526231, No. 2:13-CV-01015-JRG-RSP (E.D. Tex. May 11, 2017).
14. Id. at *8.
15. Id.
16. General Access Solutions, Ltd. v. Sprint Spectrum L.P., 2020 WL 12572917, No. 2:20-CV-00007-RWS (E.D. Dec. 1, 2020).
17. Id. at *3-4.
18. Id.
19. 2015 WL 4744394, No. SACV 12-01861 (C.D. Cal. Jan. 29, 2015).
20. Id.
21. Id.
22. 2019 WL 8192255, No. CV-16-3714-GW (C.D. Cal. Aug. 9, 2019).
23. Id. at *7.
24. Id.
25. Id.