Don’t Estop What Couldn’t Have Been Asserted

In Network-1 Techs., Inc. v. Hewlett-Packard Co., No. 2018-2338, 2020 WL 5666893 (Fed. Cir. Sept. 24, 2020), the Federal Circuit vacated and remanded the district court’s judgment as a matter of law on validity based on HP’s limited participation during a related IPR proceeding. The Federal Circuit explained that because a party joining an IPR cannot bring additional grounds for institution, the joining party cannot be estopped from raising other invalidity grounds in district court proceedings.

Background: Network-1 sued HP for patent infringement in the Eastern District of Texas. The jury returned a verdict that the patent was invalid and not infringed. Subsequently, the district court granted Network-1’s motion for judgment as a matter of law on validity relying on 35 U.S.C. § 315(e)(2) to determine that HP’s joinder to an IPR filed by defendant Avaya estopped HP from asserting invalidity grounds at trial.

HP cross-appealed the district court’s application of estoppel under 35 U.S.C. § 315(e)(2). The Federal Circuit panel of Judges Prost, Newman, and Bryson ruled on the appeals.

Analysis: On appeal, HP argued that the district court misapplied the estoppel provision because HP’s invalidity arguments at trial could not have reasonably been raised through its joinder to the Avaya IPR. Writing for the Court, Chief Judge Prost agreed. She explained that under 35 U.S.C. § 315(c), HP could join the Avaya IPR “as a party” even though HP was time-barred under § 315(b) from bringing its own petition, but HP was not permitted to bring other grounds of invalidity in the IPR. According to the AIA estoppel provision, 35 U.S.C. § 315(e)(2), “a party is only estopped from challenging claims in the final written decision based on grounds that it ‘raised or reasonably could have raised’ during the IPR.” Accordingly, “because a joining party cannot bring additional grounds other than those already instituted, that party is not statutorily estopped from raising other invalidity grounds” in a civil action or other proceeding.

Here, HP did not timely petition for IPR but relied on the joinder exception to the time bar under § 315(b). HP first filed a motion to join the Avaya IPR with a petition requesting review based on new grounds that had not been instituted in the Avaya IPR. The Board denied that request, but granted HP’s second joinder request, which petitioned for only the two grounds already instituted. When the Board reached its final written decision, HP was estopped from raising invalidity defenses based on those two grounds. However, HP was not estopped from raising other invalidity challenges because, as a joining party, HP could not have raised any additional invalidity challenges in the Avaya IPR. Thus, the district court’s judgment as a matter of law based on statutory estoppel does not prevent HP from a “second bite at the apple,”  because HP could not have raised the additional challenges in the Avaya IPR.