The inter partes review procedure includes an estoppel provision that prohibits an IPR petitioner from later raising before the U.S. Patent and Trademark Office, a district court or U.S. International Trade Commission any ground of invalidity of a claim that the petitioner "raised or reasonably could have raised" during the IPR. 35 U.S.C. § 315(e). The seemingly broad scope of the estoppel provision has concerned many petitioners about the risk of losing a patentability challenge in an IPR and being estopped from challenging the same patent claims in the district court or a subsequent IPR. Recently, the Federal Circuit, some district courts and the Patent Trial and Appeal Board have provided valuable guidance on the application of estoppel and the news is heartening for IPR petitioners. While all of these decisions have interpreted the scope of § 315(e) more narrowly than many had originally anticipated, the inconsistencies between the PTAB and the district courts’ interpretations of the statute and the related Federal Circuit decisions, particularly with regard to the "raised or reasonably could have raised" provision, has continued to muddle the issue of IPR petitioner estoppel. This article discusses these conflicting interpretations and what practitioners can learn from the divergent approaches taken by the PTAB and the district courts.
Before discussing the differences between the PTAB’s and the district courts’ interpretations, however, it is worthwhile to discuss one aspect of the estoppel provision—estoppel against noninstituted claims—where there is some consensus. District courts and the PTAB are in agreement that estoppel applies only to claims that are addressed in a final written decision of an IPR, i.e., only those claims on which trial has been instituted. Thus, if a challenged claim is not addressed in the final written decision of an IPR, the petitioner is not statutorily estopped from challenging that claim in a subsequent IPR using the same prior art and arguments. See our Law360 article titled "Fed. Circ. Clarifies Scope Of IPR Petitioner Estoppel," published March 25, 2016, discussing this issue.
District courts have similarly declined to apply statutory estoppel against noninstituted claims. See, e.g., Depomed Inc. v. Purdue Pharma LP, 3:13-cv-00571, slip op. at 16-18 (D.N.J. Nov. 4, 2016) (defendant not estopped from challenging non-instituted claims on the basis of prior art asserted in the IPR petition); Princeton Digital Image Corp. v. Konami Digital Entm’t. 12-1461-LPS-CJB, slip op. at 3-5 (D. Del. March 30, 2017) (defendant not estopped from challenging the validity of claims that the PTAB did not address in a final written decision).
The PTAB’s and the district courts’ decisions to not apply estoppel to noninstituted claims is largely driven by the PTAB’s practice of addressing only the instituted claims in the final written decision. The merits of this practice have been appealed to the U.S. Supreme Court in SAS Institute v. Matal (oral argument held on Nov. 27, 2017) where SAS Institute argues that the plain text of 35 U.S.C. § 318 requires the PTAB to address all, not some, of the challenged claims in the final written decision, even if the PTAB did not institute on all challenged claims. The Supreme Court’s decision will likely bear heavily on estoppel against noninstituted claims. But for now, there is consensus among the PTAB and some district courts that estoppel under § 315(e) does not apply to noninstituted claims.
The consensus ends here, however, because the PTAB and the district courts have been interpreting a related provision of § 315(e)—estoppel against invalidity grounds that were "raised or reasonably could have [been] raised" in a preceding IPR—very differently. Under the Federal Circuit’s decision in Shaw Industries Group Inc. v. Automated Creel Systems, noninstituted grounds are not addressed during the IPR, and therefore, are not subject to estoppel under §315(e). 817 F.3d 1293, 1300 (Fed. Cir. 2016). The Federal Circuit reiterated this holding in HP Inc. v. MPHJ Tech. Invs., 817 F.3d 1339, 1347 (Fed. Cir. 2016). In both Shaw and in HP, however, estoppel was not applied to invalidity grounds that were denied institution on the basis of redundancy. It remains to be seen if the Federal Circuit will extend the rationale for declining to apply estoppel to grounds that are denied institution on the merits.
Raised, but Noninstituted, Invalidity Grounds
In at least one PTAB decision—Great West Casualty Co. et al. v. Intellectual Ventures II LLC—the panel indicated in dicta that any ground denied institution (irrespective of whether it was denied based on merits or redundancy) may be spared from estoppel. IPR2016-01534, Paper 13, at 12 (PTAB Feb. 15, 2017) ("[W]e discern that Shaw Industries Group held that estoppel does not apply to any ground of unpatentability that was presented in a petition, but denied institution."). In particular, the panel was unpersuaded by petitioner’s argument that estoppel extends to only those grounds actually raised in a petition, and explained that there was "a substantive distinction between a ground that a petitioner attempted to raise, but was denied a trial, and a ground that a petitioner could have raised, but elected not to raise in its previous petition or petitions." Based on this explanation, it seems likely that at least some PTAB panels may not estop petitioners from maintaining invalidity grounds that were raised in an earlier IPR, but not instituted either due to merits or redundancy.
Invalidity Grounds Not Raised in an Earlier IPR Petition
In contrast to grounds raised but not instituted, the PTAB has been applying estoppel to invalidity grounds that are based on prior art that a petitioner was aware of, or reasonably could have found, but chose not to raise in an earlier IPR petition. For example, in Apotex Inc. v. Wyeth LLC, the petitioner was estopped from maintaining an invalidity ground that relied on prior art that was cited as a teaching reference by the petitioner in an earlier IPR petition, noting that the petitioner was "aware of" of the reference and "reasonably could have raised [that ground] during" the earlier IPR. IPR2015-00873, Paper 8, at 8 (PTAB Sept. 16, 2015). Similarly, in Ford Motor Co. v. Paice LLP, the petitioner was estopped from maintaining certain invalidity grounds because the primary prior art reference relied on for those grounds was cited during prosecution and listed on the face of the patent, and so, petitioner “reasonably could have raised” those grounds in the earlier IPR. IPR2015-00722, paper 36, at 6-8 (PTAB Sept. 26, 2016).
In the same vein, the PTAB has been applying estoppel if a prior art reference could have been reasonably found by the petitioner through a diligent search prior to filing the earlier IPR. See, e.g., Great West Casualty, IPR2016-01534, Paper 13, 15-16 (Feb. 15, 2017) (petitioner estopped from maintaining invalidity grounds based on a prior art reference that the PTAB panel found "was readily identifiable in a diligent search"). Similarly, in Praxair Distribution Inc. v. INO Therapeutics LLC., the PTAB panel found that the single search report provided by petitioner was insufficient to show that a diligent search by a skilled searcher was conducted before filing the first IPR, and therefore, petitioner was estopped from requesting invalidity grounds that it "reasonably could have raised" in the earlier IPR. IPR2016-00781, Paper 10, at 10 (Aug. 25, 2016). In contrast, in Johns Manville Corp. v. Knauf Insulation Inc., the PTAB panel found that the skilled searchers employed by petitioner had conducted "a reasonably diligent search" and that petitioner’s failure to discover a hard copy of a brochure in an employee’s possession was not "unreasonable" within the meaning of § 315(e)(1). IPR2016-00130, paper 35, 12-15 (PTAB May 8, 2017). As the Johns Manville panel explained, the word "reasonable" in § 315(e)(1) "signifies certain leeway and a meaning besides strict liability." Thus, the PTAB is likely to decline to apply estoppel if the petitioner provides sufficient credible evidence that a prior art reference could not reasonably have been found when an earlier IPR was filed.
In sum, the PTAB is likely to estop a petitioner from maintaining invalidity grounds that were raised or "reasonably could have [been] raised" in an earlier IPR, but decline to apply estoppel to grounds that were raised in the petition but not instituted. Indeed, under the current PTAB practice, a petitioner could avoid the risk of estoppel by including multiple grounds in the petition (provided they fit within the word count limit and does not dilute the merits of the winnable ground(s)). If some of those grounds are not instituted, petitioner would not be barred from raising those grounds in a later IPR.
District courts, on the other hand, have interpreted the holding of Shaw very inconsistently. While some district courts have declined to apply estoppel to grounds that were raised but not instituted (much like the PTAB), others have interpreted Shaw more broadly than the PTAB and declined to apply estoppel to any ground that was not raised in an earlier IPR petition (irrespective of whether the defendant/petitioner reasonably could have presented that ground in the IPR petition). In Verinata Health Inc. v. Ariosa Diagnostics Inc., for example, the district court allowed defendant/petitioner to maintain an invalidity ground that was denied institution based on redundancy. 2017 U.S. Dist. LEXIS 7728, *12 (N.D. Cal. Jan. 19, 2017); see also Illumina Inc. v. Qiagen N.V., 207 F.Supp.3d 1081, 1088-89 (N.D. Cal. Sep. 9, 2016) (redundant grounds not estopped). Interestingly, however, the Verinata court barred another ground that was also found to be redundant by the PTAB, but the court reasoned that because that ground was a subset of an instituted ground, the petitioner could have reasonably raised that ground in the IPR petition but did not do so. Verinata, 2017 U.S. Dist. LEXIS at *12. Notably, the Verinata court explained that "limiting IPR estoppel to grounds actually instituted ensures that estoppel applies only to those arguments, or potential arguments, that received (or reasonably could have received) proper judicial attention," thus suggesting that non-instituted grounds should not be estopped, irrespective of the reason for noninstitution. Indeed, in Douglas Dynamics LLC v. Meyer Prods LLC, the district court allowed defendant/petitioner to pursue invalidity grounds that were denied institution on the merits in an IPR proceeding. 2017 U.S. Dist. LEXIS 58773, *4, *16 (W.D. Wis. Apr. 18, 2017).
But in Intellectual Ventures I LLC v. Toshiba Corp., the district court stretched the rationale of Shaw and found that estoppel only applies to invalidity grounds that were actually raised in the IPR, and declined to extend estoppel to invalidity grounds not presented in the petition irrespective of whether the petitioner "reasonably could have raised" those grounds. 221 F.Supp.3d 534, 553-54 (D. Del. Dec. 19, 2016). This argument, however, was rejected by the PTAB in Great West Casualty, IPR2016-01534, Paper 13, at 13-14.
Thus, under Shaw, district courts are consistently declining application of estoppel to invalidity grounds that were raised in an IPR petition but not instituted. However, as demonstrated by the aforementioned district court cases, there is inconsistency in district courts’ application of estoppel to invalidity grounds that were not raised in the IPR petition. While some district courts are barring grounds that “reasonably could have [been] raised” in the IPR, the Toshiba court held that estoppel applies only to grounds that were actually presented in the petition and addressed during the IPR. The Federal Circuit likely will need to clarify the scope of estoppel under §315(e) to address this inconsistency. Until then, petitioners will be well served to heed the guidance of the PTAB (and not the conflicting district court decisions) that grounds not raised in an IPR petition are likely to be precluded from a subsequent IPR or district court invalidity challenge. Petitioners should also consider presenting multiple grounds in their IPR petitions to safeguard the ability to later pursue any invalidity grounds that may be denied institution.
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