By Scott A. McKeown
| January 12, 2017

315(e)(2) Estoppel Application Less Than Straightforward


IPR estoppel is established under 35 U.S.C. § 315(e)(2), which provides that “the petitioner in an inter partes review of a claim in a patent . . . that results in a final written decision . . . may not assert . . . in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” (emphasis added).  After Last year, in Shaw Industries Group, Inc. v. Auomated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016) the interpretation of "reasonably could have raised during that inter partes review" has been unnecessarily complicated.

Shaw had petitioned for a writ of mandamus instructing the PTO to institute IPR based on a ground the Board previously denied as redundant.  Id. at 1299.  To satisfy one of three requirements for such a writ, Shaw argued that it had no other adequate means to attain the desired relief because it had brought that ground before the PTO and thus may be estopped from arguing the ground in any future proceeding.  Id.  However, the Court found no reason for Shaw to fear estoppel, holding that “[t]he plain language of the statute prohibits the application of estoppel under these circumstances.”  Id. at 1300.  The Court’s logic was that an IPR does not “begin until it is instituted.”   Id.  According to the Court, under Section 315 and due to its term “during that inter partes review,” an IPR petitioner could not have raised (or have reasonably raised) any ground in a petition for which the PTAB did not institute trial.  Shaw’s proffered invalidity ground had been denied and thus never entered the IPR; therefore, Shaw would not be estopped from its new invalidity argument.  The take-away from Shaw is that Section 315(e) does not estop an IPR petitioner from challenging a patent based on petitioned but non-instituted grounds of unpatentability.

The legislative intent behind 315(e)(2) is quite the contrary.

As Senator Kyl stated in the debates that led up to the passage of the AIA:
The present bill also softens the could-have-raised estoppel that is applied by inter partes review against subsequent civil litigation by adding the modifier “reasonably.” It is possible that courts would have read this limitation into current law’s estoppel. Current law, however, is also amenable to the interpretation that litigants are estopped from raising any issue that it would have been physically possible to raise in the interpartes reexamination, even if only a scorched-earth search around the world would have uncovered the prior art in question. Adding 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.
(emphasis added)

Of course, there is no mention about the agency decision triggering the scope of estoppel with its institution decision.

More recently, the District of Delaware decided upon a motion for summary judgment in Intellectual Ventures I LLC v. Toshiba Corp., Civ. No. 13-453, in which the plaintiff patent owner Intellectual Ventures argued that the defendant was precluded on the basis of IPR estoppel from introducing a new invalidity argument.  Slip Op. (DN 559) (D. Del. Dec. 19, 2016).  Intellectual Ventures filed a motion for summary judgment to “prevent [the defendant] from asserting invalidity challenges against [its] patent, because defendant was the petitioner in an [IPR] in which the [PTAB] found several claims of the ‘819 patent invalid . . . .”  Id. at 25.  Intellectual Ventures first argued that one obviousness combination raised in the IPR was at issue in this action, and thus, defendant should be estopped from pursuing it.  On this point, the district court agreed.  Id. at 27.  After all, earlier in the case, the Court had held that defendant was estopped from challenging validity on this patent, finding that defendant "chose to take the validity dispute to the PTAB through the IPR procedure rather than litigating validity in this court . . . .”  Slip Op. (DN 150) at 8 (D. Del. May 15, 2015).  So, far, nothing surprising. 

In the same motion, Intellectual Ventures also argued that another combination of publicly available patents and printed publications “could have been raised” in the prior IPR.  The Court's initial reaction to this contention was favorable: “IV's argument in this regard is perfectly plausible, in the sense that defendant certainly could have raised these additional obviousness grounds based on public documents at the outset of their IPR petition.”  Slip Op. (DN 559) at 26 (emphasis added).  However, in light of Shaw, the Court expressed that its hands were tied.  “[T]he Federal Circuit has construed the [Section 315(e)(2)] language quite literally.”  Id.  And “[a]lthough extending the above logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit's interpretation in Shaw.”  Id. at 26-27.  Despite these misgivings, the Court proceeded to expand Shaw, finding that defendant's prior art references were not introduced at the IPR and thus were not raised “during that inter partes review.”  Id.  Thus, despite the fact that this art reasonably could have been raised (presumably) in a prior related IPR, defendant was permitted to introduce this art for invalidity purposes.  Id. at 27. 

Thus, there appears to be a significant disconnect in practice and intent of 315(e)(2). That is, 315(e)(2) does not estop an IPR petitioner from challenging a patent based on non-instituted grounds of unpatentability or from pursuing an invalidity argument in district court based on prior art that the petitioner did not raise at all—but reasonably could have raised—during the IPR. This essentially rewrites IPR estoppel to the "actually raised" estoppel of CBM.

There would seem to be a distinction between Shaw and the Intellectual Ventures scenario in that the art in Shaw was actually raised, but thwarted by the PTAB's decision not to move forward. Thus, the Federal Circuit was actually assessing the reasonability aspect of the statute in cases where there was no trial at all, as opposed to a hard and fast rule about art needing to be part of an instituted trial to qualify for estoppel.  (Of course, all of this ignores the obvious problem that if the art was shot down under PTO standards it may not be of much use under a clear and convincing standard).

In any event, the redundancy doctrine is frustrating for petitioners that are already under a word count restriction, and are paying a significant filing fee to have their disputes settled by the agency. It may be time for the PTAB to accept all grounds for trial if one ground is determined to show a reasonable likelihood of prevailing. This would help avoid the re-litigating of issues on the back end of an IPR, as well as the bad facts and unintended consequences of cases like Shaw.
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