Estoppel Provisions Disfavor Parallel Proceedings

During yesterday’s webinar on post grant USPTO proceedings, I compared the current estoppel provisions of inter partes patent reexamination to that of Inter Partes Review. The Inter Partes Review (IPR) estoppel provisions are similar in some respects to the current inter partes patent reexamination (IPX) provisions, but differ in significant respects.

In some ways, the new estoppel provisions are designed to address shortcomings of the existing IPX estoppel provisions. For example, while IPX estoppel does not apply to ITC proceedings, the IPR provisions extend estoppel to ITC proceedings. Additionally, while the IPX provisions use the terminology “raised or could have raised,” the new IPR provisions recite “raised or reasonably could have raised during Inter Partes Review.” Ostensibly, this language softening is designed to provide some slight wiggle room to account for the late found reference in a far away library of Siberia.

Of perhaps much greater interest however is the aspect of IPR estoppel that may compel judges to stay a parallel litigation pending IPR.

The Chart below lays out the differences between IPX and IPR estoppel. (modified from yesterday’s presentation for clarity, Click to Enlarge)

IPR-IPX estoppel

As shown in the chart, starting at the leftmost column. IPR estoppel attaches upon a written determination of the PTAB, not at the exhaustion of all appeals. This is a significant difference as estoppel is attainable within 12-18 months, much different than the roughly 6 year time frame it takes to navigate the USPTO and get a final CAFC decision.

In the second column, when a patent is found not invalid at the PTO in either IPX or IPR, the estoppel effect is largely the same. (The only difference being that the IPR estoppel extends to the ITC and is expressed as “reasonably could have raised, note bold text).”

In the third column, whether a patent falls at the USPTO or in court, estoppel becomes irrelevant.

The fourth and fifth columns are a bit trickier. Column 4 assumes there are no parallel USPTO proceedings. In column 5 the proceedings are conducted in parallel.

In the fourth column, with respect to IPX , a failure to prove invalidity in a district court would preclude the same party from later seeking inter partes patent reexamination based upon issues that were raised or could have been raised in the district court action. 35 U.S.C. 317(b). Applying this same circumstance to a defendant that is seeking IPR, while there is no estoppel per se, the litigation would be well beyond the 12 month deadline for filing. (New requirement of 315 (b)). Thus, there is a practical estoppel for those defendants that do not seek Inter Partes Review before the 12th month of litigation.

Moving on the 5th column, if both an IPX and litigation are running in parallel, the first to conclude (after all appeals) wins. If the court action concludes first, the ongoing IPX is vacated by the USPTO. See Sony Computer Entertainment America Inc. v. Dudas (E.D. Va 2006, discussing race to the finish)

On the other hand, if an IPR is running in parallel to a court proceeding (district court or ITC), and the court action concludes first, a failure to prove invalidity will not impact the ongoing IPR. So, judges considering whether or not to stay the litigation pending the new IPR proceeding will consider the following scenarios in the case of a parallel IPR:

1. If the stay is granted, in 12-18 months IPR will either simplify the validity issues in dispute by operation of estoppel, or perhaps resolve the dispute altogether by invalidating the patent.

2. If the stay is not granted and the court result comes first, IPR will continue and possibly conclude with a different result. Alternatively, if the USPTO result comes first (very likely if concluded on time) the court may be wasting resources in continuing on a parallel track.

One might argue that the above scenario exists today, such as when ex parte patent reexamination runs in parallel. (as there is no estoppel for these proceedings). Yet, the years of pendency of patent reexamination greatly diminishes that eventuality in all but the rarest of cases. On the other hand, estoppel will attach in IPR within 12-18 months of commencement.

Clearly, fending off a motion to stay pending IPR will be an uphill battle for future plaintiffs.