Recent Decision out of EDTX First to Get PTAB Estoppel Provision Correct

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).

As previously discussed, IPR estoppel has been unnecessarily complicated by the PTAB’s redundancy practice as discussed in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016

For example, the district court in Intellectual Ventures I LLC v. Toshiba Corp., Civ. No. 13-453, explained that, based on Shaw, it was necessary to interpret the scope of estoppel very narrowly, only applying estoppel to prior art or publications actually instituted in the IPR.  As this decision contradicts the plain language of the estoppel statute, it has been heavily criticized as too literal a reading of Shaw.  More recently, several other district courts have taken a more expansive view of Shaw.  But, in my opinion the first district to actually get it right, is, surprisingly, this week’s venue whipping boy— the Eastern District of Texas (EDTX).

In Biscotti Inv. V. Microsoft Corp., Civ. No. 13-01015 (E.D. Tex.) (here) decided to hold Shaw to its unique facts and apply 315(e)(2) estoppel in a sensible way, more in keeping with its legislative intent.

After Biscotti filed suit, Microsoft filed three IPR petitions that were instituted, and ultimately resulted in the PTAB upholding the patentability of all claims. Three later petitions were denied as time-barred. In the district court litigation, Biscotti filed for summary judgment, arguing that Microsoft should be estopped from presenting the same or similar invalidity defenses at trial as were presented at the PTAB.

Magistrate Judge Payne began by noting that the legislative history of IPR estoppel suggests that IPR was intended to completely substitute for invalidity challenges based on patents and printed publications during the civil litigation. (Slip op. at 8.) The judge contrasted this legislative intent with Shaw and noted another recent CAFC case, HP Inc. v. MPHJ Tech. Inv., LLC, holding that non-instituted grounds are not subject to estoppel. (Id. at 9.)

Judge Payne  held that Shaw and HP can be read either broadly or narrowly. The broad interpretation suggests that any ground not raised during the IPR, regardless of whether that ground was included in the petition, is exempt from estoppel. (Id.) The narrow interpretation is that only grounds raised in a petition but not instituted for some procedural reason are exempt from estoppel. (Id. at 11.) Judge Payne noted that the narrow interpretation would be consistent with the purpose and legislative history of the AIA, and also consistent with the precise scenarios analysed in Shaw and HP.

Accordingly, the judge adopted the narrow view of Shaw and HP, holding that Microsoft is estopped from asserting at trial:
1) Grounds for which the PTAB instituted IPR and determined to be insufficient to establish unpatentability after a trial on the merits;
2) Grounds included in the petition but determined by the PTAB to not establish a reasonable likelihood of unpatentability;
3) Grounds not included in the petition that a skilled searcher conducting a diligent search reasonably could have been expected to discover; and
4) Any subsets of invalidity grounds that Microsoft raised or could have raised during the IPR.
(Id. at 13-14.)

And there you have it, the EDTX being the voice of reason on PTAB estoppel.