Top 5 PTAB Developments of 2020 for District Court Litigators

New PTAB Roadblocks & Strategies

Earlier this week I laid out my Top 5 PTAB cases of 2020 for PTAB Practitioners, focusing on those cases that changed day-to-day practices before the agency. Like the practitioner list, my Top 5 PTAB developments of 2020 for District Court Litigators will focus on those practical PTAB developments that will impact parallel litigation practices outside of the agency.

In 2020, there were a number developments of interest to litigators, from litigation forums where a PTAB challenge is foreclosed or highly unlikely, to stipulations for avoiding PTAB discretionary denials, and new risks of collateral estoppel across a litigated portfolio.

5.  Forums That May Foreclose a Parallel PTAB Challenge – COFC/ITC

As detailed earlier this week, the continued rise of discretionary denials of PTAB trials was the story for PTAB practitioners in 2020. As such, litigators are certainly well aware that district courts setting early trial dates, such as the WDTX, enhance the chance of 314(a) denials. However, some forums are now know to foreclose PTAB challenge altogether.

In Microsoft Corp. v. Science Applications International Corp. (IPR2019-01311-12 & IPR2019-01359-62) (here) PTAB considered the relationship of government contractors in Court of Federal Claim (COFC) patent disputes against the U.S. government.  In considering the typical COFC intervenor scenario under 314(a), the Board explained:

[We] exercise our discretion to deny review to avoid any concerns that the government is obtaining a benefit to which it is not permitted under ReturnMail.

As a reminder, ReturnMail found the government was not a “person” that would be qualified to file an AIA trial petition. While not yet precedential, it is hard to imagine a panel going in the opposite direction on a common COFC fact pattern.

Although, also not yet precedential, the PTAB may let stand a recent shift in decisions on parallel ITC filings. That is, a year or so back, I discussed a 314(a) dispute at the PTAB where the Board considered the relevance of a co-pending ITC investigation under 314(a). In that decision, the Board instituted trial, pointing out that “the ITC does not have the authority to invalidate a patent and ITC decisions do not necessarily pertain to the issues raised in an inter partes review petition.”  More recently the Board has taken the opposite position.

Most recently, on Garmin International, Inc. v. Koninklijke Philips N.V., (IPR2020-00754) the Board found that a co-pending ITC investigation favored a denial of institution due to its fast docket. The case is noteworthy as in assessing the Fintiv factors, the Board effectively made clear that any petition concurrent with an ITC filing should be denied (earlier discussion here)

4.  Collateral Estoppel Flowing from an FWD – No Second Chance

Over the past year or so there have been a number of court decisions where claims cancelled by the PTAB that were not materially different from a related and otherwise valid patent could fall by operation of collateral estoppel. The most common scenario is that a family of patents are challenged at the PTAB and a claim of similar scope of one patent somehow escapes review and is later litigated. The Federal Circuit’s Ohio Willow Wood decision features prominently in the analysis of such scenarios. This year courts began to consider the impact of PTAB claim cancellation on even claims reissued in the face of the same art earlier considered by the PTAB.

In Cisco Systems, Inc. v. Capella Photonics, Inc. (here), Capella asserted that (1) Cisco infringed two reissued patents, and (2) Capella was entitled to pre-issuance damages because the reissued claims were “substantially identical” to claims of the original patents (i.e., intervening rights did not apply).  However, the claims of the original patents had been invalidated by the PTAB in earlier IPR proceedings.

The Northern District of California therefore had to address:

whether [reissued] claims that are substantially identical to previously invalidated claims are also invalid.  In other words, given the PTAB’s ruling, can this Court nonetheless redetermine the scope of the original claims of the [original] Patents, and conclude (contrary to the PTAB) that the original claims were not invalid and that Capella’s reissue claims are likewise not invalid?

The court held that “logic and precedent suggest the PTAB determination[s] should be given preclusive effect,” explaining that Federal Circuit precedent led the court to conclude that “the breadth of the collateral estoppel effect afforded to a PTAB determination of invalidity, and the strong interest in affording such PTAB determinations finality suggest that [the binding effect of a PTAB decision applies to the validity of substantially identical claims of a reissued patent].”

So, even if you escape the patent office via a continuation, reissue, or reexamination after an adverse FWD of a given portfolio (which shouldn’t happen if the PTO applies its own estoppel rules), the trend in the courts is to deny such assertions on ground of collateral estoppel

3. Courts Continue to Grapple with Products vs Product Manuals – Estopped or not?

District courts continue to grapple with whether or not physical products described by prior art publications of an earlier PTAB trial are subject to 315(e)(2) estoppel. That is, by virtue of utilizing a product manual in the earlier PTAB proceeding, whether the actual products corresponding to such a manual can be considered “raised, or reasonably could have been raised” under 35 U.S.C. § 315(e)(2).

The view of some districts has been that since physical products can’t be raised at the PTAB, such evidence is simply outside the scope of estoppel.  Others take a narrower view, weighing the potential technical superiority of the physical product to the previously used publication.  In another twist on this fact pattern, the District of Delaware recently considered whether the underlying evidence of these disputes should be the focus at all.

In Wasica Finance GmbH et al v. Schrader International Inc., the Court explained (here):

[Defendant].  .   . does not dispute that a 1990 article the parties refer to as “Siuru” is a printed publication that discloses all of the relevant features of the [physical product] and that Siuru reasonably could have been raised during the IPR.  .    .    .¶ The parties’ dispute (which the parties agree the Federal Circuit has not addressed) is whether an obviousness combination – whose only relevant difference from a prior IPR combination is the inclusion of a physical product as one component, where all the relevant features of that physical product had been disclosed in a patent or printed publication that reasonably could have been raised during the IPR – is estopped as a “ground” that “reasonably could have been raised” during the IPR. That is, does IPR estoppel extend to invalidity “grounds” that include a physical product when a patent or prior art publication – to which the physical product is entirely cumulative – was reasonably available during the IPR?

[Patent Owner] contends that [defendant]  is so estopped. [Patent Owner] observes that moving from a printed publication (such as a manual describing a device) in an IPR proceeding to a physical product (such as the device described in the manual) in litigation merely swaps evidentiary proofs supporting the same “ground” for invalidity that was raised or reasonably could have been raised during the IPR.  .  .  .

As [Patent Owner] observes, 35 U.S.C. § 312(a)(3) identifies as separate requirements to be included in an IPR petition “the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim” (emphasis added). In this way, the Patent Act distinguishes between grounds and evidence. Since the estoppel provision, § 315( e )(2), applies to grounds, a petitioner is estopped from proceeding in litigation on those grounds, even if the evidence used to support those grounds was not available to be used in the IPR. See also generally 35 U.S.C. § 315(e)(l) (estopping IPR petitioner from requesting or maintaining IPR proceeding with respect to claim “on any ground that the petitioner raised or reasonably could have raised” in previous IPR that concluded with final written decision).   .   .   .¶The Siuru 1990 prior art publication also reasonably could have been raised in the IPR and is materially identical (i.e., discloses the same claim elements) to the [physical products].
(Internal citations omitted)

The Court continued in a footnote, explaining its concerns over the “physical product” exception, explaining:

The Court’s decision is based on its agreement with [Patent Owner] that the statutory distinction between “grounds” and “evidence” leads to the conclusion that estoppel can apply to cumulative evidence that is offered in litigation to support the same invalidity “grounds” that were presented in an IPR. Although not the basis for the Court’s decision, the Court does also share [Patent Owner’s]concern that endorsing Defendants’ position could “gut the estoppel provision entirely. In future litigation, defendants will simply swap out publications that were available through a diligent search with the same prior art, only in a slightly different format or in a version that could not have been found in a search (such as public white papers, presentations, and data sheets that were not widely circulated).”

Thus, in those districts where a physical product is now considered outside of 315(e)(2) estoppel by definition, perhaps this analysis of grounds vs. evidence could lead to a change of practice.  Either way, the issue will certainly head to the Federal Circuit shortly.

2. Joinder – Less Estoppel for Free Riders

In Network-1 Technologies, Inc. v. Hewlett-Packard Co. (here), the CAFC had to determine whether HP was estopped from raising certain validity challenges under 35 U.S.C. § 315(e)(2) based on HP’s joinder to an IPR.

In 2011, Network-1 sued a number of defendants, including HP and Avaya, for infringement in the Eastern District of Texas.  Avaya filed an IPR petition against an asserted patent that the Board partially instituted.  Following institution, HP filed a first IPR petition and motion to join the Avaya IPR.  HP’s petition included grounds different than those that had already been instituted, and the Board denied HP’s request.  HP thereafter filed a second IPR petition and motion to join the Avaya IPR, this time including only the grounds already instituted.  The Board granted HP’s request, and HP was joined as a party to the Avaya IPR.  In the Board’s final written decision, it found none of the challenged claims unpatentable, and the CAFC ultimately affirmed this decision.

Back at the district court years later, following a jury verdict finding the patent invalid, Network-1 filed a motion for JMOL related to validity.  The district court granted Network-1’s motion, concluding that because of HP’s joinder to the Avaya IPR, HP should have been estopped under 35 U.S.C. § 315(e) from raising obviousness challenges, which the court determined “reasonably could have been raised” in the Avaya IPR.  HP appealed this decision.

On appeal, HP argued that the district court misapplied the estoppel provision under § 315(e).  Specifically, HP argued that no validity ground that it raised at trial “reasonably could have [been] raised” through its joinder to the Avaya IPR.

The CAFC agreed.  In so doing, the Court interpreted § 315(e) and, for the first time, its modified holding in Facebook, Inc. v. Windy City Innovations:

[A]s we held in Facebook, Inc. v. Windy City Innovations, LLC, the joinder provision does not permit a joining party to bring into the proceeding new grounds that were not already instituted. Rather, it may only join the already-instituted proceeding as a party.

. . .

[A]ccording to [§ 315(e)], 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. Because a joining party cannot bring with it grounds other than those already instituted, that party is not statutorily estopped from raising other invalidity grounds.

Therefore, since HP relied on the joinder exception to the time bar under § 315(b) to join Avaya’s IPR with identical grounds to those already present in Avaya’s petition and was unable to raise new grounds of its own, HP was only estopped from raising those grounds present within the joined petition.  Accordingly, the CAFC held that “permitting HP to challenge the asserted claims . . . as obvious over the [non-petitioned art] does not give HP a ‘second bite at the apple’ to challenge the [ ] patent because HP could not have raised such a challenge in the Avaya IPR.”

Given this ruling, joining a PTAB petition comes with less risk than going it alone as a first-filer.

1.  Threading the Needle of 314(a) – Stipulations

In a recent precedential opinion, the Board explained the scope of stipulation that may lean a 314(a) analysis in favor of institution. Given the frequency of 314(a) challenges for petitioners, this case is one to be aware of on the litigation side.  Sotera Wireless, Inc. v. Masimo Corporation, IPR2020-01019, Paper 12 (Dec. 1, 2020) (precedential as to § II.A)

In addressing the Fintiv factors, Sotera explains that the petitioner’s broad stipulation not to pursue in district court any ground that it raised, or could have raised, in the inter partes review weighs strongly in favor of institution.  (I don’t see much downside to such a stipulation as you are far more likely to succeed at the PTAB on such grounds anyway.)

Well, those are the 5 decisions that caught my eye in 2020. Can’t wait to see what is in store for 2021.