1. Introduction

The Leahy-Smith America Invents Act (“AIA”) introduced estoppel provisions that limit a party’s ability to assert as a defense in a District Court proceeding certain arguments of invalidity related to claims that were challenged by that party in a completed inter partes review (“IPR”). Under §315(e) of Title 35 of the U.S. Code, estoppel applies to “any ground that the petitioner raised or reasonably could have raised during that inter partes review.”1 There has been minimal guidance from the courts on the deceptively-complicated question of what it means to “raise” a ground under § 315(e). This is particularly important in view of the PTAB’s practice of routinely denying institution of grounds in a petition, without addressing the merits of those grounds (often calling those grounds “redundant” or “unnecessary”).2 The district courts will soon have to face the question of whether these grounds that were asserted in the petition, but denied by the PTAB at the institution stage without reaching the merits of those grounds, were “raised” under § 315(e) and thus subject to estoppel.

  1. Procedural Background

An IPR begins when a petition is filed with the Patent Trial and Appeal Board (“PTAB”) that identifies each claim the petitioner is challenging, sets the grounds for each challenge, and presents evidence and argument to support each ground.3 The statute and rules provide no limit as to the number of grounds that can be asserted in a petition against a single claim. Instead, the regulatory page limit (60 pages per IPR petition) acts as a practical limit on the number of grounds that can be raised by a Petitioner.4 It is not uncommon for a petitioner to assert multiple grounds of invalidity in a petition as to a single claim (such as when multiple, distinct prior art references are alleged to render the claim invalid).

Section 314(a) of Title 35, in turn, requires that the PTAB not authorize an IPR “unless” there is a determination “that the information presented in the petition . . . shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”5 The PTAB has interpreted this language, as well as other provisions of the AIA, to give discretion to not institute on grounds that would otherwise be authorized under § 314(a).6 In other words, if a petition includes multiple grounds that raise a reasonable likelihood that a challenged claim is invalid, the PTAB may exercise its discretion to pick one ground for institution and deny the others—leaving the merits of those other grounds unresolved.

Once instituted, an IPR typically results in a final written decision, which potentially triggers the statutory estoppel provision of § 315(e). That provision has two subsections: (e)(1), which applies estoppel to future proceedings before the USPTO, and (e)(2), which applies estoppel to civil actions before a district court or the International Trade Commission (ITC). The estoppel provisions are triggered on a claim-by-claim basis for each claim that results in a final written decision by the PTAB.7 Once estoppel is triggered for a claim, estoppel applies as to “any ground that the petitioner raised or reasonably could have raised during that inter partes review” with respect to claims addressed in the final written decision by the PTAB.8

  1. Statutory Interpretation

On its face, the estoppel statute appears broad: preventing an accused infringer who took an IPR to completion and lost from asserting as a defense in a district court or ITC proceeding that the claim upheld by the PTAB in a final written decision “is invalid on any ground that the petitioner raised or could have raised during that inter partes review.”9 But the question remains as to whether this language should be interpreted to create an estoppel as to a ground of invalidity that the petitioner set forth in the petition but that the PTAB refused to consider on the merits during the IPR. If the petitioner were estopped from raising such a ground in the District Court, it might implicate due process considerations. In particular, this reading of the estoppel statute would mean that the petitioner might never have the merits of its challenge heard.10

It is possible that courts faced with the question of how to interpret § 315(e) will do so in a manner that avoids any constitutional due-process issue, following the well-known canon of statutory construction that statutes should be construed to avoid serious doubts as to their constitutionality.11 This canon of constitutional avoidance, coupled with the presumption favoring judicial review of rights-changing administrative action,12 might lead the courts to interpret the statute to avoid imposing estoppel on a petitioner as to a ground of invalidity that was raised in a petition but which the PTAB refused to reach on the merits. Indeed, while the question has not been squarely presented to the Federal Circuit yet, some judges on that court have begun hinting that this is the proper approach to interpreting §315(e). Moreover, the PTO has taken this position as well, both in briefs it has filed with the Federal Circuit and in PTAB decisions interpreting the parallel estoppel provision applicable in PTO proceedings, as discussed below.

  1. Schott Gemtron—Federal Circuit Panel Expresses Skepticism that Estoppel Applies to Grounds That Were Not Instituted

The Federal Circuit came close to addressing whether estoppel applies to grounds set forth in a petition that were not instituted in the appeal of Schott Gemtron. There, the petitioner had asserted several grounds of invalidity in its petition, but two of those grounds were denied institution on the basis of redundancy.13 The petitioner eventually lost at the PTAB on the instituted grounds, and appealed from the PTAB’s final written decision.14 At oral argument, the appellee/patent owner argued that the decision of the PTAB not to institute on the two grounds was unreviewable, and that the appellant should be estopped from asserting those grounds in district court under § 315(e).15 The panel’s reaction was one of outright hostility. One member of the panel’s reaction to this argument was to say that it “seems untenable” because it would mean that the petitioner would not be able to have the grounds decided on the merits at either the PTAB or in district court.16 That member of the panel later said to the appellee that they were “going to get that decided either here, now, against you, or you are going to get it decided against you later,” and then asked appellee “would you rather have it decided against you now, when it seems like an advisory opinion, or later?”17 The appellee decided that it was best if the court refrained from deciding the issue so that it could be briefed in the district court.18 Ultimately, the Federal Circuit simply affirmed the PTAB’s decision without an opinion, leaving the estoppel issue unresolved.

  1. Schott Gemtron—USPTO Takes the Position That § 315(e) Does Not Apply to Grounds On Which The IPR Was Not Instituted

The USPTO also participated in the oral argument in Schott Gemtron, arguing against applying estoppel to grounds that were not instituted by the PTAB. As yet another sign of the Federal Circuit’s position on this issue, the first question asked of the USPTO attorney was “do you have areasonable position on estoppel?”19 The USPTO’s position was that the statutory framework made it clear that institution decisions are discretionary and that if estoppel were to apply to any ground in the petition, the PTAB would be forced to institute on every ground in a petition that was reasonably likely to succeed.20 Further, the USPTO argued that parties would cease to use the IPR proceedings and the statutory scheme would fall apart if estoppel were to apply to grounds that were in a petition but that were not instituted.21

The USPTO’s brief in Schott outlined the USPTO’s proposed interpretation of the estoppel statute. Its position was that estoppel would not apply to a ground in a petition unless the PTAB institutes the IPR on that ground. The USPTO noted that “estoppel applies for ‘any ground that the petitioner raised or reasonably could have raised during that inter partes review.’”22 Further, “the Agency’s rules state . . . [that] ‘[d]enial of a ground is a Board decision not to institute inter partes review on that ground.’”23 The USPTO also argued that the Agency clarified during the rulemaking process that “[a]ny claim or issue not included in the authorization for review is not part of the review.”24 Thus, the USPTO concluded that estoppel would not apply to non-instituted grounds in a petition.25

Although somewhat unclear, the USPTO’s argument seems to be that a ground raised in a petition, but not instituted, was not ” raised . . . during that inter partes review” because an inter partes review begins after institution, not with the filing of the petition. This interpretation seems to be in accord with the Federal Circuit’s reasoning in Intellectual Ventures II LLC v. JPMorgan Chase & Co.26 That case construed § 18 of the AIA, the covered business method review (“CBMR”) statute authorizing immediate appellate review of stay rulings “relating to CBMR proceedings.”27 There, the Federal Circuit held that the “proceedings” begin when the PTAB institutes review, not when a petition for review is filed.28 The holding was based on the language of the AIA, which “differentiates between a petition for a CBMR proceeding (which a party files) and the act of instituting such a proceeding (which the Director is authorized to do).”29 Coupled with a statute providing that the Director bases an institution decision on the strength of the petition, the Federal Circuit found that a petition itself cannot substitute for the exercise of the Director’s discretion for when or whether to institute the proceedings.30 The reasoning of Intellectual Ventures II about the meaning of “proceeding” seems to apply just as well to IPR proceedings.31

  1. Apotex—PTAB Determines § 315(E)(1) Does Not Preclude Grounds On Which A Prior IPR Was Not Instituted

The USPTO’s position expressed in its brief in the Schott Gemtron case is consistent with the PTAB’s ruling in Apotex Inc. v. Wyeth LLC, which interprets the statutory estoppel applicable in proceedings before the patent office after losing in a prior IPR.32 In Apotex, the petitioner filed a petition to institute IPR on two grounds after participating and losing in a previous IPR regarding the same patent.33 Ground 1 of the second petition was the same as Ground 6 in the prior petition, which the PTAB had concluded was “redundant.”34 The PTAB found that the petitioner was not estopped as to Ground 1 under the ‘raised’ prong because “grounds raised during the preliminary proceeding, but not made part of the instituted trial, are not raised ‘during’ an inter partes review and cannot be the basis for estoppel under 35 U.S.C. § 315(e)(1).” Nor, according to the PTAB, was this a ground that reasonably could have been raised because “once denied, the Board’s decision on institution prevents Petitioner from raising that ground during trial.”35

The Petitioner’s Ground 2, however, presented a different issue. That ground did not appear in the prior IPR petition.36 Despite lacking an identical counterpart, petitioner was aware of and actually cited all of the Ground 2 prior art in the original petition.37 Petitioner argued that Ground 2 could not have reasonably been raised because, based on the PTAB’s institution decision in the prior case, Ground 2 would have been considered redundant in the prior IPR institution.38 The PTAB refused to consider whether Ground 2, if included in the original petition, would have been found redundant.39 Instead the PTAB merely stated that it was “unclear” how the prior determination that several grounds were redundant was relevant to whether petitioner could have asserted Ground 2 “in the [prior] petition.”40 The PTAB concluded that because petitioner was aware of the prior art used in Ground 2 at the time of filing the first petition, it “could have raised” Ground 2 in that prior petition and was therefore estopped from raising that ground in the second IPR.41

Thus, when analyzing whether a ground was one that the “petitioner raised,” the PTAB looks not to whether the ground was present in the petition, but whether the PTAB instituted an IPR on that ground. However, when analyzing whether a ground was one that the petitioner “reasonably could have raised,” the PTAB will look to whether the ground was presented in a petition. Accordingly, the PTAB’s appears to interpret the term “raised” when used in the estoppel statute to mean: “identified in a petition and subsequently instituted.”

  1. Practical Implications

While the Federal Circuit has not addressed this issue in a written opinion, it seems plausible that when faced with this question directly, the Federal Circuit will conclude that a petitioner who loses in a completed IPR proceeding will not be estopped from asserting invalidity based on grounds that the petitioner asserted in the petition, but which were not instituted by the PTO. This is the position taken by the PTO in its briefing and oral argument in Schott Gemtron as well as the holding of the PTAB panel in the Apotex case, interpreting the identical language in the parallel estoppel provision applicable to PTO proceedings filed by a party that lost a previous IPR.

This leads to a few practice suggestions. First, petitioners may benefit by including in their petitions multiple reasonable grounds of invalidity. If one or more of those grounds are denied as redundant by the PTAB, the redundant grounds would be available as a defense in the district court proceeding.

Second, petitioners should carefully consider whether it is beneficial to include in a petition prior art that is not part of any ground. While there may be good reasons to include such art in a petition,42 its inclusion in the petition will be dispositive evidence that the petitioner was aware of that art and therefore could have raised it as part of a ground in a petition. This finding would potentially estop the petitioner from raising invalidity arguments based on that art in subsequent proceedings.

Until the Federal Circuit and/or Supreme Court speaks on this issue, there will remain uncertainty as to how the estoppel statute will be interpreted and what type of showing the petitioner must make in order to preserve the ability to assert in subsequent proceedings grounds that were identified in a petition but not instituted by the PTAB. However, there are preliminary suggestions that the scope of the “raised or could have raised” estoppel will leave open the possibility for losing IPR petitioners to assert invalidity defenses based on prior art publications in subsequent proceedings.