When the America Invents Act was enacted, one of the biggest questions facing petitioners was the scope of the estoppel set forth in 35 U.S.C. § 315(e). While IPR was expected to provide a cheaper, more efficient method of challenging the validity of a patent, what would the challenger be giving up?

The statute provides that for any patent claim addressed in a final written IPR decision the petitioner (or real party in interest), may not request, maintain, or assert that any such claim is invalid on a ground that the petitioner “raised or reasonably could have raised” during the IPR in any proceeding before the patent office, or in any action in the district courts or the ITC. 35 U.S.C. § 315(e). The legislative history of the statute suggests that Congress intended a broad application of estoppel. See, e.g., 157 Cong. Rec. S1375, 1358 (Daily Ed. March 8, 2011) (Statement of Senator Grassley) (indicating that inter partes review “will completely substitute for at least the patents-and-printed publications portion of the civil litigation”).

Nevertheless, a number of questions were left to the courts to answer. Chief among these—what is a ground that petitioner “reasonably could have raised” in the IPR? The PTAB and the courts have now had over five years to answer this and related questions.

So, here are 7 things we have learned about estoppel to date, each discussed in detail below, and summarized as follows:

  1. Estoppel is limited to patents and printed publications;
  2. Non-instituted grounds are not estopped;
  3. Beyond that, courts differ on the grounds that “reasonably could have” been raised in an IPR petition;
  4. The PTAB is more liberal in its application of estoppel than District Courts;
  5. Estoppel extends to real parties-in-interest;
  6. Joinder does not avoid estoppel; and
  7. The uncertain scope of estoppel has some courts wary of granting stays.

1. Estoppel is Limited to Patents and Printed Publications

IPR is available only for validity challenges based on patents and printed publications. So, § 315(e) estoppel does not limit challenges based on other types of prior art. In an early court case addressing IPR estoppel, the district court refused to strike invalidity contentions directed to a physical specimen of a prior art machine. See Star Envirotech Inc. v. Redline Detection LLC, Case No. 12-01861, 2015 WL 4744394, at *3-4 (C.D. Cal. Jan. 29, 2015). The patent owner sought to bar defendants/petitioners from presenting such evidence, arguing they had a printed manual corresponding to the prior art machine, but had elected not to submit it as part of the IPR. The court concluded that the statute prevented the PTAB from considering the physical machine. The court declined to estop defendants from arguing invalidity based upon the physical specimen. In that case, however, it was undisputed that the user manual did not disclose all of the features disclosed by the physical specimen upon which the defendants relied for invalidity. It remains an open question whether the same result would follow if disclosures reflected in the printed publication and physical specimen were identical.

2. Non-instituted Grounds Are Not Estopped

The Federal Circuit weighed in on IPR estoppel in 2016. See Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir.), cert. denied, 137 S. Ct. 374 (2016). In Shaw, the court held that a party retains the ability to assert invalidity grounds that were raised in a petition, but not instituted for review by the PTAB. This decision recognized that the PTAB has the final and unreviewable authority to decide whether or not to institute review. The court reasoned that when the PTAB chooses not to institute, the non-instituted grounds of invalidity “could not have been raised” during the IPR as required by the estoppel provision.

In Shaw, the PTAB instituted inter partes review on all challenged claims in Shaw’s petition, but not on all of the invalidity grounds identified in the petition. Specifically, it declined to institute on one ground after finding it redundant to other grounds. In its final written decision, the PTAB found in favor of the patent owner. On appeal, the Federal Circuit rejected the petitioner’s challenge to the PTAB’s decision not to institute on all grounds. Referencing 35 U.S.C. § 314(d), the Federal Circuit declared the PTAB’s decision final and non-appealable. Separately, the Federal Circuit also denied petitioner’s writ of mandamus directed to the PTAB’s redundancy determination, holding that Section 315(e) did not preclude petitioner from pursuing the non-instituted grounds in either the PTO or the district court. See Shaw, 817 F.3d at 1300. The court agreed with the PTO that the Board must have the authority to choose among asserted grounds in order to meet the statutory deadline to issue a final written decision within one year of institution. The court, however, concluded that accommodating this need should not prejudice petitioners.

This position was more clearly articulated by the Federal Circuit two weeks later in HP Inc. v. MPHJ Tech. Inv., LLC, 817 F.3d 1339 (Fed. Cir. 2016): “[T]he noninstituted grounds do not become a part of the IPR. Accordingly, the noninstituted grounds were not raised and, as the review was denied, could not be raised in the IPR. Therefore, the estoppel provisions of § 315(e)(1) do not apply.” Id. at 1347.

Patent owners have tested the scope of Shaw’s holding, arguing that Shaw applies only to those circumstances where the PTAB denied institution based on redundancy. Some district courts have agreed to this limitation on Shaw, applying Shaw’s exemption only to grounds that were not instituted for procedural reasons. Biscotti, Inc. v. Microsoft Corp., Case No. 2:13-cv-01015 (E.D. Tex. May 11, 2017); Douglas Dynamics v. Meyer Products LLC, Case No. 14-cv-886 (W.D. Wis. April 18, 2017). Under this analysis, estoppel applies to all grounds instituted and all grounds included in the petition but not instituted on substantive (rather than procedural) grounds. But others have disagreed, extending the Shaw exemption to all non-instituted grounds, whatever the basis, in order to ensure that estoppel was limited to only to those grounds that did receive– or could have received–attention in the IPR. See, e.g., Verinata Health, Inc. v. Ariosa Diagnostics, Inc., Case No. 12-cv-5501, 2017 WL 235048 at * 3 (N.D. Cal. Jan. 19, 2017). In this case, the patent owner sought a writ of mandamus on the issues. The Federal Circuit declined on the ground that the current state of binding precedent does not compel a decision that the court abused its discretion. In re Verinata Health, Inc., No. 17-109 2017 WL 1422489, slip op. at *2 (Fed. Cir. Mar. 9, 2017).

3. Grounds Not Raised—Confusion in the District Courts

It is less certain how to apply estoppel to grounds that were never raised in the IPR petition but arguably “reasonably could have” been raised.

In one pre-Shaw decision the district court relied upon the legislative history of the AIA provision to determine that estoppel should extend to prior art that a skilled searcher, conducting a diligent search, reasonably could have been expected to discover. Clearlamp, LLC v. LKQ Corp., No. 12-cv-2533, 2016 WL 4734389, at *8 (N.D. Ill. Mar. 18, 2016). The court focused its estoppel analysis on whether the art was available—suggesting that no estoppel would apply to even cumulative prior art if shown to have been unavailable. According to the court, § 315(e) estoppel applies to specific pieces of prior art that reasonably could have been raised, not more broadly any subject matter that reasonably could have been raised. As a result, the court permitted invalidity arguments based upon a datasheet for a prior art product. The datasheet was only obtained via third-party subpoena, and the patent owner failed to demonstrate that a skilled searcher would have found it as part of a diligent search. The data sheet disclosed non-cumulative information that was not available from previously identified sources. For these reasons, the defendant was not estopped from arguing invalidity based upon the datasheet.

Other courts have adopted this test for what reasonably could have been raised. See Douglas Dynamics v. Meyer Products LLC, Case No. 14-cv-886, 2017 WL 1382556 (W.D. Wis. April 18, 2017); Biscotti, Inc. v. Microsoft Corp., Case No. 2:13-cv-01015 (E.D. Tex. May 11, 2017). In Douglas Dynamics, the district court announced that if a party chose to pursue an IPR, it cannot hold back a “second-string invalidity case in reserve[.]” Id. at *8-9. The court expressed concern that if the rationale of Shaw were extended to allow a party to raise grounds in the district court that it never included in its IPR petition, Shaw would undermine the purported efficiency of IPRs. While the court agreed with Shaw that estoppel did not apply to invalidity grounds raised but not instituted by the PTAB (because the challenger had no meaningful opportunity for review), it concluded that a party should be estopped from presenting prior art it failed to raise in its petition. The court reasoned that once a party pursues IPR, it surrenders the right to judicial review of invalidity grounds it chose not to bring in the IPR. In this case, there was no question that the art was known to the petitioner because it had been identified in the party’s invalidity contentions prior to IPR institution.

In a subsequent order, the court clarified its ruling. Douglas Dynamics, LLC v. Meyer Products LLC, Case no. 14-cv-886, 2017 WL 2116714 (W.D. Wis. May 15, 2017). The court explained that a defendant is not locked into the precise argument made in its IPR petition, but if it presents a new theory relying on different, uncited portions of the prior art, attacks different claim limitations, or relies on substantially different claim constructions, then the new theory is essentially a new invalidity ground and subject to the estoppel. Id. at *2-3. In Douglas, the defendant/petitioner argued that its differing characterization of a portion of the prior art was driven by the patentee’s changed claim construction position. The court considered whether it was unfair to hold the defendant to the claim construction asserted in IPR if the patentee is free to argue a variation, but deferred its decision on estoppel until summary judgment. In dicta, the court also warned that asserting grounds for invalidity in a manner designed to provoke a denial of institution (e.g. making arguments in a bare bones fashion) would nevertheless be subject to estoppel. Id. at *2.

In Precision Fabrics Grp., Inc. v. Tietex Int’l, Ltd., No. 13-cv-645, 2016 WL 6839394 (M.D.N.C. Nov. 21, 2016), the North Carolina district court estopped a defendant from presenting invalidity arguments directed to a patent that survived IPR, without concerning itself with whether those grounds were non-instituted or not raised. Id. at *9.

Similarly, courts have precluded the defendant from asserting subsets of obviousness combinations different from those raised in the IPR. For example, in Biscotti, Inc. v. Microsoft Corp., Case No. 2:13-cv-01015 (E.D. Tex. May 11, 2017), the PTAB had instituted under § 103 based upon a combination of three prior art references. The court estopped the defendant at trial from relying upon any other combination of those three references as a basis for obviousness. Id at * 14; see also Verinata Health, Inc. v. Ariosa Diagnostics, Inc., Case no. 12-cv-05501-SI, 2017 WL 235048 at *3 (N.D. Cal. Jan. 19, 2017).

However, other district courts have given greater effect to Shaw’s reading of the statute. In Intellectual Ventures I LLC v. Toshiba Corp., Case No. 13-cv-453, 2016 WL 7341713 (D. Del. Dec. 19, 2016), Toshiba challenged the validity of Intellectual Venture’s patent based upon two patents it had not asserted in its previous IPR petition. Id. at *38. The court expressed concern that interpreting Shaw to allow the assertion of “references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of” inter partes review. Id. Nevertheless, the court felt bound by Shaw and declined to estop defendant. Id. In a subsequent opinion, the court acknowledged the competing views of unfairness, on the one hand, of requiring a party to raise all of its grounds of invalidity before the PTAB given the strict page limits imposed by the PTAB, and on the other, of allowing a party to “play games between the PTAB (IPR) and the courts (litigation).” Intellectual Ventures I LLC v. Toshiba Corp., 2017 WL 107980, at *1 (D. Del. Jan. 11, 2017). Ultimately, deciding it is not a court’s place to make policy decisions, the court again declined to estop reliance on art that was not presented in the IPR petition. Id. at *2.

Turning to the specific claims to which estoppel will be applied, the court in Princeton Digital Image Corp. v. Konami Digital Entertainment, Inc., Case No. 12-1461, 2017 WL 1196642 (D. Del. March 30, 2017), held that estoppel applies only to patent claims that were subject to a final IPR written decision. Id. at *2. In that case, the defendant did not seek review of claims 14 and 20 and review was not instituted as to claim 19. Because the final written decision in the IPR did not address those three asserted patent claims, the defendant was not estopped from raising invalidity arguments as to those claims.

4. PTAB More Liberal in its Application of Estoppel

The PTAB has generally applied estoppel more broadly in its own proceedings. Recently in Great West Casualty Co. v. Intellectual Ventures II LLC, the board rejected a petitioner’s argument that Shaw limits estoppel only to grounds “actually litigated in an inter partes review after an institution decision.” IPR2016-01534, Paper No. 13 at 11. The board stated “Congress would not have included the additional words ‘or reasonably could have raised’ after ‘raised’ if Congress had desired to limit the estoppel to grounds actually raised.” Id. at 12. The board read Shaw to mean only that “estoppel does not apply to any ground of unpatentability that was presented in a petition, but denied institution.” Id. at 12. The board further clarified that it “discern[s] a substantive distinction between a ground that a petitioner attempted to raise, but was denied a trial, and a ground that a petitioner could have raised, but elected not to raise in its previous petition or petitions.” Id. at 13.

The PTAB has found that art reasonably could have been raised, and that later arguments based on that art were estopped, in a wide variety of circumstances:

  • The art could have been raised because it was actually cited in an earlier petition, although it was not raised as a ground of invalidity in that petition. Apotex v. Wyeth, IPR2015-00873, Paper 8, 2015 WL 5523393 at *2-3 (P.T.A.B. Sept. 16, 2015).
  • The art was cited, but is now being argued as part of a new invalidity theory. In Dell Inc. et al. v. Electronics and Telecommunications Research Institute, IPR2015-00549, Paper 10, 2015 WL 1731182 at *2-3 (P.T.A.B. March 26, 2015).
  • The art was cited in the prosecution history and the petitioner had raised the art in a related petition filed on the same date directed to a different patent. Ford Motor Co. v. Paice, IPR2014-00884, Paper 38 2015 WL 8536739, at *6-7 (P.T.A.B. Dec. 10, 2015).
  • The art could reasonably have been expected to be discovered by “a skilled searcher conducting a diligent search.” Praxair Distrib., Inc., v. INO Therapeutics LLC, IPR2016-00781, Paper 10, 2016 WL 5105519 (P.T.A.B. Aug. 25, 2016). The board required the petitioner to demonstrate why it could not have raised that art earlier and stated that a show of diligence should “‘identify the actual searcher, his or her skill level and experience in the field, . . . why he or she searched using keywords and keyword combinations,’ or explain whether [the references] were encompassed by the initial search results but not selected for the exemplary list.” Id.
  • The author of the prior art was a well-known “thought leader” in the relevant field and a person of skill in the art would have sought out that individual’s works. Also, other articles by the author were cited during prosecution. The Board additionally noted that the cited reference was catalogued and accessible at dozens of public libraries and was readily identified by searching Google Books using keywords from the specification. Praxair Distrib., Inc., v. INO Therapeutics LLC, IPR2016-00781, Paper 10, 2016 WL 5105519 (P.T.A.B. Aug. 25, 2016).

Estoppel considerations have also led panels to be more willing to exercise their discretion in favor of granting institution on numerous grounds. See also, e.g., Resmed Ltd. V. Fisher & Paykel Healthcare Ltd., IPR206-01719, Paper 12 at 11 (P.T.A.B. Mar. 13, 2017) (“because ‘the petition’ supports a reasonable likelihood that at least one of the challenged claims is unpatentable, we exercise our discretion under 37 C.F.R. § 42.108 to have the review proceed on all of the challenges that raise these same combinations as a primary basis of invalidity and likely would give rise to estoppel under 35 U.S.C. § 315(e).”).

5. Estoppel Extends to the Real Party-in-Interest

The statute explicitly states that estoppel will apply to the petitioner and the real party in interest or privy of the petitioner. 35 U.S.C. § 315 (e). Both the PTAB and district courts have applied these provisions expansively. In Roche Molecular Systems, Inc. v. Illumina, Inc., IPR 2015-01091 (October 30, 2015), Roche, who acquired the IPR petitioner (Ariosa) after the petition was filed, was estopped from later filing its own petition. Id., Paper 18 at 9-11, 14-16. After the acquisition, Ariosa had identified Roche in one of its filings as a real party-in-interest. Roche argued, however, that the acquisition did not close until after institution of the IPR, leaving it with no opportunity to truly participate in or guide the proceedings. The PTAB denied Roche’s efforts to file its own petition or to join Ariosa’s, viewing these as belated, duplicative attempts for which Roche was estopped. Id. at *15-16. The PTAB based its decision on evidence that discussions between the parties began long before institution of the Ariosa IPR, and that Roche had always been free to file its own IPR petition at any time. Id. at *12(“there is no standing requirement” for IPRs). In the parallel litigation, the district court adopted this same reasoning to hold that Roche was further estopped there from asserting grounds instituted in the IPR proceeding initiated by Ariosa. See Verinata Health, Inc. v. Ariosa Diagnostics, Inc., No. 12-cv-5501, 2017 WL 235048, * 5-6 (N.D. Cal. Jan. 19, 2017).

However, other courts have declined to give the term “privies” such an expansive reading, holding that merely being ultimate subsidiaries of the same parent does not make all defendants “privies” of the subsidiary that filed the IPR under this rule. See Illumina, Inc. v. Quaigen, N.V., Case No. 16-02788, 2016 WL 4719269 at * 6 (N.D. Cal. September 9, 2016).

6. No Exception to Estoppel Rules for Joinder

As discussed here, a party that joins the IPR petition of another will be estopped from raising additional arguments that it could have raised in the IPR. See Parallel Networks Licensing, LLC v. International Business Machines Corporation, Case No. 13-2072, 2017 WL 1045912 (D. Del February 22, 2017). In this recent decision, IBM argued that it merely joined the IPR petitions of another and should not thereby be estopped from raising additional grounds for invalidity in the district court. The patent owner, Parallel Networks, argued that IBM was estopped from asserting prior art combinations not raised in four joinder petitions that IBM filed with the PTAB in August 2015. Id. at *11. IBM argued that it could not have presented those prior art combinations because it was limited by the procedural posture of its follow-on IPR petitions which were necessarily linked to petitions filed by Microsoft in December 2014 and instituted in July 2015. IBM argued that the PTAB would only grant joinder on petitions limited to grounds identical to those already raised. Id. The court, however, disagreed, declaring that there is no “mirror image” rule for joinder. Id. at * 11-12. IBM’s petitions had resulted in a final decision in favor of the patent owner. Accordingly, the court estopped IBM from presenting prior art combinations of which it was aware before it filed its IPR petitions, as reflected in invalidity contentions and expert reports exchanged prior to filing of the IPRs. Id. at *12.

7. The Uncertain Scope of Estoppel Has Some Courts Wary about Granting a Stay

As noted by the court in Infernal Tech., LLC v. Electronic Arts, Inc., Case No. 2:15-cv-1523 (E.D. Tex. Nov. 21, 2016), the scope of IPR estoppel governs the likelihood that an IPR will simplify the issues in a case should patent claims survive the PTAB proceeding. Id. at *4-5. In Infernal, the IPR petition was based on only 2 of the 22 references asserted before the district court. The court deferred its decision on the motion to stay in view of the potential complexity in having to address the scope of estoppel. But, the judge stated that if the defendant would stipulate that it will not assert a defense under § 102 or §103 based on prior art identified in its invalidity contentions, or relied upon in its opening expert report, then the court would reconsider its decision. Id. at * 10-11; see also Depomed, Inc. v. Purdue Pharma LP, Case No. 3:13cv00571, 2016 WL 8677317 at *24 (D.N.J. Nov. 4, 2016)(stating that the Federal Circuit’s IPR decisions regarding estoppel “may impact the Court’s decisions going forward regarding whether matters should be stayed pending IPR”).