What is the scope of IPR estoppel? It depends. Not necessarily on the facts, but sometimes on the court: district courts continue to have divergent views of IPR estoppel.
The source of this disparity is district courts’ different interpretations of Shaw Industries v. Automated Creel. In Shaw, the petitioner sought review of the PTO’s decision not to institute grounds deemed redundant to other instituted grounds. Shaw argued that review was appropriate in part because it would be estopped from asserting those redundant grounds under 35 U.S.C. § 315(e). The Federal Circuit denied review, reasoning that Shaw’s estoppel fear was unfounded because the provision estopping “any ground that the petitioner raised or reasonably could have raised during an inter partes review” estopped only arguments that were (or could have been) raised post-institution, because pre-institution is not “during” the IPR.
Two weeks later, another Federal Circuit panel cited Shaw with approval in its decision in HP v. MPHJ Technology Investments. HP held on similar facts that “the noninstituted grounds were not raised and, as review was denied, could not be raised in the IPR. Therefore, the estoppel provisions of § 315(e)(1) do not apply.”
District courts have interpreted Shaw and HP in three ways:
First, Verinata Health v. Ariosa Diagnostics (North District of California, Judge Illston) represents a limited view of estoppel. Verinata limited estoppel to “to grounds actually instituted” and permitted the defendant to assert any other ground, including those “based on [prior art raised in the petition] as combined with art not presented during IPR.” The Federal Circuit denied mandamus review.
Second, Douglas Dynamics v. Meyer Products (Western District of Wisconsin, Judge Peterson) represents a broader view of estoppel. The Douglas Dynamics court felt that a narrow reading of IPR estoppel would undermine the “purported efficiency of IPR” by permitting defendants “to hold a second-string invalidity case in reserve in case the IPR does not go defendant’s way.” The court therefore held that IPR estoppel applied broadly to any invalidity claim that could have been raised in the IPR petition. But, in Douglas Dynamics’s corresponding IPR, the PTAB declined institution on some grounds due to no likelihood of success. Douglas Dynamics reluctantly read Shaw to preclude estoppel on those rejected grounds. Thus, the court held that no estoppel attached to a ground actually raised in the petition if that ground was rejected by the board. In a clarifying opinion, the court found that these “grounds” were limited to the theories presented to (and rejected by) the PTAB in the petition, and that any bare-bones grounds raised “in bad faith” would be subject to estoppel.
Third, Biscotti v. Microsoft (Eastern District of Texas, Magistrate Judge Payne) represents an even broader view of estoppel. Biscotti limited the holdings of Shaw and HP to their facts, and read the statute to apply to all grounds the petitioner raised or could have raised in the petition except for those that the PTAB did not institute “for purely procedural reasons, such as redundancy.” The court’s reasoning echoed Douglas Dynamics’s concern that applying Shaw broadly would be contrary to the stated statutory purpose of simplifying issues for trial.
What is the final approach? We will have to wait for clarity from the Federal Circuit, or perhaps the Supreme Court. Until then, expect parties to litigate estoppel fiercely whenever an instituted IPR does not kill all claims.