Recent decisions from the Federal Circuit provide guidance on whether the PTAB must adopt a prior claim construction that is affirmed by the Federal Circuit. The answer depends on whether the doctrine of collateral estoppel applies.
The doctrine of collateral estoppel, also known as issue preclusion, is intended to prevent a party from re-litigating an issue that was already decided in an earlier proceeding if that party had a full and fair opportunity to litigate the issue. The Federal Circuit has explained that collateral estoppel “protects a party from having to litigate issues that have been fully and fairly tried in a previous action and adversely resolved against a party-opponent.” For collateral estoppel to apply, the following four elements must be shown: “(1) the previous determination was necessary to the decision; (2) the identical issue was previously litigated; (3) the issue was actually decided in a decision that was final, valid, and on the merits; and (4) the party being precluded from relitigating the issues was adequately represented in the previous action.” Collateral estoppel applies to administrative proceedings, including AIA trials before the PTAB.
Collateral estoppel is not limited to identical patent claims. Rather, as explained by the Federal Circuit, “it is the identity of the issues that were litigated that determines whether collateral estoppel should apply.” For patent claims with different features, collateral estoppel applies “[i]f the differences between the unadjudicated patent claims and adjudicated patent claims do not materially alter the question of invalidity.”
PTAB Bound by Prior Claim Construction
In Nestlé USA Inc. v. Steuben Foods Inc., the Federal Circuit held that a PTAB panel was bound by a claim construction from a prior Federal Circuit appeal involving the same parties and a related patent. Nestlé appealed the PTAB’s final written decision in IPR2015-00249 in which the PTAB found that claim 9 of US 6,481,468 (‘468 patent) was not obvious over the asserted art. The ‘468 patent, which is owned by Steuben Foods, is related to US 6,945,013 (‘013 patent). Both the ‘468 patent and the ‘013 patent are directed to aseptic packaging of food products.
Nestlé previously appealed the PTAB’s final written decision in IPR2014-01235 involving the ‘013 patent based on the PTAB’s construction of the term “aseptic” in the ‘013 patent. In the prior appeal, the Federal Circuit vacated the PTAB’s final written decision because the PTAB erred in construing the term “aseptic.” The Federal Circuit held that the term “aseptic” had to be interpreted to mean “FDA level of aseptic” based on a “binding lexicography in the specification” of the ‘013 patent.
In the appeal involving the ‘468 patent, the Federal Circuit explained that collateral estoppel attaches to the construction of the term “aseptic,” because the ‘468 and ‘013 patents use the term in a similar fashion, and both patents provide the same lexicography for the term. In addition, the Federal Circuit indicated that “neither party…pointed to any material difference between the two patents or their prosecution histories that would give rise to claim construction issues in this appeal different from those raised in the prior appeal.” Since Steuben Foods “had a full and fair opportunity to litigate the issue of claim construction” of the term “aseptic” during the prior appeal, “collateral estoppel protects Nestlé and obviates the need to revisit an issue that was already resolved against Steuben Foods.”
Thus, in Nestlé USA, collateral estoppel attached to a claim construction determination that was previously litigated by both parties involved in the appeal.
PTAB Not Bound by Prior Claim Construction
In another appeal of a PTAB decision, the Federal Circuit held that the PTAB was not bound by a prior claim construction which led to the validity of the challenged patent being affirmed by the International Trade Commission (ITC) seven years before. In Knowles Electronics LLC v. Cirrus Logic, Inc., the Federal Circuit was faced with the question of whether the PTAB must adopt the same construction of the term “package” that was adopted by the ITC in construing the same claims of the patent.  The challenged patent is directed to a microelectromechanical system package that provides protection from an interference signal.
The ITC construed the term “package” as a “self-contained unit that has two levels of connection, to the device and to a circuit (or other system).” The Federal Circuit affirmed the ITC’s construction of the term “package.” On the other hand, the PTAB, applying the broadest reasonable interpretation (BRI) standard, found that the term “package” “may refer to chip assemblies that possess any type of second-level connection mechanism.”
The majority of the Federal Circuit panel did not expressly address the issue of whether the PTAB should be bound by the ITC’s prior claim construction that was affirmed by the Federal Circuit. Rather, the majority determined that the PTAB’s reliance on extrinsic evidence to reach its construction was supported by substantial evidence, because the intrinsic evidence of the patent was not definitive. The majority also indicated that the prior decision affirming the ITC’s claim construction was in connection with the ITC rejecting an anticipation challenge that was not at issue before the PTAB. Based on the extrinsic evidence considered by the PTAB and the different context which led to the ITC’s construction, the majority indicated that the PTAB’s construction of the term “package” was in “accord with the definition adopted” by the ITC.
In a dissenting opinion, Judge Newman argued that even if the PTAB is not bound by prior claim constructions of a district court or the ITC, the PTAB should be bound by prior Federal Circuit decisions addressing “the same term of the same claims of the same patent.” Judge Newman explained that duplicate proceedings in the courts and the Patent Office “inhibit finality of judicial determinations in areas subject to the America Invents Act.” Judge Newman argued that collateral estoppel should apply to issues already decided by the Federal Circuit, because “[t]he [AIA’s] purposes of efficiency, economy, and finality of patent review are lost when judicial determination of the same question of patentability has been completed, including appeal to and decision by the Federal Circuit—yet the decision is ignored and the proceeding repeated by the administrative agency and again appealed to the Federal Circuit.”
Different Results in Different Forums
The majority decision in Knowles Electronics generally follows the Federal Circuit’s earlier decision in Novartis AG v. Noven Pharmaceuticals Inc. (discussed here), in which the court held that the PTAB is not bound by a district court’s validity determination due to the different burdens of proof in AIA trials and invalidity challenges before a district court. The Federal Circuit has also explained that the PTAB is generally not bound by a prior judicial construction of a claim term by a district court due to the different claim construction standards applied in AIA trials and district court litigation. In addition, the Federal Circuit has explained that collateral estoppel does not bind the PTAB to a district court’s claim construction if the Patent Office was not a party in the district court trial.
Under the Federal Circuit’s current guidance, collateral estoppel in AIA trials appears to be limited to situations in which the same issues are being litigated, and the party who received an adverse decision exhausted its right of appeal on the issues that are being addressed again.