Before Prost, Moore, and Reyna. Appeal from the Patent Trial and Appeal Board.

Summary: Failure to petition for certiorari on the issue of invalidity triggers estoppel of parallel inter partes reexamination proceedings even if Federal Circuit remands on other non-validity issues.

VirnetX sued Apple for infringement of its patents relating to secure communication links. Apple filed requests for inter partes reexamination of two of the asserted patents (“Apple reexams”). At the district court, the jury found the asserted claims infringed and not invalid and Apple appealed. The Federal Circuit affirmed the jury’s finding of no invalidity but vacated the infringement finding for the two patents at issue and remanded. Apple did not file a request for rehearing or a petition for writ of certiorari on the invalidity or infringement issues. After the Federal Circuit’s decision, VirnetX petitioned the Board to terminate the Apple reexams based on the estoppel provision of pre-AIA § 317(b), which provides that once a “final decision” has been entered that “the party has not sustained its burden of proving invalidity” then a reexamination requested by that party “may not thereafter be maintained.” The Board denied the petition and affirmed the Examiner’s finding that the claims were unpatentable. VirnetX appealed the Board’s decision.

The Federal Circuit affirmed the Board’s decision in-part, vacated in-part, and remanded. Regarding the issue of whether § 317(b) estoppel applied, the Federal Circuit rejected Apple’s argument that there was no “final decision” of the issue of validity because Apple may choose to file a petition for certiorari of the other non-validity issues to be decided on remand and, when doing so, Apple may also ask the Supreme Court to consider the invalidity issues from the first appeal. While acknowledging that the Supreme Court would have the ability to hear issues raised on the first appeal, the court reasoned that its earlier decision, Fairchild (Taiwan) Corp. v. Power Integrations, Inc., 854 F.3d 1364 (Fed. Cir. 2017), implicitly foreclosed Apple’s argument with regards to § 317(b) estoppel. The court explained that Fairchild held that “all appeals” regarding issues of validity had terminated despite the fact that other issues in that case were remanded and thus remained pending for potential appeal. In addition, the court reasoned that statutory text and purpose of § 317(b) does not support Apple’s position since the statute requires a final decision only on the issue of whether a party has “sustained its burden of proving invalidity,” and Apple’s position would essentially require a final decision on all issues. Thus, the court found that § 317(b) estoppel applied to the Apple reexams and vacated and remanded with instructions to terminate Apple reexams with respect to the claims considered at trial. Regarding the portion of the reexamination that pertained to claims not subject to estoppel, the court rejected VirnetX’s “kitchen sink approach” and affirmed the Board’s finding that the claims not subject to estoppel were unpatentable.

Judge Reyna dissented in part, distinguishing Fairchild from this case since Fairchild did not consider the possibility of Supreme Court review on a second appeal.