An AIA trial is a relatively-inexpensive, partial substitute for challenging the validity of a patent. Yet, prospective AIA trial petitioners routinely struggle with the potential estoppel effect of not raising prior art before the Patent Trial and Appeal Board. Petitioners concerned about that issue may be encouraged by a recent Delaware district court decision interpreting the statutory estoppel provision and a 2016 Federal Circuit decision not to prevent an AIA trial petitioner from pursuing in court an invalidity argument based on prior art that the petitioner did not raise—but one might have thought reasonably could have raised—during the concluded AIA trial of the same patent-in-suit. The decision appears to render null an important phrase in that statutory provision. Intellectual Ventures I LLC v. Toshiba Corp., Civil Action No. 13-453, Slip Op. (DN 559) at 25–27 (D. Del. Dec. 19, 2016) (Memorandum Opinion).

In IPR2014-00418, Toshiba successfully petitioned for inter partes review of claims in U.S. Patent No. 5,500,819 on the basis that the claims are unpatentable over a combination of three prior art publications. The PTAB instituted review and cancelled the claims in a final written decision in 2015. The patent owner (Intellectual Ventures), appealed that decision to the Federal Circuit, and the appeal is pending. In the parallel litigation in the Delaware federal court between the same parties, Toshiba advanced an additional (new) invalidity argument based on prior art that it did not present in its IPR petition or during the IPR. Intellectual Ventures filed a motion for summary judgment that the IPR estoppel provision prevents Toshiba from advancing in court its new invalidity argument. The briefs are sealed and it’s unclear whether there is evidence that Toshiba could have petitioned for IPR on the basis of this new prior art. Toshiba opposed summary judgment, arguing that estoppel would be unfair and that a stay of the court proceedings with respect to the ’819 patent involved in the IPR may be more appropriate pending the Federal Circuit’s disposition of the IPR appeal.

The relevant IPR estoppel provision states a “petitioner in an inter partes review of a claim in a patent … that results in a final written decision … may not assert in … a civil action … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” 35 U.S.C. § 315(e)(2) (emphasis added). The court thus acknowledged the plausibility of Intellectual Ventures’s argument that the new invalidity argument could have been raised during the IPR, but denied summary judgment based on the Federal Circuit’s decision in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1243 (Fed. Cir. 2016), which we previously discussed here. In Shaw, the Federal Circuit determined that section 315(e) does not estop an IPR petitioner from challenging a patent based on petitioned but non-instituted grounds of unpatentability, because prior art underlying such grounds was not and could not have been raised during the IPR, i.e., post-institution. Id. at 1300; see also, HP v. MPHJ Tech Investments, LLC, 817 F.3d 1339, 1347 (Fed. Cir. 2016) (same). In Toshiba, the court could not “divine a reasoned way around the Federal Circuit’s interpretation in Shaw” and, thus, concluded that Toshiba likewise is not estopped from raising in court its new argument.

The Toshiba decision is interesting because, prior to Shaw, the district court recognized that “Toshiba chose to take the validity dispute to the PTAB through the IPR procedure rather than litigating validity in [the district] court,” and, thus, determined that Toshiba was estopped from challenging validity in court based on section 315(e)(2). Intellectual Ventures I LLC v. Toshiba Corp., Civil Action No. 13-453, Slip Op. (DN 150) at 8 (D. Del. May 15, 2015) (Memorandum Order). The court’s earlier pre-Shaw decision was consistent with another pre-Shaw federal court decision that interpreted the same statutory provision. See Clearlamp, LLC v. LKQ Corporation, Civil Action No. 12-02533, Slip Op. (DN 193) at 15 (N.D. Ill. Mar. 18, 2016) (Order and Opinion) (suggesting section 315(e) estops party in litigation from advancing prior art that “could have been found by a skilled searcher’s diligent search”), discussed here.

But the Toshiba court’s recent post-Shaw decision appears to render null the section 315(e)(2) phrase “or reasonably could have raised.” Further, the decision seems inconsistent with the PTAB’s recent interpretations of a similar statutory provision in Apotex Inc. v. Wyeth LLC, IPR2015-00873, Paper 8 (PTAB Sept. 16, 2015) (applying the estoppel provision in 35 U.S.C. § 315(e)(1)), discussed here, and a similar regulation in Adama Makhteshim Ltd. v. Finchimica S.p.A., IPR2016-00577, Paper 7 at 9–10 (PTAB May 24, 2016) (applying interference estoppel (37 C.F.R. § 41.127) to deny IPR institution on Ground 2), discussed here. The issue in Toshiba may become moot in that case if the Federal Circuit affirms the pending IPR appeal. Nevertheless, the Delaware court’s interpretation of Shaw and section 315 appears to significantly limit the scope of IPR estoppel.