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Finding Needles in a Haystack and Driving Down One-Way Streets: Recent Developments in the Application of Estoppel in Patent Proceedings

April 13, 2023

Finding Needles in a Haystack and Driving Down One-Way Streets: Recent Developments in the Application of Estoppel in Patent Proceedings

April 13, 2023

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Following Ironburg Inventions, there is now a clearer standard for when a potential ground for invalidity “reasonably could have [been] raised” during the IPR; a skilled searcher conducting a diligent search should be able to uncover the relied upon reference. 

Inter partes review (IPR) before the Patent Trial and Appeal Board (PTAB) presents an alternative and more expedient forum for a petitioner to challenge the validity of an issued patent. The PTAB typically issues a Final Written Decision within 12 months following institution of the IPR. One unique aspect of IPR is the statutory estoppel provision that prevents challengers from raising the same invalidity grounds in subsequent civil actions before a district court or the International Trade Commission. The petitioner in an IPR bears the risk of estoppel, precluding it from raising “any ground that the petitioner raised or reasonably could have raised during… inter partes review.” 35 U.S.C. § 315(e)(2).

Recently, there have been multiple developments regarding the application of estoppel. In one case, the Federal Circuit clarified the standard when determining if a potential ground for invalidity “reasonably could have [been] raised” during the IPR and which party bears the burden of proof. In another case, the PTAB held that a party who failed to demonstrate the invalidity of claims in district court is not estopped from subsequently challenging the same patent in an IPR petition.

Ironburg Inventions Ltd. v. Valve Corp

The standard of deciding when a potential ground for invalidity rises to the level of “reasonably could have [been] raised” and which party bears this burden of proof has not been particularly clear. The United States Court of Appeals for the Federal Circuit recently clarified this standard in Ironburg Inventions Ltd. v. Valve Corp., Nos. 2021-2296, 2021-2297, 2022-1070, 2023 WL 2749199 (Fed. Cir. Apr. 3, 2023) when reviewing a decision from the district court.

Ironburg, the owner of U.S. Patent No. 8,641,525 (’525 patent) directed to a video game controller, sued Valve alleging infringement of the ’525 patent. Valve petitioned for IPR, which was partially instituted on September 27, 2016.[1] The PTAB issued its Final Written Decision (FWD), cancelling some claims and affirming the patentability of others.

Based on the FWD, Ironburg moved the district court for estoppel under 35 U.S.C. § 315(e)(2) of two sets of invalidity grounds asserted by Valve.

The first set of invalidity grounds were previously denied institution by the PTAB (pre-SAS), and Valve did not seek a remand following the FWD on the instituted grounds.[2] The second set of invalidity grounds were based on “newly” discovered references located by Valve in a third party’s IPR petition after Valve had already filed its IPR petition. The district court held that Valve was estopped from challenging validity of the ’525 patent on both sets of grounds.

Valve sought review of the district court’s estoppel rulings, arguing that it could not reasonably have raised these sets of grounds in the IPR.

The court affirmed estoppel with respect to the first set of invalidity grounds―relying in part on Valve's failure to seek remand post-SAS―since, because these grounds were contained in Valve’s IPR petition, they were previously raised and Valve is estopped from raising them again before the district court.

However, the court vacated the district court’s decision on the second set of grounds, finding that the burden of proving that Value “reasonably could have raised” them during the IPR was improperly placed on Valve. The parties agreed that the “skilled searcher” standard was set forth in SiOnyx LLC v. Hamamatsu Photonics K.K., 330 F. Supp. 3d 574, 602 (D. Mass. 2018) (any grounds that “a skilled searcher conducting a diligent search reasonably could have been expected to discover”) and the court adopted this standard.

Further, the court agreed with Valve that the burden of proof for establishing whether a ground reasonably could have been raised in an IPR should be borne by the party asserting the estoppel, consistent with the burden a party bears in raising an affirmative defense. As the party seeking to defend against invalidity with IPR estoppel, the court held that Patent Owner, Ironburg, should bear the burden of proving that the skilled searcher would have uncovered the references in conducting a diligent search. Because the district court improperly placed the burden on Valve to demonstrate that it could not “reasonably… have raised” the newly discovered invalidity grounds during IPR, the court vacated the decision of the district court with respect to estoppel on these newly discovered invalidity grounds.

OpenSky Industries, LLC v. VLSI Technology LLC

While the Federal Circuit clarified issues surrounding estoppel that arises from IPR proceedings in Ironburg Inventions, a PTAB panel recently addressed whether a defendant that fails to demonstrate the invalidity of claims in district court is precluded from subsequently filing an IPR petition against the same patent in OpenSky Industries, LLC v. VLSI Technology LLC, IPR2021-01064, Paper 132 (PTAB Apr. 4, 2023).

As background, in May 2021, a district court entered a final judgment that Intel Corporation had not proven the invalidity of various claims of U.S. Patent No. 7,725,759 (’759 patent), owned by VLSI Technology LLC. Intel did not appeal this ruling. Shortly after the final judgment, OpenSky Industries LLC filed an IPR petition challenging the same, plus additional claims of the ’759 patent. The PTAB granted institution of OpenSky’s petition. Intel subsequently filed a petition that was substantively identical to OpenSky’s petition along with a motion to join the IPR proceeding brought by OpenSky. The Board granted Intel’s motion and added Intel as a petitioner.

VLSI sought to terminate the IPR with respect to Intel, asserting that common-law claim preclusion barred Intel from challenging the claims of the ’759 patent. Intel countered that claim preclusion does not apply to IPRs under the America Invents Act (AIA).

Initially, the PTAB reviewed what standard to apply in determining whether the presumption of claim preclusion applied to IPR proceedings. Patent Owner argued that Kremer v. Chemical Construction Corp., 456 U.S. 461 (1982) requires a “plainly stated” intention of Congress to overcome a presumption of preclusion where a court decision precedes an agency decision. Intel argued that Congress needed to merely demonstrate an intent for claim preclusion to not apply to IPRs to overcome the presumption, citing Astoria Federal Savings & Loan Association v. Solimino, 501 U.S. 104 (1991). The Board favored Intel’s arguments, noting that Astoria stated that overcoming the presumption does not require a “clear statement” except for limited circumstances, such as when constitutional values or overlapping statutes are involved. While noting that Kremer involved a court decision preceding an agency decision, as Patent Owner asserted, the PTAB found Kremer’s higher standard was used because of overlapping statues and not because of the order of the decisions and forums in which those decisions were made.

Thus, the PTAB found that the question at hand was whether “the AIA with its statutory estoppel provisions demonstrated Congress’ intent that common-law claim preclusion should not apply to IPRs.”

Turning to Congress’ intent, the PTAB first began with the estoppel provisions of 315(e), noting that “the AIA expressly imposes claim preclusion in one direction—from an IPR to other proceedings” before the U.S. Patent and Trademark Office, district courts and the ITC. The Board stated that there would be no need for this statutory estoppel if the common law applied and that this estoppel directly bears on the types of restrictions imposed by common-law claim preclusion. Further, the Board noted that former 35 U.S.C. § 317 expressly applied claim preclusion to inter partes reexamination—the predecessor to current IPR practice—and that Congress chose not to maintain the claim preclusion provision in the AIA. Also, while the PTAB took care to state that it did not rely on the difference in evidentiary standards, it nevertheless found that the lower burden during an IPR, preponderance of the evidence rather than the clear and convincing evidence required for district-court invalidity, served as further evidence of Congress’ intent. Finally, the PTAB stated that Congress expressly spoke to how district-court proceedings may limit proceedings before the Board, noting that both filing a civil action challenging the validity of a patent and being served with complaint of infringement on a patent one year before filing an IPR both barred challenging the patent action before the PTAB.

Thus the Board found that the passage of the AIA’s estoppel provision expressed Congress’ intent that claim preclusion not apply to the circumstances presented.

Practice Points

Following Ironburg Inventions, there is now a clearer standard for when a potential ground for invalidity “reasonably could have [been] raised” during the IPR; a skilled searcher conducting a diligent search should be able to uncover the relied upon reference. Patent Owners, who now bear the burden of proof, seeking to benefit from IPR to defend against allegations of invalidity should be ready to evince and demonstrate that the references relied upon for asserting the grounds of invalidity would have been uncovered by the skilled searcher conducting a diligent search. An example of such objective evidence was discussed in Clearlamp LLC v. LKQ Corp., No. 12 C 2533, 2016 WL 4734389, at *9 (N.D. Ill. Mar. 18, 2016) (“One way to show what a skilled search would have found would be (1) to identify the search string and search source that would identify the allegedly unavailable prior art and (2) present evidence, likely expert testimony, why such a criterion would be part of a skilled searcher’s diligent search.”). Thus, rather than rely on the references the petitioner has cited in its IPR petition, a Patent Owner should be prepared to undertake a diligent search of its own to supplement what has been cited in the IPR petition. The Patent Owner in parallel district court proceedings, following an FWD affirming patentability of one or more claims, should also be prepared to demonstrate that the skilled searcher conducting a diligent search could uncover these additional references and, although the references were not cited in the IPR petition, IPR estoppel should still nonetheless apply because these references found by the skilled searcher “reasonably could have [been] raised” during the IPR.

OpenSky has been the subject of much interest and will likely remain so going forward. While this PTAB panel decided that claim preclusion did not apply to IPRs, nonprecedential Board decisions are not binding on other panels. As such, Patent Owners who find themselves in the unusual circumstances as those presented in OpenSky can still argue for claim preclusion, though they should perhaps focus more on other issues in challenging petitions and motions to join. Petitioners who are both time-barred and subject to a final decision by a district court have limited choices to challenge a patent and should be prepared to make the arguments accepted by this PTAB panel.

For More Information

If you have any questions about this Alert, please contact Thomas J. Kowalski, Patrick D. McPherson, Paul H. Belnap, Brandon A. Chan, Ph.D., any of the attorneys in our Intellectual Property Practice Group or the attorney in the firm with whom you are regularly in contact.


[1] Valve’s IPR petition preceded the Supreme Court’s decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018), which held that the USPTO must institute or deny an IPR petition in whole. Valve did not seek a remand that would have permitted the PTAB to consider those grounds in which institution of IPR was denied.

[2] See supra note 1.

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