How SAS has Focused Courts' Approaches to IPR Estoppel

August 24, 2020 – Article
IAM Media

The US Supreme Court’s 2018 decision in SAS Institute v Iancu changed PTAB strategy for petitioners and patent owners, says Oblon’s Stephen McBride, and this has led to a more consistent approach in how lower courts handle estoppel.

US courts have struggled with applying the IPR estoppel provisions since the America Invents Act (AIA) was enacted. After receiving a final written decision, the petitioner may not later assert that the claims are invalid “on any ground that the petitioner raised or reasonably could have raised” during the IPR (35 USC § 315(e)(2)).  This leaves the open question of what prior art “reasonably could have [been] raised” in the petition such that estoppel should apply. 

The Federal Circuit has yet to weigh in on this issue, but district courts have developed a fairly consistent framework after the Supreme Court’s decision in SAS Institute Inc v Iancu. Most addressing the issue after SAS have held that estoppel applies to any patent or printed publication that: (1) a petitioner actually knew about; or (2) that a skilled searcher conducting a diligent search reasonably could have been expected to discover.

Theholding in SAS eliminated the PTAB’s prior practice of partially instituting IPRs and, as a corollary, made it clear that the phrase “reasonably could have raised” must apply to some set of prior art beyond prior art that actually reaches a final written decision. 

After SAS, district courts have widely interpreted “reasonably could have raised” to mean “any patent or printed publication that a petitioner actually knew about or that a skilled searcher conducting a diligent search reasonably could have been expected to discover". 

As the court in Wi-LAN v LG Electronicsdiscussedthis standard shifts the issue from what “reasonably could have raised” means to what the phrase “a skilled searcher conducting a diligent search reasonably could have been expected to discover” means.   As explained by the Palomar Tech v MRSI Sys court in a later opinion: “The standard thus has a subjective prong (did the IPR petitioner actually know about the reference?) and an objective prong (would a reasonable search have discovered the reference?).” 

The subjective prong of actual knowledge is a fairly straightforward fact issue that can usually be resolved by reviewing invalidity contentions or prior art search results.  The objective prong - whether a reasonable search would have discovered the reference - is a thornier factual issue.  The Palomar court held that: “The appropriate standard for the objective prong is one of probability, not possibility: that is, whether it is more probable than not that a skilled searcher conducting a diligent search reasonably could have been expected to discover the disputed reference.” 

In Palomar, the prior art references were only discovered after the IPRs and after several prior art searches.   The court held a three-day evidentiary hearing and heard expert and fact testimony to determine whether the original searches were reasonable.  The Palomar court agreed with the defendant that a reasonable search would probably not have returned the references it sought to assert.  In doing so, the court criticised the plaintiff for applying hindsight reasoning in crafting searches that returned the prior art references and focusing on art classes that were not listed on the patent. 

On the other hand, the Wi-LAN court analysed three prior art references that were allegedly returned in a prior art search performed after the relevant IPRs.  It held that the defendant, LG, was estopped from using these three references, stating: “Even assuming the search was performed [after the IPRs], LG has not identified any barriers or difficulties that would cause the prior art search at issue to produce different results had it been ran a year earlier, prior to the filing of its IPR petition.”

Further, one of the references was cited in the prior art uncovered before the IPRs and appeared to have identical disclosure in relevant part to one of the existing prior art references. 

The takeaway from Palomar and Wi-LAN is that defendants cannot simply rely on the fact that the prior art was discovered after the IPRs.  Defendants should be prepared with a good explanation as to why a prior art search performed before the IPR would not have produced the prior art relied on.

Key points to remember

Defendants should remember that IPR estoppel does not apply in many situations:

  • First, IPR estoppel only applies to patents and printed publications.  Prior art systems and products are outside the scope of IPRs; thus § 315(e) does not apply.  However, in order to avoid the potential for estoppel, a defendant should make sure that the system art is not merely duplicative of prior art publications.  For example, an article describing a product might be materially identical (ie, discloses the same claim elements) as a prior art product.  Courts in these situations tend to apply estoppel, rationalising that the product is at best cumulative of the prior art reference.  
  • Second, estoppel only applies to IPRs that result in a final written decision (35 USC § 315(e)(2)).  If the PTAB does not institute an IPR, or the IPR settles before a final written decision, then no estoppel applies. 
  • Third, as discussed above, the SAS decision ended the PTAB’s practice of partially instituting IPRs - that is, instituting some challenged claims but denying institution on others.  Before SAS, weaker IPR grounds were often weeded out before institution, meaning estoppel would often only apply to strong grounds that survived institution.  After SAS, if any challenged claims merit institution, then the IPR must be instituted for all challenged claims.  This has the effect of expanding estoppel to include claims that otherwise would have been removed before institution. 
  • Finally, IPR estoppel only applies to petitioners or “the real party in interest or privy of the petitioner” (35 USC § 315(e)(2)).  Defendants in district court litigations may be able to avoid IPR estoppel if an unrelated petitioner files an IPR.  This can happen when petitioners are, for example, co-defendants, suppliers of the defendant or and third-party organisations like Unified Patents or RPX. 

The bottom line

Petitioners should understand the risk of estoppel before filing an IPR and plan accordingly.  Factual disputes about whether prior art reasonably could have been raised can be uncertain, messy and expensive.  Defendants should put themselves in the best position to avoid these fights. 

Consider not petitioning on weaker claims where an IPR is unlikely to succeed.  Develop system prior art before filing IPRs so that there are alternatives to patents or printed publications in case of an adverse final written decision.  In invalidity contentions, make sure that system prior art is clearly identified as such instead of printed publication art and, where possible, rely on multiple documents and the product or system itself as part of the invalidity chart.  Similarly, if an unrelated party has filed an IPR, it may not make sense to join in order to avoid any potential estoppel.

If it is impossible to avoid an estoppel dispute, defendants should develop the record to show that their search was reasonable and to explain why the prior art probably could not have been discovered by a reasonable search.  Obtain several comprehensive searches from reputable prior art search firms before filing an IPR to strengthen the argument that the prior art searching was reasonable and develop rationales for why it was improbable that late discovered prior art would have been identified by a reasonable search.