No Retroactive IPR Estoppel in Co-Pending Litigation

April 3, 2019 – Article

            35 U.S.C. § 315(e)(1) and (2) are the statutory provisions regarding petitioner estoppel in IPRs. These provisions dictate that, after a final written decision is issued, a petitioner (and its real parties in interest and privies) are estopped from asserting in a subsequent USPTO proceeding, district court case, or ITC investigation “any ground that petitioner raised or reasonably could have raised” during the IPR in other proceedings before the USPTO, in district court, or in the ITC.

            Although the Federal Circuit has interpreted estoppel narrowly, district courts were split, and estoppel’s impact has remained in flux for several years. The Federal Circuit decisions led some petitioners to present multiple unpatentability grounds in their IPR petitions with the expectancy that some grounds would be denied institution and therefore preserved against estoppel.  But, the U.S. Supreme Court’s recent SAS Institute Inc. v. Iancu decision—leading to “all or none” institution decisions—has eliminated this approach as a viable strategy.  Narrow interpretation is no longer supportable, as it would only estop the exact same grounds raised and instituted upon in an earlier petition, rendering the words “reasonably could have raised” meaningless.  Accordingly, once a final written decision issues, estoppel applies to all grounds instituted upon as well as those that reasonably could have been raised. 

            Although estoppel is traditionally thought of with respect to future litigation or other proceedings, it also has implications for co-pending litigation. If the IPR results in a final written decision from the PTAB while litigation is pending, parties may argue that estoppel should apply to any eligible grounds in the district court and effectively stop asserting invalidity counterclaims and defenses during the litigation.

            This issue was raised (but not resolved) in Senju Pharmaceutical Co., Ltd. v. Lupin Ltd. (No. 14-667, see D.I. 301 and 302, D.N.J.) In Senju, both IPR proceedings and district court litigation were proceeding concurrently until the PTAB issued a final written decision in the IPR after completion of the district court trial, but before the trial court had issued its decision. The trial court was then asked to apply estoppel because the defendants were asserting invalidity counterclaims and defenses based on the same references they had relied on in the IPR proceedings. In opposition, the defendants argued that, under Section 315(e)(2), the petitioner “may not assert” the same grounds in a district court case, but they were not barred from “maintaining” a claim or defense that already had been fully asserted in district court because all that remained was for the trial court to issue its decision. The case was settled before the district court decided the estoppel issue. 

            But, in Intellectual Ventures II, LLC v. FedEx Corp. et al. (No. 16-00980, see D.I. 600, E.D. Tex.), the court affirmatively concluded that estoppel does not apply retroactively in a situation where the trial was over and the court had already issued its decision. Here, the litigation proceeded simultaneously with IPRs against the asserted patents. In May 2018, a jury trial resulted in a verdict finding all asserted claims to be invalid and not infringed. Two months later the PTAB issued its final written decisions—notably determining that several asserted claims were not proven to be unpatentable. In its brief requesting judgment as a matter of law and a new trial, IV argued that, under Section 315(e)(2), defendants should be estopped from asserting that any of the valid claims are invalid based on any ground that defendants raised or reasonably could have raised in its IPR petitions. Judge Gilstrap denied this argument, explaining:

The Court finds that Section 315(e)(2) no longer applies to this case. The plain language of the statutes states that defendants may not assert claims that may have been raised before the PTAB. However, this Court entered final judgement as to all validity claims on May 21, 2018. At that point, Defendants cease to “assert” their invalidity-based defenses and counterclaims; instead, the jury’s verdict of invalidity became that of the Court. Further, the Court finds that the correct application of IV’s analogy is that the Court’s judgment invalidating the [patents] should be the governing law of the land, despite the PTAB’s faster post-verdict certification. Accordingly, the Court DENIES IV’s post-briefing motion to estop Defendants from asserting any invalidity bases that they raised or could have raised before the PTAB.

D.I. 600 at 25.

            This case provides a marking post to understand how district courts may address estoppel and co-pending litigation. As other courts weigh in, the law on this issue may change. Although Judge Gilstrap did not apply estoppel retroactively in this instance, the safest approach in this scenario may be to assume that estoppel will apply based on the concluded IPR proceeding and ensure invalidity grounds not subject to estoppel are included in the litigation.