Narrow Estoppel for IPR Petitioner Asserting Prior Art in District Court

A district court recently interpreted the statutory estoppel from an Inter Partes Review (IPR) to not apply to prior art that was publicly available at the time of the petition. Intellectual Ventures I LLC et al. v. Toshiba Corp. et al., Civ. No. 13-453-SLR (D. Del. Dec. 19, 2016).  Bites at the apple: we all want more of them. Patent defendants would love to have a bite at invalidating patent claims asserted against them in an Inter Partes review, followed by a second bite at any remaining claims in a civil trial.  Here, the defendants got to bite at the whole apple.

When Congress enacted the IPR procedure, estoppel was an attempt to balance this powerful tool for invalidating patents with patent owner’s rights in a civil trial: “The petitioner in an inter partes review of a claim in a patent … 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).

In IV v. Toshiba, Toshiba asserted that U.S. Patent No. 5,500,819 was obvious based on three prior art references that Toshiba had previously asserted against the ’819 patent in an IPR proceeding, as well as based on other publicly available patents and printed publications. The PTAB in the IPR proceeding had invalidated some of the asserted claims of the ’819 patent as obvious based on the three asserted references. The court applied estoppel to those three references.

But the court did not apply estoppel to the references that had not been raised in the IPR, relying on Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016). In Shaw, the Federal Circuit held that estoppel does not apply to grounds of invalidity asserted in a petition for IPR but on which the PTAB does not institute review. Because the IPR does not begin until institution, the noninstituted grounds could not have been raised during the IPR, as required by the statutory text.

The district court here extended the Shaw decision to grounds of invalidity not even included in the petition for IPR—even if the petitioner could have included the grounds. “Although extending the above logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw.” Thus, the references not raised in the IPR are fair game for Toshiba.

Lessons for Practice

The effects of Shaw and IV v. Toshiba will not necessarily be limited to giving defendants multiple bites at invalidity arguments. District courts may become less amenable to granting stays for IPRs. Simplification of the issues is key factor underlying stays for IPRs, but if a defendant can assert a full suite of invalidity arguments regardless of the IPR outcome, simplification disappears. Any patentee resisting a stay should point to Shaw and IV v. Toshiba.

Upcoming Webinar

Practical Considerations of IPR Estoppel
June 22, 2017 at 12:00 pm EDT
In the webinar, Bryan Hart will discuss estoppel stemming from inter partes review petitions. After an IPR, what invalidity arguments can the petitioner still use at trial? Bryan will analyze the Federal Circuit decision Shaw Industries Group, Inc.…Register

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