No Estoppel for IPR Dicta

In Oil-Dri Corp. v. Nestlé Purina Petcare Co., No. 15-cv-1067 (N.D. Ill. Aug. 2, 2017), an Illinois district court held that 35 U.S.C. § 315(e)(2) does not estop an accused infringer from challenging the validity of claims under an invalidity theory even if the Patent Trial and Appeal Board’s Final Written Decision indicated the Board would not have held the claims unpatentable under the same theory, at least where the Board declined to institute inter partes review on the theory in the first place.

By way of background, Oil-Dri sued Nestlé in the Northern District of Illinois alleging Nestlé infringed U.S. Patent No. 5,975,019 (“the ‘019 patent”). Shortly after, Nestlé filed a petition with the Patent Trial and Appeal Board for inter partes review of the ‘019 patent.

Nestlé asserted five challenges against the ‘019 patent: (1) that claims 1-4, 6-13, 30 and 32 were unpatentable as anticipated by U.S. Patent No. 5,386,803 (“Hughes”); (2) that claims 1-4, 6-13, 30 and 32 were unpatentable as anticipated by U.S. Patent No. 5,458,091 (“Pattengill”); (3) that claims 1-13, 30 and 32 were unpatentable as obvious over Hughes; (4) that claims 1-13, 30 and 32 were unpatentable as obvious over Pattengill; and (5) that claims 1-13, 30 and 32 were unpatentable as obvious over Hughes in view of Pattengill. Oil-Dri Corp., at *4.  The Board instituted the petition, but only as to Nestlé’s fifth challenge. Id. at *5.

In its Final Written Decision, the Board held that Nestlé failed to prove that claims 1-13, 30 and 32 were invalid over the Hughes-Pattengill combination. The Decision also noted that “[t]he ground of obviousness based on Pattengill alone was presented in the Petition, but we did not institute [IPR] on that ground. Thus, to the extent Petitioner’s arguments are directed to Pattengill alone, they are not properly part of this proceeding.’” Id. at *10-11 (quoting Final Written Decision). However, the Decision went on to say that “’[e]ven if we were to consider Pattengill alone, we find that Pattengill does not render the challenged claims obvious.’” Id. at *11 (quoting Final Written Decision).  

Nestlé requested a rehearing of the Final Written Decision. The Board denied the request. Following that, Nestlé took an appeal to the Federal Circuit, where the matter was pending at the time of this decision. Id. at *5. In the meantime, the district court re-opened its proceedings.

There, Oil-Dri argued that Nestlé is estopped from asserting invalidity based on the specific challenges Nestlé raised in its petition even though the Board did not institute on those grounds (“noninstituted grounds”), as well as on grounds Nestlé did not raise in its petition that Nestlé reasonably could have (“nonpetitioned grounds”). Id

As for Nestlé’s challenges (1) and (3), the court held Nestlé was not estopped from asserting them in the district court proceeding in view of the Federal Circuit’s decision in Shaw Indus. Group, Inc., v. Automated Creel Sys., Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016). Id. at *7. The court added that “due process and fairness” supported its conclusion that non-instituted grounds should not give rise to estoppel. Id. at *9.

As for Nestle’s challenge (4), however, Oil-Dri urged Nestlé should be estopped from asserting it in the district court proceeding based on several decisions in which estoppel was held to apply to theories of invalidity based on a reference or references that were subsets of combinations upon which the Board did institute proceedings. Id. at *9-11.  

The district court distinguished those decisions, however, because the subsets were not themselves the subject of a challenge on which the Board declined to institute proceedings. Id. In addition, the Board made “explicit statements” indicating it didn’t believe any subset of the instituted ground—i.e., the Hughes-Pattengill combination—was before it. Id. The court thus held that Nestlé was not estopped from asserting challenge (4), even though the Board’s Final Written Decision indicated “we find that Pattengill does not render the challenged claims obvious.”  

Finally, the court held that Nestlé would be estopped in the proceeding from asserting any grounds that it could reasonably have included in its petition to the Board, but didn’t. As for those, Nestlé would be estopped from asserting any prior art “that a ‘skilled searcher conducting a diligent search reasonably could have been expected to discover.” Id. at *20.

Upcoming Webinar

Business Methods and Patent-Eligibility at the USPTO
September 22, 2017 at 07:00 am EDT
During the webinar, Charles Bieneman will discuss recent trends and current practices with respect to patent-eligibility at the USPTO’s business methods arts units – including a looks at how some cases are surviving Section 101 rejections. Register

Subscribe