Agency Action and Issue Preclusion

SynQor, Inc. v. Vicor Corp. (Fed. Cir. 2021)

In a split-decision, the majority has sided with the patentee and vacated a PTAB inter partes reexamination decision cancelling the claims of SynQor’s U.S. Patent No. 7,072,190.  Judge Hughes wrote the majority decision that was joined by Judge Clevenger focusing on the procedural issues of collateral estoppel and mootness.  Judge Dyk wrote in dissent — arguing that reexamination decisions do not create issue preclusion — they are “examination” and “inquisitorial” rather than “adjudicatory.” Citing B & B Hardware, Inc. v. Hargis Industries, Inc., 575 U.S. 138 (2015).

Issue Preclusion: Issue preclusion always involves a tribunal decision in a first case followed by a second case where the same issue is raised.  When the stars align, the first decision finally settles the issue between the parties and precludes the party who lost on the issue in the first case from relitigating the same issue in the second case.

The tricky aspects of the “cases” here is that they are inter partes reexamination proceedings.  Back in 2011, Vicor petitioned for pre-AIA inter partes reexamination of three closely-related SynQor patents.  First Case: Two of the reexaminations reached the PTAB first — and the PTAB sided with the patentee by holding that the asserted prior art could not be combined because of “incompatibilities in the frequency.”  In its decision, the PTAB noted that both sides had presented evidence regarding the issue and expressly concluded that the patentee’s evidence was more credible than that presented by the patent challenger.  The Federal Circuit then affirmed that decision on appeal, although the Federal Circuit was not asked to address the particular incompatibility issue.  Second Case: When the third reexamination reached the PTAB, the Board changed course — now holding that the two references were not incompatible.

On appeal, the majority found that the outcome of the first case foreclosed any relitigation of the issue by the PTAB second time around.

“[T]he determination of a question directly involved in one action is conclusive as to that question in a second suit.” B & B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138, 147 (2015) (quoting Cromwell v. County of Sac, 94 U.S.
351, 354 (1877)).

In B&B, the Supreme Court indicated that issue preclusion applies in the administrative context, unless congress says otherwise. B&B explained more caveats: Preclusion applies “[w]hen an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate.” (TTAB context).  The dissent argued on this point that reexaminations are different — it is not ‘judicial’ but rather ‘inquisitorial.’  This dispute is an interesting exercise in line drawing, but does not carry much import going forward because inter partes reexamination has been supplanted by inter partes review.  The court has previously ruled that issue preclusion applies to IPR decisions (so long as the requirements of issue preclusion are met).

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One quirk of the decision is that the patentee SynQor did not raise issue preclusion to the PTAB.  In its decision, the court found no forfeiture or waiver — writing that “SynQor could not have raised issue preclusion because neither [of the first two] reexaminations became final until after the Board’s decision [in the second case].”  In making this determination, the Federal Circuit appears to implicitly conclude that issue preclusion does not apply until a case is affirmed on appeal or otherwise completely concluded, even if the issue-at-hand is not appealed.

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Mootness. The patentee had added some claims during the reexamination, and the PTAB found them unpatentable.  Meanwhile, the patent has also expired.  Thus, even if those claims emerged from the reexamination, they would have never been part of a valid patent.   The patentee asked the Federal Circuit to thus vacate the invalidity finding — and it agreed.  “[V]acatur is available so that “those who have been prevented from obtaining the review to which they are entitled [are] not . . . treated as if there had been a review.” Munsingwear, This “prevent[s] an unreviewable decision ‘from spawning any legal consequences.’” Camreta v. Greene, 563 U.S. 692 (2011).  This effectively prevents that aspect of issue preclusion from applying against the patentee when/if this ever gets back to the infringement action in district court.

2 thoughts on “Agency Action and Issue Preclusion

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    I have to wonder about Judge Dyk’s view of, “not ‘judicial’ but rather ‘inquisitorial.’

    Even in reexamination, you have two parties asserting different things and you have a third party deciding.

    I “get” (somewhat) the notion of “inquisiting” — especially if you have different players in the first two parties. Party A: patent holder versus Party B: first challenger, and Party D: second challenger. In the case in which Party D challenges a same issue but with different evidence, I cannot see how it would be fair to block the issue (hence why a double negative of “not invalid” as opposed to “valid” is often used.

    But that’s a bit myopic when — as presented — the second attack is by the same Party B.

    And that’s even presuming that the second attack had different evidence. Even if different evidence, you still have the situation of same two different parties bringing the same issue to a neutral third to decide. Sure, you have elements of “inquisition,” but you still have elements of “judgment.”

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    Footnote 2 notes that: “The inter partes reexamination procedure ended with the passage of the America Invents Act. .. (2011). As a consequence, our holding today is necessarily limited to remaining inter partes reexaminations.* As of November 2020, only eight appeals and two requests for rehearing from inter partes reexaminations remained pending before the Board.** See link to”
    **[Why are any still pending?]

    *[This decision holds that the statutory litigation estoppel provisions of the inter partes reexamination statute should also apply to PTO proceedings.]

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