Scope of IPR Estoppel: Reasonable Procedural Steps

By Dennis Crouch

Almost all patent law professionals will agree that an accused infringer with good prior art generally has a much better chance of getting the claims cancelled via IPR rather than asking a jury to decide.  Accused infringers also prefer IPRs because they effectively bifurcate the trial between validity and infringement, with the IPR validity questions being decided first while infringement litigation is stayed.  The result is that the IPRs are also a low risk option for accused infringers since no liability attaches from that decision.  If they lose the IPR, accused infringers still have another shot of escaping liability in the actual infringement trial.  At trial, the accused infringer can still raise invalidity defenses.  However, the estoppel provisions of 35 U.S.C. § 315(e) bar relitigation of “any ground that the petitioner raised or reasonably could have raised during that inter partes review.”

The Federal Circuit recently gave some further interpretation to the scope estoppel in Click-to-Call, LP v. Ingenio, Inc., 22-1016, — F.4th — (Fed. Cir. August 17, 2022).  Ingenio filed its IPR petition back in 2013.  At the time, the PTAB was still doing “partial institutions” pre SAS. And, in this case the Board instituted the IPR on three grounds and denied to institute on three grounds.  The Board eventually sided with the petitioner in its final written decision and cancelled the challenged claims.  There are two additional important procedural elements of the IPR: (1) The petitioner had challenged claim 27, but the Board denied to institute that particular ground.  Thus, claim 27 survived the IPR.  (2) While the IPR was on appeal to the Federal, SAS was decided banning partial institution. SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018).  In a strategic decision Ingenio did not seek remand for full institution to try to also catch the one remaining claim 27.

On remand, the district court judge (Yeakel, W.D.Tex.) allowed Ingenio to challenge claim 27 on the same grounds raised at IPR and ultimately issued a summary judgment of invalidity.  The district court clearly erred in its decision by analyzing the argument as only raising issue preclusion.  In general, issue preclusion is much narrower because it applies only to arguments actually litigated and decided whereas IPR estoppel applies more broadly to cover grounds that “reasonably could have [been] raised.”

But Ingenio argues that the error was harmless.  In particular, if you look at the estoppel statute, it appears to apply only to claims that were part of the inter partes review.  Although claim 27 had been challenged in the petition, it never became part of the inter partes review itself and was not subject to a final written decision.   On appeal though the Federal Circuit concluded that claim 27 was only missing from the IPR because of a deliberate choice by Ingenio in failing to seek remaind post-SAS.

The fact that the Board, due to a legal error corrected by SAS, failed to include claim 27 in its final written decision does not absolve Ingenio of the estoppel triggered by its choice to challenge claim 27 at the Board. . . . [Under SAS], the scope of the IPR as defined in the petition included claim 27. . . . Ingenio’s choice to leave unremedied the Board’s mistake does not shield it from estoppel as to a claim it included in its IPR petition.

Slip Op.  I mentioned that Ingenio made a strategic decision to not request remand following SAS to remedy the partial institution.  In its brief, Ingenio explains that it was concerned that the PTAB would have denied the entire petition–thus undermining all the work that it had completed in the process. “It is equally likely the
PTAB would have rejected the entire petition instead of instituting the entire petition in the post-SAS world.” Ingenio Brief.  The Federal Circuit’s response–tough cookies.  You make your choices and get the results.

The court identifies this case as a unique situation resulting from an intervening Supreme Court decision.  But I would also recognize it as a broader statement from the court on the scope of estoppel and what a petitioner “reasonably” can do.  Summary judgment of invalidity reversed.  Here in particular, the scope now includes legal or procedural steps that could have been made.

= = = = =

Changing focus post-IPR: The infringement litigation was filed back in 2012 and later that year Ingenio submitted its infringement contentions listing the particular claims being asserted.  Ingenio subsequently filed its IPR petition in 2013 challenging all of the asserted claims.  At that point, the district court stayed litigation until the IPR concluded in 2020.  In the first joint-status report the parties made a joint statement that the patentee “intends to proceed with litigation of the asserted claims not affected by the Inter Partes Review proceedings: specifically, claims 24, 27, and 28.”  In its statement to the court, the defendant indicated its intent to challenge the validity of those claims, but did not object to the fact that claims 24 and 28 had not been one of the claims originally asserted in the infringement contentions.

The Magistrate Judge Hightower refused to permit the patentee to change its infringement contentions despite the changes that took place during the proceeding seven years where the case had been stayed.  Without analysis, the court simply wrote that “Click-to-Call has not provided good cause for leave to amend nearly eight years after its original selection of claims for trial.”  Judge Yeakel then adopted the Magistrate Judge’s recommendations.   On appeal, the Federal Circuit affirmed — finding no abuse of discretion.  On this point, the district court had noted that it issued a stay because the IPR would likely simply the case for trial since “all but one of the claims to be asserted at trial” were being reviewed in the IPR.   On appeal, the court concluded that the district court’s approach from the beginning to narrow issues for trial and “did not envision adding other claims to the case following the IPR.” The appellate court also suggested that at some point during the six-year delay Click to Call should have indicated its plans to amend.  Of course, during that time of the case being stayed, the district court was not permitting or considering any procedural motions of this type. The court also noted the magistrate judge’s terse analysis, but found it appropriate given that Click-to-Call had only put “minimal effort” into making the argument in the first place.

Refusal to permit amendments to the infringement contentions affirmed on appeal.

= =

Panel: Stoll, Schall, and Cunningham
Decision by: Stoll
Attorneys: Dan Shih (Susman Godfrey) for plaintiff-appellant (along with Brian Melton & Max Tribble); Amanda Brouillette (Kilpatrick) for defendant-appellee (along with Clay Holloway and Mitch Stockwell).

12 thoughts on “Scope of IPR Estoppel: Reasonable Procedural Steps

  1. 5

    If anyone is still advising defendants to “save for the jury”, rather than using in an IPR, invalidity arguments based on prior patents, they should perhaps read the recent J. Albright W.D. TX Waco decision hot-linked on Gene’s blog today. Albright had thrown out some of the defendants trial invalidity evidence as insufficient for any jury verdict even before it even got to the jury to decide! Somewhat unusual but not a bad idea for trial simplification if it survives an appeal? [This was indicated in a post-trial decision on requested attorney fees and enhanced damages.]

  2. 4

    I think this is the wrong outcome. When a judge proceeds on a matter based on their own good-faith interpretation of an ambiguous statute- proven so by a later change in that very law- and arrives at a finding otherwise supported by the facts, that finding should not simply be erased.

    The public is now subject to a patent claim that should be invalid. That is not a good outcome.

    1. 4.1

      marty – ever hear of “The Ends do not justify the Means?”

      It is a rather important concept – especially in (the terrain of) law.

    2. 4.2

      Not really clear whether the public is subject to that claim. The public is still free to challenge that claim on the same basis that the court applied. The defendant is subject to that claim, but the defendant made that choice with its eyes open.

      1. 4.2.1

        Gregg if you can read my recent FB Post with no problem. Make sure you read the whole post.

    3. 4.3

      I agree Martin if you are speaking about bringing a slew of crimes into the light. A Judge should follow the law not make it because he is working both angles

  3. 3

    Yes Greg, as shown here, broader IPR estoppel can greatly reduce the number of claims in suit, greatly simplifying infringement issues and substantially reducing the number of prior art issues that can be raised as to claims surviving the IPR. Which can also lead to greatly reduced discovery burdens, more settlements, and more summary judgments of non-infringement of the surviving [narrower] claims.

    1. 3.1

      But another aspect of this case is also important. Approving not letting a patent owner mislead the defendant and the Court by asserting previously unasserted claims long after the lawsuit was filed, too late to directly challenge them in the IPR.

      1. 3.1.1

        Right. That is what I was discussing in my second paragraph. The district court was right not to let the patentee amend to bring additional claims into the suit.

  4. 2

    Thanks for noting that this W.D. TX was by Judge Yeakel [not Judge Albright] which explains the grant of the stay for an IPR.

  5. 1

    Anything that puts more teeth in the estoppel provisions is a move in the right direction. The original CAFC approach to the estoppel provisions was far too weak.

    Meanwhile, the court was right to deny the motion to amend the infringement contentions. A jury trial drags honest citizens away from their daily lives—citizens who have done nothing to merit this disruption. Some matters are important enough to impose this burden on the innocent, but we should not impose it lightly. One should invoke a jury trial only for serious and important issues, with an eye toward making the jury’s time commitment as short as possible consistent with due concerns of justice. The point of pre-trial activity is to focus the issues critical enough to merit the jury’s attention. Adding more claims into the mix years into the process is a move in the wrong direction.

    1. 1.1

      +1 Greg. All valid points.

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