Race to the Finish: Timing Battles in Parallel IPR and District Court Litigation

by Dennis Crouch

The new petition for certiorari filed by Liquidia raises some interesting questions about the ongoing race between inter partes review proceedings and district court litigation.  Liquidia Techs v. United Therapeutics Corp., 23-804 (US), on petition for writ of certiorari from United Therapeutics Corp. v. Liquidia Techs., Inc., 74 F.4th 1360 (Fed. Cir. 2023).

UTC won its infringement suit against Liquidia with a holding that its patent covering treprostinil administration by inhalation were valid and infringed. (US10716793).  While the appeal was pending, the PTAB sided against the patentee and found the claims unpatentable as obvious.  In the appeal, however, the Federal Circuit refused to give credence to the PTAB decision – finding that litigation was still “pending” and “non-final.” The claims had not actually been cancelled yet – since the Director only issues the certificate confirming unpatentability after any appeal. Further, the Federal Circuit concluded that IPR decisions do not have issue-preclusive (collateral estoppel) effect until the decision is affirmed on appeal, or the parties waive their right to appeal. Citing XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1294 (Fed. Cir. 2018).

Liquidia’s petition argues that the PTAB’s final-written decision should be given preclusive effect in parallel litigation even if an appeal is pending, just like would be done for a district court opinion.

The question reads as follows:

Under the Leahy-Smith America Invents Act (“AIA”), a party may challenge the validity of a patent in an inter partes review proceeding before the Patent Trial and Appeal Board (“PTAB”) and obtain a decision regarding the patent’s validity. In this case, the PTAB issued a final written decision holding that a patent held by Respondent United Therapeutics, Inc. (“UTC”) was invalid. Subsequently, however, the Federal Circuit held that Petitioner Liquidia Technologies, Inc. (“Liquidia”) was liable for induced infringement of the same patent, notwithstanding the PTAB’s invalidity determination. In the Federal Circuit’s view, the PTAB’s decision had “no impact” on this infringement litigation, primarily because the PTAB’s decision was pending on appeal. The questions presented are:

1. Whether a party may be liable for induced patent infringement when the PTAB has already issued a final written decision determining that the same patent is invalid.

2. Whether a final written decision of the PTAB remains preclusive while it is pending on appeal.

Liquidia Petition for Writ of Certiorari.

The following are some of the key bases of for the argument:

  1. Restatement (Second) of Judgments § 13 cmt. f (1982).  A district court’s judgment that is “otherwise final remains so despite the taking of an appeal.”  The idea here is that a district court final judgment can have preclusive effect even while an appeal is pending.
  2. B & B Hardware Inc. v. Hargis Industries, Inc., 575 U.S. 138 (2015).  “[C]ourts may take it as given that Congress has legislated with the expectation that the principle of issue preclusion will apply [in the administrative context] except when a statutory purpose to the contrary is evident.”
  3. Commil USA, LLC v. Cisco Systems, Inc., 575 U.S. 632 (2015).  In this case, the court offered several avenues for an a defendant with a good-faith belief that a patent is invalid to actually avoid liability.  One of those avenues is to file an IPR and “receive a decision as to validity.”  The Court explained that “If the defendant is successful, he will be immune from liability.”
  4. Astoria Federal Savings & Loan Ass’n v. Solimino, 501 U.S. 104 (1991) “[A]dministrative estoppel is favored as a matter of general policy.” This provides a longer history to the B&B Hardware precedent as does Deposit Bank of Frankfort v. Bd. of Councilmen of City of Frankfort, 191 U.S. 499 (1903).

The Federal Circuit’s decision here does appear wrong — to entirely reject the potential for collateral estoppel flowing from a PTAB final written decision.  Issue preclusion is flexible and must always consider fairness and justice, but the court should consider those before simply rejecting the notion.

Petitioner’s brief was filed by Kathleen Harnett along with her team from  Cooley. The Patentee’s brief is not due until February 26, 2024.

= = =

Meanwhile, the IPR siding against the patentee was recently affirmed by the Federal Circuit, but the patentee is petitioning for en banc rehearing. This means that the claims still have not actually been cancelled since the Director will only issue the cancellation certificate once the appeal is complete.  Throughout this process, the parties have played an extended game of timing, with the patentee wanting the district court case to move more quickly, while the defendant pushed for a quicker decision in the IPR.

 

45 thoughts on “Race to the Finish: Timing Battles in Parallel IPR and District Court Litigation

  1. 6

    Blonder Tongue provides several conditions where collateral estoppel is limited. Many or most of these conditions are met in PTAB proceeding.

    [1] the requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most significant safeguard.
    [2] we should keep firmly in mind that we are considering the situation where the patentee was plaintiff in the prior suit and chose to litigate at that time and place.
    [3] the patentee-plaintiff must be permitted to demonstrate, if he can, that he did not have a fair opportunity procedurally, substantively and evidentially to pursue his claim the first time.
    [4] certain other factors immediately emerge. For example, if the issue is nonobviousness, appropriate inquiries would be whether the first validity determination purported to employ the standards announced in Graham v. John Deere Co.
    [5] whether…the prior case was one of those relatively rare instances where the courts wholly failed to grasp the technical subject matter and issues in suit
    [6] whether without fault of his own the patentee was deprived of crucial evidence or witnesses in the first litigation.
    [7] as so often is the case, no one set of facts, no one collection of words or phrases, will provide an automatic formula for proper rulings on estoppel pleas. In the end, decision will necessarily rest on the trial courts sense of justice and equity.
    [8] Res judicata and collateral estoppel are affirmative defenses that must be pleaded. Fed.Rules Civ.Proc. 8(c)

    1. 6.1

      note the last paragraph of 2.1

      1. 6.1.1

        Yes, I am familiar with the Fresenius “your patent never existed holding”. It’s absurd. PTAB determinations of unpatentability are just the USPTO changing its mind. They can’t undo the existence of the patent.

        1. 6.1.1.1

          Worth exploring in view of the meaning of a patent grant and the creation of expectation value — especially in any view of FranchisOR to FranchisEE relations of the type of personal property of a “Public Franchise.”

  2. 5

    So, “The Prophet” or MM can’t refute my actual arguments. His response is to make up imaginary arguments he hopes I will make. Sad.

    1. 5.1

      As you first pointed out – that is how he has acted on this blog I>from the very beginning.

    2. 5.2

      Nothing “imaginary” about “the argument” which flows from the exact same fetid, diseased well as your other commonly deployed “arguments”. I couldn’t make your “arguments” up if I tried.

      Anyway, the clock is running. I’ll give you a couple months.

      1. 5.2.1

        Nothing “imaginary” about an argument that has never existed, based solely on future projections of Malcolm’s suppositions, based in the
        H
        @
        T
        R
        E
        D
        of Malcom’s cognitive dissonance…

        And he wonders why only freakazoids glom onto him and find “humor” in his spiel.

        ¯\_(ツ)_/¯

        1. 5.2.1.1

          +1 Just bizarre. Not imaginary but doesn’t exist.

          1. 5.2.1.1.1

            … he of the “MUST have singular objective structure”….

  3. 4

    While justice delayed is justice denied, it cannot — must not — be dependent on who gets to the finish line first.

    Congress should — indeed must — put an end to these sprints.

    Doing so by insuring that America’s real courts take precedence over the off-the-rails, innovation-killing, constitution-usurping PTAB.

  4. 3

    OT but let’s start the countdown to see how long before Night Wiper starts blaming Taylor Swift for the “weakened” US patent system.

    1. 3.1

      He’s a liberal D you know. And anon is a centrist.

      Lulz

      1. 3.1.1

        In Malcolm’s haze of a brain, Bernie Sanders is a centrist.

        1. 3.1.1.1

          UD – it’s called an Overton Window shift.

          Gaslight long enough, and the lemmings will herd themselves over the cliff.

      2. 3.1.2

        Please Pardon Potential re(P)eat

        Your comment is awaiting moderation.

        January 30, 2024 at 4:31 pm

        Smelly and P00py – both Sprint Left so quickly they left their brains behind.

        Wait – maybe you can put them back in and develop your own thoughts as to the Israel/Hamas mess.

        Yeah, that’s what I thought.

        1. 3.1.2.1

          Crickets from the Sprint Left.

        2. 3.1.2.2

          This X post shows the change in political ideology over time. Professionals skewed almost completely left. Blue collar is more balanced, but skewed left as well. No one remains in the middle.

          link to x.com

          1. 3.1.2.2.1

            Plenty in the middle.

            Polarization certainly occurred – no one is stating otherwise.

    2. 3.2

      JOHN DOLL has been dead a long time. You just can’t fire Schoonover and then cover up everything. You can’t.

    3. 3.3

      If you really think you absolutely MUST go onto a comments section of a blog post and start your “comment” with “OT but…”, just don’t.

      1. 3.3.1

        Starting the countdown was necessary. Tomorrow we’ll begin the betting phase.

        1. 3.3.1.1

          Necessary to you?

          1. 3.3.1.1.1

            Just watch and enjoy the laughs at the expense of rightwing Neanderthals everywhere, but especially in the south where the strip mall zombies worship their scripts almost as much as their popguns.

            1. 3.3.1.1.1.1

              I live in the south. I get plenty of entertainment, but usually my laughter turns to pity and despair for my state and our country.

              1. 3.3.1.1.1.1.1

                You are definitely in Malcolm’s ‘one-bucket.’

    4. 3.4

      T swift is a pretty big challenge for the patent system let’s be honest. But MM, before NWPA gets to that can you tell us how glad you are that your good uncle president Hassan is our president and how near and dear somalia is to your heart and how your reps always think about it?

      link to youtube.com

      1. 3.4.1

        The individual is anathema to identity politics.

        Note how fast the Sprint Left run away when asked about the Israel/Hamas fiasco.

        1. 3.4.1.1

          “Note how fast the Sprint Left run away when asked about the Israel/Hamas fiasco.”

          Not sure I’d say that, they seem to be all anti-israel (anti colonialist). But yeah it really is a fiasco.

          1. 3.4.1.1.1

            Please Pardon Potential re(P)eat…

            Your comment is awaiting moderation.

            February 1, 2024 at 1:35 pm

            Well, certainly NOT all.

            You should be aware that MANY in the “lawyer profession” are all of a sudden getting VERY upset at the likes of Ivy League presidents.

            As you may have missed, I provided Wt a link showing the ideological leanings of our profession.

            A whopping 5% leaned Right of Center on social hot button issues.

            Methinks the reason for the silence is that our cohort of Sprint Lefts on this blog work in firms that have come out on the ‘defend ourselves – never again’ Israel side of the fiasco.

            1. 3.4.1.1.1.1

              “You should be aware that MANY in the “lawyer profession” are all of a sudden getting VERY upset at the likes of Ivy League presidents.”

              Glad to hear that the eggheads are finally coming down from their ivory towers a skosh. Doubt it’ll cure them entirely though. Their desire for virtue and to be seen as paragons of virtue etc. will be too strong.

              “Methinks the reason for the silence is that our cohort of Sprint Lefts on this blog work in firms that have come out on the ‘defend ourselves – never again’ Israel side of the fiasco.”

              I wouldn’t doubt it, they’re boomers. Or boomers in spirit.

    5. 3.5

      She was very upset when her music catalog was bought in 2019 by someone with some connection to Soros money. Quite upset. Soros likes to destroy countries.

      1. 3.5.1

        Yes, the dreaded and evil “Soros”. The destroyer of countries, devourer of worlds, devastator of entire galaxies, but otherwise a nice guy!

        1. 3.5.1.1

          At what point does this “nice guy!” thing occur?

          Serious question.

        2. 3.5.1.2

          I am not sure what the point of your sarcasm is here.

          But, I should have said “destroyer of economies of countries.” I suggest you look up what Britannica has to say about him. England, Thailand, Malaysia, and France have all accused him.

          1. 3.5.1.2.1

            …as has the US.

            (and not just from any notion of Right of Center)

  5. 2

    The possibility of a patent suit trial deciding validity before an IPR deciding invalidity has been argued about for a long time. But it was not supposed to normally occur, and rarely does occur. Few District Courts insist on using their valuable time to conduct a fast full trial on all possible infringement and invalidity issues when an IPR [with its short deadlines and much lower costs] is pending that could eliminate all that work and cost for the court and both parties.
    So the interesting question, asked above but not answered, is how was the trial fully conducted before the IPR was over in this Liquidia Techs case?

    1. 2.1

      IPR delay opportunities are restricted by 35 USC 315(b) “.. An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. .. ” Also, by the limited times allowed for conducting the IPR and its respective defined stages, and the rarity of significant IPR time extensions, as compared to the time for District Court to conduct a full blown trial and decide post-trial motions. Even if the District Court judge is one that will not grant trial-stays for IPRs.
      BTW, irrespective of the outcome of this unusual case, the IPR decision [once appeals are exhausted] will cause statutory in rem elimination of those claims held invalid as to any other infringers, not just issue preclusion. A good reason to make this case of less interest to the Sup. Ct. if cert is attempted by either party.

    2. 2.2

      Liquidia’s first motion to stay the Delaware case due to anything regarding the PTAB (props to Judge Richard Andrews for the promptness of docket!!) wasn’t even filed until four months AFTER the bench trial was completed. 19 month after the IPR petition was filed. Looks to me (non-lawyer) like if Liquidia ends up having to pay the damages awarded by the DC, they’d have a really good case for mal-practice. Liquidia also took seven months to file their IPR after the initial filing of the DC litigation.

      As I said, non-lawyer here, but even I know that you file for a stay after the IPR is filed, once it is accepted, and once there is a FWR (Liquidia waited a month for that even though the PTAB was up against its statutory deadline. The motion to stay should have already been written). And if the judge doesn’t grumble too much several more times in between.

      I’m sure that with “justice is denied when justice is delayed” and the built in mechanisms for delay to our present system Liquidia will not pay a dime, but dang it’s a lot closer than it should be.

      1. 2.2.1

        Not verified, but interesting if true.

      2. 2.2.2

        Thanks, I never head of not asking for a trial stay for an IPR that late relative to both the trial date and the IPR filing date. I would guess that having a bench trial rather than a jury trial might have speeded up the trial? Your info is confirming the abnormality of this situation.

    3. 2.3

      So hold the claimant under water for 2 minutes and if they survive give them a real trial.

  6. 1

    “ the PTAB issued a final written decision holding that a patent held by Respondent United Therapeutics, Inc. (“UTC”) was invalid. Subsequently, however, the
    Federal Circuit held that Petitioner Liquidia Technologies, Inc. (“Liquidia”) was liable for induced infringement of the same patent, notwithstanding the PTAB’s invalidity determination.”

    Given that both the validity and the “liability” issue are both being appealed, what is the present practical effect of the liability finding on the defendant? I assume that if the en banc CAFC reverses the PTAB’s invalidity finding that the invalidity issue (at least)
    will end up at the Supreme Court …

    1. 1.1

      anon read my recent FB posting. The two letters I received explain my mail problems. And I think the one still rolling around near Waltham will be delivered as soon as he realizes I know being a mailman has it’s own shsll we say benefits … NOT.

Leave a Reply

Your email address will not be published. Required fields are marked *

You can click here to Subscribe without commenting

Add a picture