by Dennis Crouch
Issue preclusion (also called collateral estoppel) prevents parties from relitigating issues already decided in prior proceedings. To apply issue preclusion, courts generally require: (1) the issue was actually litigated and decided in the prior proceeding; (2) the determination was essential to the judgment; (3) the party against whom preclusion is asserted had a full and fair opportunity to litigate; and (4) the party against whom preclusion is asserted was a party (or in privity) in the prior proceeding. Issue preclusion can sometimes dispose of an entire case, but it can also apply more narrowly — operating to prevent relitigation of any individual issue of law or fact that was already resolved in a prior proceeding.
Issue preclusion has the potential of arising often in patent cases — especially because most patent cases these days involve two different proceedings (1) the IPR; followed by (2) the district court litigation.
A key way this comes up is when an IPR cancels several claims, but then the patentee subsequently amends the lawsuit to assert other claims that are similar but not identical to those cancelled. An example here might be that the cancelled claim involved elements A, B, C, and D; and the newly asserted claim covers A, B, C, and Δ. The accused infringer would hope to invoke issue preclusion, arguing that it is a settled fact that the prior art teach A, B, C, and D, leaving only the question of whether the Δ modification is obvious.
But, the Federal Circuit has generally prohibited this approach because in IPRs facts are are decided under the lower preponderance-of-the-evidence standard while invalidating a patent in court requires the higher clear-and-convincing standard for invalidity. In issue preclusion lingo, this means that the IPR decision is not the same issue being decided in litigation. The court has addressed this issue in some prior cases, including ParkerVision, Inc. v. Qualcomm Inc., 116 F.4th 1345 (Fed. Cir. 2024), and Kroy IP Holdings, LLC v. Groupon, Inc., 127 F.4th 1376 (Fed. Cir. 2025).
The court’s newest decision makes clear the broad scope of the rule:
Fact findings made under a lower standard of proof do not have issue-preclusive effect in proceedings in which facts must be proven under a higher standard of proof.
Inland Diamond Products Co. v. Cherry Optical Inc., No. 24-1106, slip op. at 6 (Fed. Cir. Oct. 15, 2025). In the case, Cherry Optical wanted the district court to treat as established the PTAB’s findings that certain claim elements were taught or suggested by the prior art. But, the Federal Circuit held that those prior-art and obviousness-related facts were established only under the PTAB’s preponderance standard, and thus could not be imported into district-court litigation, where clear and convincing evidence governs.
Notice here that we have some wiggle room around the fact/law divide. The court’s broad quote applies to “fact finding” because the differing burdens between IPR/Court only apply to factual conclusions, not legal conclusions.
Take claim construction, for instance, which is generally a question of law. In the case, the court used different reasoning for barring issue preclusion – at the time, the PTAB applied the broadest reasonable interpretation” (BRI) standard, while district courts apply the Phillips framework. The Federal Circuit explained that preclusion was inappropriate not because of any difference in evidentiary burden, but because the governing legal standard itself was different. Of course, today the PTAB applies the Phillips framework for IPRs and so this distinction would no longer apply. What this means is – in my view IPR claim construction could create issue preclusions in later district court litigation (assuming no underlying issues of fact were at issue).
Note here that my speculation regarding collateral estoppel for pure legal issues is just that – speculation. None of the decisions directly confront this issue. And, many “legal” questions in patent law are inextricably mixed with factual findings and so this law/fact distinction would simply not apply. A keen example of this is obviousness that ultimately is a question of law although based upon extensive factual findings.
Distinguishing Prior Precedent: The XY Exception
In Island D, the Federal Circuit distinguished its earlier decision in XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282 (Fed. Cir. 2018), which had allowed issue preclusion to bar assertion of claims that had been finally adjudicated as invalid through Federal Circuit appeal. The court explained that XY “involved a different situation,” namely, the application of issue preclusion to bar assertion of a patent claim that had been determined invalid or unpatentable through appeals to the Federal Circuit.
The distinction is critical. Once the Federal Circuit has affirmed the invalidity of a claim, that claim “no longer exists and cannot be asserted as a basis for infringement.” In such circumstances, there is nothing left to litigate. The claim has been finally determined to be invalid and cannot serve as a basis for any infringement action. By contrast, in Inland Diamond, as in ParkerVision, the Federal Circuit was addressing claims that had not been cancelled in the IPR.
The Irrelevance of IPR Survival
Some of the claims challenged in litigation had survived the IPR unpatentability challenge. This creates estoppel under 35 U.S.C. § 315(e), but at times, the patentee may also want to claim issue preclusion. On that point, the court included some stray language that I do not fully understand:
That the Asserted Claims happened to survive an unpatentability challenge (as opposed to, say, having never been challenged at all) is irrelevant to issue preclusion’s inapplicability to those claims in this district-court setting.
The point of this, I believe, was to clarify that the patentee’s right to litigate validity in district court does not depend on whether the claims were previously challenged. But, the quote could be misread to bar issue preclusion going the other way. Let me explain that – when a patentee wins and a claim is not-proven-invalid, that also creates potential issue preclusion. And, in that situation, the difference in standards should not be a problem. Effectively, if the challenger failed to prove invalidity with the lower standard, then it would also fail to prove invalidity at the higher standard. Note here that my example is the broad question of “invalidity,” but issue preclusion could apply to very narrow questions such as whether a particular reference teaches a particular limitation.