United States: How SAS Expands Scope Of Inter Partes Review Estoppel

The possibility of estoppel is an important consideration for a defendant in a patent infringement action in deciding whether or not to file an inter partes review petition. Indeed, it is well-known that upon issuance of a final written decision, the petitioner "may not assert in a civil action that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review."1 Two Federal Circuit decisions—Shaw and HP—had (temporarily) blunted the impact of this seemingly broad estoppel provision by determining that noninstituted grounds in an IPR petition are not subject to estoppel.2 While at least one district court has limited Shaw and HP to their facts and exempted only grounds that were not instituted for procedural reasons (such as redundancy), other district courts have exempted all noninstituted grounds from estoppel irrespective of the reason for noninstitution.3

The Shaw and HP decisions led many petitioners to present multiple unpatentability grounds in their IPR petitions (sometimes filing multiple petitions and/or devoting less argument to some grounds), with the expectation and even hope that some grounds are denied institution and thereby preserved against estoppel. The U.S. Supreme Court's recent SAS Institute Inc. v. Iancu decision, however, has dealt a sharp blow to this strategy by eliminating partial IPR institution.4 In SAS, the majority opinion held that if IPR is instituted at all, it "must address every claim the petitioner has challenged."5

Soon after the SAS decision, the Patent Trial and Appeal Board issued guidance that "if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition."6 In a recent decision, the Federal Circuit endorsed the PTAB's implementation of the SAS mandate and found that SAS supports "[e]qual treatment of claims and grounds for institution purposes."7 Thus, under SAS, IPR proceedings can no longer have noninstituted grounds—the PTAB will either institute on all claims and all grounds or deny institution altogether. This all-or-nothing approach to IPR institution will cause petitioners to face the full reach of estoppel under Section 315(e)(2). No longer will petitioners be able to pursue noninstituted grounds in litigation following an unsuccessful IPR trial. Put another way, if trial is instituted, then every ground raised in the petition (and potentially everything that "reasonably could have [been] raised") is likely to become unavailable in litigation.

Prior Art Invalidity Grounds Available in Litigation After Trigger of Estoppel

Without the possibility of partial institution, the impact of Shaw and HP on estoppel has faded. Under the all-or-nothing approach of SAS, as interpreted by the PTAB and the Federal Circuit in PGS, if an IPR trial is not instituted, there will be no final written decision and therefore no estoppel in district court. However, if institution is denied on the merits under the PTAB's less stringent "reasonable likelihood of success" standard and that information is allowed to come before the jury, then petitioner may face an uphill battle in proving invalidity using the same grounds under the district court's "clear and convincing" standard.

On the other hand, if trial is instituted but one or more claims are later found not unpatentable, then the only prior art-based invalidity grounds that will remain available in district court are: (1) grounds based on prior art devices or systems, and (2) nonpetitioned grounds that reasonably could not have been raised in the IPR petition.

Invalidity Grounds Based on Prior Art Devices Are Exempt from Estoppel

Indeed, the safest course for petitioner-defendant in district court is to rely on invalidity grounds based on prior use/sale of physical products or systems because IPR petitions can only be based on patents or printed publications.8

The issue of whether estoppel applies to prior art devices was specifically addressed in Star Envirotech Inc. v. Redline Detection LLC.9 There, the petitioner's invalidity contentions in the district court included grounds that combined a physical machine with six prior art references that had been asserted in the IPR proceeding.10 The patentee contended that the petitioner should be estopped from relying on the physical machine as part of its invalidity contentions because petitioner could have raised the machine's instruction manual in the IPR proceeding.11 The district court disagreed and found that the physical machine embodied claimed features that were not disclosed in the instruction manual, that the machine was "a superior and separate reference," and that the obviousness combinations using the machine were not estopped.12 The Star Envirotech decision suggests that physical machines/systems could be used alone, or in combination with prior art patents or printed publications asserted in an IPR, to create new grounds of invalidity that could not have been statutorily raised in the IPR. Likewise, courts may allow invalidity grounds that combine prior art asserted in an IPR with patents or printed publications that were reasonably not available prior to the filing of the IPR.

Metes and Bounds of Estoppel Under the "Reasonably Could Have Raised" Provision

With no guidance yet from the Federal Circuit on the meaning and scope of the "reasonably could have raised" phrase in Section 315(e)(2), district courts are interpreting it in two divergent ways. A first reading of this statutory provision is that "[i]f a party does not include an invalidity ground in its petition that it reasonably could have included, it necessarily has not raised a ground that it 'reasonably could have raised during ... IPR.'"13 Indeed, many district courts are following this broader and more restrictive interpretation of Section 315(e)(2) and applying estoppel to grounds that petitioner reasonably could have included in its petition.14

In contrast, some district courts are interpreting the "reasonably could have raised" language narrowly and only estopping grounds that were raised in the IPR petition and instituted, and not estopping nonpetitioned grounds.15

Critics of the latter interpretation of "reasonably could have raised" have argued that exempting nonpetitioned grounds from estoppel would render this IPR provision "essentially meaningless"16 and "undermine[] the purported efficiency of IPR"17 because it would allow a defendant who chooses to pursue the IPR option "to hold a second-string invalidity case in reserve in case the IPR does not go defendant's way."18 Even so, until the Federal Circuit resolves this inconsistency between the districts court decisions, parties will continue to advocate for the two different readings of Section 315(e)(2) depending on whichever reading suits their litigation strategy.

Applying "Reasonably Could Have Raised" Provision to Nonpetitioned Grounds

Whether estoppel applies to nonpetitioned grounds is hardly a binary choice — district courts have to further resolve the issue of whether petitioner reasonably could have included the nopetitioned grounds in its IPR petition. District courts that have applied estoppel to nonpetitioned grounds have provided valuable guidance on determining what prior art references were reasonably available when the IPR petition was filed. Clearlamp, for example, states that estoppel includes "any ground that could have been raised based on prior art that could have been found by a skilled searcher's diligent search"19 Other district courts have followed Clearlamp's approach to nonpetitioned grounds.20

The court in Clearlamp further explained that exemption from estoppel applies even if the prior art in question is cumulative of prior art raised in the IPR because "[t]he relevant inquiry ... is not whether the ground is redundant of a ground that was asserted but, rather, whether the ground reasonably could have been raised."21 Additionally, the Clearlamp court made clear that the party urging estoppel (generally the plaintiff/patent owner) bore the burden of showing that a skilled searcher would reasonably have found the prior art reference in question with a diligent search.22 Thus, ultimately, the patent owner is responsible for establishing in district court that the petitioner should be estopped from relying on certain prior art references because they were either available to petitioner prior to petitioning the PTAB, or would have been reasonably found by a diligent searcher.23

The full impact of SAS on estoppel remains to be seen, but recent developments from the PTAB and the Federal Circuit make clear that petitioners have lost the opportunity to preserve some "back pocket" invalidity arguments following an unsuccessful IPR trial. The SAS "all or nothing" approach, as interpreted by the PTAB and the Federal Circuit in PGS, expands the scope of estoppel by eliminating partial institution, thereby blocking petitioners from relying on noninstituted grounds (which would have been exempt from estoppel) in district court. From here on out, only invalidity grounds based on prior art devices/systems and nonpetitioned grounds that "reasonably could not have [been] raised" in the petition can be relied on in district court to prove invalidity of a patent that has survived an IPR trial.


1 35 U.S.C. § 315(e)(2).

2 Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016), cert. denied, 137 S. Ct. 374 (2016) ("Shaw did not raise—nor could it have reasonably raised—the [noninstituted] ground during the IPR. The plain language of the statute prohibits the application of estoppel under these circumstances."); HP Inc. v. MPHJ Tech. Inv., LLC, 817 F.3d 1339, 1347-48 (Fed. Cir. 2016) (citing Shaw, and finding that the noninstituted grounds were not estopped because they were not raised and could not be raised in the IPR because review was denied as to those grounds).

3 Compare Biscotti Inc. v. Microsoft Corp., No. 2:13-CV-01015-JRG-RSP, 2017 WL 2526231, *7 (E.D. Tex. May 11, 2017) (exempting only those grounds that were denied institution due to redundancy or other procedural reason), with, e.g., Douglas Dynamics, LLC v. Meyer Prods. LLC, No. 14-cv-886-jdp, 2017 WL 1382556, *5 (W.D. Wis. Apr. 18, 2017) (exempting grounds denied institution on the merits).

4 SAS Institute, Inc. v. Iancu,138 S.Ct. 1348 (2018).

Id. at 1354, 1359-60.

6 PTAB, Guidance on the Impact of SAS on AIA Trial Proceedings, released April 26, 2018.

7 PGS Geophysical AS v. Iancu, No. 2016-2470, slip op., 7-8 (Fed. Cir. June 7, 2018).

8 See 35 U.S.C. § 311(b) (limiting the scope of IPRs to unpatentability grounds based on "section 102 or 103 and only on the basis of prior art consisting of patents or printed publications."); see also Douglas, 2017 WL 1382556, at *1, n.1 ("IPR is available only for validity challenges based on patents and printed publications. So § 315(e) estoppel will have no effect on validity challenges based on other types of prior art.").

9 Star Envirotech, Inc. v. Redline Detection, LLC, No. SACV 12-cv-01861 JGB (DFMx), 2015 WL 4744394, *3-4 (C. D. Cal. January 29, 2015).

10 Id.

11 Id. at *4.

12 Id.

13 Oil-Dri Corp. of America v. Nestle Purina Petcare Co., No. 15-cv-1067, 2017 WL 3278915, *8 (N. D. Ill August 2, 2017) (citing § 315(e)(2)).

14 See, e.g., Cobalt Boats, LLC v. Sea Ray Boats, Inc., No. 2:15-cv-21, 2017 WL 2605977, *3 (E.D. Va. June 5, 2017) (noting a split in interpretation of Shaw, but concluding that "[t]he Court adopts the narrow reading of Shaw and FINDS that estoppel applies to grounds that the petitioner raised at the IPR itself and could have raised in the IPR petition or at the IPR itself."); see also Douglas 2017 WL 1382556, at *4 (applying estoppel to nonpetitioned grounds that the defendant chose not to present in its IPR petition).

15 See, e.g., Intellectual Ventures I LLC v. Toshiba Corp., 221 F.Supp.3d 534, 553-54 (D. Del. Dec. 19, 2016) (finding that under the Federal Circuit's Shaw decision, the defendant was not estopped from presenting new invalidity grounds based on publicly available prior art that the defendant could have raised in its IPR petition but did not do so); see also Finjan, Inc. v. Blue Coat Systems, LLC, 283 F.Supp.3d 839, 856-57 (N. D. Cal. July 28, 2017) (defendant was not estopped from pursing any of its invalidity contentions in the district court because none of the IPRs were instituted on those precise combinations).

16 Cobalt Boats, 2017 WL 2605977, at *3.

17 Douglas, 2017 WL 1382556, at *4.

18 Id.

19 Clearlamp, LLC v. LKQ Corp., 12-c-2533, 2016 WL 4734389, *8 (N.D.Ill. March 18, 2016).

20 See, e.g., Douglas, 2017 WL 1382556, at *5 (finding that estoppel applies to grounds not asserted in the IPR petition "so long as they are based on prior art that could have been found by a skilled searcher's diligent search."); Biscotti, 2017 WL 2526231, at *7 (estopping petitioner from presenting patents and printed publications at trial that a "skilled searcher conducting a diligent search reasonably could have been expected to discover").

21 Clearlamp, 2016 WL 4734389, at *8.

22 Id. at *9; see also Oil-Dri, 2017 WL 3278915, at *9 (citing Clearlamp, and noting that plaintiff Oil-Dri bore "the burden of establishing estoppel.").

23 See, e.g., Milwaukee Elec. Tool Corp. v. Snap-On Inc., 271 F.Supp.3d 990, 1032-33 (E. D. Wis. Sept. 22, 2017) (estopping prior art references that petitioner possessed before filing the IPR petition or were shown to be found by plaintiffs' searchers, but exempting other references because plaintiffs either produced no evidence of whether a diligent searcher could have located them or admitted those references were not found).

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