Issue preclusion, or collateral estoppel, is a doctrine that prevents a party from relitigating an issue in a proceeding if that issue was actually litigated and necessary to the judgment in an earlier proceeding. Collateral estoppel typically applies to patent claims if the issues of patentability are identical — e.g., same claims, same prior art.1
However, collateral estoppel is not limited to situations involving identical claims; instead, courts look at the underlying issues that were litigated and ultimately decided.
Estoppel generally, and collateral estoppel in particular, involving PTAB proceedings continues to evolve at the PTAB itself and across district courts.
As the Federal Circuit continues to weigh in on this area, we are starting to see brighter lines. Two recent cases addressing collateral estoppel illustrate this evolution. Both cases considered whether collateral estoppel should apply to factual findings on prior art from the PTAB in a later district court litigation.
The issue in both cases arose when a defendant sought to prohibit a patentee from introducing expert evidence proffered to show that a prior art reference failed to sufficiently disclose a claim element after the board, considering the same prior art reference, found that it did.
Centripetal
In January, in Centripetal Networks Inc. v. Palo Alto Networks Inc., the U.S. District Court for the Eastern District of Virginia applied collateral estoppel and excluded evidence from the patent owner's expert witness that contradicted the PTAB's findings regarding the same prior art.2 The court did so even though the petitioner in the inter partes review was different than the defendant in the litigation, and the two proceedings dealt with different, although related, patents.
Cisco Systems Inc. had filed an IPR petition in August 2018, challenging all claims of Centripetal Networks' U.S. Patent No. 9,560,077, which relates to protecting networks using packet security gateways armed with dynamic security policies.3 Cisco asserted two pieces of prior art relating to improvements to a network's infrastructure, and Centripetal, through its expert, proffered evidence and opinions rebutting the alleged teachings.
At final written decision in March 2020, the PTAB gave weight to Cisco's evidence, credited the prior art references with teaching specific claim elements, and found all claims unpatentable.4 On appeal, the Federal Circuit in June 2020 affirmed the PTAB's decision pursuant to Federal Circuit Rule 36.5
In a subsequent district court litigation, which led to the decision this year, Centripetal asserted patents related to the '077 patent against Palo Alto Networks. As part of its invalidity defense, Palo Alto Networks raised the same pieces of prior art that Cisco did against the '077 patent.6 Centripetal relied on the same expert to discuss the patents at issue and address the alleged teachings of prior art.
Because statutory estoppel did not apply — different patents, different petitioner/defendant — Palo Alto Networks sought to strike part of the expert's testimony that characterized the same prior at issue in the IPR via collateral estoppel. Palo Alto Networks contended that the expert's opinions on the prior art teachings proffered in the litigation contradicted the PTAB's factual findings on the same prior art in the IPR proceeding.7
Centripetal argued otherwise, emphasizing that PTAB factual findings should not have preclusive effect in district court due to the lower standard of proof for obviousness at the PTAB.
The court sided with Palo Alto Networks.8
First, the court noted that collateral estoppel can apply to PTAB proceedings. Second, the court reasoned that Palo Alto Networks did not assert issue preclusion on the question of obviousness, but rather for specific factual findings asserted by Centripetal's expert; and the PTAB decision was affirmed by the Federal Circuit on appeal. Third, the court held that the requirements for collateral estoppel — issue actually litigated and central to the judgment — were met, concluding:
Centripetal, having participated in the prior action before the PTAB, is now collaterally estopped from challenging the factual findings made there. While [the expert] can certainly opine that the prior art is not applicable to the claim limitations here, he may not opine that the prior art operates in a way that contradicts the PTAB's findings.9
After trial, both parties filed notices of appeal to the Federal Circuit last month.
While there are several issues on appeal in Centripetal, the Federal Circuit recently decided another case addressing a similar collateral estoppel issue.
ParkerVision
In the midst of two district court actions brought by ParkerVision Inc., Qualcomm Inc. filed multiple IPR petitions challenging various claims of ParkerVision's U.S. Patent No. 6,091,940 in August 2015.10 Relevant to the questions on appeal, the '940 patent included method and apparatus claims that shared certain limitations related to systems for frequency up-conversion.
In its final written decision in March 2017, the PTAB found the apparatus claims unpatentable in view of prior art, but did not find the method claims unpatentable.11 On appeal from the PTAB, the Federal Circuit affirmed both patentability decisions in September 2018.12
Once the district court action resumed in December 2018, ParkerVision offered expert testimony supporting the validity of the '940 patent method claims. Qualcomm sought to exclude ParkerVision's expert's testimony, arguing that collateral estoppel barred any attempt to contradict the PTAB's prior factual findings.13 In doing so, Qualcomm emphasized that the method claims at issue in the district court and the invalidated apparatus claims shared limitations that the PTAB found to be in the prior art at issue in both proceedings.
The district court granted Qualcomm's Daubert motion in March 2022, finding that the PTAB's invalidation of the apparatus claims prevented ParkerVision from "relitigating characteristics of the prior art reference on which Qualcomm's invalidity contentions rested."14
On appeal, in September of this year, the Federal Circuit directly addressed whether a factual finding "underlying an unpatentability decision in an IPR proceeding collaterally estops a patentee from making validity arguments regarding separate, related claims in district court litigation." And it held that it does not.15
The Federal Circuit noted that in the "IPR proceedings, Qualcomm's burden of proof was only a preponderance of the evidence" and "[a]ccordingly, Qualcomm proved the capabilities of the prior art apparatus" by this standard.16 However, in the district court, patents have a presumption of validity and "invalidity contentions must meet a higher burden: clear and convincing evidence."17 And ParkerVision remained able to proffer evidence, through its expert, on whether Qualcomm met that higher burden.18
On remand, ParkerVision could therefore use the previously excluded expert testimony to support the validity of the '940 claims.
Conclusion
While Centripetal suggests parties should be aware that factual underpinnings of invalidity decisions at the PTAB count as issues appropriate for collateral estoppel in district court litigation, the Federal Circuit has yet to hear arguments or rule on the appeal.
The Federal Circuit may decide, as it did earlier this fall in ParkerVision, that the higher evidentiary burden at the district court prevents the application of collateral estoppel arising from PTAB findings.
Footnotes
1. Finjan LLC v. SonicWall Inc. , 84 F.4th 963 (Fed. Cir. 2023).
2. Centripetal Networks LLC, v. Palo Alto Networks Inc., 2:21-cv-00137 (E.D. Va. Jan. 9, 2024).
3. U.S. Patent No. 9,560,077.
4. Cisco Systems, Inc. v. Centripetal Networks, Inc., No. IPR2018-01513 at 51 (P.T.A.B. Mar. 31, 2020).
5. Centripetal Networks LLC, v. Cisco Sys. Inc., No. 20-1885 (Fed. Cir. Jun. 11, 2020).
6. Centripetal Networks, LLC, 2:21-cv-00137 at 11-12. .
7. Id., at 11.
8. Id., at 13.
9. Id.
10. ParkerVision Inc. v. Qualcomm Inc., 116 F.4th 1345, 1352 (2024).
11. Id., at 1353.
12. ParkerVision,Inc. v. Qualcomm Inc., 903 F.3d 1354, 1362-63 (Fed. Cir. 2018).
13. ParkerVision, 116 F.4th at 1353.
14. Id., at 1354.
15. Id. at 1362.
16. Id.
17. Id.
18. Id.
Originally published by Law360
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