A recent decision from Judge Connolly in the District of Delaware provides guidance on the scope of inter partes review (IPR) estoppel.
After being accused of infringing several patents, the defendants in a district court action successfully petitioned the Patent Trial and Appeal Board (PTAB) to institute an IPR on one of the asserted patents. But, in a final written decision, the PTAB ultimately found the challenged claims not unpatentable and that decision was later affirmed by the Federal Circuit. Subsequently, plaintiffs in the district court action filed a motion in limine based on statutory estoppel to preclude defendants from asserting certain prior-art-based invalidity defenses at trial.
Statutory estoppel in district court arising from an IPR proceeding is governed by 35 U.S.C. § 315(e)(2). Under that section, a petitioner in an IPR that results in a final written decision may not assert in a civil action any invalidity ground(s) that were "raised or reasonably could have [been] raised" during the IPR. Here, the court addressed two questions. First, it considered whether the defendants were estopped from asserting invalidity based on a prior art reference (the "Sato reference") that was not raised during the IPR. Second, it considered whether the defendants were estopped from asserting obviousness based on a combination of three references that the PTAB had expressly declined to institute based on redundancy.
Regarding the first question, it was undisputed that defendants were unaware of the Sato reference until two months after the filing of the IPR. Consequently, the court considered whether a "skilled searcher conducting a diligent search" reasonably could have discovered the Sato reference. The defendants submitted sworn declarations of two recognized patent searchers who had conducted prior art searches for the asserted patent but did not identify the Sato reference. One of the searchers opined that since the Sato reference is a Japanese Utility Model (without translation of any portions of the reference), it was not reasonable to expect a skilled searcher to have found the Sato reference. The searcher further explained that the tools generally used in prior art searches are not able to correlate the search terms with the Sato reference in global patent databases and further noted that "[e]ven having the exact reference number for Sato, it cannot be found in any PTO internal prior art database." The court found that the two declarations were sufficient to rebut plaintiffs' proposition that the Sato reference could reasonably have been discovered at the time of the IPR filing; therefore, the court denied plaintiffs' motion to preclude defendants' use of the Sato reference at trial.
Regarding the second question, the court noted that defendants chose not to appeal the PTAB's decision to deny institution of certain petitioned grounds nor to request a remand following the Supreme Court's decision in SAS Institute Inc. v. Iancu. The court further noted that the decision in SAS issued while defendants' appeal was pending and that, as such, defendants could have sought a remand but did not. Thus, the court granted plaintiffs' motion and precluded defendants from asserting grounds of invalidity at trial that had been denied as redundant grounds by the PTAB.
Practice tip: In determining whether to pursue an IPR, a petitioner should carefully consider the potential consequences of statutory estoppel. In preparing an IPR petition, an accused infringer should also understand that the reasonableness of the prior art search may be a subsequent point of contention in determining the scope of estoppel in related district court litigation.
F'real Foods, LLC v. Hamilton Beach Brands, Inc., No. 16-41-CFC, Order (D. Del. April 10, 2019) (Connolly, C.)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.