January 9, 2018Client Alert

District Court Applies Narrow Reading of IPR Estoppel Provisions Under § 315(e)(2)

In a recent decision, a Massachusetts district court held that the estoppel provision of 35 U.S.C. § 315(e)(2) is applicable only to a ground of unpatentability for which inter partes review (IPR) was petitioned, instituted, and decided in a final written decision by the Patent Trial and Appeal Board (PTAB). Koninklijke Philips NV et al v. Wangs Alliance Corporation d/b/a WAC Lighting Co., 1-14-cv-12298 (MAD January 2, 2018, Order) (Casper, USDJ). Under this holding, grounds that are not included in the petition, either intentionally or otherwise, are not within the scope of the estoppel provision. Thus, alleged patent infringers could subsequently raise such invalidity contentions in district court. This decision represents a reading of the estoppel provision that is significantly narrower than the reading adopted by other courts.

The America Invents Act (AIA) created IPR proceedings as a way for parties (often alleged patent infringers) to challenge the validity of patent claims at the U.S. Patent and Trademark Office (USPTO) in a more efficient manner than patent litigation in district courts. An IPR proceeding is divided into two phases. In the first phase (i.e., the institution phase), a party files a petition for institution of IPR that sets forth grounds of unpatentability for a challenged set of patent claims. The PTAB evaluates the petition and makes its institution decision determining whether or not the petitioner has shown a reasonable likelihood of prevailing with respect to any grounds of unpatentability. In the interest of efficiency, the PTAB was granted broad discretion to decline institution, even for non-substantive reasons. For example, the PTAB can decline institution on certain grounds of unpatentability raised by the petitioner because they are rendered redundant in view of other grounds on which the PTAB decided to institute IPR. See e.g., Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016).  

If IPR is instituted, the proceeding enters a second or trial phase that ends with a final written decision by the PTAB in which it decides whether or not the petitioner has shown by a preponderance of the evidence that the instituted grounds render the challenged claims unpatentable. In order to avoid relitigating the same grounds both at the USPTO and in district courts, Congress incorporated estoppel provisions in the AIA. One such provision in 35 U.S.C. § 315(e)(2) states that a “petitioner in an inter partes review of a claim in a patent. . . that results in a final written decision. . . 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.”

In Shaw, the Federal Circuit interpreted this estoppel provision in denying a petition for a writ of mandamus after deciding that the court lacked jurisdiction to review an institution decision of the PTAB. Shaw, 817 F.3d at 1297-1299. In its petition for a writ of mandamus, Shaw argued that the PTAB should be instructed to reevaluate its institution decision, in which IPR was instituted on one ground but denied for another, allegedly redundant ground, because (1) that institution decision was non-appealable and (2) Shaw could be estopped from arguing that ground in future proceedings. Id. at 1299. The Federal Circuit determined that the estoppel provision would not apply to Shaw’s situation because 35 U.S.C. § 315(e)(2) is only applicable to grounds raised during inter partes review, so mandamus was not warranted. Id. at 1300. Since IPR does not begin until institution, the court reasoned, an un-instituted ground of unpatentability would not be subject to this estoppel provision as that ground was not raised during IPR. Id.

In the recent decision described above, the Massachusetts district court followed the Shaw rationale and limited the estoppel provision further, holding that it also does not apply to invalidity contentions an alleged infringer failed to raise in its petition for IPR. Koninklijke Philips NV et al v. Wangs Alliance Corporation d/b/a WAC Lighting Co., 1-14-cv-12298 (MAD January 2, 2018, Order) (Casper, USDJ). Specifically, the court determined that estoppel only applies to grounds that were raised in a petition and instituted by the Board. The decision recognized that other courts have adopted a broader reading of the estoppel provisions, which effectively precludes alleged infringers from raising invalidity contentions in district court that could have been raised in an IPR petition. The broad reading is appealing, the court said, because it would effectively prevent alleged infringers from withholding back-up invalidity contentions from an IPR in the event that IPR proceedings produce an unfavorable result. However, the court concluded that the Shaw court’s interpretation of the estoppel provision foreclosed such a reading. Since Shaw concluded that the phrase “during inter parties review” only applies to the period after IPR is instituted, a broader reading of the estoppel provision is not permitted.

Under this decision, an alleged infringer could withhold a back-up set of invalidity contentions from an IPR petition to use in district court in the event that the result of the IPR is unfavorable. While it seems unlikely the Federal Circuit will endorse such a narrow reading of the 35 U.S.C. § 315(e)(2), this decision may prompt Congress to refine the estoppel provisions to allow the AIA to continue to achieve its goal of enhancing efficiency in patent infringement proceedings. 

back to top