January 31, 2020Client Alert

Defendant Estopped in Court from Using Physical Product that is “Materially Identical” to an Available Publication

The United States District Court for the District of Delaware recently determined that the Defendant in a patent litigation suit was estopped from arguing that the patent was obvious based in part on a physical product because the physical product was “materially identical” to a prior art publication that reasonably could have been raised in a prior Inter Partes Review (IPR) proceeding relating to the same patent. Wasica Finance GmbH v. Schrader Int’l, 2020 U.S. Dist. LEXIS 9699 (D. Del. Jan. 14, 2020).

In July 2013, Patent Owner (Wasica) sued Defendant (Schrader) for infringement of claim 6 of U.S. Patent No. 5,602,524 (‘524 Patent), relating to devices for monitoring air pressure in vehicle tires. Schrader filed petitions for IPR in late-2013 and early-2014, contending that the ‘524 Patent’s claims were invalid based on anticipation and obviousness. In the IPR proceedings, Schrader’s invalidity arguments focused primarily on Italian Patent No. 1,219,753 (Oselin). The Patent Trial and Appeal Board ultimately concluded, and the Federal Circuit affirmed, that claim 6 was not unpatentable over Oselin.

In the civil action before the District of Delaware, Schrader attempted to challenge the validity of claim 6 based on Oselin in view of 14 other patents or printed publications and one physical product (ZR-1 Sensors)—none of which were used as evidence in the IPRs. One of the printed publications raised during litigation (Siuru) disclosed all of the relevant features of the ZR-1 Sensors. As a result, Wasica argued that Schrader should be estopped from using the ZR-1 Sensors as prior art because those sensors were disclosed in Siuru and Siuru reasonably could have been raised during the IPRs.

Under 35 U.S.C. § 315(e)(2), an IPR petitioner 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 IPR.”  Under Parallel Networks Licensing, LLC v. IBM Corp., 2017 U.S. Dist. LEXIS 28461 (D. Del. Feb. 22, 2017), references that “reasonably could have [been] raised” during an IPR include “any references that were known to the petitioner or that could reasonably have been discovered by a skilled researcher conducting a diligent search.” While physical products cannot be raised during IPR, patents and printed publications that relate to and/or describe a physical product can.

The court agreed with Wasica that Schrader was estopped from asserting the ZR-1 Sensors because Siuru reasonably could have been raised in the IPR and was “materially identical” to (i.e., disclosed the same claim elements as) the ZR-1 Sensors. In reaching its conclusion, the court noted that the Patent Act distinguishes between the “grounds” on which an IPR is based (obviousness or anticipation) and the “evidence” that can be used to support those grounds (patents and printed publications). This conclusion is bolstered by 35 U.S.C. §312(a)(3), which identifies as separate requirements to be included in an IPR petition “the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim.” Because 35 U.S.C. § 315(e)(2) applies to the “grounds” for an IPR, a petitioner is estopped from proceeding in litigation on the grounds set forth in its IPR petition, even if the evidence used to support those grounds was not available for use during the IPR, if the evidence it seeks to use is “materially identical” to evidence that reasonably could have been used in the IPR.

Under Wasica, therefore, a petitioner is estopped from asserting at trial a reference combination that was raised or reasonably could have been raised in the IPR or is “materially identical” to the evidence that was raised or reasonably could have been raised in the IPR. Such estoppel may apply to prior art (e.g., physical products) that could not have been used in the IPR.

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