The America Invents Act of 2011, which ushered in a new regime for post-grant patent challenges at the U.S. Patent and Trademark Office (PTO), provides that any patent challenger initiating an inter partes review (IPR) proceeding at the PTO “may not assert” an invalidity ground in a patent case in U.S. district court or in the U.S. International Trade Commission that it “raised or reasonably could have raised during that inter partes review.”  35 U.S.C. § 315(e)(2).   Despite its seeming simplicity, however, the proper scope of this so-called “IPR-estoppel” provision has bedeviled the district courts since the new post-grant proceedings became effective in 2012.  The most common issues have concerned how to treat (1) grounds that were, or could have been, known but were not asserted in the IPR petition; and (2) grounds that were included in the petition but not instituted by the PTO.   

A recent decision of the U.S. District Court for the District of Massachusetts in Koninklijke Philips N.V. And Philips Lighting North America Corp., v. Wangs Alliance Corp., No.  1-14-cv-12298-DJC (D. Mass., Jan. 2, 2018)—bucks an apparent trend in the case law by refusing to apply estoppel in either circumstance.  While acknowledging that there is “much appeal in a broader reading of the estoppel provision,” the district court rejects such a reading as “foreclosed by” the U.S. Court of Appeals for the Federal Circuit’s decision in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016).  According to the district court, because “Shaw held that the [statutory] phrase ‘during inter partes review’ applies only to the period of time after the PTAB has instituted review,” the patent challenger (here, Wangs Alliance) was not estopped from asserting invalidity grounds in the district court case that were not presented in the petition or that were presented but were denied institution.

As we reported in a prior post, the district courts appeared to have been coalescing around the view that although IPR estoppel does not cover grounds that were presented in the IPR petition but denied institution, it does cover grounds that could have been raised in the petition had the petitioner been reasonably diligent.  Oil Dri Corp. v. Nestle Purina Petcare Co., No. 1-15-cv-01067 (N.D. Ill., Aug. 2, 2017); Advanced Micro Devices, Inc. v. LG Elecs., Inc., No. 14-cv-01012-SI, 2017 WL 2774339, at *6 (N.D. Cal. June 26, 2017); Biscotti Inc. v. Microsoft Corp., No.13-CV-01015-JRG-RSP, 2017 WL 2526231, at *7–8 (E.D. Tex. May 11, 2017); Douglas Dynamics, LLC v. Meyer Prods. LLC, No. 14-cv-886-JDP, 2017 WL 1382556, at *4-*5 (W.D. Wis. Apr. 18, 2017).  The Northern District of Illinois’ decision in Oil Dri summarized the practical basis for this apparent modus vivendi, explaining that whereas

“[estopping a party on] noninstituted (but petitioned-for) grounds—which the PTAB declines to fully consider—deprives a party of ‘a full and fair opportunity to be heard on the estopped ground’. . . [estopping] a party [who] fails to raise a claim that it reasonably could have raised . . . is both fair—as the party could only blame itself . . . [and] common [in civil litigation].”

The District of Massachusetts decision represents a swing of the pendulum back toward a restrictive reading of Shaw, one that constrains the district courts from applying IPR estoppel to any invalidity grounds other than those that were instituted in an IPR.  Although there is clear disagreement among the district courts on the scope of IPR estoppel and the impact of Shaw, the Federal Circuit has previously denied at least one mandamus petition seeking resolution of these issues.  And, while the Federal Circuit has recently seemed more willing to undertake mandamus review to resolve rifts between the district courts,  it is unclear whether it would consider doing so while SAS Institute v. Matal, No. 16-969 is pending in the Supreme Court.  Although that case concerns a different question—whether the PTO can institute IPRs on less than all of the challenged claims—, the Supreme Court’s decision potentially may impact the scope of IPR estoppel directly or by implication based on the Court’s reading of the statutory framework for IPRs.