This article appeared in The Intellectual Property Strategist, an ALM/Law Journal Newsletters publication that provides a practical source of both business and litigation tactics in the fast-changing area of intellectual property law, including litigating IP rights, patent damages, venue and infringement issues, inter partes review, trademarks on social media – and more.
The America Invents Act (AIA) created inter partes review (IPR) to allow the public to challenge issued patents based upon published prior art. IPRs allowed for greater participation for challengers, and replaced the previous inter partes reexamination procedure. IPRs are conducted before a panel of Administrative Patent Judges of the Patent Trial and Appeal Board (PTAB). In contrast, inter partes reexamination was conducted before a patent examiner, and permitted appeal to the PTAB.
The AIA contains estoppel provisions for IPR judgments. Congress included these provisions to address concerns that challengers could harass patent owners through serial filing of IPR petitions. See, 157 Cong. Rec. S1374 (March 8, 2011). The estoppel provisions provide that an IPR petitioner who has received a final decision on a claim may not request or maintain another proceeding against that claim on a ground that the petitioner “raised or reasonably could have raised.” 35 USC §315(e). The estoppel applies in patent office proceedings, district court actions and Section 337 actions by the International Trade Commission.
IPRs have now been conducted for several years, and litigation has ensued over the procedures by which they are conducted. Decisions have been rendered by the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit, which have resolved some issues, created others, and altered procedures.
The state of the law currently is:
- IPRs will no longer be partially instituted, which resolves some uncertainly relating to the applicability of IPR estoppel.
- The scope of estoppel on non-petitioned grounds and prior art awaits further clarification from the Federal Circuit.
- The inability of certain petitioners to establish Article III jurisdiction for judicial review may impact the estoppel.
Until 2018, the PTAB could partially institute an IPR on fewer claims or grounds than the petitioner requested. In the event such a petitioner received an adverse decision, the question arose as to the scope of the ensuing estoppel. The Federal Circuit held that for claims or grounds that were petitioned but not instituted, no estoppel applied since those claims or grounds were not part of the IPR. See, Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016) (stating that “[t]he IPR does not begin until it is instituted”).
The partial institution scenario will no longer be encountered, however. The Supreme Court ruled that an IPR must now proceed on all challenged claims. See, SAS Institute Inc. v. Iancu, 138 S.Ct. 1348 (2018). Following the SAS decision, the patent office announced that if it institutes an IPR, it will fully institute as the petitioner requests. Thus, institution will be an all or nothing proposition, which moots the partial institution aspect of the Federal Circuit Shaw decision.
While Shaw held that there was no estoppel for petitioned but non-instituted grounds, it did not address estoppel with respect to non-petitioned grounds. District courts have been inconsistent in addressing the scope of estoppel.
Some courts have held that a non-petitioned ground is not subject to estoppel, and thereby narrowed the application of IPR estoppel. For example, in Koninklijke Philips N.V. v. Wangs Alliance Corp., 2018 U.S. Dist. LEXIS 607 (D. Mass. Jan. 2, 2018), the court determined that there is no estoppel for non-petitioned grounds since estoppel only applies to petitioned and instituted grounds. The rationale underlying these narrowing decisions is based upon the language in Shaw concerning when an IPR starts. Simply put, under Shaw, an IPR does not begin until it is instituted, and since a non-petitioned ground cannot be instituted in an IPR, it therefore cannot be raised in that IPR.
Another judge in the District of Massachusetts had different take on the estoppel. In SiOnyx, LLC v. Hamamatsu Photonics K.K., 330 F. Supp.3d 574 (D. Mass. 2018), the court held that estoppel applied to grounds that were not in the petition, but reasonably could have been raised in the petition. The court in SiOnyx discussed the Koninklijke Philips decision from January 2018, but reasoned that the April 2018 Supreme Court SAS decision would have required institution on the non-petitioned grounds had they been in the petition.
The PTAB has previously taken a position similar to that in SiOnyx. In Apotex Inc. v. Wyeth LLC, IPR 2015-00873, Paper 8, at 8 (PTAB Sept. 16, 2015), the PTAB applied estoppel where petitioner was aware of a reference not raised in an IPR petition, and therefore petitioner reasonably could have raised the reference.
Reasonably Could Have Raised
The court in The California Institute of Technology v. Broadcom Ltd. et al., Case No. 2:16-cv-03714-GW-(AGRx) (Dec. 28, 2018) was persuaded by the SiOnyx decision. Indeed, the court there followed the approach in SiOnyx to adopt the definition of “reasonably could have raised” as found in the Congressional Record:
In congressional debates, one of the key architects of the America Invents Act explained that “reasonably could have raised” is meant to include any patent or printed publication that a petitioner actually knew about or that “a skilled searcher conducting a diligent search reasonably could have been expected to discover.” 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl)….
SiOnyx, 330 F. Supp. 3d at 602. California Institute of Technology v. Broadcom Ltd. at 13-14.
Further clarification from the Federal Circuit on both of these issues is awaited.
Right to Appeal
The AIA grants an unsuccessful IPR petitioner a statutory right to appeal under 35 USC §§141(c), 319. However, Article III of the U.S. Constitution prohibits access to the courts if a case or controversy does not exist. In Phigenix, Inc. v. ImmunoGen, Inc., 845 F.3d 1168 (Fed. Cir. 2017), the Federal Circuit determined that Petitioner Phigenix had not shown it was engaged in any activity that would give rise to a possible infringement suit, and thereby dismissed Phigenix’s appeal of the IPR decision. Although Phigenix lost in the PTAB and thus could face an estoppel, the Federal Circuit determined that Phigenix did not possess the requisite “injury in fact” to pursue an appeal because Phigenix did not face the possibility of a patent infringement lawsuit. In order to have standing, the Federal Circuit explained that an injury in fact:
- Must be “concrete and particularized”;
- “Harm must ‘actually exist’ or appear ‘imminent’”; and
- “‘Conjectural or hypothetical’ injury will not suffice.”
Phigenix v. ImmunoGen, 845 F.3d 1168, 1171 (Fed. Cir. 2017) (internal citations omitted).
Similarly, in Momenta Pharms., Inc. v. Bristol-Myers Squibb Co., —F.3d —, 129 USPQ2d 1335 (Fed. Cir. 2019), IPR Petitioner Momenta withdrew its proposed biosimilar of ORENCIA® (abatacept) during clinical trials. Momenta had argued that prior to the withdrawal it would have possessed the necessary injury in fact, but the Federal Circuit was not persuaded. The Federal Circuit explained:
Momenta also argues that since it was engaged in infringing activity when these proceedings began, it has not lost its standing to complete the review. However, even though Momenta may have been working in pursuit of potentially infringing activity, it is established that jurisdiction must exist throughout the judicial review, and an intervening abandonment of the controversy produces loss of jurisdiction.
Momenta Pharms., 129 USPQ2d at 1339.
Effect on IPR Estoppel
Traditional collateral estoppel in litigation is meant to prevent re-litigation of issues. See, Parklane Hosiery v. Shore, 439 U.S. 322, 327 (1979); Blonder-Tongue Labs. v. Univ. of Illinois, 402 U.S. 313, 328-29 (1971). Such estoppel only applies where there has been a “full and fair opportunity to litigate.” Parklane Hosiery, 439 U.S. at 328; Blonder-Tongue at 328-29. The Supreme Court has reasoned that:
Although neither judges, the parties, nor the adversary system performs perfectly in all cases, the requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most significant safeguard.
Blonder-Tongue Labs, 402 U.S. at 329.
In the context of administrative adjudications, the Federal Circuit has recognized the importance of appeal rights. The Federal Circuit in interpreting the predecessor inter partes reexamination statute reasoned that estoppel there “applies only after all appeal rights are exhausted, including appeals to this court.” Bettcher Indus., Inc. v. Bunzl USA, Inc., 661 F.3d 629, 648 (Fed. Cir. 2011).
The Federal Circuit has applied collateral estoppel to a pending IPR when a previous IPR invalidated the claims. The Federal Circuit stated that “the preclusive effect of prior [IPR] adjudications, and subsequent affirmations” were sufficient to apply collateral estoppel. Maxlinear, Inc. v. C.F. Crespe LLC, 880 F.3d 1373, 1377 (Fed. Cir. 2018).
Although IPR estoppel is a creation of Section 315 of the statute, will it be available where Article III jurisdiction prevents appeal to the courts by the petitioner? The courts now allow the PTAB to have the last and only word in IPRs where there the petitioner cannot establish Article III jurisdiction, but will those decisions apply to other proceedings through the estoppel? Time will tell.
John P. Isacson is a partner in the Intellectual Property Department of Pepper Hamilton LLP. He represents clients in the pharmaceutical, biotechnology, chemical and medical device industries in all patent-related matters. His clients include internationally recognized research and health care institutions, emerging ventures, investors and large public corporations. He can be reached at email@example.com.