April 27, 2017

Issue Four: PTAB Trial Tracker

Parallel District Court and PTAB Proceedings

In Douglas Dynamics, LLC v. Meyer Prods. LLC, No. 3:14-cv0886-JDP (W.D. Wis. April 18, 2017), the district court for the Western District of Wisconsin drew a clear line regarding petitioner estoppel:  estoppel applies to (1) grounds on which the Board instituted IPR, and (2) grounds of which petitioner was reasonably aware but did not include in its IPR petition, but following the Federal Circuit’s Shaw decision, does not apply to grounds that petitioner included in its IPR petition, but on which the Board did not institute IPR. 

The court explained the competing policy considerations underlying estoppel.  With respect to grounds of which defendant was aware  but did not include in its IPR petition, the court found that policy considerations favor a broad application of estoppel.  If a defendant/petitioner is not estopped from pursuing such grounds in a district court, the defendant/petitioner would be incentivized to hold grounds “in reserve in case the IPR does not go defendant’s way.”  The court found that this would be contrary to the AIA’s legislative history, which suggests that IPR was intended to be a complete alternative to litigation. 

With respect to grounds that the defendant/petitioner included in its IPR petition but on which the Board declined institution, the court held that the Federal Circuit’s decision in Shaw is “crystal clear” that estoppel does not apply to grounds that were included in the IPR petition, but not instituted.  The court also found that policy considerations favor a narrow application of estoppel.  According to the court, petitioners should not sacrifice judicial review of meritorious invalidity grounds through no fault of their own.  “As long as PTAB has the unreviewable discretion to decline to institute IPR on any ground for any reason, the defendant ought to be able to assert non-instituted grounds in the district court after the IPR is concluded.”

Takeaway: The Federal Circuit’s Shaw decision continues to influence the estoppel outcome in district courts.  Many courts have followed Shaw’s rationale that no estoppel attaches to grounds presented in a petition but denied institution.  Courts have been more variable in deciding whether estoppel applies to grounds that the petitioner reasonably knew about but did not include in its petition.  Here, the court applied estoppel to such grounds.  We expect that the estoppel case law will continue to develop, so parties are well-advised to keep a close eye on this developing body of law.

In Novartis, AG v. Noven Pharms, Inc., No. 2016-1678 (April 4, 2017), the Federal Circuit affirmed the PTAB’s finding that claims were unpatentable as obvious.  Two prior decisions by the District Court for the District of Delaware had found that the claims were not invalid due to obviousness, one of which was affirmed by the Federal Circuit (the second decision was not appealed).  The Federal Circuit explained that although the same prior art references were at issue in both fora, and the same experts testified in both fora, the PTAB and district court relied on different factual records.  The court further explained that, even if the records had been identical, due to the different standards of proof (preponderance of the evidence at the PTAB and clear and convincing evidence at the district court), the two fora could still reach different conclusions.

Takeaway:  This case aptly demonstrates that the different burdens of proof in the PTAB versus the district court, and the lack of deference accorded to judgments between the two fora, can sometimes result in inconsistent judgments on the same patent.  The Federal Circuit was careful to point out that in the Cuozzo case, the Supreme Court expressly acknowledged the possibility of such inconsistent outcomes.  This case is a cautionary tale for patent owners:  even if patent claims survive district court litigation, they can still be vulnerable to cancellation in a later IPR. 

In Microsoft Corp. v. Global Techs., Inc., IPR2016-00663 (Paper 24, P.T.A.B. Mar. 21, 2017), the Board applied collateral estoppel to prevent a purported patent owner from re-litigating the question of patent ownership, which had already been decided in district court.  

The Board had originally instituted IPR with one Mr. Raniere appearing as the Patent Owner, pursuant to an alleged assignment of the patent from Global Techs. to Mr. Raniere.  The district court had dismissed a parallel litigation involving the same patent because it found that Mr. Raniere, the plaintiff in that case, had no standing to sue for patent infringement, as the assignment was invalid and he was therefore not the owner of the patent.  The Federal Circuit affirmed.  Following the Federal Circuit’s affirmance, at Petitioner’s request, the Board authorized Petitioner to file a motion to expunge the materials Mr. Raniere had filed as Patent Owner in the IPR.

After considering the four factors that are part of a determination of collateral estoppel [(1) identity of the issues in the prior proceeding; (2) whether the issues were actually litigated; (3) whether the determination of the issues was necessary to the resulting judgment; and (4) whether the party defending against preclusion had a full and fair opportunity to litigate the issues], the Board held that Mr. Raniere was collaterally estopped from asserting the invalid assignment as evidence of his ownership of the patent.  The Board allowed time for Petitioner to attempt to serve the proper Patent Owner, and will decide the motion to expunge and whether to move forward with the IPR when that time expires.

Takeaway:  Due to the different burdens of proof, the Board has previously rejected the application of collateral estoppel to a district court’s decision on patentability.  For example, in Interthinx, Inc. v. Corelogic Solutions, LLC, CBM2012-000007 (Paper 58 Jan. 30, 2014), the Board reasoned that because the PTAB and district courts apply different standards of proof, and because the Board had not participated in the prior court proceeding, res judicata and collateral estoppel did not prevent the PTAB from independently deciding the patentability of a patent previously litigated in district court.  This case demonstrates, however, that the Board may apply collateral estoppel to other issues that come before it.


In Xactware Solutions, Inc. v. Eagle View Techs., Inc., IPR2017-00034 (Paper 9, April 13, 2017), the Board exercised its discretion not to institute inter partes review for reasons unrelated to the merits of the Petitioner’s patentability challenge.  This was Petitioner’s second IPR petition on the same patent.  In denying the petition, the Board’s primary concern was prejudice to the Patent Owner based on “Petitioner’s strategy of morphing its challenges over multiple petitions based on the Board’s feedback.”  (Page 11.)

In evaluating whether to institute the follow-on petition, the Board considered five factors:  (a) whether the same petitioner previously filed a petition directed to the same claims of the same patent; (b) whether the petitioner knew or should have known of the prior art asserted in the later petition when it filed its earlier petition; (c) whether at the time of filing the later petition, the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the earlier petition; (d) the length of time that elapsed between when the petitioner had the patent owner’s or Board’s analysis on the earlier petition and when petitioner filed the later petition; and (e) whether the petitioner provided adequate explanation as to why the Board should permit another attack on the same claims of the same patent.

Takeaway:  Petitioners disappointed with the outcome of a first IPR should be aware of these five factors and the Board’s views on serial petitions before filing a second petition for a IPR on the same patent.  While the Board has not consistently denied serial petitions for IPR in the past, this case outlines the factors the Board will evaluate when considering whether to use its discretion to deny institution under 35 U.S.C. § 314(d).

In Robert Bosch Tool Corp. v. SD3 LLC, IPR2016-01751 (Paper 15, Mar. 22, 2017), the Board’s decision not to institute inter partes review depended, in part, on Petitioner’s failure to address secondary considerations.  Petitioner was a respondent in an ITC investigation concerning the patent at issue in the IPR.  The ITC case had advanced sufficiently so that Petitioner knew Patent Owner’s positions concerning secondary considerations.  The Board explained that since Petitioner had full knowledge of the secondary considerations alleged by Patent Owner prior to filing the petition, Petitioner should have addressed those secondary considerations in its petition.

Takeaway:  Petitioners should review all prior proceedings concerning the challenged patent, and should address in their petitions any secondary considerations patent owner raised in other proceedings.

In IBG, LLC v. Trading Techs. Int’l Inc., CBM2015-00054 (Paper 38, April 7, 2017), the Board denied Petitioner’s motion to strike a certain exhibit and a string cite in the Patent Owner Response.  Petitioner had argued that by citing the exhibit and including the string cite, Patent Owner improperly attempted to establish a nexus for its alleged objective evidence of nonobviousness without explaining how the cited evidence established the nexus.  The Board agreed with Petitioner that the Response was an improper attempt to incorporate arguments by reference, but instead of striking the offending exhibit and string cite, determined that it would just “not consider such arguments.”  Having decided that it would not consider the exhibit and string cite, the Board also denied Petitioner’s request that it be allowed to submit a Reply with an extra 3,000 words.

Takeaway:  The Board strictly enforces its word limit rules, requiring certification of word count to be filed for many documents.  Here, a party’s reference to voluminous materials in support of a conclusory assertion was deemed to be an improper incorporation by reference. 

In Green Cross Corp. v. Shire Human Genetic Therapies, Inc., IPR2016-00258 (Paper 91, March 31, 2017), the Board denied Patent Owner’s Motion to Seal an exhibit with a figure that was “central to the Final Written Decision.”  Patent Owner had relied on the contested exhibit in an effort to antedate a prior art reference, and the Board found that the exhibit was “extensively relied upon by Patent Owner and Patent Owner’s experts.”  The Board found that the strong public interest in having a complete public record outweighed Patent Owner’s interest in keeping this exhibit confidential. 

Takeaway:  Parties must be aware that confidential materials they file in IPRs will not necessarily remain confidential, particularly where the Board and parties rely on such materials.