May 30, 2017

Issue Five: PTAB Trial Tracker


The Supreme Court has granted certiorari in SAS Institute Inc. v. Lee, No. 15-969 (Fed. Cir.), to examine the Board’s practice of instituting IPR on fewer than all challenged claims.  The question for review is:

Does 35 U.S.C. § 318(a), which provides that the Patent Trial and Appeal Board in an inter partes review “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,” require that Board to issue a final written decision as to every claim challenged by the petitioner, or does it allow that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the Federal Circuit held?

The Board currently institutes IPR only on claims for which the petitioner has shown a reasonable likelihood of succeeding in showing unpatentability, and limits its final decision to only those claims.  This leaves some challenged claims unaddressed in the final written decision and free for challenge in the ITC and district court, which, according to SAS, frustrates Congress’s intent that IPRs simplify the patent litigation process.  Judge Newman agrees with SAS—she has filed dissenting opinions in a few cases regarding the Board’s partial institution practice, including in the original panel decision that is now on appeal to the Supreme Court.  (SAS Institute, Inc. v. Complementsoft, LLC, 825 F.3d 1341 (Fed. Cir. 2016).)

  • Takeaway:  If the Supreme Court rejects the Board’s practice of instituting IPR on fewer than all challenged claims, it could lead to fewer petitions filed or fewer claims challenged in a petition.  Currently, there is no defined penalty for failing to obtain review of all challenged claims, because estoppel applies only to claims that are adjudicated in a final written decision.  If the Supreme Court rejects the partial institution approach, petitioners may find themselves in the undesirable situation of getting institution on claims for which the Board believes they are unlikely to succeed—and being hit with estoppel on those claims upon issuance of the final written decision.  Patent owners may also be negatively affected by a change in the partial institution practice.  With the high rates of claim cancellation, avoiding institution on some challenged claims is often of significant value to patent owners.


In Douglas Dynamics LLC v. Meyer Prods. LLC, No. 14-866, Judge Peterson of the Western District of Wisconsin clarified his earlier ruling on the scope of petitioner estoppel.  (W.D. Wis. May 15, 2017.)  Judge Peterson had previously ruled that estoppel (i) applies to “grounds” that were instituted in an IPR and grounds of which petitioner was reasonably aware but did not include in its IPR petition, and (ii) does not apply to grounds that were included in the IPR petition but were not instituted.  (April 18, 2017.)

In this second opinion, Judge Peterson clarified the meaning of “ground,” stating that it includes the cited prior art, as well as “the thrust” of a defendant’s invalidity theory.  Further, if a patent challenger raises a new theory that “relies on different, uncited portions of the prior art, attacks different claim limitations, or relies on substantially different claim constructions, then the new theory is tantamount to a new invalidity ground, and the court will treat it like a non-petitioned ground subject to estoppel.”  (May 15, 2017 Opinion at 3-4.) 

In another recent decision, Biscotti Inc. v. Microsoft Corp., No. 13-01015, Magistrate Judge Payne issued a Report and Recommendation regarding the scope of petitioner estoppel.  (E.D. Tex. May 11, 2017.)  The district court litigation had been stayed pending IPR, and following patent owner Biscotti’s win in the IPR, Biscotti moved for summary judgment of estoppel on the prior art and theories Microsoft used in the IPR.

Magistrate Payne recognized that the Federal Circuit’s Shaw decision exempts petitioners from estoppel on grounds for which the Board denied institution, but recommended applying this exemption only to grounds the Board denied for purely procedural reasons such as redundancy.  In other words, Magistrate Payne recommended that the petitioner be estopped on grounds that the Board determined did not establish a reasonable likelihood of unpatentability.  

In sum, Magistrate Payne recommended defining the scope of estoppel as follows:

Estoppel applies to:

(1) instituted grounds on which the petitioner ultimately lost after a trial on the merits;

(2) grounds included in a petition but for which the Board denied institution because the petitioner failed to establish a reasonable likelihood of unpatentability;

(3) grounds not included in a petition that a “skilled searcher conducting a diligent search reasonably could have been expected to discover;” and

(4)  subsets of grounds to which estoppel applies.  (For example, where the Board instituted IPR on the combination of Kenoyer, Briere, and Hurley, estoppel should extend to the combination of Kenoyer and Briere.)

Estoppel does not apply to “grounds included in a petition but which the PTAB found redundant or declined to institute review for another procedural reason.”

(May 11, 2017 Opinion at 13-14.) 

  • Takeaway:  District court applications of petitioner estoppel continue to evolve.  Many district courts are looking to expand the scope of estoppel while remaining consistent with the Federal Circuit’s Shaw ruling, which held that grounds included in a petition but not instituted are not subject to estoppel.  For example, the Biscotti case recommends narrowing the Shaw estoppel exemption to only those grounds that were denied institution for purely procedural reasons such as redundancy. 

    While we are moving towards some clarity on the scope of estoppel, each new case highlights new wrinkles in sorting out the estoppel question.  For example, if more courts adopt the Biscotti approach, we will likely see litigants beginning to argue over the reason the Board denied various grounds.  And the Douglas Dynamics case shows that courts will view estopped “grounds” as extending not only to the putatively invalidating references, but also the theories and arguments that were presented in the IPR petition, as well as new theories of invalidity based on the same art presented in the petition.


In Aylus Networks, Inc. v. Apple, Inc., No. 2016-1599, the Federal Circuit, in an issue of first impression, held that prosecution disclaimer may stem from a patent owner’s statements made in responding to an IPR petition—regardless of whether IPR was instituted.  (Fed. Cir. May 11, 2017.) 

The district court had granted defendant Apple’s motion for summary judgment of non-infringement based on claim construction positions patent owner Aylus had asserted in a patent owner preliminary response to an IPR petition challenging the patent-in-suit.  The Federal Circuit affirmed, holding that prosecution disclaimer applies to statements made in an IPR (and to statements made in a preliminary response to a petition for IPR, even if IPR is not instituted).  According to the Court, “Extending the prosecution disclaimer doctrine to IPR proceedings will ensure that claims are not argued one way in order to maintain their patentability and in a different way against accused infringers.”  (Slip op. at 10.)

  • Takeaway:  This case is an important reminder to patent owners to tightly coordinate a global strategy on a given patent to avoid inconsistent positions and unintended consequences from statements made in different minder to patent challengers to review all proceedings related to a given patent for statements that may impact claim construction.


In Telebrands Corp. v. Tinnus Enterprises, LLC, PGR2016-00030, the Board denied Patent Owner Telebrands’ request for rehearing of the Board’s decision instituting PGR.  (Paper 31, P.T.A.B. May 5, 2017.)  In a parallel proceeding on the same patent, the E.D. Texas had granted Telebrands’ motion for preliminary injunction.  Telebrands argued that the grant of preliminary injunction should dictate denial of PGR, because “if an attacker cannot even generate a ‘substantial question’ in federal court, it necessarily cannot have met the ‘more likely than not’ standard in this agency under identical arguments and evidence.”  Telebrands further argued that PGR institution “unnecessarily and improperly puts the Board into conflict with an Article III court.”  

The Board disagreed.  Citing the Federal Circuit’s Novartis v. Noven case (see the April 27, 2017 edition of this newsletter), it found that the prior judicial opinion did not bind it or control its independent review of the record.  It also found that the district court preliminary injunction standard of “substantial question of validity” did not “transfer so neatly” to the Board’s institution standard of “more likely than not,” at least because of the lack of a presumption of validity at the Board.  It also cited the different factual records at the two fora, and the Board’s rules requiring it to view disputed issues of material fact in the light most favorable to petitioner.  The Board sidestepped the “complex question” of whether issue preclusion should apply, including because the district court’s findings were preliminary and merely intended to maintain the status quo.

  • Takeaway:  This is another example of potentially inconsistent outcomes between the Board and district courts.  Because of, e.g., the different burdens of proof and different factual records before the two fora, the Board is not bound by prior district court determinations.


In Ford Motor Co. v. Versata Development Group, Inc., IPR2017-00144, the Board denied institution, finding that Ford was barred under 35 U.S.C. § 315(b) from requesting an IPR.  The reason was that Versata had filed an infringement complaint against Ford in Texas concerning the patent at issue, and had served that complaint more than one year prior to Ford’s filing of the IPR.  (Paper 17, P.T.A.B. May 1, 2017.)  

Ford sought to avoid the one-year bar because the Texas court had dismissed Versata’s complaint without prejudice, and the Board has previously found an exception to the one-year bar in such circumstances, reasoning that “‘[t]he dismissal of an action without prejudice leaves the parties as though the action had never been brought.’”  (Id. at 4 (quoting Oracle Corp. v. Click-to-Call Techs. LP, Case IPR2013-00321, slip op. at 15-18 (P.T.A.B. Oct. 30, 2013)) (Paper 26) (precedential in relevant part)). 

Under the facts of this case, however, the Board  rejected application of this exception.  Specifically, although the Texas court had dismissed Versata’s complaint without prejudice, it did so in favor of Ford’s earlier-filed declaratory judgment action on patents related to the patent at issue in the IPR.  The Board further noted that the dismissal was not voluntary, and did not leave the parties in the same position as if the case had not been filed, including because the Board had doubts that the parties could have refiled the action in the Texas court as if the dismissed Texas action had never occurred. 

  • Takeaway:  The exception to the one-year bar for filing an IPR due to a dismissal without prejudice is not absolute.  As this case illustrates, the key is whether the parties have been left in the position they were in had the action not been filed.  Parties should carefully analyze this key inquiry in determining whether the exception applies.