Inter partes review (IPR) proceedings can give rise to statutory and collateral estoppel. But these two bases for estoppel attach at different times, which can lead to asymmetrical outcomes in related district court proceedings. One such situation arose in a recent pre-trial ruling in the District of Delaware, where a plaintiff was permitted to continue asserting patent claims that were found unpatentable in an IPR while the defendant was prevented from asserting prior art to defend itself at trial.
While litigation was pending in TrustID, Inc. v. Next Caller Inc., the defendant challenged the asserted patent claims in a parallel IPR proceeding. The defendant won and the Patent Trial and Appeal Board (PTAB) issued a final written decision finding the asserted claims unpatentable. The plaintiff appealed and, while the appeal was pending, the parties filed motions in limine in the district court litigation based on the PTAB’s decision.
The plaintiff’s motion in limine sought to bar the defendant from raising six prior art references at trial based on IPR estoppel under 35 U.S.C. § 315(e)(2), which bars an IPR petitioner from raising invalidity grounds in district court that it raised, or reasonably could have raised, in the IPR proceeding. Importantly, IPR estoppel attaches as soon as the PTAB issues a final written decision. The court granted plaintiff’s motion, finding that estoppel applied because a final written decision had been entered in the IPR and because the references were either known to the defendant or could have been found by a diligent searcher.
At the same time, the defendant moved to apply traditional collateral estoppel to preclude the plaintiff from asserting the patent claims that the PTAB found unpatentable. The court denied the defendant’s motion. For collateral estoppel to apply, there must be a final judgment in place; according to the court, an unaffirmed final written decision in an IPR is not sufficiently final to trigger collateral estoppel. Drawing on the Federal Circuit’s rationale across multiple cases, the district court explained that “an IPR decision does not have preclusive effect until that decision is either affirmed or the parties waive their appeal rights.” Thus, because the plaintiff had not yet exhausted its appellate rights, collateral estoppel did not bar the plaintiff from asserting claims that the PTAB found unpatentable. The court also included a footnote detailing an alternate basis for refusing to apply collateral estoppel, explaining that because the burden of proving unpatentability in an IPR is not as high as the “clear and convincing evidence” standard applied in district court, the issues in the two proceedings were not identical.
The court acknowledged that it seems counterintuitive that a PTAB finding of unpatentability could result in a plaintiff continuing to assert infringement while barring the defendant from raising prior art invalidity defenses. Nevertheless, according to the court, because different types of estoppel attach at different times, “it is a permissible result that follows from the statute and relevant case law.” Moreover, while the court recognized that any perceived asymmetry could be resolved by staying the case pending the appeal of the PTAB’s decision, the court declined to do so given the late stage of the long-pending case and the “significant inefficiencies” that a stay might cause.
Practice Tip: Multi-venue patent disputes carry with them the inherent potential for issues of estoppel to arise. Thus, parties involved in patent litigation should take into account the timing and the effect that any given ruling from one venue may have on a parallel proceeding. Accused infringers, in particular, should recognize the triggering points for statutory and collateral estoppel to plan and time their challenges at the PTAB in the most effective manner.
TrustID, Inc. v. Next Caller Inc., C.A. No. 18-172 (D. Del. Jul. 6, 2021) (Noreika, J.).