In an appeal from the United States District Court for the Western District of Washington, the Federal Circuit confirmed that on the issue of inter partes review (IPR) estoppel, the burden of proof rests on the patentee to prove by a preponderance of the evidence that a skilled searcher exercising reasonable diligence would have identified any non-petitioned grounds. Aside from other disputes between the defendant Valve Corporation and patentee Ironburg Inventions, the court addressed the argument that Valve should not have been estopped from asserting invalidity grounds it sought to raise against the challenged patent. The Federal Circuit vacated and remanded for further proceedings regarding the estoppel issue.
Simultaneously with the initial district court litigation, Valve filed an IPR petition, which was instituted on certain grounds but not others. Ironburg sought and was granted an order by the district court applying IPR estoppel on these non-instituted grounds as well as “non-petitioned grounds,” which were grounds that Valve discovered based on a third party’s IPR petition that was filed after Valve’s own IPR petition. Under 35 U.S.C. § 315(e)(2), an IPR petitioner of a claim challenged in an IPR that results in a final written decision may not assert that the same claim is invalid in a later civil suit “on any ground that the petitioner raised or reasonably could have raised” during the IPR review. On appeal, the Federal Circuit affirmed the district court’s decision to apply IPR estoppel on the non-instituted grounds, concluding that they were explicitly raised during the IPR. While Valve had the opportunity following the Supreme Court’s decision in SAS Institute, Inc. v. Iancu to seek remand of its IPR for the board to institute on all grounds, it declined to do so, and the court held that this decision did not shield it from estoppel on these non-instituted grounds.
As to the non-petitioned grounds, the district court determined that an IPR petitioner “reasonably could have raised” any grounds that a skilled searcher conducting a diligent search reasonably could have been expected to discover. As such, the district court placed the burden on Valve as the party challenging the patent’s validity to show that it could not have been expected to discover the non-petitioned grounds. Valve showed evidence of its search and indicated that it was diligent yet did not uncover key prior art references at issue. Nonetheless, the district court concluded that Valve offered no evidence concerning the degree of difficulty involved in locating those references and estopped them from asserting the non-petitioned grounds.
On appeal, the Federal Circuit determined, following the trend of other district courts placing the burden solely on the patent owner, that the burden was erroneously placed on Valve rather than Ironburg to prove by a preponderance of the evidence that a skilled searcher exercising reasonable diligence would have identified these invalidity grounds. Therefore, the Federal Circuit vacated and remanded to the district court to determine if Ironburg could meet that burden.
Practice Tip: Following an IPR challenge, a patentee seeking to estop a district court defendant from asserting any non-petitioned grounds should set forth evidence showing those grounds reasonably could have been raised in the IPR. This typically includes evidence that a reasonable search would have identified the non-petitioned prior art references that are being asserted in the district court proceeding.
Ironburg Inventions Ltd. v. Valve Corporation, No. 2021-2296 (Fed. Cir. Apr. 3, 2023).