Hot Topics – AIA Estoppel Provisions Clarified

The Federal Circuit’s recent decision in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., has shed some light on the estoppel provisions in America Invents Act (AIA) post-grant proceedings. Like the estoppels in the discontinued inter partes reexamination, they may ultimately be toothless.

District court estoppel arising from an inter partes review (IPR) proceeding is governed by 35 U.S.C. § 315(e)(2) which states:

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party-in-interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

The uncertainty surrounding the “raised or reasonably could have raised” language, led some petitioners to file petitions containing dozens of unpatentability grounds. And in parallel district court proceedings, some petitioners relied exclusively on invalidity positions not available in an IPR, such as §101, §112, and prior art that is not a printed publication, therefore not available in an IPR.

But such caution may be unnecessary. In Shaw, a unanimous Federal Circuit panel ruled that redundant grounds not instituted in an IPR do not create an estoppel against a petitioner. The court determined that because § 315(e)(2) limits the estoppel effect to grounds raised “during the IPR,” estoppel attaches only to unpatentability grounds on which the IPR was instituted and decided in a final written decision. (Slip Op. at 11). The court reasoned that “[t]he IPR does not begin until instituted,” and therefore, unpatentability grounds not instituted were not raised and could not have been reasonably raised during the IPR. Id. As a result, petitioners are not estopped from raising in district court grounds raised in an IPR petition, but not adopted upon institution by the PTAB. Id.

It is unclear whether courts will extend the decision to grounds not raised in a petition, but sought to be used in district court proceedings. But under the Federal Circuit’s logic in Shaw, and its focus on the “during” language of the statute, there is an argument that only the instituted-on art is ever raised during the IPR. Accordingly, estoppels should be limited only to art actually reached in a PTAB final written decision. The result would be a toothless estoppel that poses few risks to patent challengers.

On the other hand, Judge Reyna’s concurrence in Shaw reminds us that the issue of whether estoppel would apply to “redundant” grounds was “not properly before” the court, and the court’s opinion on that issue is therefore dicta. Concurrence at 7. The Federal Circuit will undoubtedly revisit IPR estoppels again, when the issue arises from a district court. Until then, petitioners should continue to exercise caution and patent owners should not give up hope of stronger estoppels.

This article appeared in the Inaugural issue of PTAB Strategies and Insights. To view our past issues, as well as other firm newsletters, please click here.