Recently, the Federal District Court for the District of New Jersey allowed Purdue Pharma to assert invalidity arguments in the litigation that were previously submitted in an IPR petition, but upon which IPR review was not instituted. See Depomed Inc. v Purdue Pharma LP, Civil Action 13-571, Order (D.N.J. Nov. 4, 2016). The Court rejected the patent owner’s arguments that Section 315(e) of Title 35 estopped Purdue from raising these argument.

Patent Owner Depomed holds multiple patents directed to compositions for extended-release dosages or oral drugs, including U.S. Patents 6,340,475 and 6,635,280. Depomed filed an infringement action against Purdue for infringing the ’475, ’280 patents in view of Purdue’s sale of OxyContin® and MS Contin®. Purdue counter-claimed during litigation that the patents were invalid under several grounds, including anticipation based on the on-sale bar and under various obviousness grounds.

In related proceedings, Purdue filed Petitions seeking inter partes review of the Depomed ’475 and ’280 patents. (See IPR2014-00377, IPR2014-00378 and IPR2014-00379). IPR was instituted for several claims of the ’280 patent and several claims of the ’475 patent. However, the PTAB declined to institute review of claims 11 and 12 of both the ’475 and ’280 patents. In final written decisions, the challenged claims were determined to be “not unpatentable” in each of the IPRs.

During litigation in the district court, Purdue sought to advance arguments that claims 11 and 12 of the ‘280 and ‘475 patents were invalid for anticipation under the on-sale bar and for obviousness in light of prior art. Depomed filed a cross motion to strike these Invalidity Contentions, arguing that Purdue was statutorily estopped from raising those defenses on the basis that Purdue could have raised these defenses in the IPRs but failed to do so.

In its November 4 Order, the court ruled that there was no estoppel and the Invalidity Contentions were permissible, citing Synopsis Inc. v Mentor Graphics Corp., 814 F.3d 1309 (Fed. Cir. 2016) and Shaw Indus. Group, Inc. v. Automated Creel Sys., Inc., 817 F3d 1293 (Fed. Cir. 2016) for the proposition that the validity of claims for which the PTAB did not institute IPR can still be litigated in district court. Citing Shaw, the court reiterated that 35 U.S.C. § 315(e) does not statutorily estop a party from litigating an invalidity ground in a later proceeding if that invalidity ground was raised in a prior petition for IPR, but not instituted (Shaw at 1300, emphasis added). Accordingly, the Court held that Purdue was not estopped from pursuing the on-sale bar defense or its invalidity contentions against claims 11 and 12 of the ’280 and ’475 patents.

The court further noted that Purdue was not estopped from raising the on-sale bar defense, because under 35 U.S.C. § 311(b) the scope of an IPR is limited to grounds that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications, which does not include prior art consisting of products that were on sale.

Following the earlier holdings of Synopsis and Shaw, as well as HP Inc. v. MPHJ Technology Investments, LLC, 817 F.3d 1339 (Fed Cic 2016), this case further confirms that courts are entering invalidity contentions in litigation that were raised but not instituted in a related IPR proceeding. The courts have stated that if a grounds is not instituted in IPR at all, it does not become part of the IPR record and could not have been raised during the IPR and, therefore, no estoppel issue arises.

In view of this, in practice it may be advantageous to include all known grounds for invalidity in an IPR, so if all grounds are not instituted, there is a ready argument for avoiding estoppel in litigation. However, a recent decision out of Delaware suggests that including all known grounds may not be necessary to avoid estoppel. If and how practitioners will use this gap in the estoppel provision to their advantage in future litigation and IPR strategy remains to be borne out.