A little more than a month after the Delaware district court narrowly interpreted the IPR estoppel provision to suggest that it may not be necessary to include all known grounds so as to avoid estoppel in district court litigation, the same court issued a decision suggesting that the IPR estoppel provision may not be so narrow after all. The decision adds to the growing confusion over the scope of the estoppel provision Congress wrote into the AIA.
On December 20, 2013, Parallel Networks Licensing, LLC (“Parallel Networks”) sued International Business Machines Corporation (“IBM”) in the Delaware district court for infringement of U.S. Patent Nos. 5,894,554 (“the ‘554 Patent”) and 6,415,335 (“the ‘335 Patent”). Parallel Networks Licensing, LLC v. International Bus. Machs. Corp., Case No. 13-2072 (D. Del.). IBM answered and counterclaimed seeking declaratory judgments of non-infringement and invalidity based on anticipation and obviousness.
Thereafter, IBM successfully filed four IPR petitions challenging the validity of claims in each patent as being anticipated by and obvious over various prior art references. IBM’s four petitions were closely linked with four IPR petitions Microsoft filed in December 2014, so IBM successfully requested that its petitions be joined with Microsoft’s (which had recently been instituted). Ultimately, the PTAB issued final written decisions confirming the validity of all of the challenged claims.
On this basis, Parallel Networks moved the district court to issue summary judgment rejecting IBM’s invalidity contentions that the claims of the asserted patents were obvious over various combinations of prior art references. In support, Parallel Networks argued that IBM’s obviousness contentions were based on combinations of prior art references that IBM was aware of but did not include in its filed IPR petitions and, therefore, 35 U.S.C. § 315(e) estops IBM from asserting its obviousness contentions in the district court action. In opposition, IBM submitted that it could not have included these prior art combinations in its IPR petitions because of the unique procedural posture of the related proceedings. Specifically, IBM contended that the PTAB would have denied its request for joinder with Microsoft’s instituted IPRs if IBM included these prior art combinations, consistent with PTAB practice that joinder is only granted when the joining party’s grounds are identical to those already presented.
In its February 22, 2017, Order, the court granted Parallel Network’s motion for summary judgment, ruling that IBM was statutorily estopped from asserting the combinations of prior art references that it reasonably could have raised, but did not raise, before the PTAB. The court first looked to the estoppel provision set forth in Section 315(e), which states, in relevant part (with emphasis added):
The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision … may not assert … in a civil action … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
For guidance on this provision, the court looked to the PTAB’s non-precedential decision in Apotex v. Wyeth, Case IPR2015-00873, Paper 8 (PTAB Sept. 16, 2015), discussed here. In Apotex, the PTAB concluded that the estoppel provision of Section 315(e) is “broad” and the language “reasonably could have raised” includes “any references that were known to the petitioner or that could reasonably have been discovered by ‘a skilled searcher conducting a diligent search.’” Order at 25 (quoting Apotex). In view of these principles, the court found “a strong case for estoppel,” because IBM knew of the references when filing its IPR petitions and, thus, “reasonably could have raised its prior art combinations during the IPR proceedings.” Id.
The court then dismissed IBM’s argument that it could not have included these prior art combinations in its IPR petitions for joinder reasons, finding no support in the cases cited by IBM for a “mirror image” rule requiring that joined petitions include identical invalidity grounds. Instead, the court found that the cases cited by IBM explicitly contemplated joinder requests involving petitions having different grounds of invalidity. Indeed, the court noted that in one case cited by IBM, the PTAB granted a joinder request despite the fact that the later filed petition asserted new invalidity contentions. Id. (citing Ariosa Diag. v. Isis Innovation Ltd., IPR2012-00022, Paper 104 (PTAB Oct. 31, 2013)). In concluding that estoppel applies, the court reasoned that it would be unfair to “give [IBM] a second bite at the apple and allow it to reap the benefits of the IPR without the downside of meaningful estoppel.” Id. at 26.
This case adds to the growing, and arguably contradictory, body of district court cases that have interpreted and applied the estoppel provision of Section 315(e). While some decisions have suggested that it may be advantageous for petitioners to include all known grounds for invalidity, other decisions have suggested that including all known grounds may not be necessary to avoid estoppel. And yet other decisions have suggested that estoppel may be applied to block unknown, but reasonably discoverable, grounds for invalidity. Collectively, the courts have effectively estopped practitioners from counseling clients on the true scope of estoppel.