It is puzzling, if not troubling, that the Federal Circuit recently invited (link) the Patent Office to submit a brief expressing its views on the scope of the petitioner estoppel under 35 U.S.C. § 315(e)(2), a veritable Pandora’s Box. It is puzzling because only the judiciary can apply this estoppel provision, the Patent Office cannot. It is troubling not necessarily because the Patent Office unsurprisingly accepted the court’s invitation, but because it then answered in the affirmative a broad question the court did not pose: “whether section 315(e)(2) bars a successful inter partes review petitioner from making the same arguments in district court that it prevailed on in the inter partes review.” By inviting the court to conclude as much, the Patent Office has identified a statutory gaffe that may require parties to reevaluate the risks and rewards in pursuing inter partes review in parallel with district court actions.
This transpired in consolidated appeals, the lead one of which is BTG International Ltd. v. Amneal Pharmaceuticals LLC, Appeal 2019-1147 (Fed. Cir. Nov. 1, 2018). The appeals are of a district court judgment (link) in consolidated Hatch-Waxman actions for infringement of patent claims directed to a prostate cancer treatment. In the district court’s judgment, the claims are invalid over prior art publications. The same patent claims were the subject of an inter partes review (IPR) where the Board earlier concluded the same claims are unpatentable over prior art publications. When the court issued its judgment, however, that IPR was arguably not yet final because the Board had not yet decided the patent owner’s then-pending request for reconsideration.
During the infringement action and while the Board was still considering the rehearing request, the patent owner argued that the Board’s final written decision resolving the prior art challenges meant section 315(e)(2) barred the petitioners—victorious thus far before the Board—from presenting the court with invalidity attacks on prior art grounds that petitioners raised or could have raised during the IPR:
(e) ESTOPPEL. —
(2) CIVIL ACTIONS AND OTHER PROCEEDINGS.—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.
§ 315(e)(2) (emphases added). The statutory estoppel attached, according to the patent owner, as soon as the Board issued its final written decision, and it did not matter that the petitioner prevailed before the Board or that the Board had yet to decide the patent owner’s then-pending request for rehearing.
Addressing the issue in a footnote to its opinion explaining the judgment, the district court conceded the statute could be read as the patent owner argued. BTG Int’l Ltd. v. Amneal Pharms., Inc., Case 2:15-cv-05909-KM-JBC, Paper 571, at 27–27a, n.13 (D.N.J. Oct. 31, 2018) (link). But the court credited what it saw as Congress’s “manifest statutory intent:” to prevent only the abuse of IPRs “through,” for example, “the withholding of grounds and presentation of serial challenges.” Id. The court would not, therefore, accept the potential that it must “enter an injunction against infringement based on a patent [the Board] already found invalid.” Id. Having ultimately concluded the patents were invalid over prior art, the court did not issue the injunction the patent owner sought. (Six weeks later, the Board denied the patent owner’s request for rehearing, and the ensuing appeals of those IPRs were consolidated with the appeal of the district court’s judgment.).
On appeal, the patent owner has argued (link), among other things, that the district court was wrong in refusing to apply the estoppel, and thus wrong also in refusing to issue an injunction (the statutory remedy to redress infringement in Hatch-Waxman actions). The Federal Circuit invited the Patent Office to address at least four questions generally regarding the applicability and scope of petitioner estoppel when a rehearing request is pending before the Board, and whether a district court may stay a case, pending the Board’s decision on the rehearing request (link). The Office answered these questions, and also said that the statutory estoppel applies not only to petitioners who lose an IPR but also to those who prevail, even though application to those prevailing petitioners “leads to the counterintuitive result that a district court would not be able to consider invalidity arguments that the Board found persuasive.” Invited Brief for the Director – U.S. Patent and Trademark Office as Amicus Curiae in Support of Neither Party, at 4, BTG Int’l Ltd. v. Amneal Pharms. LLC, Appeals 2019-1147, -1148, -1323, -1324, -1325 (Fed. Cir. Feb. 1, 2019) (link).
The Office pointed to the drafting history of the petitioner estoppel provision to support its views. That history, according to the Office, includes the estoppel provision applicable following inter partes reexamination (IPX). The IPX estoppel provision said, according to the Office, that only unsuccessful IPX requesters “were barred from bringing the previously addressed or addressable challenges in district court.” Id. at 5. Because Congress wrote the petitioner estoppel provision differently, and specifically in a way that is silent on whether the IPR petitioner won or lost, the Office argued, the natural reading of the statute is the best indicator of Congress’s intent even if that reading leads to a counterintuitive result. Id. The Patent Office also noted that in most cases, the application of the estoppel to prevailing IPR petitioners will have no practical effect. If the Federal Circuit vacates or otherwise reverses the Board’s final written decision, then estoppel indisputably attaches; and if the court affirms, then the challenged claims will forever be canceled and unenforceable. Id. at 8–9.
District courts are under pressure to issue judgments within thirty months after a Hatch-Waxman action begins (the statutory stay of FDA approval for the generic drug at issue). There is no doubt that courts may issue stays of even these actions, pending the Board’s resolution of a parallel IPR. But it may have been too much for the Patent Office to say that there is no practical effect in applying the counterintuitive reading of the estoppel provision to prevailing IPR petitioners. In opening this veritable Pandora’s Box and offering its view of how to interpret a statutory provision it can never apply, the Patent Office has simultaneously complicated the lives of petitioners—if not also patent owners and district court judges—and highlighted an opportunity for a legislative fix.