A few months ago, in BTG International Ltd. v. Amneal Pharmaceuticals LLC, the Federal Circuit invited the Patent Office’s views on the scope of the petitioner estoppel under 35 U.S.C. § 315(e)(2). We noted then that this is an estoppel a district court may apply, but the Patent Office may not. In response to the court’s invitation, the Patent Office said that a court may apply this statutory estoppel not only to petitioners who lose an IPR, but also to those who prevail. The Office conceded that estopping prevailing IPR petitioners “leads to the counterintuitive result that a district court would not be able to consider invalidity arguments that the Board found persuasive.” But the Office said that this will have no practical effect in most cases. 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. The Federal Circuit ultimately affirmed the Board’s decision canceling the claims of the patents-in-suit in BTG International. The estoppel effect here, is, as the Office posited: none. In a footnote concluding its opinion, the court said as much. Slip Op. at 26–27 n.12 (Fed. Cir. May 14, 2019) (link).
But before the court’s decision, and in response to the Office’s views on estoppel, the successful IPR Petitioners (appellees) had urged the Federal Circuit to reject the Office’s position, arguing that the statutory estoppel provision, sensibly read as “collateral estoppel,” applies only to losing IPR petitioners, not to winners:
Collateral estoppel is a consequence of losing: “‘a losing litigant deserves no rematch after a defeat fairly suffered.’” Parties that have prevailed are not collaterally estopped. Furthermore, collateral estoppel is designed to promote consistency of results in different proceedings. “The idea is straightforward: Once a court has decided an issue, it is ‘forever settled as between the parties,’ thereby ‘protect[ing]’ against ‘the expense and vexation attending multiple lawsuits, conserv[ing] judicial resources, and foster[ing] reliance on judicial action by minimizing the possibility of inconsistent verdicts.’” Limiting § 315(e)(2) estoppel to petitioners that have lost ensures consistency between PTAB and district court results. Estopping petitioners that have won would produce inconsistency: an IPR petitioner that has proven the invalidity of issued claims would be prevented from establishing invalidity in the district court and ITC on the same grounds.
Appellees’ Response Brief, at 50–51 (filed Feb. 19, 2019) (quoting the Supreme Court’s decision in B&B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1302–03 (2015)). The Petitioners observed that applying estoppel to prevailing IPR petitioners in Hatch-Waxman cases “would lead to absurd results,” id. at 53, with the district court “enter[ing] an injunction against infringement based on a patent [the Board] already found invalid.” 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); see also, Appellees’ Response Brief, at 53.
“[T]here is nothing absurd,” countered the Patent Owners (appellants), “about enjoining a drug maker whose product is found to infringe unless and until the patent is ultimately held invalid by an Article III court—whether in an infringement suit absent an IPR or on appeal after a PTAB decision.” Reply Brief of Plaintiffs-Appellants, at 18 (filed Feb. 28, 2019). The Patent Owners did not acknowledge that the Patent Office has authority to cancel the patent via ex parte reexamination. Nevertheless, like the Patent Office, the Patent Owners argued that the plain language of the statutory estoppel is so clear that the Federal Circuit need not review its legislative history. But even that history, continued the Patent Owners, compels a statutory interpretation that estoppel applies not only to IPR petitioners that lost at the Board, but also to those that prevailed.
Having affirmed the Board’s cancellation of the patent claims, the BTG court relegated the estoppel issue to a footnote where it stated it wasn’t even considering the appeals of the district court’s decision that refused to apply the estoppel provision. The issue, academic for now, will matter in another case—perhaps soon. It may well deserve legislative attention if any meaningful patent law reform has potential.