Back in 2016, the Federal Circuit held that a petitioner retains the ability, after an adverse Patent Trial and Appeal Board decision, to assert un-instituted invalidity grounds it presented in its petition. The court reasoned that when the Board chooses not to institute certain petitioned grounds (e.g., due to redundancy), the petitioner could not have raised those grounds during the AIA trial and, therefore, cannot be estopped from pursuing those attacks in later litigation. Shaw Indus. Grp. v. Automated Creel Sys., 817 F.3d 1293, 1300 (Fed. Cir. 2016). In the district courts, the Shaw decision spawned confusion as to the scope of the statutory estoppel. Courts seemed split on whether estoppel applied to grounds the petition never presented—why should a ground never presented be subject to estoppel when Shaw says a presented but un-instituted ground is not subject to estoppel?
Then, in 2018, along came the Supreme Court’s decision in SAS Industries, Inc. v. Iancu, 138 S. Ct. 1348 (2018), which stated the Board lacked authority to institute a trial on anything less than all of the petitioned grounds. This blogsite noted that absent the prospect of partial institution—preventing a party from raising during the trial some grounds on which institution was denied—the focus of the statutory estoppel provision would likely shift to an assessment of grounds that the petitioner “reasonably could have raised.” Indeed, that was a focus of a recent district court decision and the subsequent appeal in California Institute of Technology v. Broadcom Ltd., Appeals 2020-2222, 2021-1527 (Fed. Cir. Feb. 4, 2022) (“Caltech”).
Caltech accused Broadcom and Broadcom’s customer, Apple Computer, of infringing patents relating to wireless chips. Caltech, Slip Op. at 5, 7. Before the civil trial, however, Apple successfully persuaded the Board to review the patents yet failed to persuade the Board to cancel the patents in the administrative trial. The Board issued final written decisions adverse to Apple. Id. at 7. Later, in court, Broadcom and Apple argued that the asserted claims would have been obvious over a combination of prior art they did not present to the Board but knew at the time the petitions were filed. Id. at 7, 20. The known obviousness attack, the district court found, reasonably could have been raised in the filed petitions. The court therefore granted summary judgment of no invalidity, applying the estoppel provision in 35 USC § 315(e)(2). Id. at 7, 20.
“[E]stoppel applies … to all grounds not stated in the petition but which reasonably could have been asserted against the claims included.” – Federal Circuit
In affirming the district court’s summary judgment, the Federal Circuit overruled its earlier Shaw decision. Why? Because, as the court explained, the SAS decision undercut its reasoning in Shaw. As a result, this three-judge panel concluded the court need not go en banc to overrule Shaw. Continuing, the court explained that “estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all grounds not stated in the petition but which reasonably could have been asserted against the claims included.” Id. at 23, corrected via Errata (Feb. 22, 2022). The court concluded that the invalidity attack Broadcom and Apple were pursuing in the district court reasonably could have been raised in the filed IPR petitions and, therefore, were now barred under section 315(e)(2).
The Caltech decision is interesting if only because it decided what some perceived was SAS’s logical fallout. But the decision also has practical significance. Rare may be the case where there is no dispute that the losing petitioner knew of the attack it presents in a later proceeding. But after Caltech, determining a losing petitioner’s knowledge of invalidity positions may spawn a side show over facts that the attorney-client privilege and the attorney work-product doctrine often protect from discovery. Separately, Caltech may exacerbate prospective AIA trial petitioners’ struggle with assessing which grounds and how many grounds to present in a petition. In Caltech, Apple may have decided it wasn’t worth encumbering its petitions with the attack it later attempted to pursue in district court—perhaps because there was no space in the petition to properly present the ground or the ground was weaker than those petitioned. If the presented and perceived stronger grounds failed to persuade the Board, then weaker grounds likely would fare no better and even less so before a district court where the patent-challenger’s burden of proof is higher.
Pursuing secondary attacks in a parallel petition may offer no sure solution either. In Intuitive Surgical, Inc. v. Ethicon, LLC, Appeal 2020-1481, Slip Op. at 3 (Fed. Cir. Feb. 11, 2022), a petitioner filed three IPR petitions on the same day, challenging the same patent claim on different grounds. The Board instituted one of the three proceedings later than it instituted the other two. Eventually, the Board issued final written decisions in the first two proceedings, declining to cancel the claim, and subsequently issued a final written decision in the third, terminating that proceeding based on the statutory estoppel provision in 35 USC § 315(e)(1). Intuitive, Slip Op. at 4. On appeal, the Federal Circuit affirmed and “h[e]ld that § 315(e)(1) estops a petitioner as to invalidity grounds for an asserted claim that it failed to raise but ‘reasonably could have raised’ in an earlier decided IPR, regardless of whether the petitions were simultaneously filed and regardless of the reasons for their separate filing.” Id. at 8 (emphasis added).
The Intuitive decision is interesting because it seems to counsel estoppel-anxious petitioners to file more concise petitions with as many grounds as practical. Further, Intuitive informs petitioners filling parallel petitions to challenge a different subset of claims in each petition so that an adverse decision in one proceeding will not apply to estop the petitioner in the other. Intuitive also reminds petitioners to ask the Board to consolidate proceedings—viz., proceedings on the same patent that are not on the same schedule—to ensure final written decisions in each issue simultaneously. Even though the estoppel in Intuitive seems unfair, it also seems practical given the text, purpose, and history of the statutory estoppel provision that the court recounted. Nearly ten years after the advent of AIA trials, Intuitive and Caltech illustrate the statutory estoppel’s evolution.