Last year, a district court applied the doctrine of collateral estoppel to dismiss an infringement suit after the Patent Trial and Appeal Board decided to cancel the asserted patent’s claims in an inter partes review. In the ensuing appeal of the court’s decision, the Federal Circuit granted the patent owner’s (Jump Rope’s) unopposed motion for summary affirmance. Jump Rope Sys., LLC v. Coulter Ventures, LLC, Appeal 22-1624 (Fed. Cir. June 28, 2022). Jump Rope presented the unopposed motion after the Federal Circuit denied its motion that the court go en banc. Jump Rope had sought a determination by the court as a whole that parallel civil litigation seeking to enforce those canceled claims was not moot and could proceed, potentially to an infringement judgment and consequent remedy. Jump Rope has since presented the same argument to the Supreme Court in a petition for a writ of certiorari. Brief of Petitioner, Jump Rope Sys., LLC v. Coulter Ventures, LLC, Sup. Ct. Dkt. 22-298 (Sept. 26, 2022).
The argument seems absurd, but in the petition, Jump Rope asserts a conflict exits between the Federal Circuit’s decision in XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282 (Fed. Cir. 2018) (applying collateral estoppel to a factually similar situation), and the Supreme Court’s decisions in Grogan v. Garner, 498 U.S. 279, 284–85 (1991) (determining that collateral estoppel may not apply where two proceedings involve different standards of proof on common factual findings), and B&B Hardware, Inc. v. Hargis Industries, Inc., 575 U.S. 138, 154 (2015) (stating that, for collateral estoppel purposes, similar legal issues are not identical if different legal standards apply). The Court’s review is necessary, according to the petition, to overrule XY, on which the district court relied. Amicus briefs were filed encouraging the Court’s review, complaining estoppel should not apply because of the different standards of proof in Board and court proceedings, even though that difference rarely matters in assessing what a prior art publication discloses.
XY (discussed in detail here) concerned assertions of patent infringement and patent invalidity in federal court. During the pendency of that litigation, the Board had canceled the patent claims in a final written decision in an inter partes review. That decision was affirmed by the Federal Circuit in a separate appeal on the same day it issued its decision in XY. Said the court, its “affirmance renders final a judgment on the invalidity of the [patent] and has an immediate issue-preclusive effect on any pending or co-pending actions involving the patent.” XY, 890 F.3d at 1294. Continuing, the court “f[ou]nd that an affirmance of an invalidity finding, whether from a district court or the Board, has a collateral estoppel effect on all pending or co-pending actions.” Id. (citing support in the Supreme Court’s decision in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971), among other cases).
But Circuit Judge Newman dissented in XY, complaining that the panel’s majority was wrong to apply collateral estoppel given the different standards of validity, different burdens of proof, and different appellate review standards. XY, 890 F.3d at 1300 (Newman, J., dissent). She suggested that the Supreme Court’s decision in Blonder-Tongue rejected the majority’s automatic application of estoppel where the question in the litigation (validity) is not identical to the question in the earlier proceeding (patentability). Id. at 1299-1300. Judge Newman has similarly dissented in numerous cases like this one, most recently and notably in Fresenius USA, Inc. v. Baxter International, Inc., 721 F.3d 1330 (Fed. Cir. 2013), cert. denied, 572 U.S. 1115 (2014). Jump Rope’s petition asserts that Judge Newman was correct.
Jump Rope’s petition also complains the panel majority in XY did not address the Supreme Court’s Grogan decision. Grogan, according to the petition, “held that collateral estoppel does not apply in  circumstances” where “a subsequent litigation involving the same party is governed by a different standard of proof than applied in the [earlier case].” Jump Rope Pet. at 8. Grogan concerned issues regarding bankruptcy, not patents, but importantly, perhaps, also concerned a juxtaposition between evidentiary standards (preponderance and clear and convincing) across different proceedings adjudicating issues based on common facts. In Grogan, the Supreme Court wrestled with whether different evidentiary standards exist in the different bankruptcy proceedings. That’s not an open question in patent proceedings. The evidentiary standard of proving unpatentability before the Board is a preponderance of evidence, codified at 35 USC § 316(e), and the standard of proving invalidity in court is clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 97 (2011) (holding that 35 USC § 282 “requires an invalidity defense to be proved by clear and convincing evidence”). Continuing, the petition notes that the Supreme Court’s B&B Hardware decision explained that “‘issues are not identical if the second action involves application of a different legal standard, even though the factual setting of both suits may be the same.’” Jump Rope Pet. at 12 (quoting B&B Hardware, 575 U.S. at 154).
If Jump Rope is correct, then the Board’s final written decision canceling claims on a preponderance of evidence and the court’s subsequent affirmance under a substantial evidence review standard have no collateral estoppel effect in the parallel infringement action. Jump Rope’s petition notes the “issue raised in this case is one of nationwide importance in patent infringement litigation, as it affects countless patent disputes all over the country.” Id. at 14–15. Post-grant and inter partes reviews exist to offer a faster and cheaper alternative to adjudicating validity in federal court. If Board decisions canceling claims in these reviews are not going to have a collateral estoppel effect in court, then why pursue these reviews? Congress makes mistakes. But in authorizing these reviews in the AIA—after Microsoft—could Congress really have overlooked the import of Blonder-Tongue and Grogan in purposely setting a lower standard of proving unpatentability before the Board? Regardless of whether the petition presents a plausible conflict, it invites an absurd result. The accused infringer waived its right to respond to the petition, but recently filed a response, upon the Court’s request. The case is pending.