Estoppel Estopped?

The Federal Circuit recently resolved a split among the district courts whether patent infringement defendants who bring inter partes review (IPR) challenges are estopped from raising new prior art challenges in a co-pending district court litigation. While some district courts had earlier found estoppel to have broad effect, and thus prevent challenges based on products on sale or public use, the Federal Circuit’s decision means that estoppel is limited only to challenges based on patents or printed publications, opening the door to use patents and publications to provide evidence of what subject matter was “on sale” or “in public use.”

The Court’s precedential decision focused on the interpretation of 35 U.S.C. § 315(e)(2), which governs IPR estoppel. The statute prevents a petitioner from asserting in district court that a patent claim is invalid on any ground that the petitioner raised or reasonably could have raised during the IPR. The court clarified that “grounds” refer to the theories of invalidity available under sections 102 and 103, specifically those based on prior art consisting of patents or printed publications.

In this case, the defendant challenged the validity of the asserted patent by arguing that a product, the DiskOnKey System, was “known or used by others, on sale, or in public use”—grounds that statutorily could not have been raised during the IPR because they do not rely solely on patents or printed publications. The court held that IPR estoppel does not preclude a petitioner from asserting these “statutory grounds” of invalidity in district court, as they are distinct from those “statutory grounds” that could be raised in an IPR even if they are based on the same prior art references. In other words, the factual basis for the “statutory grounds” raised in district court can include the same factual basis that was used in the IPR proceeding if used to show the structure and operation of prior art systems and devices that were “in use.”

The Court’s interpretation aligns with previous decisions that emphasized Congress’s intent to limit IPR proceedings to challenges based on patents and printed publications. This decision reinforces the understanding that estoppel applies only to grounds that could have been raised in an IPR, not to the evidence used to support those grounds.

This decision has important implications for patent litigation strategy and the use of IPRs to streamline invalidity issues. It underscores the limitations of IPR estoppel, allowing parties to introduce evidence of public use, sales, or knowledge and use by others in district court even if the same evidence formed the basis of the challenge in the IPR proceeding. This distinction provides a broader opportunity for challenging patent validity.

By Jason Engel, Erik Halverson, Devon Beane and Vince Galluzzo