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Failure to Institute Inter Partes Review Is Not Grounds for Common Law Estoppel to Prevent Defendant from Re-Litigating Issues Raised before the Patent Office

The defendant filed a petition for Inter Partes Review (“IPR”) with the Patent Office. As part of its application, it submitted a 65 page brief along with several hundred page s of accompanying evidence. The plaintiffs submitted a 60 page brief along with its own evidence in response. After the Patent Office declined to institute review of the patent-in-suit, the plaintiffs contended that the denial of the IPR was a final decision by an administrative board and that the defendant was collaterally estopped from bringing those same arguments again before the district court.

After reviewing the law on collateral estoppel, the district court noted that the defendant “did not make it past the preliminary proceedings in their attempted IPR.” The district court concluded that this was important for several reasons. “First, it means a ‘trial’ was never conducted o[n] the merits. Instead, the ‘proceedings’ were limited to a single petition brief, a response, and any accompanying evidence. Second, there was not a final written decision issued. The Board denied further review, that is, it denied initiating the IPR proceedings. Accordingly, no final written decision was necessary.”

The district court then referred to the Federal Circuit’s decision in Synopsys, Inc. v. Mentor Graphics, which stated that the “validity of the claims for which the Board did not institute inter partes review can still be litigated in the district court.” 2016 WL 520236, at *5. The district court also noted that the Synopsys court discussed the absurdity of the denial of the IPR petition being read as a “final written decision.” Id.

The plaintiff also argue that common law estoppel should apply, but the district court disagreed with that argument as well. “Regardless, it is still instructive that Congress would expressly exclude the preliminary proceedings from statutory collateral estoppel. And while the Synopsys court’s language is unequivocal, to the point of perhaps precluding even common law estoppel, the question that is in front of this Court was not squarely in front of the Synopsys Court.”

The district court then analyzed the specific common law factors and found that the element had not been met. “[T]he Court is not persuaded that the three of the four elements of common law estoppel have been met: (i) the issue under consideration in a subsequent action must be identical to the issue litigated in a prior action; ii) the issue must have been fully and vigorously litigated in the prior action; and (iv) there must be no special circumstances that would render estoppel inappropriate or unfair. Each of these elements is significantly affected by the exact inquiry of the preliminary petition.”

Thus, the district court denied the motion based on collateral estoppel. “Taken on the whole, a denial at the preliminary phase of the IPR proceedings does not statutorily, or at common law, collaterally estop a party from raising the same arguments at the district court.”

Top-Co Inc. v. Blackhawk Specialty Tools, LLC
, Case No. 4:14-CV-1937 (S.D. Tex. May 2, 2016)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or