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IP Alert: Court Clarifies Scope of IPR Estoppel

August 10, 2017

Last week, the Northern District of Illinois issued an opinion addressing the scope of estoppel that attaches upon filing a petition for inter partes review (IPR). The case, Oil-Dri Corp. of America v. Nestlé Purina Petcare Co., is in conflict with other courts that have addressed similar issues. This case is of interest to patentees and petitioners concerned with potential surrender of invalidity defenses through IPR estoppel.

After Oil-Dri filed a patent infringement suit against Purina, Purina filed an IPR petition before the Patent Trial and Appeal Board (PTAB) challenging the validity of U.S. Patent No. 5,975,019 on multiple grounds. The PTAB instituted the IPR on some, but not all, of the premised grounds. In its final decision, the PTAB ruled that Purina failed to show invalidity via any of the instituted grounds. Purina is currently appealing this decision.

Per 35 U.S.C. § 315(e), IPR estoppel prevents a petitioner, or real party in interest, from asserting an invalidity defense on “any ground that the petitioner raised or reasonably could have raised during that inter partes review.” Oil-Dri sought to preclude Purina from raising various defenses based on IPR estoppel. Specifically, Oil-Dri argued that Purina is estopped from asserting (1) invalidity grounds Purina raised in its IPR petition but not instituted by the PTAB (“noninstituted grounds”), and (2) grounds Purina did not raise in its petition that it could have reasonably raised (“nonpetitioned grounds”).

The court ruled that IPR estoppel does not apply to noninstituted grounds. Section 315(e) creates estoppel based on “any ground that the petitioner raised or reasonably could have raised during that inter partes review” (emphasis added). The court reasoned that an IPR proceeding begins at institution, and thus only the instituted grounds are raised during the inter partes review. The court additionally relied on the right of “due process and fairness” to reach this conclusion, because a denial of petition is not a final decision rejecting an invalidity contention.

In the IPR proceedings, Purina challenged validity over a combination of two references, reference A and reference B, both individually and in combination. The PTAB had agreed to hear the challenge based on the combination of references A and B, but declined to hear the challenges based individually on reference A and on reference B. Purina sought to assert these separate invalidity challenges at trial, and Oil-Dri moved to preclude these defenses on the grounds of IPR estoppel. In a split from other districts (including the Eastern District of Texas in Biscotti Inc. v. Microsoft Corp. and the Northern District of California in Verinata Health, Inc. v. Ariosa Diagnostics, Inc.), the court held that IPR estoppel did not apply under these circumstances. (Note that in both of the above-mentioned cases, the combination of A and B was raised in the petition, but grounds applying A and B individually were not.)

The court reasoned that because the PTAB did not institute the IPR based on the individual reference challenges, it did not believe these grounds to be subsets of the combination. The court also put weight on the PTAB’s conclusion that Purina did “not . . . explain persuasively how or why a person of ordinary skill in the art would have combined the features” of the two references, as opposed to ruling on whether or not the combined features rendered the claims obvious.

Lastly, the court ruled that IPR estoppel does apply to invalidity grounds that were not raised in the IPR petition, which the petitioner reasonably could have raised. The Federal Circuit has not yet ruled on this question, and several district courts are split based on the “during that inter partes review” language of the statute discussed above. Purina contended that it could only reasonably have raised invalidity grounds that the PTAB actually considered, while Oil-Dri contended that Purina was estopped from raising any invalidity defenses Purina might have tried to raise in its IPR petition. The court reasoned that there was a meaningful difference between grounds that the petitioner attempted to raise versus grounds that the petitioner did not attempt to raise. Where the petitioner tried to raise a challenge but the PTAB declined to hear it, concluded the court, the petitioner cannot be faulted for having failed to reasonably bring this challenge before the PTAB. But where the petitioner chose not to include certain challenges, or neglected to include them, there is no denial of due process to the petitioner. The court further pointed out that under Purina’s interpretation, where estoppel applied only to challenges actually considered by the PTAB, the language “or reasonably could have been raised” in § 315 would have no meaning.

Purina did not propose a definition for what constitutes prior art that the petitioner “reasonably could have raised.” As a result, the court accepted Oil-Dri’s proposal that the scope of estoppel encompasses prior art that “a skilled researcher conducting a diligent search reasonably could have been expected to discover.”  

This ruling reflects the rapidly evolving area of IPR estoppel case law. The Federal Circuit is expected to resolve some of the questions raised in this case as the law continues to develop.

--Written by Fitch Even attorney Donald R. Bunton


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