Courts Divided Over Whether IPR Estoppel Extends to Unraised Grounds
Last week Judge Casper of the District of Massachusetts joined the District of Delaware in holding that IPR estoppel under 35 U.S.C. § 315(e)(2) does not apply to grounds that a petitioner failed to raise in its petition. Koninklijke Philips N.V. et al. v. Wang Alliance Corp. This decision adds to a growing district court split over the scope of IPR estoppel. § 315(e)(2) states:
The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision . . . may not assert  in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
In Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), the Federal Circuit held that estoppel under § 315(e) did not apply to grounds included in a petition that the PTAB did not institute for review. The Federal Circuit reasoned that an IPR does not begin until instituted, and therefore any grounds that were not instituted were neither raised, nor could have reasonably been raised, during the IPR.
Several courts have limited the applicability of Shaw to grounds that were included in the petition but that the PTAB declined to institute for review. These courts held that if a ground was not raised in the petition estoppel applied notwithstanding the fact that the ground could not have been raised after institution of the IPR. These courts have expressed the concern that a narrower estoppel provision would encourage gamesmanship by which a petitioner would hold back a “second-string” invalidity defense in case the IPR challenge failed. Douglas Dynamics, LLC v. Meyer Prods. LLC, No. 14-cv-886-JPD, 2017 WL1382556, at *4-*5 (W.D. Wis. Apr. 18, 2017); see also Biscotti Inc. v. Microsoft Corp., No. 2-13-cv-01015JRGRSP, 2017 WL 2526231, at *6 (E.D. Tex. May 11, 2017); Cobalt Boats, LLC v. Sea Ray Boats, Inc., No. 2-15-cv-21, 2017 WL 2605977, at *3 (E.D. Va. June 5, 2017).
The District of Massachusetts held that these cases were decided inconsistently with Federal Circuit’s Shaw decision. “Shaw held that the phrase ‘during inter partes review’ applies only to the period of time after the PTAB has instituted review, and . . . that holding was not limited to Section 315(e)(1) nor was it mere dicta.” Therefore, the court held that the defendant was not estopped from arguing invalidity on a ground that it did not raise in its IPR petition.
The scope of estoppel under these circumstances has not been squarely addressed, and remains something of an open question. If Judge Casper is right, however, IPR estoppel will be limited, and IPRs would become an even more attractive method for defendants to challenge patent validity.