Effect and Timing of AIA Petitioner Estoppel Clarified; Patent Owner Protections Strengthened

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In a pair of February 2022 decisions by the U.S. Court of Appeals for the Federal Circuit, both the broad estoppel effect of 35 U.S.C. Section 315(e) and the timing of that estoppel effect have been clarified, ending a lengthy period of uncertainty and conflicting lower court applications of the estoppel provisions of the America Invents Act. These decisions strengthen the position of patent owners who prevail in inter partes review and post grant review proceedings in the USPTO’s Patent Trial and Appeal Board, substantially protecting winning patent owners from many potential serial validity challenges.

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In its 2016 Shaw Industries Group decision,[1] the U.S. Court of Appeals for the Federal Circuit (CAFC) held that petitioner estoppel under 35 U.S.C. Section 315(e) of the America Invents Act (AIA) applied only to invalidity “grounds” actually addressed in a Final Written Decision (FWD) by the USPTO’s Patent Trial and Appeal Board (PTAB) in an Inter Partes Review (IPR). While the foundation upon which that decision rested, namely, the PTAB’s practice of “partial institution” of petitions, was subsequently eliminated by the U.S. Supreme Court,[2] Shaw Industries Group remained available to patent challengers and U.S. district courts as available precedent in support of limiting the litigation effect of post-IPR petitioner estoppel.

Then, in its nonprecedential Olaplex decision in May 2021, the CAFC suggested without actually deciding that statutory petitioner estoppel does not take effect until all of the losing petitioner’s appeals of the adverse FWD have been exhausted.[3] Taken together, Shaw Industries Group (however dubious its vitality may have been) and Olaplex continued to create a confused and inconsistent body of law on the issue of IPR petitioner estoppel at the trial court level.

Now, in a pair of February 2022 CAFC decisions, both the broad estoppel effect of 35 U.S.C. Section 315(e) and the timing of that estoppel effect have been clarified. Taken together, these appellate decisions end the lengthy period of uncertainty and conflicting lower court applications of the estoppel provisions of the America Invents Act. Importantly, these decisions strengthen the position of patent owners who prevail in IPRs and post grant review (PGR) proceedings, and protect patentees from serial validity attacks in the manner surely intended by Congress when the AIA was enacted into law.

First, in California Inst. of Technology v. Broadcom Ltd.,[4] the CAFC held that accused infringers are estopped, i.e., barred, from raising in court any validity challenge that they could have raised in a previous unsuccessful IPR petition but chose not to raise at that time, without regard to any reason or explanation given by the losing party for its choice to omit the challenge (such as page limits for IPR petitions). Previously, a patent challenger could, in reliance on the Shaw Industries Group case and its progeny, pursue and lose a PTAB IPR patent validity attack and yet still “reserve” some validity challenges for its district court defense notwithstanding the AIA’s statutory estoppel provision, 35 U.S.C. Section 315(e)(2).  It should be noted, however, that the strategy was seen as risky due to the inconsistent treatment of the estoppel issue by district courts.[5] That practice has now been firmly rejected by the CAFC, and Shaw Industries Group has been expressly overruled.

Just one week after its California Inst. of Technology decision, the CAFC held that the estoppel provision concerning multiple IPRs barring IPR petitioners from “maintaining” an IPR challenging a patent claim that had been confirmed by the PTAB in a previously issued FWD in any other IPR proceeding filed by the same petitioner.[6] The CAFC held that the applicable statutory estoppel provision, 35 U.S.C. Section 315(e)(1), applies regardless of whether the petitions were filed on the same day or different days, and regardless of the petitioner's reasons for splitting its validity challenges into multiple petitions.

Taken together, California Inst. of Technology and Intuitive Surgical represent the end of many serial patent validity challenges by accused infringers, both in PTAB proceedings and district court litigation. That is what Congress intended when it created PTAB post-grant validity challenge mechanisms as an alternative to, not supplement to, district court patent litigation on the issue of validity, as many—but not all—courts have previously recognized. 

A further issue receiving much less attention has also been clarified by these two February 2022 decisions: the timing of application of statutory estoppel. While the CAFC had previously suggested in Olaplex that statutory petitioner estoppel does not take effect until all of the losing IPR petitioner’s appeals have been exhausted, in both California Inst. of Technology and Intuitive Surgical the relevant estoppel provision (§ 315(e)(2) and § 315(e)(1), respectively), the CAFC upheld or applied the estoppel provisions as being effective while the appeals of the underlying estoppel-creating adverse FWDs was pending. Whatever force its Olaplex suggestion may have had, the CAFC appears to have reconsidered and has now applied the statutory estoppel provisions as written, i.e., as taking effect immediately upon the PTAB’s issuance of the FWD confirming validity of a patent claim. This development also strongly tips the scale back in favor of the patent owner, because patent infringement trials typically occur before conclusion of the challenger’s appeals of its failed IPRs to the CAFC. Broad estoppel effects should now be applied by district courts during patent infringement litigation and at infringement trials as a matter of course, regardless of the pendency of any appeals of failed IPRs.