Application of AIA Petitioner Estoppel Before Exhaustion of All Appeals Is Likely Incorrect as Premature

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An AIA validity challenge petitioner may not request or maintain a USPTO proceeding, or assert in a civil action or ITC proceeding, any ground of patent claim invalidity that the petitioner raised or reasonably could have raised during an IPR “that results in a final written decision.” Until now, PTAB and courts have applied this estoppel against petitioners immediately upon PTAB’s issuance of a final written decision. In Olaplex, Inc. v. L’Oréal USA, Inc., the CAFC strongly suggests that this timing of the application of petitioner estoppel is incorrect as premature. 

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When Inter Partes Review (IPR) and Post-Grant Review (PGR) were created by enactment of the American Invents Act (AIA), Congress included estoppel provisions designed to prevent petitioners from pursuing serial validity challenges, both in subsequent proceedings in the U.S. Patent and Trademark Office and in U.S. district courts. The operative language is the same in all relevant estoppel provisions of the AIA: “The petitioner in [an IPR or PGR] of a claim in a patent under this chapter that results in a final written decision” may not request or maintain a USPTO proceeding, or assert in a civil action or ITC proceeding, any ground of patent claim invalidity that the petitioner raised or reasonably could have raised during the estoppel-triggering IPR or PGR.[1]  

Until now, the USPTO’s Patent Trial and Appeal Board (PTAB) and district courts have applied this AIA estoppel against petitioners immediately upon PTAB’s issuance of a final written decision. In Olaplex, Inc. v. L’Oréal USA, Inc.,[2] the CAFC strongly suggests that this timing of the application of petitioner estoppel is incorrect as premature. Instead, the likely correct timing is that AIA estoppel applies against the IPR or PGR petitioner only when all of the petitioner’s appellate rights with respect to PTAB’s estoppel-triggering final written decision are exhausted.

At different times during numerous AIA proceedings to date, PTAB has consistently applied petitioner estoppel immediately upon issuance of a final written decision in a separate related proceeding. PTAB has stated that estoppel applies “once a Petitioner has obtained a final written decision,” and that entry of a final written decision, without more, satisfies the AIA’s requirement for application of statutory estoppel.

Trial courts have likewise applied AIA statutory estoppel against defendants from the moment of PTAB’s issuance of a final written decision in an IPR or PGR proceeding where the defendant is the losing petitioner. Courts have made statements such as “IPR estoppel attaches once the PTAB issues a final written decision” without any further requirements.

The Olaplex litigation has a lengthy and complex procedural history involving multiple AIA proceedings and multiple appeals of both PTAB and district court decisions to the Court of Appeals for the Federal Circuit (CAFC). Relevant here are the following procedural facts. During the district court litigation, L’Oréal filed an IPR petition challenging validity of certain claims of an asserted Olaplex patent. On July 30, 2019, PTAB issued a final written decision that was adverse to petitioner L’Oréal. The period for seeking rehearing from PTAB expired in late August 2019, and L’Oréal appealed the final written decision on September 12, 2019. The CAFC affirmed PTAB’s final written decision against L’Oréal earlier this year on January 28, 2021. 

Olaplex raised the AIA statutory estoppel issue for the first time on March 10, 2021. The CAFC first addressed L’Oréal’s argument that Olaplex had waived its assertion of AIA estoppel by raising it too late in the litigation. The CAFC agreed that Olaplex could have raised the estoppel issue sooner than it actually did raise it. Nonetheless, the CAFC declined to decide exactly when the issue should have first been raised by Olaplex and exercised its discretion to address the issue even if it was raised in an untimely manner.

First, the CAFC stated that the “point in time at which the issue [of AIA estoppel] generally must be raised is not apparent on the face of the statute and has not been decided by this court.” Consistent with this statement, in a prior decision involving an estoppel issue after a final written decision issued by PTAB in a PGR proceeding, the CAFC explicitly recognized that “§ 325(e)(1) does not say when a final decision begins to have estoppel effect (on the petitioner).”[3] The CAFC disagreed with L’Oréal’s contention that the issue had in fact been decided in prior appellate decisions.

The CAFC pointed out that under the estoppel provision relating to inter partes reexamination (which was replaced by IPR with enactment of the AIA in 2012), estoppel rights arose only when all appellate rights were exhausted.  The pre-AIA estoppel provision stated that a “third-party requester whose request for an inter partes reexamination results in an order [equivalent to an AIA final written decision] is estopped from asserting at a later time, … the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.”  The phrase “at a later time” was held by the CAFC to mean “at a later time after all appellate rights have been exhausted.”[4] 

Despite this discussion in the Olaplex decision, the CAFC did not explicitly decide that AIA estoppel attaches only after all of the IPR/PGR petitioner’s appellate rights have been exhausted. This is understandable because estoppel would have applied whether it arose immediately upon PTAB’s issuance of the final written decision adverse to L’Oréal or only after all of L’Oréal’s appellate rights had been exhausted, with both events having already occurred. 

The CAFC’s discussion strongly suggests, however, that in a subsequent case in which the issue is squarely presented for decision, the CAFC will hold that AIA estoppel does not arise and may not be applied by either PTAB or a district court against an unsuccessful AIA petitioner until all of the losing petitioner’s appellate rights with respect to the adverse final written decision have been exhausted. Litigants are best advised to challenge any application of AIA estoppel by PTAB and trial courts during the pendency of appeals of the unfavorable PTAB final written decisions asserted as triggering any of the various AIA statutory estoppel provisions.

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