Contributors: Akin Gump
Failure to Seek Remand in View of SAS Triggers IPR Estoppel of Redundant Grounds
by Svetlana Pavlovic, Matthew George Hartman & Rubén H. Muñoz
District Court, Patent Trial and Appeal Board, 35 U.S.C. § 315(e)(2) estoppel, Inter Partes Review, District of Delaware
A recent decision from Judge Connolly in the District of Delaware provides guidance on the scope of inter partes review (IPR) estoppel.
After being accused of infringing several patents, the defendants in a district court action successfully petitioned the Patent Trial and Appeal Board (PTAB) to institute an IPR on one of the asserted patents. But, in a final written decision, the PTAB ultimately found the challenged claims not unpatentable and that decision was later affirmed by the Federal Circuit. Subsequently, plaintiffs in the district court action filed a motion in limine based on statutory estoppel to preclude defendants from asserting certain prior-art-based invalidity defenses at trial.
Statutory estoppel in district court arising from an IPR proceeding is governed by 35 U.S.C. § 315(e)(2). Under that section, a petitioner in an IPR that results in a final written decision may not assert in a civil action any invalidity ground(s) that were “raised or reasonably could have [been] raised” during the IPR. Here, the court addressed two questions. First, it considered whether the defendants were estopped from asserting invalidity based on a prior art reference (the “Sato reference”) that was not raised during the IPR. Second, it considered whether the defendants were estopped from asserting obviousness based on a combination of three references that the PTAB had expressly declined to institute based on redundancy.
Regarding the first question, it was undisputed that defendants were unaware of the Sato reference until two months after the filing of the IPR. Consequently, the court considered whether a “skilled searcher conducting a diligent search” reasonably could have discovered the Sato reference. The defendants submitted sworn declarations of two recognized patent searchers who had conducted prior art searches for the asserted patent but did not identify the Sato reference. One of the searchers opined that since the Sato reference is a Japanese Utility Model (without translation of any portions of the reference), it was not reasonable to expect a skilled searcher to have found the Sato reference. The searcher further explained that the tools generally used in prior art searches are not able to correlate the search terms with the Sato reference in global patent databases and further noted that “[e]ven having the exact reference number for Sato, it cannot be found in any PTO internal prior art database.” The court found that the two declarations were sufficient to rebut plaintiffs’ proposition that the Sato reference could reasonably have been discovered at the time of the IPR filing; therefore, the court denied plaintiffs’ motion to preclude defendants’ use of the Sato reference at trial.
Regarding the second question, the court noted that defendants chose not to appeal the PTAB’s decision to deny institution of certain petitioned grounds nor to request a remand following the Supreme Court’s decision in SAS Institute Inc. v. Iancu. The court further noted that the decision in SAS issued while defendants’ appeal was pending and that, as such, defendants could have sought a remand but did not. Thus, the court granted plaintiffs’ motion and precluded defendants from asserting grounds of invalidity at trial that had been denied as redundant grounds by the PTAB.
Practice tip: In determining whether to pursue an IPR, a petitioner should carefully consider the potential consequences of statutory estoppel. In preparing an IPR petition, an accused infringer should also understand that the reasonableness of the prior art search may be a subsequent point of contention in determining the scope of estoppel in related district court litigation.
F’real Foods, LLC v. Hamilton Beach Brands, Inc., No. 16-41-CFC, Order (D. Del. April 10, 2019) (Connolly, C.)
District Court Denies Grant of Partial Stay Pending IPR Due to Defendants’ Delay
by John Wittenzellner & Charles Everingham IV
District Court, Patent Trial and Appeal Board, Inter Partes Review, District of Delaware
In 3G Licensing, S.A. et al v. HTC Corporation, the Honorable Christopher J. Burke of the District of Delaware denied Defendants’ motion for partial stay pending resolution of inter partes review (IPR) because of the lack of potential simplification of issues, the late stage of the case and prejudice to Plaintiffs weighed against a stay.
On January 30, 2017, 3G Licensing, S.A. (“3G Licensing”) and Koninklijke KPN N.V. (“KPN”) (collectively, “Plaintiffs”) filed their initial complaint against HTC Corporation and HTC America, Inc. (collectively, “HTC” or “Defendants”), alleging the infringement of U.S. Patent Nos. 6,212,662 (“’662 patent”); 9,014,667 (“’667 patent”); 7,933,564 (“’564 patent”); 7,995,091 (“’091 patent”); and 6,856,818 (“’818 patent”) (collectively, the “Asserted Patents”). HTC filed a petition for inter partes review of the ’667 Patent on February 1, 2018; the Patent Trial and Appeals Board (PTAB) instituted proceedings on August 3, 2018. Defendants moved to stay the district court litigation on March 1, 2019, based on the institution of the ’667 Patent IPR nearly seven months earlier. By that time, however, the court had already issued an order on claim construction, resolved various discovery disputes and set a jury-trial date. The court evaluated the motion for stay under the typical three factors: (1) whether a stay will simplify the issues for trial; (2) the status of the litigation, particularly whether discovery is complete and a trial date has been set; and (3) whether a stay would cause the non-movant to suffer undue prejudice from any delay or allow the movant to gain a clear tactical advantage.
HTC argued that a stay would simplify issues for trial by removing the ’667 patent from the case, reducing the number of technical matters and likely eliminating KPN’s claims for relief. The Plaintiffs responded that HTC’s argument was speculative and ignored the fact that there was considerable overlap in accused products and infringement proofs across the Asserted Patents. The district court sided with the Plaintiffs, finding that “even if the Court denies the Motion now and then the [PTAB] were to subsequently find the single asserted claim of the ’667 patent to be invalid in or around August 2019, the Court would almost certainly grant a stay at that time . . . [and] that patent would not be at issue at the summary judgment and trial stages.”
HTC argued that the case was in an early stage of litigation because fact discovery was still ongoing, expert discovery had not yet begun and no depositions had occurred. Plaintiffs, on the other hand, argued that the parties had already served nearly 500 discovery requests and by the time briefing on the motion to stay closed, many of the scheduled depositions would have already occurred. In addition, the court had already issued a Markman ruling and addressed a variety of motions, including multiple motions to dismiss, motions to transfer, a previous motion to stay and a variety of discovery disputes. The court agreed with Plaintiffs, finding that the case was “at a relatively advanced stage, as [it had] heard and resolved numerous motions and [had] issued a claim construction opinion.”
HTC argued that a stay would not create undue prejudice for Plaintiffs or a clear tactical advantage for Defendants because the ’667 IPR petition was timely, HTC had timely moved for a stay under the circumstances, the PTAB’s final decision was expected within six months and the parties were not direct competitors. Plaintiffs responded by pointing out that HTC failed to request an IPR within the one-year window of when the complaint was filed and waited seven months after institution to request a stay.
Further, although the PTAB could issue a decision by August 2019, either the Plaintiffs or Defendants would likely appeal the decision such that the IPR process would not be complete before late 2020. The court agreed with the Plaintiffs, identifying Defendants’ delay in filing the motion to stay as well as a lack of a compelling reason for the delay as “the most significant subfactor” in its analysis.
The district court also expressed concern “as to whether the parties could integrate the ’667 patent back into the case schedule without experiencing some expert discovery inefficiencies and/or disruption to the [court]’s pre-trail and trial schedule” if the court stayed the case as to the ’667 patent, but the PTAB later ruled the sole asserted claim of the patent was valid. That concern, added to the findings on the three factors, counseled the court to deny HTC’s motion to stay.
Practice Tip: Any delay in seeking a stay may weigh heavily against the grant of a stay, particularly as the case advances to its later stages.
3G Licensing, SA et al v. HTC Corporation et al, 1-17-cv-00083 (DED 2019-04-16, Order) (Christopher J. Burke)