During some research the other day, I came across the below order that Judge Noreika issued last summer.
A defendant had moved in limine to exclude three of the four asserted claims of a patent from trial, after it prevailed on those claims in an IPR. Easy motion, right?
No. Judge Noreika held that, under Federal Circuit precedent, collateral estoppel does not prevent plaintiff from asserting those claims at trial until the decision is final. And the decision is not final until the appeal is exhausted:
Federal Circuit case law suggests that an IPR decision does not have preclusive effect until that decision is either affirmed or the parties waive their appeal rights.
Even worse for the defendant, collateral estoppel requires that the issue be identical in each case but, as Judge Noreika noted, the PTAB applies a different standard than the district court:
In IPR proceedings before the PTAB, invalidity must be proven by a preponderance of the evidence, whereas in district court cases it must be proven by clear and convincing evidence. The differing legal standards preclude the application of collateral estoppel.
Thus, the Court denied defendant's motion, and held that trial on infringement of the now-invalid claims would go forward.
But defendant should have some pretty good invalidity arguments if it won at the IPR, right? Wrong. The Court also held that, having brought an IPR, defendant was now estopped by statute from asserting the invalidity of the claims:
As other courts in this district have noted, estoppel under § 315(e) is “broad and . . . the prior art references or combinations a petitioner ‘could have raised’ includes any references that were known to the petitioner or that could reasonably have been discovered by ‘a skilled researcher conducting a diligent search.’” . . . Plaintiff argues that that the Goldman reference could have been found by a diligent searcher because: (i) it is indexed in the same International Classification subclass as the ’985 and indexed in the same USPC class & subclass as is listed on the “Field of Classification Search” on the ’985; (ii) a search limited to that USPC class and sub-class and using the words “ANI” and “caller ID” has seventeen results and Goldman is the 5th; (iii) one of Defendant’s experts said he may have found Goldman when preparing the IPR petition; (iv) it was included in Defendant’s invalidity contentions “several months after” the IPR petition. “One way to show what a skilled search would have found would be (1) to identify the search string and search source that would identify the allegedly unavailable prior art and (2) present evidence, likely expert testimony, why such a criterion would be part of a skilled searcher’s diligent search.” . . . . Defendant does not contest that Plaintiff has met step one. The Court finds that Plaintiff has also met step two. The words “ANI” and “Caller ID” appear in the patent numerous times – “Caller ID” about 20 times, and “ANI” about 80 times. Both are clearly important to the subject matter of the patent. Therefore, it seems likely that a skilled searcher conducting a diligent search would have used these terms and searched within the same USPC subclass as the ’985 patent. Further, the fact that Defendant included Goldman in its invalidity contentions filed just several months after the IPR petition confirms that a skilled searcher likely would have been able to find the reference.
Thus, the Court granted the motion to preclude defendant from arguing invalidity. It recognized that the result seems counterintuitive, but that it is supported by the statute and precedent:
The Court understands that allowing Plaintiff to proceed at trial on claims that have been found by the PTAB to be invalid while at the same time preventing Defendant from asserting prior art defenses against these claims based on estoppel under § 315(e)(2) seems counterintuitive. That said, it is a permissible result that follows from the statute and relevant case law. And although the Court could perhaps stay the trial on the invalidated claims until after the decision in the appeal of the PTAB’s determination, to do so risks more significant inefficiencies for the Court and the parties, including a possible second trial in this already four-year-old case.
The patentee still had another claim from the patent remaining, and had also alleged infringement of two other patents. Those facts likely influenced the Court's decision not to stay the trial pending appeal of the IPR.
Don't Forget That IPRs are Not Just "Win" or "Lose"
I think it's easy for parties (and for some judges—not necessarily in Delaware) to forget that the outcome of an instituted IPR can be more than either "invalid" or "not invalid," and can include split results like the above, or even amendment of claims by the patentee. But the party bringing the IPR risks estoppel regardless. That's certainly something to keep in mind when considering an IPR.
So What Happened at Trial?
Like me, you may be wondering how the trial turned out. After all, losing the ability to present invalidity arguments on those claims while still having to argue infringement seems like something that could impact trial dynamics.
Luckily for defendant, they did very well: the jury found that plaintiff had failed to show infringement or inducement for any of the nine claims (from three patents) that plaintiff went to trial on, including three claims where defendant was precluded from arguing invalidity.
It wasn't a total loss for Plaintiff, though—they still won a $2.88m false advertising verdict in the same case.
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