Strategic Considerations in Light of the New "Skilled Searcher" Standard for IPR Estoppel
IPR Estoppel — Background & Newly Adopted Standard
Inter partes review (“IPR”) proceedings have become a familiar avenue for challenging the validity of a patent since the America Invents Act (“AIA”) was passed.[1] IPR proceedings allow a petitioner to challenge patent claims “only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.”[2] One of the primary tradeoffs to filing an IPR is that, under 35 U.S.C. § 315(e)(2), the petitioner “or the real party in interest or privy of the petitioner,”[3] is estopped from asserting, in either a district court action or International Trade Commission (“ITC”) proceeding, “any ground that the petitioner raised or reasonably could have raised during that inter partes review.”[4]
The exact scope and applicability of the IPR estoppel provision has been evolving ever since the AIA codified IPR proceedings.[5] Recent decisions from the Federal Circuit, however, offer guidance that practitioners should be aware of. In California Institute of Technology v. Broadcom Ltd.,[6] the Federal Circuit overruled its prior 2016 holding regarding IPR estoppel in Shaw Indus. Grp., Inc. v. Automated Creel Sys’s, Inc.[7] In Shaw the Court held that, so long as the USPTO did not institute IPR based on a particular ground (i.e., the ground was denied or not raised), “§ 315(e) would not estop [Petitioner] from bringing its [denied] arguments in either the PTO or the district courts.”[8] Six years later in Cal. Tech. v. Broadcom, the Federal Circuit expressly overruled Shaw’s holding, stating that “estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all grounds not stated in the petition but which reasonably could have been asserted against the claims included in the petition.”[9]
More recently, in Ironburg Inventions Ltd. v. Valve Corp., the Federal Circuit “fully addressed the standards by which a determination is to be made as to what invalidity grounds not presented in a petition are estopped pursuant to § 315(e)(2)” for the first time.[10] In Ironburg, the Court reviewed “the district court’s decision to estop Valve from asserting [] Non-Petitioned Grounds.”[11] While ultimately vacating and remanding “[b]ecause the district court improperly placed the burden of proof on Valve . . . when instead the burden of proof rests with Ironburg,”[12] the Federal Circuit clarified that, “provided the other conditions of the statute are satisfied, § 315(e)(2) estops a petitioner as to invalidity grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover, as these are grounds that the petitioner ‘reasonably could have raised’ in its petition.”[13] The adoption of this new “skilled searcher” standard is consistent with the Federal Circuit’s recent trend of cases expanding the scope and applicability of IPR estoppel under 35 U.S.C. § 315(e)(2).[14] Given that Ironburg was only decided a few months ago and that the Federal Circuit did not apply the newly adopted “skilled searcher” standard in Ironburg,[15] practitioners should monitor how parties argue this issue (e.g., what evidence and potential experts parties use to show what a skilled searcher conducting a diligent search would have found) and how district courts apply this standard (e.g., how technology, such as AI searching tools, or the amount of time between filing of the petition and the subsequent IPR estoppel issue, affect courts’ analysis on this issue) over the coming months and years.
IPR estoppel has significant implications for parties’ strategies across all patent litigation.[16] Thus, the next two sections provide some strategic considerations for patent challengers and patent owners based on the recent ruling in Ironburg Inventions and the current state of IPR estoppel under 35 U.S.C.§ 315(e)(2).
Strategic Considerations for Patent Challengers Based on New Standard
As discussed above, the Ironburg Inventions holding is consistent with the recent trend of expanding the scope of IPR estoppel. Based on this trend and the newly adopted “skilled searcher” standard, prospective petitioners should consider the following before filing a petition for IPR:
- Consider increasing your budget on the front end for prior art searching and analysis.Regardless of the detail of the actual search or what was found, courts are likely to hold petitioners to the standard of “a skilled searcher conducting a diligent search”—so at a minimum, petitioners should take steps to ensure their prior art search is both “skilled” and “diligent.”Additionally, since the issue of IPR estoppel typically arises long after the petition is filed, and the trend has been for courts to expand the scope of the estoppel provision, additional investment for searching and analysis on the front end is good insurance for potential issues and arguments down the road.
- Petitioners should ensure that counsel or their prior art search firm has sound procedures in place for documenting the methodology of the search that is performed and the results.This information could be helpful to refute a potential estoppel argument that “a skilled searcher conducting a diligent search” would have found prior art that would like to be used in the district court, but which only became relevant later (e.g., if a claim construction issue changed the scope of the relevant search).
- Review the language you use for Sotera-style stipulations.With the scope of IPR estoppel being broadened, there is potentially less you need to waive by stipulation.For example, particularly when Shaw was controlling law and petitioners were not estopped from later asserting non-petitioned or un-raised grounds,[17] Sotera-style stipulations commonly mirrored the language and scope of 35 U.S.C. § 315(e) after the decision in Cal. Tech. v. Broadcom[18] (e.g., “Petitioner stipulates that they will not raise at the parallel proceeding any ground raised or that could have been reasonably raised in the IPR”).Such stipulations are now at least duplicative of, and arguably less limiting, than the new scope of IPR estoppel under 35 U.S.C. § 315(e)(2), which “estops a petitioner as to invalidity grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover.”[19]
Strategic Considerations for Patent Owners Based on New Standard
As discussed above, Ironburg Inventions also clarified that the burden of proof rests with the plaintiff/patent owner to prove that the defendant is making arguments in district court that they “reasonably could have raised” in an IPR (as determined by the “skilled searcher conducting a diligent search” standard). Based on this, patent owners should consider the following when a petition for IPR is filed against one of your patents:
- Consider conducting your own search for patents and printed publications around the time the petition is filed.Since the patent owner bears the burden of proof, contemporaneous search results may provide the evidence necessary to establish that a skilled searcher conducting a diligent search would have found a given prior art reference.However, there is risk associated with conducting your own search.For example:
- The search may turn up prior art that has to be disclosed to the USPTO and/or the Patent Trial and Appeal Board.
- Prior art itself is typically neither privileged nor confidential, so it may be discoverable and later used against you (though this risk is mitigated if the defendant is ultimately estopped from using the art).
- The defendant may seek to depose your patent searcher to undermine the credibility or probative value of your search (e.g., see if the search was biased by using the art already identified in the IPR as the starting point of the search).
- For all patents and patent publications that a petitioner identifies in the IPR, note the associated international classification categories and other characteristics that may have been relevant to that art being identified.This can be compared to subsequent prior art references raised in litigation to support an IPR estoppel argument (i.e., a petitioner may try to rely on a new patent publication in the district court case that has the same international classification category as art they identified in IPR).
- To avoid the risks associated with conducting your own search, consider seeking a patent searching expert.The expert(s) could provide a declaration (preferably contemporaneous with the filing of the petition) regarding search strategy they would use based on the patents and technology at issue, including search terms, customary terminology in the art, and search methods they would use.
[1] Between July 1, 2016 and June 30, 2021, over 7,500 IPR petitions alone were filed—averaging just over 1,500 IPR petitions filed per year over this five-year span. Pedram Sameni, Report: Almost One-Third of IPR Proceedings are Settled, IPWatchdog: USPTO (Sept. 11, 2021) (https://ipwatchdog.com/2021/09/11/report-almost-one-third-ipr-proceedings-settled/id=137459/).
[2] 35 U.S.C. § 311(b).
[3] See Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336, 1351 (Fed. Cir. 2018) (concluding “Congress intended that the term ‘real party in interest’ have its expansive common-law meaning.”).
[4] 35 U.S.C. § 315(e)(2).
[5] Nick Baniel, IPR Estoppel Issues, Baker Botts Thought Leadership (May 1, 2023) (https://www.bakerbotts.com/thought-leadership/publications/2023/may/ipr-estoppel-issues).
[6] California Institute of Technology v. Broadcom Ltd., 25 F.4th 976 (Fed. Cir. 2022).
[7] Shaw Indus. Grp., Inc. v. Automated Creel Sys’s, Inc., 817 F.3d 1293 (Fed. Cir. 2016).
[8] Shaw Indus. Grp., Inc. v. Automated Creel Sys’s, Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016) (“The PTO argues that Shaw's statutory interpretation of the estoppel provision is incorrect because ‘the denied ground never became part of the IPR.’ We agree with the PTO that § 315(e) would not estop Shaw from bringing its Payne-based arguments in either the PTO or the district courts. Both parts of § 315(e) create estoppel for arguments ‘on any ground that the petitioner raised or reasonably could have raised during that inter partes review.’ Shaw raised its Payne-based ground in its petition for IPR. the PTO denied the petition as to that ground, thus no IPR was instituted on that ground. The IPR does not begin until it is instituted. Thus, Shaw did not raise—nor could it have reasonably raised—the Payne-based ground during the IPR. The plain language of the statute prohibits the application of estoppel under these circumstances.”) (internal citations omitted) (emphasis in original).
[9] California Institute of Technology v. Broadcom Ltd., 25 F.4th 976, 991 (Fed. Cir. 2022) (“Accordingly, we take this opportunity to overrule Shaw and clarify that estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all grounds not stated in the petition but which reasonably could have been asserted against the claims included in the petition.”).
[10] Ironburg Inventions Ltd. v. Valve Corp., 64 F. 4th 1274, 1297–1298 (Fed. Cir. 2023).
[11] Id. at 1297 (“We turn now to the district court’s decision to estop Valve from asserting the Non-Petitioned Grounds.”).
[12] Id. at 1297 (“Because the district court improperly placed the burden of proof on Valve, to show that it could not ‘reasonably . . . have raised’ the Non-Petitioned Grounds in its petition, when instead the burden of proof rests with Ironburg to prove that these were grounds Valve ‘reasonably could have raised’ during the IPR, we vacate and remand for further proceedings.”).
[13] Id. at 1298 (“Accordingly, we hold that, provided the other conditions of the statute are satisfied, § 315(e)(2) estops a petitioner as to invalidity grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover, as these are grounds that the petitioner ‘reasonably could have raised’ in its petition.”).
[14] In 2016, under Shaw, a petitioner was not estopped from later raising grounds that were not raised in the petition or were denied by the PTAB. Shaw, 817 F.3d at 1300 (Fed. Cir. 2016). However, in 2018 the Federal Circuit gave an expansive interpretation to the parties estopped under § 315(e). Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336, 1351 (Fed. Cir. 2018) (concluding “Congress intended that the term ‘real party in interest’ have its expansive common-law meaning.”). Further, in 2022 in Cal. Tech., the Federal Circuit overruled its decision in Shaw, holding that a petitioner is estopped on un-raised and denied grounds under § 315(e). Cal. Tech., 25 F.4th at 991 (Fed. Cir. 2022). Finally, in 2023 in Ironburg, the Federal Circuit clarified that the determination of what grounds a petitioner “reasonably could have raised” is judged by the high standard of any “grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover.” Ironburg, 64 F.4th at 1298 (Fed. Cir. 2023).
[15] Ironburg, 64 F.4th at 1297 (Fed. Cir. 2023) (vacating and remanding the issue of IPR estoppel based on the district court improperly placing the burden on Valve, petitioner, to show that it could not reasonably have raised the non-petitioned grounds—thus, not needing to apply the new “skilled searcher” standard).
[16] Nick Baniel, IPR Estoppel Issues, Baker Botts Thought Leadership (May 1, 2023) (https://www.bakerbotts.com/thought-leadership/publications/2023/may/ipr-estoppel-issues) (discussing unresolved questions related to IPR estoppel and how the “exact scope and application of IPR estoppel has significant implications for defendants’ strategies across all patent litigation”).
[17] Shaw Indus. Grp., Inc. v. Automated Creel Sys’s, Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016) (“§ 315(e) would not estop [Petitioner] from bringing its [denied] arguments in either the PTO or the district courts.”).
[18] California Institute of Technology v. Broadcom Ltd., 25 F.4th 976, 991 (Fed. Cir. 2022) (“Accordingly, we take this opportunity to overrule Shaw and clarify that estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all grounds not stated in the petition but which reasonably could have been asserted against the claims included in the petition.”).
[19] Ironburg Inventions Ltd. v. Valve Corp., 64 F. 4th 1274, 1298 (“Accordingly, we hold that, provided the other conditions of the statute are satisfied, § 315(e)(2) estops a petitioner as to invalidity grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover, as these are grounds that the petitioner ‘reasonably could have raised’ in its petition.”).
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