The Software IP Report

Inter Partes Review Estoppel Extends to Non-Petitioned Grounds

By Kevin Hinman

Categories: The Software IP Report, USPTO Post-Issue Proceedings

Hewlett Packard Enterprises (“HP”), accused of infringing U.S. Patent No. 6,218,930 owned by Network-1 Technologies, Inc. (“Network-1”), was recently estopped from relying on certain references and combinations thereof to support arguments of patent claim invalidity.  Magistrate Judge K. Nicole Mitchell recommended granting a motion for Summary Judgment that HP was estopped under 35 U.S.C. §315(e)(2) from asserting the obviousness of the disputed claims over non-petitioned grounds that Judge Mitchell believed HP reasonably could have raised during an earlier inter partes review (“IPR”). Network-1 Technologies, Inc. v. Alcatel-Lucent USA, Inc., et al., C.A. No. 6:11-cv-492-RWS-KNM (E.D. Texas September 26, 2017).

Network-1 filed suit against HP and several other Defendants on September 15, 2011.  HP served Network-1 with Invalidity Contentions, challenging the asserted claims as obvious or anticipated by four patent references.

HP also joined with several of the other Defendants in filing an inter partes review petition.  At the request of the Defendants, the infringement trial was stayed pending the outcome of the inter partes review.  The inter partes review petition cited four patent references with only one of HP’s Invalidity Contention references being included.  Responsive to the inter partes review petition, the PTAB granted review on two grounds:  1. anticipation by a first of the references, and 2. obviousness over a second of the references in light of the first reference.  Unfortunately for the Defendants, Network-1’s asserted claims survived the inter partes review, with the PTAB determining that the claims in dispute “have not been shown to be unpatentable.”     

At trial, HP sought to argue invalidity based on two combinations of the references cited in HP’s Invalidity Contentions.  In response, Network-1 moved for summary judgment estopping HP from asserting the prior art references and the combinations as references that HP “reasonably could have raised” in its inter partes review petition.  HP argued in response that, for several reasons, it was not reasonably able to raise the now-asserted grounds of claim invalidity during the inter partes review.

Section 315(e)(2) prohibits an inter partes review petitioner from later asserting that that a claim subjected to the inter partes review “is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”  Judge Mitchell identified Shaw Industries Group, Inc. v. Automate Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir.), cert. denied, 137 S. Ct. 374, 196 L. Ed. 2d 292 (2016) (“Shaw”) as the controlling precedential case from the Federal Circuit in the interpretation of 35 U.S.C. §315(e)(2).   The Federal Circuit held in Shaw that, when the PTAB denies institution on a particular ground, estoppel does not apply to that ground.  In reaching that conclusion, the Federal Circuit stated:

“The IPR does not begin until it is instituted. . . . Thus, Shaw did not raise—nor could it have reasonably raised—the [third non-instituted] ground during the IPR. The plain language of the statute prohibits the application of estoppel under these circumstances.”

 Judge Mitchell noted a split in the district court decisions after Shaw.  Some district courts have limited the applicability of Shaw to references on which the institution of inter partes reviews have been denied, i.e., non-instituted grounds, while other courts have interpreted Shaw to be applicable to both non-instituted grounds, and to references or combinations of references that the PTAB was not petitioned to consider, i.e., non-petitioned grounds. 

Judge Mitchell found fault with the logic used to reach the conclusion that Shaw is applicable to not just non-instituted grounds, but also to non-petitioned grounds.  An interpretation of Shaw that extends it to include non-petitioned grounds would “render the ‘reasonably could have raised’ language nearly meaningless.”  Judge Mitchell concludes that “Under §315(e)(2), inter partes review estoppel applies to non-petitioned grounds (grounds that a party failed to raise in an inter partes review, but reasonably could have).”

Judge Mitchell then considered whether the non-petitioned grounds that HP wanted to assert at trial “reasonably could have been raised” in HP’s IPR petition.  Factors included both the effort that HP would have needed to expend to identify the non-petitioned references and how much time HP had to consider the references before filing the inter partes review.  In the present case, Judge Mitchell noted that the disputed references were known to HP before it filed its inter partes review, and that it was aware of them for eight months before the inter partes review was filed by HP.  Magistrate Judge Mitchell, after considering the necessary effort and the available time, recommended granting Plaintiff’s motion estopping HP from asserting the non-petitioned grounds.

Lessons for Practice

Before filing an inter partes review petition, consideration needs to be given to the consequences of estoppel against arguments based on possible non-petition references.  When the decision to move forward with an inter partes review is determined to be the best option, be sure to include the relevant the references of which you are aware that you could possibly argue, possible combinations of the same, and be able to demonstrate that you have made a reasonable effort to identify such references.