On July 6, 2021, Judge Noreika of the United States District Court for the District of Delaware issued an Order denying defendant’s motion in limine
to preclude plaintiff from asserting claims of a patent that were found unpatentable by the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office in an inter partes
review. TrustID, Inc. v. Next Caller Inc.
, Slip. Op. (D. Del. July 6, 2021). The Court determined that plaintiff was not collaterally estopped.
Defendant Next Caller filed an inter partes
review, challenging the validity of certain claims of plaintiff TrustID’s patent. The PTAB agreed with NextCaller, and issued a final written decision finding the claims unpatentable. TrustID appealed to the Federal Circuit, which appeal is pending.
In district court, Next Caller moved in limine
to preclude TrustID from continuing to assert the claims found unpatentable on the basis of collateral estoppel. TrustID opposed.
In reaching its determination, the Court first determined whether Third Circuit or Federal Circuit law applies to this question of collateral estoppel. The Court determined the latter applied, relying on the Federal Circuit’s instruction in Aspex Eyewear, Inc. v. Zenni Optical Inc
., 713 F.3d 1377, 1380 (Fed. Cir. 2013) that “[s]ince the criteria of collateral estoppel are not unique to patent issues, on appellate review we are guided by the precedent of the regional circuit . . . However, for any aspects that may have special or unique application to patent cases, Federal Circuit precedent is applicable.” According to the court, the question of whether an IPR final written decision currently subject to an appeal has preclusive effect on a district court action asserting the same claims has special application to patent cases.
The Court then turned to the substantive issue of collateral estoppel. The Court found that an IPR final written decision does not have preclusive effect until the decision is affirmed or the parties waive their right to appeal, citing XY, LLC v. Trans Ova Genetics
, 890 F.3d 1282, 1294 (Fed. Cir. 2018) (finding that “an affirmance of an invalidity finding, whether from a district court or the Board, has a collateral estoppel effect”); MaxLinear, Inc. v. CF CRESPE LLC
, 880 F.3d 1373, 1377 (Fed. Cir. 2018) (noting that “‘a new legal decision’ such as the affirmation of the previous IPRs by [the Federal Circuit]” is an intervening event); Papst Licensing GMBH & Co. KG v. Samsung Elecs. Am., Inc
., 924 F.3d 1243, 1249 (Fed. Cir. 2019) (indicating IPR decisions became final when appeals were voluntarily dismissed); and Fresenius USA, Inc. v. Baxter Int’l, Inc
., 721 F.3d 1330, 1344 (Fed. Cir. 2013) (stating that “there is no basis for distinguishing between the effects of a final, affirmed court decision determining invalidity and a final, affirmed PTO decision determining invalidity”).
The Court remarked the practical problem this presents, due to NextCaller itself being statutorily estopped from asserting paper prior art defenses in district court as a result of its successful IPR challenge:
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.
This decision is the latest in a line of cases addressing the implications of statutory estoppel resulting from IPR challenges.