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  • ITC Administrative Law Judge Rules That Staff Participation Can Avoid Estoppel Effect Of Respondent’s Earlier IPR

    On Tuesday, October 2, 2018, the International Trade Commission (ITC) issued the public version of an initial determination issued by Administrative Law Judge (ALJ) Clark S. Cheney. In re Certain Magnetic Tape Cartridges and Components Thereof, Investigation No. 337-TA-1058,—Fed. Reg.— (October 2, 2018).  The ALJ applied prior art to find asserted patent claims invalid, even though the respondents may have been estopped by statute from relying on that prior art.

    An inter partes review (IPR) is a proceeding in the United States Patent and Trademark Office in which one party may petition the Office to declare another party’s issued patent claims to be unpatentable.  It is a frequently used procedure, because of perceived advantages to the patent challenger compared to litigation in District Court proceedings.  One disadvantage of IPRs, however, is that in some circumstances an unsuccessful challenge can estop the challenger from asserting in a later District Court or ITC action any invalidity arguments that were raised, or could reasonably have been raised, during the IPR.  See 35 U.S.C. § 315(e).

    A patent action in the ITC is an enforcement procedure that patent owners can use instead of, or in conjunction with, a District Court infringement litigation.  See 19 U.S.C. § 1337.  The challenger files a complaint with the ITC, which determines whether to institute an investigation. If the ITC does institute an investigation, it typically proceeds with the patent owner and the accused infringer(s) as parties to the investigation.  In some cases, the ITC investigative staff will also take a role as a party to the investigation, taking its own infringement, invalidity, and remedy positions.  An ALJ ultimately issues an initial determination, which is then considered and either adopted or rejected by the Commission itself.

    In this case, the accused infringer had previously requested IPR of one of the patents asserted in the ITC investigation, without success.  It nonetheless asserted in the ITC investigation prior-art invalidity theories that, the patent owner argued, should have been forbidden by the estoppel provision of 35 U.S.C. § 315(e).

    The ALJ rejected the estoppel argument, and considered and adopted the invalidity theories in question.  The ALJ pointed out that not only the accused infringer, but the ITC staff, had asserted those invalidity theories.  The ALJ ruled that the ITC staff was not bound by the estoppel provisions, and that therefore the invalidity theories were not barred from the investigation, regardless of whether the accused infringer was estopped from using them.  The ALJ explicitly relied on the accused infringer’s arguments in finding the asserted claims invalid.  See slip op. at 105–09.

    The decision presents a loophole that, if it is upheld by the Commission (and not overturned on appeal), will in some cases make the ITC a less desirable forum for patent owners.  If the staff participates in the investigation, and if the staff is convinced by the patent challenger’s IPR invalidity arguments and reiterates them in the investigation, then it seems the estoppel effect of an IPR may effectively be ignored.