In the April 3, 2023 decision in Ironburg Inventions Ltd. v. Valve Corporation, 21-2296, Doc. 66, the Federal Circuit provides crucial guidance regarding inter partes review (IPR) estoppel under 35 U.S.C. § 315(e)(2). In clear terms, the Federal Circuit holds that “§ 315(e)(2) estops a petitioner as to invalidity grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover,” and “that the burden of proving, by a preponderance of the evidence, that a skilled searcher exercising reasonable diligence would have identified an invalidity ground rests on the patent holder, as the party asserting and seeking to benefit from the affirmative defense of IPR estoppel.”
In an IPR proceeding, a petitioner challenges the validity of an issued patent by application to the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (PTO), which either institutes a review of the patent, or denies institution. The estoppel statute provides that a petitioner, or a party in privy with a petitioner, of an IPR that results in a final written decision may not assert in certain civil actions that a patent claim “is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” 35 U.S.C. § 315(e)(2) (emphasis added).
In Ironburg v. Valve, Ironburg sued Valve for infringement of U.S. Patent No. 8,641,525 (“the ’525 patent”). Thereafter, Valve submitted an IPR petition challenging the validity of the ’525 patent. The PTAB partially instituted the IPR on three of the five asserted grounds. In the district court litigation, Valve asserted invalidity grounds, some of which were submitted in its IPR petition, and some of which were not submitted in its IPR petition because they were discovered after the filing of its IPR petition. Prior to trial, the district court granted Ironburg’s motion for IPR estoppel of both the petitioned and non-petitioned invalidity grounds asserted by Valve. Valve appealed both estoppel holdings.
Petitioned and Non-Instituted Invalidity Grounds
The Federal Circuit affirmed the application of IPR estoppel to Valve’s grounds of invalidity raised in its IPR petition, but not instituted. The Federal Circuit rejected Valve’s argument that an IPR does not begin until institution and stated that the non-instituted grounds were contained in the IPR petition, and therefore reasonably could have been raised during the IPR because “the non-instituted grounds were explicitly contained in the petition.”
The Federal Circuit also criticized Valve’s failure to remand the PTAB’s partial institution decision following SAS v. Iancu to address the non-instituted grounds, suggesting that IPR petitioners should carefully consider doing so as this will be their only recourse for obtaining a final decision on such invalidity grounds.
Non-Petitioned Invalidity Grounds
The Federal Circuit vacated and remanded the holding of IPR estoppel to Valve’s non-petitioned grounds, stating that the district court improperly placed the burden on Valve to prove it could not reasonably have raised the non-petitioned invalidity grounds in its IPR. The Federal Circuit concluded that the burden of proof is properly placed on the patent holder to show a petitioner “reasonably could have raised” any grounds “a skilled searcher conducting a diligent search reasonably could have been expected to discover.” The Federal Circuit clarified that “reasonably could have raised” is not so broad as to include any invalidating grounds identified by scorched-earth search tactics, and that the inquiry into what a skilled searcher would find “is ultimately concerned with what the searcher of ordinary skill would find through reasonable diligence and not what an actual researcher in fact did find through whatever level of diligence she exercised.”
The Federal Circuit further clarified that the patent holder bears the burden of proving, by a preponderance of the evidence, what a skilled searcher conducting a diligent search reasonably could, or could not, have been expected to discover. IPR estoppel thus falls in line with the generally applied principle that a party asserting an affirmative defense (i.e., estoppel) bears the burden to prove it.
ConclusionWith the burden squarely placed on the patent holder seeking estoppel against invalidity grounds not petitioned in an IPR, future decisions relating to application of IPR estoppel will likely analyze questions of fact as to the definition of a skilled and diligent searcher and what prior art would be reasonably expected to have been discovered. Although these issues are framed in the hypothetical, courts will likely have to address questions of privilege and relevance, as the petitioner may want to submit evidence of their actual prior art search.
 Under SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018), partial institutions are no longer permitted.
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