The Federal Circuit recently clarified that the scope of IPR estoppel in district courts includes prior art grounds that were raised or reasonably could have been raised in a petition for inter partes review (IPR), reversing its prior decision in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016). The court’s decision resolved a split in district courts over whether estoppel extends to grounds that were omitted from a petition for IPR.

Section 315(e)(2) sets forth the scope of IPR estoppel in civil litigation. Under that Section, the petitioner in an IPR that results in a final written decision “may not assert … any [invalidity] ground that the petitioner raised or reasonably could have raised” during that IPR. In Shaw, the Federal Circuit held that because an IPR does not begin until it is instituted, only those grounds on which the Patent Trial and Appeal Board (PTAB) institutes review meet the “raised or reasonably could have been raised” standard, and therefore, only those grounds that actually get reviewed during the IPR were subject to estoppel. 

However, because Shaw only involved a ground that was raised in the petition, but was not instituted by the PTAB, district courts split on whether that decision extended to grounds that were not included in the petition.

In California Institute of Technology v. Broadcom Ltd, a panel of the Federal Circuit was asked to clarify the scope of IPR estoppel. In that case, multiple accused infringers filed petitions for IPRs that were instituted, but ultimately unsuccessful. Failing to invalidate the claims through IPRs, the accused infringers raised new prior art invalidity grounds in the district court that were not presented to the PTAB. The district court held the accused infringers were estopped from raising those grounds because they were aware of the prior art references when the IPR petitions were filed, and could have raised them in the petitions.

The Federal Circuit agreed, holding that IPR estoppel applies to all grounds that a petitioner raised or reasonably could have raised at the time the petition was filed. In so doing, the court reversed its decision in Shaw. As the court explained, at the time Shaw was decided, the PTAB would often institute IPRs on fewer than all grounds raised in an IPR (as in Shaw). Thus, it made sense at the time that a petitioner should not be barred from later litigating grounds that were not reviewed in an IPR. After Shaw, however, the Supreme Court’s SAS Institute decision made clear that the PTAB’s institution authority did not permit partial institution. Rather, the PTAB was required to institute on all grounds or deny institution. Under SAS Institute, it is the petition that defines the IPR and any resulting estoppel.

The panel also clarified its authority to overrule a prior decision of the Federal Circuit without en banc activity. While acknowledging that the Supreme Court’s decision in SAS Institute did not explicitly overrule Shaw, the panel explained that the reasoning in Shaw rests on an assumption that the Supreme Court rejected. Thus, SAS Institute sufficiently undercut the theory or reasoning underlying Shaw, such that the rulings were irreconcilable, which permitted the panel in this case to overrule the Shaw panel’s decision. 

Practice Tip: Because the Federal Circuit has now clarified that IPR estoppel extends to all grounds that could have been raised in an IPR petition that results in a final written decision, petitioners should consider all defenses, including those that cannot be raised at the PTAB (e.g., evidence of prior use, Section 112 defenses), when evaluating whether to petition for IPR.