Last week, the Federal Circuit heard an appeal from a related patent infringement lawsuit between the parties that had been stayed during the IPR and lengthy appeals they spawned.  In the opinion, Click-to-Call Technologies LP v. Ingenio, Inc., the Federal Circuit held that infringement defendant Ingenio was barred by the statutory estoppel codified at 35 U.S.C. § 315(e)(2) from challenging validity of a claim for which the PTAB refused to institute the IPR, under what the Court characterized as "a rather unusual set of facts."

As set forth in the opinion, in response to Click's assertion of patent infringement of its U.S. Patent No. 5,818,836, Ingenio sought to institute an IPR based on two grounds:  one for anticipation and/or obviousness over the Dezonno reference, and the other for obviousness over the Freeman reference.  The Board instituted the IPR only on the first Dezonno ground; as a consequence only one claim (claim 27) was not within the scope of declared IPR, and the Board ultimately issued a Final Written Decision that all the challenged claims were invalid.

However, the Supreme Court's decision in SAS Institute v. Iancu intervened, in which the Court held the PTAB was compelled to render a Final Written Decision (FWD) on all claims challenged by a petitioner in its IPR petition.  Ingenio did not respond to this decision by seeking remand at the Board to include claim 27 in the IPR (it being relevant to note that the Court's SAS decision did not mandate that the Board arrive at any different conclusion regarding validity of claim 27 and that if the Board had joined claim 27 it could have and likely would have held Ingenio had not shown this claim to be invalid in view of the Freeman reference).

After the District Court lifted the stay at the final conclusion of the IPR and its appeals, Ingenio moved for summary judgment that claim 27 was invalid based on the Dezonno reference.  The District Court rejected Click's argument that Ingenio was estopped under § 315(e)(2) from challenging validity of claim 27, and granted summary judgment of invalidity against Click; this was the principal issue on appeal.  (A secondary issue was whether the District Court had abused its discretion by refusing to allow Click to amend its complaint to include two additional '836 claims not involved in the IPR; these claims had been asserted in Click's complaint but removed from consideration pursuant to the district court's order that Click reduce the number of claims to be tried, prior to the IPR being instituted.)

The Federal Circuit reversed-in-part (as to the estoppel issue), affirmed-in-part (as to the abuse of discretion issue) and remanded, in an opinion by Judge Stoll joined by Judges Schall and Cunningham.  The District Court erred, according to the Federal Circuit, by addressing Click's estoppel argument solely under the common law principle of issue preclusion, and failing to address Click's argument that the estoppel arose under the statute.  In addition, the panel found error in the District Court's reliance on Click's failure to satisfy the requirement for common law estoppel that the "issue must have been fully and vigorously litigated in the prior action," citing United States v. Shanbaum, 10 F.3d 305, 311 (5th Cir. 1994).  This requirement can be found nowhere in § 315(e)(2) and moreover it would have been unreasonable to apply this requirement in view of the provision that the estoppel arises on grounds that "reasonably could have [been] raised" by the express language of the statute.  Reaching what the opinion calls the merits of Click's estoppel argument, the opinion asserts that invalidity of claim 27 over the Dezonno reference is one that Ingenio "reasonably could have raised" in the IPR (but did not).  The Court also rejected Ingenio's argument that the estoppel should not apply because the Board had not rendered a FWD against that claim, based on a statutory construction argument regarding § 315(e)(2).  The opinion's basis for finding the estoppel applied was in the context of what it termed "the unusual procedural posture" of this case; the opinion notes:

Ingenio included claim 27 in its [IPR] petition, and the IPR did result in a final written decision[ as to that claim].  The fact that the Board, due to a legal error corrected by SAS, failed to include claim 27 in its final written decision does not absolve Ingenio of the estoppel triggered by its choice to challenge claim 27 at the Board.

The Federal Circuit also indicated the panel was influenced by the equities here, because "Ingenio was not helpless to remedy the Board's institution error" and could have moved to have claim 27 included in the IPR after the SAS decision was handed down.  "Ingenio's choice to leave unremedied the Board's mistake does not shield it from estoppel as to a claim it included in its IPR petition" according to the Court.  The case was remanded for the District Court to deny Ingenio's motion and hold that clam 27 was not invalid as being anticipated by the Dezonno reference.

Turning to the District Court's denial of Click's motion to amend its complaint to include claims not involved in the IPR, the Federal Circuit based its determination that this was not an abuse of discretion in part because it implicated the district court's management of its docket, for which the opinion states its review uses "a highly deferential lens," citing 5th Circuit (S&W Enters., L.L.C. v. SouthTrust Bank of Ala., NA, 315 F.3d 533, 535 (5th Cir. 2003)), as well as Federal Circuit (Alpek Polyester, S.A. de C.V. v. Polymetrix AG, No. 2021-1706, 2021 WL 5974163, at *8 (Fed. Cir. Dec. 16, 2021)) precedent.  Another basis for the Court's opinion was the length of time the case was pending prior to Click's motion.  As noted in the opinion, Click filed its lawsuit against Ingenio on May 29, 2012 and the District Court granted Ingenio's motion to stay on December 5, 2013.  The stay was in place for more than six years as noted in the opinion and during that time there were several status reports filed with the District Court in which Click never asked for leave to add additional claims.  And the Board's Final Written Decision issued in 2014, informing Click of the Board's reasoning in finding the challenged claims unpatentable over the Dezonno reference.  Yet Click "did not request leave to amend its asserted claims until six years later" in response to Ingenio's summary judgment motion (the panel stating that Click's request was "cursory" and lacking in justification for the request).  These facts, according to the Court, supported their conclusion that the District Court did not abuse its discretion in denying Click's motion to amend.  Specifically, the Court rejected Click's reliance on S&W Enters., L.L.C. v. SouthTrust Bank of Ala., NA, inter alia, because Click's terse and cursory motion did not itself cite S&W Enterprises in support of its motion ("We will not fault the district court for failing to apply a case that Click-to-Call did not even present to the district court") and the panel refused to consider the S&W Enterprises factors for the first time on appeal.

The Court remanded the case to the District Court for further considerations, which under the circumstances should be limited to infringement.

Click-to-Call Technologies LP v. Ingenio, Inc. (Fed. Cir. 2022)
Panel: Circuit Judges Stoll, Schall, and Cunningham
Opinion by Circuit Judge Stoll