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Stopping Holes in Your IPR Estoppel Arguments

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On April 3, 2023, in Ironburg Inventions Ltd. v. Valve Corp., Nos. 21-2296, 21-2297, 22-1070 (Fed. Cir. Apr. 3, 2023), the Federal Circuit for the first time defined the standard for determining the scope of estoppel set forth in 35 U.S.C. § 315(e)(2) for prior art that was not raised in an inter partes review (“IPR”) petition. Under Section 315(e)(2), the petitioner for an IPR that reaches a final written decision may not assert invalidity in a district court or at the International Trade Commission based on “any ground that the petitioner raised or reasonably could have raised” in the IPR. The Federal Circuit held that grounds the petitioner “reasonably could have raised” are “invalidity grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover.” Further, the court held that it is the patent owner who bears the burden of establishing in the district court that the estoppel applies.

In Ironburg, the plaintiff moved for a pre-trial order pursuant to Section 315(e)(2) to preclude the defendant — who had prevailed in having some, but not all of the asserted claims cancelled in its own IPR — from asserting two additional invalidity grounds that it later discovered through a third party’s IPR petition. Those grounds included three prior art references that were not identified in defendant’s own prior art searching. The district court granted the plaintiff’s motion to preclude reliance on those grounds, which effectively removed invalidity as an issue at trial.

On appeal, the Federal Circuit vacated and remanded that portion of the district court’s order “[b]ecause the district court improperly placed the burden of proof on Valve [Corp.], to show that it could not ‘reasonably . . . have raised’ the Non-Petitioned Grounds in its petition.” As a threshold (and uncontested) issue, the Federal Circuit adopted a standard equating grounds that reasonably could have been raised with “grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover.” The Federal Circuit then held that, consistent with other affirmative defenses, “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 this case, the plaintiff had not produced any evidence related to the “reasonableness” of the third party’s search, which left a “hole in the record” that was not defendant’s obligation to fill. The Federal Circuit noted that had the third party’s search involved “extraordinary measures” or “‘scorched earth’ tactics,” they would have gone beyond “reasonable diligence.” The Federal Circuit also brushed aside other concerns raised by the plaintiff about search efforts being protected by attorney-client privilege because (1) “privilege issues” are commonplace in patent cases and resolving such issues can factor into a court’s decision to grant estoppel, and (2) the relevant inquiry focuses on what a skilled searcher “would find through reasonable diligence and not what an actual researcher in fact did find through whatever level of diligence she exercised.”

What This Means For You

Although the Federal Circuit’s Ironburg decision places the burden on patent owners to demonstrate that Section 315(e)(2) applies to estop a defendant from asserting certain invalidity grounds, patent owners will likely have a hindsight advantage to show that a particular prior art reference could have been discovered by a skilled searcher exercising reasonable diligence. Skilled patent attorneys are likely to have little difficulty connecting the dots back from nearly any English-language patent or printed publication to a challenged patent. Global search databases and machine-translation capabilities will likely bring even more obscure references into the ambit of the skilled searcher. The quintessential foreign-language article, shelved in the recesses of a German library, may present a bit more of a challenge. On the other side, defendants seeking to avoid IPR estoppel of later-discovered prior art references will likely need to divulge at least some details related to their own prior art searching to demonstrate a search was performed with reasonable diligence without uncovering the new reference. Given that the Federal Circuit left the door open for the lower court to reopen discovery on this issue, in the future, parties may also seek third-party discovery of another’s prior art search efforts that uncovered relevant prior art.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.