Massachusetts Court Finds Shaw Decision Forecloses Any Estoppel Beyond the Grounds That Were Instituted in an IPR, Despite Policy Reasons for Broader Estoppel

| Clayton R. HensonBenjamin Anger

The court in Koninklijke Philips N.V. v. Wangs All. Corp., No. 14:cv-12298, 2018 WL 283893 (D. Mass. Jan. 2, 2018) denied summary judgement of no invalidity, finding that the Federal Circuit’s holding in Shaw forecloses a broad reading of the estoppel provisions under 35 U.S.C. §315(e)(1) & (2).

Following an inter partes review that upheld some of Philips’ asserted patent claims, Philips moved the district court for summary judgment of no invalidity of the upheld claims based on estoppel under 35 U.S.C. § 315(e)(2).  The parties disagreed on whether the phrase “during inter partes review” in § 315(e)(2) refers only to period after the IPR is instituted or whether it refers the entirety of the IPR, including the initial filing of the petition.  Philips argued that Wangs is estopped from asserting any of the invalidity contentions it had previously disclosed to Philips in the district court litigation because Wangs “raised or could have raised” any such contentions “during inter partes review,” meaning in its IPR petition.  Wangs argued that it is only estopped from arguing the grounds of invalidity that were actually instituted and adjudicated by the PTAB, but is not estopped from arguing grounds of invalidity that were not in the petition or not instituted by the PTAB.  Wangs further argued that the estoppel is limited to the exact “grounds” for which the IPR was instituted, and does not preclude it from raising any particular prior art reference because a “ground” consists of the combination of prior art references used in the IPR petition.

The district court looked to the Federal Circuit’s analysis in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), where the Federal Circuit found that under the plain language of § 315(e)(1) an IPR does not begin until it is instituted, and thus the estoppel provision under § 315(e)(1) applies only to instituted grounds.  The district court applied the Federal Circuit’s analysis in Shaw, finding that § 315(e)(2)’s estoppel provision is strictly limited to grounds that were instituted and reviewed by the PTAB.  The district court noted that other courts have taken a broader view of the estoppel provision and read Shaw narrowly, to be excluding from estoppel only those grounds the petitioner raised in the petition but were denied institution by the PTAB.  The district court acknowledged that “[t]here is much appeal in a broader reading of the estoppel provision” because it would make the litigation stay more useful in narrowing the issues before the court.  Nevertheless, the court denied the motion for summary judgment because it recognized that Shaw is binding on the court and forecloses the broader reading of the estoppel provisions of 35 U.S.C. §315(e)(1) & (2).  The court left open the question of whether the estoppel provision is limited to the exact combination of prior art references for which the IPR was instituted.