IP UPDATE
Exploring the Latest in Intellectual Property Law
IP UPDATE
Exploring the Latest in Intellectual Property Law
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Construing Unambiguous Claim Language and Qualifying Challenged Expert as POSITA

by | Mar 20, 2025 |

Addressing the issues of claim construction and the requisite expert qualifications to testify on obviousness and anticipation, the US Court of Appeals for the Federal Circuit vacated a Patent Trial & Appeal Board decision invalidating half of the challenged patent’s claims and instructed the Board to clarify whether the patent owner’s expert was indeed qualified as a person of ordinary skill in the art (POSITA). Sierra Wireless, ULC v. Sisvel S.P.A., Case Nos. 23-1059; -1085; -1089; -1125 (Fed. Cir. Mar. 10, 2025) (Moore, CJ:  Schall, Taranto, JJ.)

Sisvel owns a patent directed to methods for retrieving data lost during wireless transmission. The prior art taught methods for flagging lost protocol data units (PDUs) so that the data transmitter could retry the transmission. Sisvel’s patent includes a timer that prescribes a period of time to elapse before alerting a transmitter of a missing PDU, allowing the transmission to be completed without notification. The patent has 10 claims, two of which are independent. The primary independent claim has four limitations, including one related to stopping the timer before a status report issues if the missing PDU is located and another related to issuing a status report upon the timer’s expiration. The limitations are linked by the word “and.”

Sierra Wireless initiated inter partes review (IPR), arguing that all 10 of the claims were both anticipated and obvious in light of the “Sachs” prior art patent. The Board found that half of the claims, including both independent claims, were anticipated and obvious. In finding that the other claims were not unpatentable, the Board relied on the testimony of Sisvel’s expert. Both parties appealed.

Sisvel raised two arguments in support of the claims the Board found unpatentable. First, Sisvel argued that the Board misconstrued the two above-noted limitations as mutually exclusive. Sisvel argued that the prior art had to teach both limitations to invalidate the claim. Second, Sisvel argued that the Board’s interpretation of Sachs’ teachings to include the first of the two limitations was unsupported by substantial evidence.

The Federal Circuit agreed. On the claim construction issue, the Court found that the two limitations in issue could not be mutually exclusive because the claim language linked them using the word “and.” To construe the limitations as mutually exclusive would be inconsistent with the unambiguous claim language. With regard to the prior art, the Court looked to Sachs Figure 5, which the Board relied upon in determining that the prior patent had taught the first limitation. Both the figure and the patent’s surrounding language made clear that the time referenced therein was dependent upon reordering of PDUs, not upon receiving missing ones. The Court thus vacated the Board’s invalidity determination as not supported by substantial evidence.

In its appeal, Sierra argued that the Board’s reliance on Sisvel’s expert’s testimony to find certain claims not unpatentable was an abuse of discretion. The Federal Circuit agreed, finding that the Board abused its discretion by not finding that the proposed expert qualified as a POSITA before relying [...]

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An Odyssey of Timeliness: Appointments Clause Arguments Must Be Preserved

by | Mar 13, 2025 |

Citing forfeiture, the US Court of Appeals for the Federal Circuit upheld the dismissal of a complaint against the US Patent & Trademark Office (PTO). The complaint sought director review of a 2018 Patent Trial & Appeal Board decision that affirmed a rejection of claims in the subject patent application. In the initial appeal, no “appointments clause” argument was raised. Odyssey Logistics & Technology Corp. v. Stewart, Case No. 2023-2077 (Fed. Cir. Mar. 6, 2025) (Dyk, Reyna, Stoll, JJ.)

Background

In 2020, the Federal Circuit upheld a 2018 Board decision rejecting claims in a patent application owned by Odyssey Logistics. At that time, Odyssey did not raise an Appointments Clause challenge. However, following the Supreme Court’s 2021 ruling in United States v. Arthrex, Odyssey filed a request for PTO Director review of the 2018 Board decision, arguing that the decision was invalid under Arthrex. After its request was denied, Odyssey filed a district court complaint seeking to compel director review.

Arthrex addressed the Appointments Clause of the US Constitution, which provides that “Officers of the United States” must be appointed by the President with the advice and consent of the Senate, while Congress may permit the appointment of “inferior Officers” by the President, courts, or department heads. In that case, the plaintiff argued that the Board’s administrative judges were principal officers (rather than inferior) and should have been appointed by the President and confirmed by the Senate.

In 2019, the Federal Circuit ruled that there had been an appointments clause violation in Arthrex (coincidentally, this was during the time of Odyssey’s initial appeal to the Federal Circuit). In 2020, the Supreme Court agreed with the Federal Circuit’s ruling but provided a different remedy, holding that the Director “may review final PTAB decisions and, upon review, may issue decisions himself on behalf of the Board.”

Appeal

After Odyssey sought review of the 2018 decision, the PTO responded that it does not accept requests for Director review of ex parte appeal decisions. Odyssey then filed a district court complaint that was dismissed for lack of subject matter jurisdiction. The district court explained that judicial review of a decision committed to agency discretion was improper. Odyssey appealed.

The Federal Circuit affirmed the district court, not on the grounds of lack of jurisdiction but for failure to state a claim. The Federal Circuit ruled that the PTO did not abuse its discretion in denying review. Under Federal Rule of Civil Procedure 60(b), a district court can relieve a party from a final judgment even after an appeal mandate, as long as the relief sought does not fall within the scope of that mandate. The principles underlying this rule provide guidance for agencies regarding reconsideration of prior agency decisions.

Odyssey did not raise its Appointments Clause argument in its appeal of the 2018 Board decision. The Federal Circuit has consistently held that “a party’s failure to raise an Appointments Clause challenge in its opening brief constitutes forfeiture even when the argument was [...]

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Inventor’s Motivation to Combine Does Not Control Obviousness

by | Mar 13, 2025 |

The US Court of Appeals for the Federal Circuit affirmed a district court decision rejecting claims of a patent application directed to a dosing regimen for a cancer treatment, finding the claims to be obvious where the motivation to use the claimed dosing was not the same as the inventor’s motivation. ImmunoGen, Inc. v. Coke Morgan Stewart, Case No. 23-1763 (Fed. Cir. Mar. 6, 2025) (Lourie, Dyk, Prost, JJ)

The claims at issue involved a dosing regimen for administering IMGN853, an already-patented antibody drug conjugate used for treating certain cancers, at a claimed dose of six milligrams (mg) per kilogram (kg) of adjusted ideal body weight (AIBW) of the patient.

ImmunoGen argued that it was undisputed that, at the time of the invention, a person of ordinary skill in the art would not have known that IMGN853 caused ocular toxicity in humans and that without a motivation to address the problem of ocular toxicity, the claimed dosing limitation could not have been obvious. Therefore, according to ImmunoGen, the district court erred in its motivation-to-combine analysis. The Federal Circuit disagreed, stating, “that the specific problem the inventors . . . purported to solve via the claimed dosing regimen was unknown does not necessarily mean that the dosing regimen itself was not obvious.” The Court also noted that because ocular toxicity was a well-known adverse event in the administration of drugs containing a payload included in IMGN853, “a person of ordinary skill in the art, despite not knowing of IMGN853’s ocular toxicity, would have nonetheless been motivated to monitor for those side effects when administering the drug to a human.”

ImmunoGen also argued that the district court erred in finding that a person of ordinary skill in the art would have been motivated to use AIBW dosing to eliminate ocular toxicity. The Federal Circuit again disagreed, reasoning that although AIBW dosing has not been used for drugs such as IMGN853, it would still have been within the range of knowledge of a person of ordinary skill in the art when addressing dosing-induced ocular toxicity. The Court explained that AIBW was well known, had been used for drugs both smaller and larger than IMGN853, and had proven effective in reducing ocular toxicity.

The Federal Circuit concluded that the district court did not clearly err in determining that a person of ordinary skill in the art would have been motivated to select the claimed dose of six mg/kg AIBW with a reasonable expectation of success. The claimed dose had already been described in the literature for patients at their ideal body weight, regardless of whether a doctor was aware of AIBW dosing specifically. The Court also noted that the district court was not required to find that a person of ordinary skill in the art would have had a reasonable expectation of eliminating ocular toxicity using the claimed dose, as “the obviousness inquiry is generally agnostic to the particular motivation of the inventor” and the claims made no reference to ocular toxicity.

Practice Note: [...]

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Economic Prong of Domestic Industry Requirement Includes All Sorts of Labor and Capital

by | Mar 13, 2025 |

Addressing the economic prong of the domestic industry requirement under Section 337(a)(3)(B) of the Tariff Act of 1930, the US Court of Appeals for the Federal Circuit reversed a US International Trade Commission decision, finding that the Commission had applied an overly narrow interpretation of the requirement. The Court explained that expenses related to sales, marketing, warehousing, quality control, and distribution may qualify as “labor and capital” for establishing the existence of a domestic industry, even if there is no domestic manufacturing. Lashify, Inc. v. International Trade Comm’n, Case No. 23-1245 (Fed. Cir. Mar. 5, 2025) (Taranto, Prost, Chen, JJ.)

Lashify is a US-based company that sells eyelash extension products. Concerned about the importation of similar goods, Lashify filed a complaint with the Commission, alleging that certain importers were infringing its patents. As an importer itself, Lashify had its products manufactured abroad before selling them to customers in the United States. In doing so, Lashify incurred significant expenses related to warehousing, distribution, quality control, sales, and marketing. These expenses were critical to Lashify’s domestic industry case.

The Commission rejected Lashify’s claims, reasoning that it did not demonstrate the establishment of, or effort to establish, a domestic industry. This is known as the “economic prong” of the domestic industry requirement. One way to satisfy this prong is by showing the expenditure of significant labor or capital within the US. Lashify’s domestic expenses were limited to warehousing, distribution, quality control, sales, and marketing costs, and in the Commission’s view, these expenses did not constitute significant “labor or capital” under Section 337 (a)(3)(B). The Commission determined that these expenses were no greater than those any importer would incur once its products arrived in the US. Lashify appealed.

The Federal Circuit reversed, citing the text of the provision recognizing significant labor or capital as a means of establishing a domestic industry and noted that the statutory language did not exclude expenses related to warehousing, distribution, quality control, sales, and marketing. Considering the domestic industry requirement under Section 337(a)(3)(C), the Court noted that the reference to labor and capital in part (B) was analogous to investments in plant and manufacturing in part (C), which similarly did not limit the “enterprise functions” to which the investments must be directed.

The Federal Circuit cited its 2015 decision in Lelo, which defined “labor” as “human activity that produces goods or provides the services in demand in an economy” and “capital” as “a stock of accumulated goods,” not simply money to finance an enterprise. The Court held that complainants may satisfy the economic prong by demonstrating the “employment of a large enough stock of accumulated goods [i.e., capital] or of a significant amount of human activity for production goods or providing the services in demand in an economy [i.e., labor].” The Court determined that Lashify’s warehousing, distribution, quality control, sales, and marketing expenses fit within this definition and should therefore be considered in assessing whether Lashify had employed sufficient labor and capital within the US to satisfy the economic [...]

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Interesting Delay: Prejudgment Interest Accrues Despite Unreasonable Delay

by | Mar 13, 2025 |

The US Court of Appeals for the Federal Circuit upheld a decision on enhanced damages and prejudgment interest, concluding that the district court correctly applied the appropriate standard for enhanced damages in accordance with established precedent. Halo Electronics, Inc. v. Pulse Electronics, Inc., Case Nos. 23-1772; -1966 (Fed. Cir. Feb. 28, 2025) (Prost, Bryson, Reyna, JJ.) (nonprecedential).

In 2013, following a jury verdict in favor of Halo, the district court entered a $1.5 million verdict against Pulse for willful infringement but denied Halo enhanced damages. Halo appealed and, in 2016, engendered a new enhanced damages standard from the Supreme Court. In 2015, while the case was pending before the Supreme Court, Halo filed for an award of supplemental damages for direct infringement between 2012 and 2013, and prejudgment and post-judgment interest on the initial $1.5 million judgment and on the supplemental damages. The district court awarded supplemental damages and prejudgment and post-judgment interest.

In 2017, the district court determined that Halo was not entitled to enhanced damages or attorneys’ fees under the Supreme Court’s new standard. Although the parties still disagreed on which method to use for prejudgment interest calculation – and briefed their positions accordingly – the district court mistakenly ordered the clerk to enter a final judgment and close the case. After the Supreme Court decided WesternGeco v. ION Geophysical in 2018, Halo (in 2020) filed a motion seeking prejudgment interest and a new damages trial, arguing that the district court had not made a final ruling on the issue of prejudgment interest and that WesternGeco was intervening case law that permitted it to seek additional damages for Pulse’s activities outside the United States.

Halo argued that because the final order closing the case ignored an outstanding issue (prejudgment interest), the case was merely administratively closed. Although Pulse argued that the resurrected case should remain closed under Federal Rule of Civil Procedure 41(b), the district court awarded limited prejudgment interest in March 2023. The district court rejected Halo’s request for a new trial regarding additional foreign damages under WesternGeco.

Halo appealed, and Pulse counter appealed. Halo raised two main arguments:

  • Enhanced damages were appropriate because of the jury’s finding of willfulness.
  • The district court should have allowed a limited trial on the issue of foreign infringement.

Pulse argued that FRCP 41(b) should have barred any prejudgment interest because Halo did not address the court’s oversight until 2020.

The Federal Circuit rejected both of Halo’s arguments. It explained that a jury’s finding of willfulness is “but one factor” in an enhanced damages determination under the Supreme Court’s highly discretionary Halo test. Willful infringement does not require the more egregious intent that gives rise to enhanced damages, nor does it merge with enhanced damages analyses procedurally – willfulness is a jury issue, while enhanced damages is an issue for the court.

Addressing Pulse’s argument, the Federal Circuit found no abuse of discretion in either the district court’s refusal of a new trial [...]

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Validity Analysis for Product-by-Process Claim Focuses on Product

by | Mar 13, 2025 |

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board patentability finding, explaining that an anticipation analysis for a product-by-process claim focuses on the product and not the process. Restem, LLC v. Jadi Cell, LLC, Case No. 23-2054 (Fed. Cir. Mar. 4, 2025) (Moore, Schall, Taranto, JJ.)

Jadi Cell owns a patent directed to stem cells that have specific cell markers expressed. These stem cells are obtained from the subepithelial layer of mammalian umbilical cord tissue by first placing the layer in contact with a tissue culture growth substrate and then culturing the layer. The claims of the patent are product-by-process claims. Restem challenged certain claims of the patent in an inter partes review (IPR) petition as being anticipated by the Majore reference or obvious in view of Majore in combination with other references. The Board found that none of the challenged claims were shown to be unpatentable. Restem appealed.

The Board construed the claim term “placing a subepithelial layer of a mammalian umbilical cord tissue in direct contact with a growth substrate” to mean “to intentionally place umbilical cord tissue comprising the subepithelial layer so that it touches a growth substrate to permit cell culture.” The Board found that while the prior art references disclosed the two-step process in the claims, the references failed to disclose the claimed cells because the references did not necessarily produce cells with the claimed cell marker expression profile. Restem argued that the Board erred by construing the claims to require steps beyond the claimed two-step process. The Federal Circuit rejected that argument, finding that the Board had made underlying factual findings that supported its anticipation analysis in construing the “placing” step and therefore did not err.

In the underlying proceeding, the Board declined to construe “isolated cell” but construed “expresses/does not express” to mean that “the marker is confirmed present/absent relative to a control sample,” consistent with its interpretation of isolated cell to indicate a cell population. In construing this claim, the Board relied on extrinsic evidence to assess how a person of ordinary skill in the art would determine whether the cell markers were expressed. The Board found that both parties’ experts agreed that cell marker analysis was done at the cell population level at the time of invention. Restem argued that the Board erred in implicitly construing “isolated cell” contrary to the express definition in the challenged patent. However, the Federal Circuit upheld that implicit construction as supported by the intrinsic evidence because the specification consistently described the claimed invention as a cell population and the prosecution history indicated that the examiner only allowed the patentee to claim a cell population.

As for the Board’s finding that the Majore reference did not inherently or expressly anticipate the challenged claims, the Federal Circuit affirmed. The Board found that the cell marker expression profile distinguished the claimed cells from other stem cells and was therefore limiting, and that Majore did not expressly disclose the nonexpression limitations included [...]

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Sour Grapes: Attorney’s Oral Agreement Might Be Okay if Fair, Just, and Fully Advised

by | Feb 27, 2025 |

The US Court of Appeals for the Ninth Circuit found that a district court erred in declaring on summary judgment that an attorney had no ownership interest in a winery because the alleged agreement was made orally. The Ninth Circuit explained that there were triable issues of fact as to whether the attorney could rebut the presumption against oral agreements by showing that the transaction was fair and just and that the client was fully advised. Schrader Cellars, LLC v. Roach, Case Nos. 23-15862; -15990 (9th Cir. Feb. 21, 2025) (Smith, Bennett, Johnstone, JJ.)

Fred Schrader is the former owner of Schrader Cellars (Cellars). Robert Roach is a Texas attorney who claims to have entered into an oral agreement with Schrader regarding the creation of another company, RBS LLC, which Roach asserts has an ownership interest in Cellars. After Schrader sold Cellars in 2017, Roach sued Schrader in Texas state court, claiming that the sale was improper. In 2021, Cellars filed a lawsuit in the US District Court for the Northern District of California, seeking, among other things, a declaration that Roach did not have any ownership interest in Cellars. Roach asserted various counterclaims.

The district court granted summary judgment on Cellars’ request for declaratory relief and dismissed Roach’s counterclaims. The case proceeded to trial on Cellars’ remaining claim for breach of fiduciary duty. The district court instructed the jury that, as a matter of law, Roach had breached his fiduciary duties to Cellars, so the jury decided only the issue of harm. The jury found that Roach’s breach of fiduciary duty had harmed Cellars during the limitations period but did not award damages because of the “litigation privilege defense.” Roach appealed the summary judgment order.

The Ninth Circuit found that the district court erred in granting Cellars summary judgment. Roach argued that the district court erred in declaring that he had no ownership interest in Cellars via the purported RBS agreement. At summary judgment, Cellars argued that even if Roach’s version of the RBS oral agreement existed, Roach could not enforce it because it violated California Rules of Professional Responsibility, which require written advisories and disclosures. Relying on this provision, the district court concluded that even if an oral argument existed, it was unenforceable, and Roach therefore could not have any ownership interest in Cellars. The district court noted that although “[a]n attorney may rebut the presumption of undue influence by showing that ‘the dealing was fair and just,’ and ‘the client was fully advised[,]’ . . . Roach has made no such effort to rebut this presumption.”

The Ninth Circuit found that the district court erred because there were triable issues of fact concerning whether Roach rebutted the presumption regarding the alleged breach of his client duties. The Court explained that not only did Roach expressly argue fairness before the district court, but the basic facts of the case (when viewed in the light most favorable to Roach) demonstrated that the transaction was fair and just and that [...]

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Diamond in the Rough: Federal Circuit Polishes § 101’s Abstract Idea Test

by | Feb 20, 2025 |

The US Court of Appeals for the Federal Circuit reversed and remanded a determination by the US International Trade Commission regarding subject matter ineligibility under 35 U.S.C. § 101. The Court concluded that the Commission’s “loose and generalized” analysis did not adequately consider the specific and technical improvements specified by the claims. US Synthetic Corp. v. International Trade Commission, Case No. 23-1217 (Fed. Cir. Feb. 13, 2025) (Dyk, Chen, Stoll, JJ.)

US Synthetic Corp. (USS) filed a complaint with the Commission, alleging that several entities (intervenors) violated § 337 of the Tariff Act by importing and selling certain products that infringed five of USS’s patents. The patent at issue concerned a composition of a polycrystalline diamond compact (PDC) and disclosed an improved method for manufacturing PDCs.

An administrative law judge (ALJ) determined that several claims of the patent were valid and infringed under 35 U.S.C. §§ 102, 103, and 112. However, the ALJ found the claims patent-ineligible under § 101, deeming them directed to an abstract idea. The Commission affirmed this finding while rejecting the intervenors’ argument that the claims lacked enablement under § 112. Consequently, the only bar to a § 337 violation was the § 101 ruling. USS appealed, challenging the Commission’s patent ineligibility determination, while the intervenors argued that the claims were not enabled.

The Federal Circuit determined that the patent claims were directed to a specific technological improvement rather than an abstract idea. The Court had consistently explained that claims that provide a concrete technological solution to a recognized problem in the field are patent-eligible under § 101. Here, the claimed invention was not merely an implementation of an abstract idea on a generic computer; rather, it provided a particularized solution rooted in the physical composition of matter defined by constituent elements, dimensional information, and inherent material properties.

Applying the Supreme Court’s two-step Alice framework, the Federal Circuit reasoned that, under Alice step one, courts must determine whether the claims are directed to an abstract idea or a patent-eligible improvement. In this case, the Court found that the patent claims were not directed to an abstract idea because they recited a specific solution that was directed to a non-abstract composition of matter: PDC. Unlike claims found ineligible in prior cases, USS’s patent did not merely recite a mathematical algorithm or fundamental economic practice but instead provided a tangible technological advancement for an improved method for manufacturing PDCs.

The Federal Circuit noted that even if the claims were directed to an abstract idea under Alice step one, the claimed invention contained an inventive concept sufficient to transform the nature of the claim into patent-eligible subject matter under Alice step two. The Court explained that an inventive concept exists when the claims recite a specific, unconventional solution that goes beyond well-understood, routine, and conventional activities previously known in the field. Here, the Court determined that the claimed invention included an innovative combination of components (diamond, cobalt catalyst, and substrate) in conjunction with particular dimensional information (grain size) and [...]

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Small-Market Segment Can Still Satisfy Domestic Industry Requirement

by | Feb 20, 2025 |

The US Court of Appeals for the Federal Circuit affirmed a US International Trade Commission finding, explaining that small-market segments can be significant and substantial enough to support the Commission’s domestic industry requirement. Wuhan Healthgen Biotechnology Corp. v. International Trade Commission, Case No. 23-1389, (Fed. Cir. Feb. 7, 2025) (Moore, Chen, Murphy, JJ.)

Ventria Bioscience Inc. owns a patent directed to cell-culture media, which supplies nutrients to cells grown in artificial environments. Ventria filed a complaint at the Commission alleging that Wuhan Healthgen Biotechnology violated § 337 of the Tariff Act by importing products that infringed the patent. The Commission ultimately found that Healthgen imported infringing products and that Ventria had satisfied the domestic industry requirement. Healthgen appealed.

The Federal Circuit affirmed the Commission’s domestic industry finding. The Court began by explaining the long-standing principle that patent infringement-based violations of § 337, which establishes unlawful import practices, require that “an industry in the United States, relating to the articles protected by the patent…exists or is in the process of being established.” This requirement is divided into economic and technical prongs. Here, Healthgen conceded that the technical prong was satisfied by a Ventria product (Optibumin) that practiced the patent.

The economic prong considers three factors, any of which are sufficient to satisfy the prong. As identified by the subsections of § 337(a)(3), “there is in the United States, with respect to the articles of the patent…(A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in its exploitation, including engineering, research and development, or licensing.” The Commission found that each of these factors was met because, among other things, Ventria had 100% of its relevant investments in Optibumin located within the United States. The conclusion was further supported by a comparison of the investments to Obtibumin’s revenue.

Healthgen argued that the investments were too small to be significant or substantial, and that Optibumin’s revenue was low, which inflated investment-to-revenue ratios. The Federal Circuit rejected Healthgen’s argument, stating that “[s]mall market segments can still be significant and substantial enough to satisfy the domestic industry requirement.” The Court continued, stating that a domestic industry analysis “cannot hinge on a threshold dollar value or require a rigid formula; rather, the analysis requires a holistic review of all relevant considerations that is very context dependent.” Here, the Court found that “[t]hough the dollar amounts of Ventria’s Optibumin investments are small, the Commission found all of the investments are domestic, all market activities occur within the United States, and the high investment-to-revenue ratios indicate this is a valuable market.” The Court found that the Commission’s findings were supported by substantial evidence and affirmed the Commission.



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Collateral Estoppel Doesn’t Apply to Unchallenged IPR Claims

by | Feb 20, 2025 |

The US Court Appeals for the Federal Circuit found that despite a Patent Trial & Appeal Board determination that certain challenged patent claims were unpatentable based on a preponderance of the evidence standard, the patent owner is not collaterally estopped from asserting other, unreviewed claims of that patent in district court litigation. Kroy IP Holdings, LLC v. Groupon, Inc., Case No. 23-1359 (Fed. Cir. Feb. 10, 2025) (Prost, Reyna, Taranto JJ.)

Kroy sued Groupon for patent infringement. In response, Groupon filed two inter partes review (IPR) petitions challenging 21 claims of the patent at issue. After Groupon’s IPR deadline passed, Kroy amended its complaint to add additional claims from the challenged patent. The Board found all 21 challenged claims unpatentable. Kroy amended its complaint again, this time removing the 21 unpatentable claims and including only claims that were not at issue in the IPR proceedings.

In response, Groupon moved to dismiss the complaint, arguing that the Board’s prior IPR rulings on the unpatentable claims collaterally estopped Kroy from asserting the new claims. The district court agreed, finding that if the Board issues final judgment that a patent claim is unpatentable and another claim is immaterially different, then collateral estoppel applies to that other claim for purposes of invalidity. Applying that standard, the district court determined that the new claims were not materially different from the unpatentable claims in terms of invalidity and granted Groupon’s motion to dismiss with prejudice. Kroy appealed.

Kroy argued that collateral estoppel should not apply because the burden of proof for invalidity in an IPR proceeding (preponderance of the evidence) is lower than in the district court (clear and convincing). The Federal Circuit noted that this case presents a distinct question of collateral estoppel law; that is, whether a prior final written decision of the Board that certain patent claims are unpatentable precludes a patentee from asserting other claims from the same patent, even assuming the asserted claims are immaterially different from the unpatentable claims for purposes of invalidity.

Referring to its recent 2024 decision in ParkerVision v. Qualcomm, the Federal Circuit clarified that collateral estoppel does not apply to new claims that have not yet been adjudicated. The Court explained that Groupon must prove the invalidity of these new claims in the district court by clear and convincing evidence. The Court dismissed Groupon’s reliance on the 2013 Ohio Willow Wood decision, noting that this case addressed whether a prior district court’s invalidity ruling estopped the patentee from asserting claims in the district court that are immaterially different for purposes of invalidity. On the other hand, the Ohio Willow Wood estoppel scenario occurred in district courts involving the same burden of proof. Because the Board determined unpatentability on separate patent claims based on a preponderance of the evidence standard, courts cannot collaterally estop a patentee from asserting other, unadjudicated patent claims in district court litigation.



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