IP Law Daily, PATENT—Fed. Cir.: IPR estoppel precluded litigating validity of a patent claim that could have been raised during appeal, (Aug 17, 2022)

By Cheryl Beise, J.D.

Even though the IPR was instituted before the Supreme Court’s 2018 SAS decision, the petitioner could have sought remand for institution on a non-insituted ground.

In a patent infringement action that was revived after a companion inter partes review proceeding eventually was resolved by the U.S. Supreme Court, defendant Ingenio, Inc. was precluded by IPR estoppel from litigating the validity of the only remining asserted claim of the patent-in-suit owned by Click-to-Call Technologies, the U.S. Court of Appeals for the Federal Circuit has ruled. In 2013, the Patent Trial and Appeal Board instituted the IPR on some grounds, but not others including anticipation of the remining asserted claim. However, during the pendency of the appeal of the IPR, and while the district court case was stayed, the Supreme Court overruled the practice of partial institutions in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018). Ingenio, however, never sought remand based on SAS directing the Board to address its non-instituted claims and grounds. The district court’s determination that Ingenio was not estopped under from asserting invalidity of the asserted its summary judgment of invalidity was reversed and the case remanded. The district court’s denial of Click-to-Call’s request to amend its asserted claims was affirmed (Click-To-Call Technologies, LP v. Ingenio, Inc., August 17, 2022, Stoll, K.).

In 2012, Click-to-Call sued several entities (including Ingenio) for infringement of U.S. Patent No. 5,818,836 (the ’836 patent). A year later, Ingenio filed a petition for IPR challenging 17 claims. In its petition, Ingenio challenged these claims on six grounds, three based on one reference, Dezonno, and three based on another reference, Freeman. The Board instituted only on the Dezonno-based grounds and refused institution of the Freeman-based grounds. Claim 27 was challenged in the petition based only on Freeman, not Dezonno. In December 2013, the district court granted Ingenio’s motion to stay the case until resolution of the IPR.

In its final written decision on October 28, 2014, the Board found all claims challenged on the Dezonno grounds to be unpatentable. Click-to-Call appealed to the Federal Circuit based on the time-bar dispute. The en banc Federal Circuit held that "time-bar determinations under §315(b) are appealable" notwithstanding §314(d). That decision was reversed by the Supreme Court in Thryv, Inc v. Click-to-Call Technologies, LP, 140 S. Ct. 1367 (2020). The Court held that the “no appeal” provision of Section 314(d) of the Patent Act precludes judicial review of the agency’s application of Section 315(b)’s time bar prescription. During the pendency of the appeal of the IPR, and while the district court case was stayed, the Supreme Court overruled the practice of partial institutions in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018). Ingenio, however, never sought remand under SAS for the Board to consider Ingenio’s challenge to claim 27.

After more than six years, the district court resumed the infringement case once the IPR proceeding was finally concluded. Ingenio filed a motion for summary judgment of invalidity. Click-to-Call requested leave to amend its asserted claims to add two other claims (claims 24 and 28) that were not at issue in the IPR. In addition, Click-to-Call argued that Ingenio was estopped from pressing invalidity of claim 27 based on Dezonno due to IPR estoppel under 35 U.S.C. § 315(e)(2). The magistrate judge filed a Report and Recommendation recommending granting Ingenio’s motion on the basis that Dezonno anticipated claim 27 and that Click-to-Call should not be granted leave to amend its asserted claims. The district court adopted the Report and Recommendation on August 30, 2021, and granted summary judgment of invalidity. Click-to-Call appealed.

IPR estoppel. Click-to-Call first argued that the district court erred in refusing to estop Ingenio from arguing that claim 27 is anticipated by Dezonno. Analyzing Click-to-Call’s argument under common law issue preclusion, the district court rejected Click-to-Call’s estoppel argument under the “actually litigated” prong of issue preclusion.

The Federal Circuit agreed with Click-to-Call that its argument regarding Dezonno and claim 27 was grounded in IPR estoppel under 35 U.S.C. § 315(e)(2). Thus, the district court erred by analyzing Click-to-Call’s argument under standard issue preclusion rather than IPR estoppel. The Federal Circuit further noted that the actually litigated requirement of issue preclusion is not implicated in IPR estoppel. Therefore, Ingenio could still be estopped if it “reasonably could have raised” that ground in the IPR.

Turning to the merits, the Federal Circuit held that IPR estoppel applied to this case as a matter of law and precluded Ingenio from arguing that claim 27 is anticipated by Dezonno. Ingenio’s IPR petition included a challenge to claim 27 (based upon Freeman, but not Dezonno) and included unpatentability challenges to other claims based on Dezonno (including an anticipation challenge to claim 1 on which claim 27 depends), evidencing its awareness of the Dezonno reference. Accordingly, anticipation of claim 27 in view of Dezonno—the invalidity challenge the district court accepted—was a ground that Ingenio “reasonably could have raised” in the IPR, the court reasoned.

Ingenio argued that it was not estopped because claim 27 “was not part of the Board’s Final Written Decision,” which it contended was required by § 315(e)(2). The Federal Circuit acknowledged that § 315(e) estoppel applies on a “claim-by-claim basis” after “an inter partes review of a claim in a patent under this chapter that results in a final written decision.” § 315(e)(2). However, the fact that claim 27 was not part of the Board’s final written decision was not dispositive because of the unusual procedural posture of this case, the court explained. Ingenio included claim 27 in its petition, and the IPR did result in a final written decision. “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 court said.

Moreover, in SAS, the Supreme Court explained that “the statute tells us that the petitioner’s contentions, not the Director’s discretion, define the scope of the litigation all the way from institution through to conclusion.” Id. at 1357. It is the “petitioner’s contentions” that define “the scope of the [IPR] litigation” and thus the extent of the estoppel. Here, the scope of the IPR as defined in the petition included claim 27 and Dezonno, even if it did not include a challenge to claim 27 based upon Dezonno.

“Furthermore, unlike pre-SAS petitioners whose partially instituted proceedings went final before SAS issued, Ingenio was not helpless to remedy the Board’s institution error,” the Federal Circuit observed. Due to the long appellate history of the IPR proceeding, the appeal of Ingenio’s IPR was still pending at the time SAS issued in 2018. “Ingenio, however, never sought a SAS remand directing the Board to address its non-instituted claims and grounds,” the court said. “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.”

Denial of motion to amend. The court next turned to the district court’s denial of Click-to-Call’s request to amend its listing of asserted claims to add claims 24 and 28, which were not challenged in the IPR. This was a decision concerning the management of a district court’s case docket, reviewed under a highly deferential lens for an abuse of discretion. The Federal Circuit found that the district court did not abuse its discretion in refusing to allow Click-to-Call to amend its selection of claims for trial to add claims 24 and 28.

The Federal Circuit reversed the district court’s determination that Ingenio was not estopped under 35 U.S.C. § 315(e)(2) from asserting invalidity of claim 27 based on anticipation by Dezonno and reversed its summary judgment of invalidity. The case was remand for further proceedings regarding claim 27. The court affirmed district court’s denial of Click-to-Call’s request to amend its asserted claims to include claims 24 and 28.

The Case is No. 22-1016.

Attorneys: Daniel J. Shih (Susman Godfrey LLP) for Click-To-Call Technologies, LP. Amanda N. Buillette (Kilpatrick Townsend & Stockton LLP) for Ingenio, Inc.

Companies: Click-To-Call Technologies, LP; Ingenio, Inc.

MainStory: TopStory Patent FedCirNews GCNNews