IP Law Daily, PATENT—N.D. Ill.: Summary judgment granted on arguments that could have been raised in prior IPR proceeding, (Sep 13, 2022)

By Kevin M. Finson, J.D.

Invalidity arguments were statutorily estopped because they could have been, but were not, raised in a prior inter partes review proceeding or during its appeal.

The owner of a grain bin sweep systems patent was entitled to summary judgment on the defendant’s defenses and counterclaims for patent invalidity, the federal district court Chicago has held. The defendant’s invalidity arguments were based on prior art that could have been, but was not, raised before the Patent Trial and Appeal Board in an inter partes review proceeding involving the patent-in-suit. The defendant was estopped from litigating not only the three grounds that the PTAB instituted for review, but also the ten non-instituted grounds. Although the Supreme Court’s decision in SAS Inst., Inc. v. Iancu did not issue until about three weeks after the PTAB made its final decision, it did issue while the case was on appeal to the Federal Circuit, and thus, the defendant should have sought remand at that time to the PTAB based on SAS (Sioux Steel Co. v. Prairie Land Mill Wright Services, September 12, 2022, Rowland, M.).

Sioux Steel Company (Sioux) was the owner of U.S. Patent No. 8,967,937 (the '937 patent), entitled “Modular Storage Bin Sweep System.” The patent related to a modular paddle sweep for sweeping particulate matter across the floor of a bin. Sioux alleged that Prairie Land Mill Wright Services (Prairie) infringed the ’937 patent through sale of its grain bin sweep products. While the suit was pending, Prairie filed a petition for inter partes review of the ’937 patent based on obviousness, and the Patent Trial and Appeal Board instituted review on some, but not all, of the prior art combinations at issue. The IPR decision was affirmed by the Federal Circuit, and the infringement suit, stayed during the IPR proceeding, resumed. Sioux moved for summary judgment on its infringement claim and Prairie's defense of invalidity.

Infringement. Sioux argued that no question of fact existed as to whether the accused products contained a "pivot structure" including a shaft and therefore infringed. The court held, however, that a reasonable jury could believe Prairie's expert, who testified that no shaft existed and that the piece of equipment at issue was a simple rod instead. Summary judgment was denied as to infringement.

Invalidity. Sioux argued that statutory estoppel prevented Prairie from raising invalidity arguments that it could have raised, but failed to raise, in the IPR proceeding. The asserted defenses relied on combinations of prior art that had not been taken up by the PTAB when it instituted review.

Based on the Supreme Court’s decision in SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354 (2018)—overruling the practice of partial institutions—Sioux argued that Prairie was estopped from litigating not only the three grounds that the PTAB instituted for review, but also the ten non-instituted grounds. Sioux reasoned that, although SAS did not issue until about three weeks after the PTAB made its final decision, it did issue during Prairie’s appeal to the Federal Circuit, and thus, Prairie should have sought remand at that time to the PTAB based on SAS.

The court agreed. While the Federal Circuit has not expressly decided how SAS affects the scope of preclusion in cases, like this one, in which the Board declined to institute on all grounds and issued its final written decision pre-SAS, it has found it “appropriate to remand to the PTAB to consider non-instituted claims as well as non-instituted grounds” for cases that were on appeal when the SAS decision came down. BioDelivery Scis. Int’l, Inc. v. Aquestive Therapeutics, Inc., 898 F.3d 1205, 1208 (Fed. Cir. 2018). In a more recent case, the Federal Circuit held that estoppel applied against a party who could, but did not, seek an SAS remand directing the Board to address its non-instituted claims and grounds, explaining that its “choice to leave unremedied the Board’s mistake does not shield it from estoppel as to a claim it included in its IPR petition.” Click-to-Call Techs. LP v. Ingenio, Inc. (Fed. Cir. Aug. 17, 2022). “Thus, because this remand procedure is available to litigants, Section 315(e)(2) bars a party from relitigating any ground raised during IPR, ‘including grounds that the PTAB declined to include in the IPR proceeding and as to which [the party raising invalidity] did not seek a remand pursuant to SAS’ when that party had the opportunity to do so,” the court said. Citation omitted. The court concluded that Prairie “reasonably could have raised” non-instituted grounds before the PTAB after SAS. The arguments were therefore waived. Summary judgment was granted in favor of Sioux on the issue of invalidity

The Case is No. 1:16-cv-02212.

Attorneys: James R. Higgins, Jr. (Middleton Reutlinger) for Sioux Steel Co. Craig Fieschko (Dewitt Ross & Stevens S.C.) for Prairie Land Millwright Services, Inc.

Companies: Sioux Steel Co.; Prairie Land Millwright Services, Inc.

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