IP Law Daily, PATENT—W.D. Wis.: Meyer estopped from asserting certain invalidity defenses in infringement suit by Douglas, (Apr 20, 2017)

By Robert Margolis, J.D.

Meyer Products LLC is estopped from asserting several invalidity defenses in Douglas Dynamic’s, LLC’s patent infringement lawsuit against it, having previously instituted a Patent Trial and Appeal Board ("PTAB") inter partes hearing, the federal district court in Madison, Wisconsin has held. The court estopped Meyer from asserting invalidity defenses on which the PTAB instituted review, as well as those that Meyer "reasonably could have" included in its inter partes petition but did not. The court held, however, that Meyer is not estopped from asserting several invalidity defenses that were included in its inter partes review petition but on which the PTAB did not institute review (Douglas Dynamics LLC v. Meyer Products LLC, April 18, 2017, Peterson, J.).

Douglas sued Meyer for infringing its patent, U.S. Patent No. 6,928,757 ("the ‘757 patent"), for a snowplow mounting assembly. Shortly after Douglas filed suit, Meyer filed for inter partes review of claims 1, 4-7, and 18. Meyer asserted several grounds for finding those claims to be invalid under prior art. When the PTAB granted the petition and instituted its review as to some but not all of Meyer’s asserted invalidity grounds, the federal litigation was stayed.

Douglas ultimately prevailed in the inter partes review, with the PTAB holding that Meyer failed to show any of the challenged claims are invalid. With the stay lifted, Douglas then moved for a determination of which invalidity defenses Meyer can still raise in the litigation, and which Meyer is precluded from raising in light of the PTAB proceedings.

Estoppel. Section 315(e)(2) of the Patent Act provides that the "petitioner in an inter partes review of a claim in a patent … that results in a final written decision . . . may not assert . . . in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review." The PTAB rejected three of Meyer’s grounds for a finding of invalidity and the parties agreed that Section 315(e)(2) barred Meyer from raising those grounds again in the district court.

The dispute before the court was whether Meyer could raise two additional categories of invalidity arguments it listed in a court filing before the case was stayed: (1) non-instituted grounds for invalidity that Meyer asserted in its inter partes review petition, but on which the PTAB did not institute review; and (2) non-instituted grounds for invalidity that Meyer did not assert in its inter partes review petition. Relying on a recent decision by the Federal Circuit, Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), the court held that Meyer was estopped from asserting the second category of defenses, but not the first.

The court looked at the purpose of and policy behind the inter partes review process, as explained in Shaw and subsequent cases. The conclusions of the PTAB are generally unreviewable, and must be completed within 12 months, giving parties an efficient mechanism for resolving disputed issues. The court noted that the PTAB would not be able to complete its review process within 12 months if it were required to review every invalidity basis a petitioner may raise. The PTAB, therefore, may choose to institute proceedings on some of the grounds that a petitioner may raise to consider, but reject consideration of others. This means that a petitioner does not have the right to have every one of its invalidity grounds decided by the PTAB, the court noted.

However, a petitioner is "entitled to meaningful judicial review of every invalidity ground presented, if not in the IPR, then in the district court," according to the court. The lesson of Shaw and subsequent cases, according to the court, is that a petitioner is entitled to "proper judicial attention" of every invalidity ground presented to the PTAB, whether in the inter partes review proceeding or, if the PTAB does not consider a particular invalidity argument, in the district court after the proceeding.

The court also noted that petitioners should be incentivized to raise what they deem to be their best arguments before the PTAB, and not to "expect to hold a second-string invalidity case in reserve" should the petitioner lose the inter partes review. The court noted that in cases where there is an "abundance of prior art with which to make an arguable invalidity defense," it would be easy to have such a "second-string invalidity case." Thus, the court applied Section 315(e)(2) estoppel to grounds not asserted in the IPR petition, so long as they are based on prior art that could have been found by a "skilled searcher's diligent search".

The court found that it is "a tougher call" whether estoppel precludes subsequent assertion of grounds that were included in a petition to the PTAB but on which the PTAB did not institute review proceedings. Given the policies of the review process and the proper incentives, the court agreed with prior courts that held § 315(e)(2) estoppel should not apply to such grounds.

Thus, the court held that Meyer is estopped from asserting all invalidity defenses, except the following non-instituted invalidity defenses that Meyer had raised in its PTAB petition: (1) Claims 1 and 4-7 are anticipated by Pruss; (2) Claim 6 is anticipated by Keeler; (3) Claims 1, 4-7, and 18 are obvious over Coates combined with Kost or Watson; and (4) Claims 1, 4-7, and 18 are obvious over Pruss combined with Kost or Watson. While the court considered itself not bound by the PTAB’s refusal to institute proceedings on these defenses, it noted that it will consider the PTAB’s reasoning to the extent that it is persuasive.

The case is No. 3:14-cv-00886-jdp.

Attorneys: Aaron T. Olejniczak (Andrus Intellectual Property Law, LLP) for Douglas Dynamics, LLC. Bryan Alan Schwartz (Squire Patton Boggs [US] LLP) and David A. Casimir (Casimir Jones, S.C.) for Meyer Products LLC.

Companies: Douglas Dynamics, LLC; Meyer Products LLC

Cases: Patent WisconsinNews