Joining Issue: The Federal Circuit Addresses the Interplay Between IPR Estoppel and IPR Joinder

On September 24, 2020 the Federal Circuit issued a decision in Network-1 Tech., Inc. v. Hewlett-Packard Co.¹, in which the Federal Circuit addressed whether statutory estoppel under 35 U.S.C. § 315(e)² applies to a party who joined an already instituted IPR under 35 U.S.C. § 315(c).³ In this decision, the Federal Circuit held that statutory estoppel does not apply to “a joining party [because it] cannot bring with it grounds other than those already instituted, [and therefore] that party is not statutorily estopped from raising other invalidity grounds.”⁴ Previously, the Federal Circuit has addressed § 315(e) estoppel only to decide whether estoppel applies when an accused infringer asserts invalidity arguments that were: (i) made in an IPR petition; (ii) but not one of the grounds on which the PTAB granted institution.⁵ This is the first case where the Federal Circuit addressed the § 315(e) estoppel statute for non-petitioned grounds. Specifically, the Federal Circuit determined that defendant Hewlett-Packard (“HP”) was not estopped under 35 U.S.C. § 315(e) based on a previous IPR written decision.

In 2011, Network-1 Tech., Inc. (“Network-1”) filed a complaint in the U.S. District Court for the Eastern District of Texas against multiple defendants, including HP, for infringement of U.S. Patent No. 6,218,930 (“the ’930 patent”), which claims an “Apparatus and Method for Remotely Powering Access Equipment over a 10/100 Switched Ethernet Network.”⁶ In 2013, co-defendant Avaya, Inc. petitioned for an IPR of the ’930 patent (“the Avaya IPR”) and the Board partially granted institution of this IPR on two grounds: “(1) anticipation under 35 U.S.C. § 102(b) by Matsuno⁷; and (2) obviousness under 35 U.S.C. § 103(a) by De Nioclo⁸ and Matsuno.”⁹ Shortly after institution of the Avaya IPR, HP and other petitioners filed their own IPR petition of the ’930 patent on grounds different from those in the Avaya IPR and subsequently filed a motion to join the Avaya IPR.¹⁰ The Board denied institution based on HP’s IPR petition, so HP filed another IPR petition and a motion to the join the Avaya IPR, but this time with only the grounds already instituted in the Avaya IPR.¹¹ While HP was time barred under 35 U.S.C. § 315(b) from filing its own petition because more than a year had passed since the district court complaint was served, § 315(c) allows the Director discretion to join a person to an already filed IPR. The Board granted HP’s second IPR petition and HP was added to the Avaya IPR pursuant to 35 U.S.C. § 315(c). Ultimately, the Board did not find the ’930 unpatentable over either instituted ground.¹²

Subsequently in the district court case, HP argued, among other things, that the “asserted claims [were] rendered obvious by both public use of ‘the Fisher system.’”¹³ The jury rendered a verdict in favor of HP, finding all asserted claims invalid.¹⁴ The district court then granted judgment as a matter of law with respect to the ’930 patent’s validity, finding that “because of HP’s joinder to the Avaya IPR, HP should have been estopped under 35 U.S.C. § 315(e) from raising the remaining obviousness challenges, which it determined ‘reasonably could have been raised’ in the Avaya IPR.”¹⁵ In particular, the Magistrate Judge applied Federal Circuit precedent Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc. in its Report and Recommendation to reason that under the “plain language of § 315(e)(2)” “IPR estoppel applies to non-petitioned grounds (grounds that a party failed to raise in an IPR, but reasonably could have).”¹⁶ In Shaw Indus. Grp., Inc. the Federal Circuit held that the § 315(e) statutory estoppel only applies to situations where the IPR was instituted and not merely petitioned and institution denied. In Shaw Indus. Grp., Inc. the patent challenger was not estopped under § 315(e) from certain prior art invalidity arguments in either the PTO or district courts because “[t]he IPR does not begin until it is instituted.”¹⁷ The Federal Circuit in Shaw Indus. Grp., Inc. emphasized the word “during” in § 315(e)—“on any grounds that the petitioner raised or reasonably could have raised during that inter partes review”—to signify that § 315(e) estoppel was intended to apply only to grounds of an IPR that are actually instituted.¹⁸...