PTAB Issues Second Ruling on Scope of Estoppel After Final Decision

Authored by Brian S. Mudge

In its second ruling on the scope of estoppel,1 the Board has rejected a patent owner’s attempt to terminate an AIA trial based on a final written decision involving the same patent. The case, Westlake Services, LLC v. Credit Acceptance Corp., CBM2014-00176 (PTAB May 14, 2015) (paper 28), involved a covered business method (CBM) proceeding brought in connection with U.S. patent no. 6,950,807. Although the ’807 patent was the subject of a final decision in a prior CBM case, the PTAB ruled that estoppel did not bar the second CBM proceeding because the specific claims of the ’807 patent at issue were not addressed in the prior final decision.

Case Facts.

In CBM2014-00176 (“the ’176 CBM”), Petitioner challenged claims 10–12 and 14–33 of the ’807 patent as unpatentable under 35 U.S.C. §101. A corrected petition was filed on Aug. 22, 2014.  The Board instituted trial on the §101 ground for these claims in a decision dated Feb. 9, 2015.2

Petitioner had previously challenged claims 1-42 of the ’807 patent in CBM2014-00008 (“the ’008 CBM”) on §101 grounds, among others. In a decision pre-dating the Supreme Court’s Alice opinion,3 the PTAB on March 31, 2014 instituted trial on §101 grounds for claims 1-9, 13, and 34-42, but declined to institute trial on §101 grounds for claims 10-12 and 14-33 (and all other grounds were rejected as well). Petitioner’s request for rehearing was denied on April 29, 2014.  After the Supreme Court issued its Alice opinion, Petitioner requested authorization to file a second request for rehearing, in light of Alice. In denying Petitioner’s request, the Board commented that Petitioner was free to file another petition to challenge claims of the ’807 patent (and Petitioner did so by initiating the ’176 CBM).

After conducting trial in the ’008 CBM, the PTAB issued its final decision on March 24, 2015, ruling that claims 1-9, 13, and 34-42 of the ’807 patent were unpatentable under §101. The final decision did not address’807 patent claims 10-12 and 14-33.  Shortly thereafter, Patent Owner requested authorization to file a motion to terminate the’176 CBM based on 35 U.S.C. §§325(d) and 325(e)(1). The Board granted authorization to file a motion to terminate based on the estoppel provisions of §325(e)(1), but denied the request as to §325(d). Subsequently, the parties briefed termination based on estoppel under §325(e)(1).4

Arguments and Ruling on Estoppel.

Patent Owner contended that estoppel barred the challenge to claims 10-12 and 14-33 in the ’176 CBM because Petitioner had previously challenged claims 10-12 and 14-33 under §101 in its petition in the ’008 CBM. Patent Owner asserted that the language “any patent claim challenged by the petitioner” in §328(a) requires that the final written decision (and, hence, estoppel) applies to all claims contained in the petition, even those for which trial was not instituted. CBM2014-00176, paper 28 at 4. In response, Petitioner argued that §§325(e) and 328 apply on a claim-by-claim basis and do not apply to claims for which trial was not instituted or addressed in the final written decision. Id. In support, Petitioner pointed to PTO comments on rules implementing AIA trial proceedings, which stated that

[t]he Board’s determination not to institute an inter partes review, post-grant review, or covered business method patent review is not a final written decision within the meaning of 35 U.S.C. 318(a), as amended, and 35 U.S.C. 328(a), and thereby does not trigger the estoppel provisions under 35 U.S.C. 315(e), as amended, and 35 U.S.C. 325(e).

Id. at 5 (quoting Response to Comment 66, 77 Fed. Reg. 48680 at 48703–04).

The Board agreed with Petitioner’s argument that estoppel is applied on a claim-by-claim basis, and rejected Patent Owner’s position. Pointing to the language of the statute, the PTAB opined that “[b]y its terms, estoppel is invoked under Section 325(e)(1) as to ‘a claim in a patent’ that ‘results in a final written decision under’ 35 U.S.C. § 328(a).” Id.  Because the final written decision in the ’008 CBM only addressed patentability of claims 1–9, 13, and 34–42, and not claims 10–12 and 14–33,

claims 10–12 and 14–33 are not claims in a patent that have resulted in a final written decision under Section 328(a), and thus, under Section 325(e)(1), estoppel does not apply to those claims.

Id. The Board firmly rejected Patent Owner’s position that the final written decision in the ’008 CBM incorporated the prior institution decision as to as to non-instituted claims 10–12 and 14–33, noting that Patent Owner had not provided any persuasive support for its argument. Id.

Implications of the Estoppel Ruling.

Although this decision may not have as broad an impact on AIA estoppel jurisprudence as the Board’s Dell decision, it is nevertheless an important case. In the present ruling, the Board has interpreted the statute in a way that sets a strong boundary on the reach of estoppel. According to the ruling, parties that challenge a patent in an AIA trial proceeding would, after a final decision, only face statutory estoppel as to those claims for which trial was instituted and ruled upon in the final written decision. Claims challenged in a petition for which trial is not instituted would not raise statutory estoppel.  Similarly, parties that challenge some, but not all, claims of a patent in an AIA trial would not, upon a final decision, face statutory estoppel as to any unchallenged claims (or as to claims in a separate patent, even if related).

There may be unresolved questions, however, as to the scope of estoppel. For example, consider a petition that includes multiple grounds to challenge patent claim N, but some grounds as to claim N are rejected or declined in the institution decision and not carried forward to trial. Would estoppel bar such grounds in a subsequent petition? If the PTAB issues a final decision that rules on claim N, then the applicable estoppel statute, either §315(e)(1) or §325(e)(1), would appear to be triggered and in play. But that does not end the inquiry – the parties may dispute whether the petitioner “raised or reasonably could have raised” such non-instituted grounds for claim N in the first proceeding, and the resolution of that issue would determine whether estoppel applies to bar a second proceeding as to claim N.

For a discussion of the PTAB’s first estoppel ruling in Dell, Inc. v. Electronics & Telecommunications Research Institute, IPR2015-00549 (PTAB March 26, 2015) (paper 10), see: “PTAB Rules on Scope of Estoppel Following Final Decision” (April 24, 2015, Kenyon’s IPR Blog).

Petitioner also challenged claims 1-42 of the ’807 patent based on grounds under §112, but these grounds were rejected on the merits in the institution decision, and were not addressed in connection with the issue of estoppel.

Alice Corp. v. CLS Bank Int’l, 573 U.S. __, 134 S. Ct. 2347 (2014).

The estoppel provisions of §325(e)(1) apply, in the case of a final written decision in a post-grant review, to proceedings before the PTO. Under AIA Section 18(a)(1), the same estoppel provisions apply in the case of a CBM final written decision; nearly-identical estoppel provisions apply in the case of a final written IPR decision under §315(e)(1).  (Of note, the PGR estoppel provisions of §325(e)(2) applicable to civil actions do not apply in the case of CBMs, per AIA Section 18(a)(1)(A); instead, AIA Section 18(a)(1)(D) governs the estoppel effect of a CBM final written decision upon civil actions and ITC proceedings.)