Rigidly Interpreting Precedents May Foreclose An Equitable Doctrine

• Published date: 30 August 2022
• Subject Matter: Intellectual Property, Litigation, Mediation & Arbitration, Patent, Trials & Appeals & Compensation
• Law Firm: Marshall, Gerstein & Borun LLP
• Author: Mr Sandip H. Patel

The Federal Circuit's Judge Bryson has been presiding over two district court cases where he decided an important and recurring issue regarding collateral estoppel. In a consolidated order, he refused to apply collateral estoppel to certain fact-finding by the Patent Trial and Appeal Board on what prior art publications disclose relative to patent claims the patent owner contends are infringed. IOENGINE, LLC v. PayPal Holdings, Inc., Nos. 18-cv-452-WCB and 18-cv-826-WCB, Dkts. 511 and 450, respectively (D. Del. June 15, 2022) (Memorandum Opinion and Order). Until the Federal Circuit clearly addresses this issue, his decision may influence district judges facing the same issue.

In these cases, the patent owner asserted infringement of claims in two patents. Soon thereafter, one of the accused infringers successfully petitioned the Board to institute inter partes review of these claims. Only three asserted claims'all dependent claims'survived the review (and an appeal is pending). Afterwards, the patent owner asserted five more dependent claims, for a total of eight claims. All of these claims depend from claims the Board decided were not patentable. In response, the accused infringers complained these claims are invalid. More importantly, they unsuccessfully asked the court for summary judgment that the patent owner should be collaterally estopped from contesting that the limitations recited in the canceled base claims are found in the prior art. These cases present a seemingly simple collateral estoppel issue that surprisingly has split district courts.

Collateral estoppel may apply when the identical issue was previously argued and decided, that decision was necessary to the disposition of the earlier dispute, and the party (to be estopped from now re-litigating the issue) was represented in the earlier dispute. "Importantly," said Judge Bryson, "when the burden of proof on an issue in the prior proceeding was less stringent than the burden of proof on the issue as to which preclusion is sought in the second proceeding, collateral estoppel typically does not apply." Id. at 22 (emphasis supplied). But should the district court have to find'under a clear and convincing standard of proof'that the prior art discloses limitations that the Board already found under a preponderance of evidence standard? Judge Bryson effectively answered "yes," because he denied the motion, refusing to apply collateral estoppel here.

"The problem" with the accused infringers' argument, Judge Bryson notes, "is that the standard for determining [patentability] that is applied in proceedings before the [Board] differs from the standard of proof [for determining validity] that is applied in proceedings before a...