Where Party Joined Pending IPRs, Delaware Takes Broad View of § 315 Estoppel

By Geoffrey Gavin

In Parallel Networks Licensing, LLC v. International Business Machines Corporation, No. 1:13-cv-02072, Dkt. No. 366 (D. Del. Feb. 22, 2017) (Slip Op.), the court held IBM was estopped from asserting obviousness under §103 based on prior art combinations of which it was aware before its filed its IPR petitions.  Id. at 24-26.

In the case, Third Circuit Judge Kent Jordan, a former district court judge in Delaware, is sitting by designation.  Judge Jordan reached the IPR estoppel issue in the context of a summary judgment motion by Parallel Networks on invalidity.  IBM filed four IPR petitions that were instituted on all grounds.  Id. at 24.  But, in the final written decisions, the PTAB ultimately held that all the challenged claims were not unpatentable.  Id.  Now back in the district court, IBM asserted the patent claims were obvious based on prior art combinations known before the filing of the IPR petitions.  Id.  In Parallel Networks’ motion on the issue of obviousness, a threshold issue was whether IBM should be estopped from asserting its proposed prior art combinations.  Id. at 23.

Citing 35 U.S.C. § 315(e)(2) and the PTAB’s decision in Apotex v. Wyeth, IPR2015-00873, Paper 8 at 6 (Sept. 16, 2015), Judge Jordan observed that the statutory estoppel is broad.  Id. at 24-25.  He specifically noted the PTAB’s statement in Apotex v. Wyeth (which applied estoppel in the context of a second IPR petition) that prior art references known to a petitioner “could have been raised” in an earlier proceeding.  Id. at 24.

IBM argued that estoppel should not apply because its IPR petitions were filed along with motions for joinder requesting its petitions be joined with already-instituted IPRs filed by Microsoft.  Id. at 25.  IBM maintained that it could not have raised its prior art combinations to the PTAB in those proceedings because of this unique posture in which it was moving to join Microsoft’s IPRs.  Id.  IBM asserted that, as a practical matter, “it would have been unreasonable for it to have raised any invalidity arguments that were not presented in Microsoft’s IPR.”  Id.

The court rejected that argument, stating:

Allowing IBM to raise arguments here that it elected not to raise during the IPR would give it a second bite at the apple and allow it to reap the benefits of the IPR without the downside of meaningful estoppel.  To prevent that unfair result, I conclude that IBM is estopped from asserting prior art references and combinations that it reasonably could have raised before the PTAB.

Id. at 26.