Federal Circuit Ruling in Avx v. Presidio Clarifies Operation of IPR Estoppel and Issue Preclusion

The Federal Circuit’s decision in Avx Corporation v. Presidio Components, Inc. indirectly tests the boundaries of 35 U.S.C. § 315(e), which provides express statutory authority providing for binding effect of final decisions from PTAB proceedings on petitioners in subsequent district court cases, as it relates to inter partes review.

https://depositphotos.com/1823001/stock-illustration-prohibition-icon.htmlAn inter partes review (IPR) petitioner appeals the final written decision of the Patent Trial and Appeal Board (PTAB) as to claims upheld but is found to have no standing, as there is no present indication that the challenger would face a patent infringement suit in future. Under these circumstances, would the IPR statutory estoppel provision, 35 U.S.C. § 315(e), prevent the petitioner from asserting the challenges it brought against the upheld claims if the patent owner were to assert those claims against the petitioner in future? Note that under these circumstances, if estopped, the petitioner would have sought judicial review, but the merits of the challenges would not have been reviewed by an Article III court. This was one of the questions before the Federal Circuit in Avx Corporation v. Presidio Components, Inc. 2018-1106 (Fed. Cir. May 13, 2019) (“Avx Corp.”). Although the court declined to answer the question, as there were no adversarial presentations on this question, it clarified that the operation of estoppel was not a foregone conclusion under these facts, which, the court indicated, may fall under one of the exceptions to issue preclusion.


The issue of standing is central to an understanding of this case. To seek relief in a federal court, a plaintiff must demonstrate standing. For a party to have standing, it must show (1) an injury in fact, (2) a causal connection between the injury and the conduct complained of, and (3) a likelihood that the injury will be redressed by a favorable decision.  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). An injury in fact is defined as a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Avx Corp at page 6 (citation omitted). Article III requirements do not apply to administrative agencies and, as such, a person need not have Article III standing to file an IPR petition and obtain a PTAB decision. Id.

IPR Estoppel Provision 35 U.S.C. § 315(e)

The IPR estoppel provision 35 U.S.C. § 315(e) has two parts. The first part, Section 315(e)(1), deals with later U.S. Patent and Trademark Office (PTO) proceedings and provides that once the PTAB issues its final written decision in an IPR, the IPR petitioner may not initiate another USPTO proceeding to challenge the same patent claim on any ground that the petitioner raised or reasonably could have raised in the IPR.

Section 315(e)(2) concerns non-USPTO proceedings, namely civil litigation and International Trade Commission action, and bars the IPR petitioner from asserting that a “claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” The present discussion deals with this second part of the estoppel provision.


Issue Preclusion

The doctrine of issue preclusion prevents a party to a lawsuit from re-litigating an issue once it has been decided in a previous case. As it relates to IPR, 35 U.S.C. § 315(e), provides express statutory authority providing for binding effect of final decisions from PTAB proceedings on petitioners in subsequent district court cases. Avx Corp. indirectly tests the boundaries of this authority.

Avx Corporation v. Presidio Components, Inc.

Presidio Components, Inc. makes and sells ceramic capacitors and owns U.S. Patent No. 6,661,639 (“the ’639 patent”). The patent describes and claims single-layer ceramic capacitors. AVX Corporation makes and sells a variety of electronic components, including capacitors and is a competitor of AVX. Although AVX has not been sued by Presidio for infringement of the ’639 patent, the parties have had a history of litigation between them. AVX petitioned the USPTO for an IPR of all claims of the ’639 patent. It asserted several grounds for unpatentability based on obviousness. The PTAB instituted a review of all claims and issued a final written decision holding certain claims unpatentable but finding that AVX had failed to establish unpatentability of the remaining claims (the “upheld claims”). AVX appealed the decision to the Federal Circuit as to the upheld claims. In addition to responding on the merits, Presidio also argued that while AVX has a statutory right to appeal, it lacked the standing required by Article III of the Constitution to appeal the PTAB’s decision.

AVX presented two principal reasons to show why, despite not engaging in any activity that would give rise to an infringement suit, it was injured and had standing to appeal. First, it argued that it was injured by the Board’s rejection of its obviousness challenges to the upheld claims because if Presidio were to assert those claims against AVX in future, the statutory estoppel provision, 35 U.S.C. § 315(e) would prevent AVX from asserting the grounds it had raised or reasonably could have raised during that inter partes review. In such event, the merits of the grounds will not have been reviewed by an Article III court. This argument is the subject of the present discussion.

The Federal Circuit disagreed that Section 315(e)(2) meant that AVX was forever barred from asserting in a district court, either in a declaratory judgment action or as a defense or counterclaim in an infringement action, that the upheld claims were invalid for obviousness based on the same grounds on which the IPR was instituted. Id. at 8.

Providing context, it first clarified that the estoppel provision by itself was not a sufficient basis for standing for appeal when there was no present indication that AVX might be sued for patent infringement in future, citing Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1171?72 (Fed. Cir. 2017) (“Phigenix”) as one example.

In Phigenix, the challenger/appellant, Phigenix was a for-profit discovery stage biotechnology, pharmaceutical, and biomedical research company that worked on cancer treatments. It did not make any products but maintained a significant portfolio of intellectual property. It claimed suffering an actual economic injury because the challenged Immunogen Inc. patent increased competition between itself and the patent holder and because the patent hindered its licensing opportunities. Id. at 13. The court reminded that on these facts, it had held that Section 315(e) did not constitute an injury in fact since, as here, the appellant was not engaged in any activity that would give rise to a possible infringement suit. Id. at 8.

Interplay of Issue Preclusion and Estoppel

Importantly, as to whether Section 315(e) would have estoppel effect in future non-USPTO actions even when (as here) the IPR petitioner lacked Article III standing to appeal the PTAB’s decision (i.e., seek judicial review), the court did not provide an answer, noting that there was no briefing on the issue by the parties and no adversarial presentation.

However, it pointed to the need to consider if Section 315(e) should be read to incorporate a traditional preclusion principle that neither claim nor issue preclusion applies when appellate review of the decision with a potentially preclusive effect is unavailable, referring, among others, to Penda Corp. v. United States, 44 F.3d 967, 973 (Fed. Cir. 1994) (“Penda Corp.”). In Penda Corp., the question before the Federal Circuit was whether a party (a third-party defendant), against whom no judgment was or could be entered, possessed standing to appeal a lower court judgment against a co-defendant that chose not to appeal. The party argued that the lower court judgment may preclude it from raising the defense relied on in that court in any subsequent district court action by either the co-defendant (whom it had agreed to indemnify) or the plaintiff (who had sued for patent infringement). The Federal Circuit disagreed, stating that neither the co-defendant nor the plaintiff could assert issue preclusion in a subsequent action against the party because, among other reasons, the court’s (Federal Circuit’s) holding of no standing had precluded the party, as a matter of law, from obtaining a review of the lower court judgment. Penda Corp. at 972.

The court observed that it was axiomatic that a judgment was without preclusive effect against a party which lacked a right to appeal that judgment, referring to Restatement (Second) Judgments, and quoting, “[a]lthough an issue is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, relitigation of the issue in a subsequent action between the parties is not precluded in the following circumstance: (1) The party against whom preclusion is sought could not, as a matter of law, have obtained review of the judgment in the initial action; . . . .” Id.

In fact, the court found that it was completely circular for the party to argue that it must have a right to appeal in order to challenge trial holdings when, if such appeal rights were denied (here, for lack of standing), the findings would have no preclusive effect. Id.

Thus, the issue of whether Section 315(e)(2) would have estoppel effect in future non-USPTO actions even where the IPR petitioner lacked Article III standing to appeal the PTAB’s final written decision is as yet unanswered. However, it appears that in this situation the estoppel might not be effective because the petitioner could not, as a matter of law, have obtained a review of the final written decision in the IPR.

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The Author

Sanjeev Mahanta, Ph.D., J.D.

Sanjeev Mahanta, Ph.D., J.D. is a patent attorney whose practice focuses on prosecution of domestic and international patent applications. Sanjeev helps clients obtain patents across a wide technology spectrum including biotechnology, pharmaceuticals, chemistry, materials science, and medical devices.

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