Dyk Splits from CAFC Panel on Application of Collateral Estoppel to Inter Partes Reexaminations

By Eileen McDermott
February 24, 2021

“Even if [inter partes reexamination] is not formally adversarial in the manner of inter partes review, it provides adequate adversarial participation for both the patent owner and requester, facilitating a reasoned judgment on the issue before a neutral factfinder.” – CAFC

reexamination - https://depositphotos.com/131825256/stock-photo-dissenting-opinion-legal-concept.htmlThe U.S. Court of Appeals for the Federal Circuit (CAFC) on Monday held that the Patent Trial and Appeal Board (PTAB) incorrectly found certain claims of SynQor, Inc.’s U.S. Patent No. 7,072,190 unpatentable as obvious in an inter partes reexamination proceeding. The CAFC said that the PTAB’s previous reexamination decisions on related patents gave rise to common law issue preclusion that collaterally estopped the Board from such a finding. Judge Hughes authored the majority opinion and Judge Dyk dissented, calling the ruling “without support and contrary to governing Supreme Court authority.”

Reexamination Proceedings

The ‘190 patent is titled “High efficiency power converter” and was issued in 2006, based on parent applications dating back to a 1997 provisional application. It is part of a patent family including U.S. Patent Nos. 7,564,702 and 8,023,290, which also were the subject of litigation that reached the CAFC. The patents all cover technology “for DC-DC power converters used in large computer systems and telecommunication and data communication equipment to convert direct electric current from one voltage to another.”

SynQor asserted the three patents and others against Vicor Corporation in 2011 and Vicor subsequently petitioned for reexamination of the patents, arguing that the ‘190 patent was unpatentable based on prior art references, U.S. Patent No. 5,377,090 (“Steigerwald”) and a published paper title “Cobos”. SynQor countered that “an artisan would not have combined Steigerwald and Cobos because they taught circuits that operated at incompatible frequencies.”

The PTAB affirmed the findings of the reexaminations of the ‘290 and ‘702 patents on appeal, holding that the ‘702 patent was not unpatentable because “there are incompatibilities in frequency between [Cobos and Steigerwald]” and that the ‘290 patent was not unpatentable based on a combination of Steigerwald, Cobos, and another reference. Both Synqor and Vicor appealed those decisions to the CAFC and the court affirmed patentability in both cases. However, with respect to the ‘190 patent, the Board found that Steigerwald and Cobos were not incompatible and that the claims were unpatentable, and SynQor ultimately appealed to the CAFC.

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Applying B&B Hardware

SynQor’s first argument on appeal was that issue preclusion arising from the reexaminations of the ‘702 and ‘290 patents collaterally estopped the Board from reaching the conclusion they did on the ‘190 patent. The CAFC agreed and therefore did not reach the other arguments on claims 1–19, 28, and 31 of the ‘190 patent. Citing B&B Hardware, Inc. v. Hargis Industries, Inc., a 2018 trademark decision, “administrative decisions have preclusive effect ‘[w]hen an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate.’” The court noted that it has previously held that issue preclusion applies to inter partes reviews in Papst Licensing GmbH & Co. KG v. Samsung Elecs. Am., Inc., and that its task in the present case was to “decide ‘whether there is an ‘evident’ reason why Congress would not want [inter partes reexamination] decisions to receive preclusive effect, even in those cases in which the ordinary elements of issue preclusion are met.’” Applying a “lenient presumption in favor of administrative estoppel,” the court next set out to determine whether there is a “categorical reason why [inter partes reexamination] decisions can never meet the ordinary elements of issue preclusion, e.g., those elements set out in § 27 of the Restatement (Second) of Judgments,” as stated in B&B Hardware, and then, absent such reasons, whether the elements of collateral estoppel are met.

Looking at the five non-exclusive factors to evaluate whether an administrative tribunal’s decision meets “the essential elements of adjudication,” the CAFC dismissed Vicor’s argument that inter partes reexamination cannot meet the second factor: “The right on behalf of a party to present evidence and legal argument in support of the party’s contentions and fair opportunity to rebut evidence and argument by opposing parties.” Vicor said that inter partes reexamination is an “examinational” or “inquisitorial” proceeding in which “’the examiner—not the third-party requester—is the person who frames the challenge and drives the inter partes reexamination proceeding,’ inhibiting Vicor’s ability to present evidence and argument and rebut SynQor’s evidence and argument.”

The CAFC said that the inter partes proceeding was meant by Congress to encourage the third-party requester to fully participate in the proceedings. Third parties are allowed to file comments to each response made by the patent owner and to present and rebut evidence, distinguishing reexamination from initial examination or ex parte reexamination, said the court. It continued:

Even if this process is not formally adversarial in the manner of inter partes review, it provides adequate adversarial participation for both the patent owner and requester, facilitating a reasoned judgment on the issue before a neutral factfinder.

Cross-Examination Not Required

The court characterized Vicor’s further argument that the absence of rights to discovery, subpoena power, cross-examination, etc. reinforce the inquisitorial nature of reexamination as “too rigid a view of the considerations at play in allowing one administrative tribunal to bind itself in later decisions,” and ultimately concluded that “the procedural mechanisms used in inter partes reexamination are sufficient to apply collateral estoppel arising from a first reexamination to a second reexamination.”

Despite the lack of opportunity to cross-examine in an inter partes reexamination,  the CAFC said the process “provides ‘full and fair opportunity to litigate,’” and that cross-examination “is not the only means of evaluating the credibility of testimony.”

Having made the determination that common law collateral estoppel applies to inter partes reexaminations, the court next found that the facts in this case supported issue preclusion as well:

Here, the issues are identical between the ’190 patent reexamination and the ’290 and ’702 patent reexaminations. “Our precedent does not limit collateral estoppel to patent claims that are identical. Rather, it is the identity of the issues that were litigated that determines whether collateral estoppel should apply.” Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1342 (Fed. Cir. 2013); see also B & B Hardware, 575 U.S. at 157

‘Without Support and ‘Contrary’

In his dissent, Judge Dyk argued that the majority holding that collateral estoppel applies to inter partes reexamination proceedings is wholly “incorrect”:

[T]hese proceedings are examinational (or inquisitorial) rather than adjudicatory, do not include court-like adjudicatory procedures, and do not satisfy the requirements of B & B Hardware, Inc. v. Hargis Industries, Inc., 575 U.S. 138 (2015), for application of collateral estoppel.”

Judge Dyk explained that the procedures governing inter partes reexamination are nothing like a court proceeding; for instance, “the examiner controls the course of the proceeding, deciding which claims to reexamine and on which grounds, searches for additional prior art references, can formulate new rejections not advanced by the third-party requester, and initiates challenges to additional claims.” Dyk also emphasized the lack of cross-examination as a “critical” factor in distinguishing inter partes reexamination from judicial proceedings. He cited Nasem v. Brown, 595 F.2d 801 (D.C. Cir. 1979); Johnson v. Vilsack, 833 F.3d 948 (8th Cir. 2016); and City of Pompano Beach v. FAA, 774 F.2d 1529, 1539 n.10 (11th Cir. 1985) to support other circuits’ view that the lack of a cross-examination option warrants refusal to find issue preclusion in administrative proceedings. Dyk dubbed the majority’s citation of Chauffer’s Training School, Inc. v. Spellings, 478 F.3d 117 (2d Cir. 2007) to support its view that cross-examination is not a prerequisite as “a single outlier case,” which “established no such categorical rule.”

Dyk added that the facts of the SynQor case supported the Board’s disparate finding on the ‘190 patent, as that reexamination included deposition testimony from Dr. Steigerwald, the inventor of the Steigerwald patent, which was not available in the earlier proceedings. The majority’s arguments that the Board’s opposite conclusion resulted from Dr. Steigerwald’s testimony and that, even if it did, collateral estoppel still applies, “misses the point,” said Dyk:

The point is that compulsory process and cross-examination allow for the development of potentially significant evidence that would otherwise be unavailable…. the absence of compulsory process and cross-examination in inter partes reexaminations—and the resulting inability to discover relevant evidence—demonstrates the inappropriateness of applying collateral estoppel to decisions in inter partes reexaminations.

Dyk also cited a 2017 USPTO brief in which the Office “urged that there should be no preclusive effect stemming from issues previously litigated in an inter partes reexamination because there is no cross-examination and cross-examination is frequently outcome-determinative.” He also noted that Congress specifically created inter partes review in an effort to provide an “essentially adjudicatory” option, distinguished from inter partes reexamination. Ultimately, said Dyk, “[t]he majority’s decision is without support and contrary to governing Supreme Court authority.”

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The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

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