Collateral Estoppel Springs From Final IPR Decisions and Applies to Proceedings Involving the Same Claims and Claims Not “Patentably Distinct”
In MaxLinear, Inc. v. CF CRESPE LLC., No. 2017-1039, 2018 U.S. App. LEXIS 1930 (Fed. Cir. Jan. 25, 2018), the Federal Circuit vacated and remanded the Patent Trial and Appeal Board’s (PTAB) final written decision in IPR2015-00592 (the ‘592 IPR). The PTAB had found that all instituted claims were not shown to be unpatentable, but during the pendency of the appeal, the Federal Circuit affirmed a decision in another IPR finding the same patent’s independent claims unpatentable. The Federal Circuit then held that collateral estoppel applied and vacated the Board’s decision. Because the PTAB focused solely on the now-invalid independent claims in its decision, the Court ordered the PTAB to consider on remand whether the dependent claims were “patentably distinct.” However, the Federal Circuit’s guidance on this point presents logical and procedural uncertainties for the PTAB, as it has been directed to consider prior art not of record in the underlying IPR.
MaxLinear petitioned for inter partes review of CF CRESPE’s U.S. Patent No. 7,075,585, which relates to “a broadband television receiver for receiving multi-standard analog television signals, digital television signals and data channels.” ’585 patent, col. 1 ll. 15-19. The Board instituted review of claims 1-4, 6-9, and 16-21 based on the prior art combination of US 6,653,502 (Van De Plassche) with US 5,418,815 (Ishikawa), along with other references. In the final written decision, the Board held that the challenged claims, both independent and dependent, were not shown to be unpatentable over the prior art combinations. MaxLinear, U.S. App. LEXIS 1930 at *3. In its decision, the Board limited its analysis to independent claims 1 and 17 and did not separately analyze the dependent claims: “Because each of challenged dependent claims 2-4, 6-9, 16, and 18-21 incorporate the limitations of the respective independent claims, we also conclude that [p]etitioner has not shown, by a preponderance of the evidence, that those claims are unpatentable.” Id. MaxLinear subsequently appealed.
While the appeal was pending, the Federal Circuit issued opinions in appeals of two IPRs that also challenged the’585 patent. In the first, IPR2014-00728 (the ’728 IPR), the Federal Circuit affirmed the Board’s decision finding claims 1-3, 5, 10, and 16-19 of the ’585 patent unpatentable over prior art that was different than the prior art in the ’592 IPR. MaxLinear, U.S. App. LEXIS 1930 at *4. In the second, IPR2015-00615 (the ‘615 IPR), the Federal Circuit affirmed a Board decision finding claim 20 of the ’585 patent unpatentable over the same prior art that was utilized in the previous ’728 IPR. Id. Accordingly, before the Federal Circuit could reach a decision in the present case, independent claims 1 and 17 and dependent claim 20 of the ’585 patent had already been ruled unpatentable.
Rather than address the merits of the Board’s decision upholding the patentability of the claims of the ’585 patent, the Federal Circuit’s decision focused solely on the procedural issues raised by the Court’s intervening rulings. Specifically, the Court held that the Board’s decision should be vacated and remanded for further consideration of the findings of unpatentability.
The Federal Circuit first outlined the preclusive effect of the prior rulings. Noting that both parties agreed that the prior decisions are binding (and that “they could hardly argue otherwise”), the Court held that collateral estoppel (also known as issue preclusion) also applies to administrative proceedings. MaxLinear, U.S. App. LEXIS 1930 at *5. Citing to a recent Supreme Court decision involving the Trademark Trial and Appeal Board (TTAB), B&B Hardware Inc. v. Hargis Indus., Inc., the Court held that it is “well established” that issue preclusion it not limited to those situations in which the same issue is before two courts. Id. at *5-6. Specifically, the Court stated that the TTAB and the PTAB are “indistinguishable for preclusion purposes,” and that “administrative decisions by the U.S. Patent and Trademark Office can ground issue preclusion.” Id. The Court further noted that it was irrelevant for the purposes of collateral estoppel that the previous IPR decisions became final during the current appeal, and that MaxLinear was not a party to the previous IPR proceedings. Id. at *6.
Because of the preclusive effect of the previous IPRs, the Federal Circuit held that the sole remaining question at issue is the patentability of the dependent claims not addressed in the earlier proceedings—claims 4, 6-9, and 21. MaxLinear, U.S. App. LEXIS 1930 at *6. In that regard, the Court noted that Board’s decision as to the patentability of these dependent claims rested entirely on the conclusion that the independent claims were not unpatentable. Id. at *7. Specifically, the Board’s final written decision contained “no separate analysis or discussion of the dependent claims.” Id. As such, the intervening invalidation of the independent claims “abrogates the basis for the Board’s decision” and requires that the decision be set aside. Id. In remanding for further consideration, the Court cited to a tradition of allowing agencies to reconsider their actions when an intervening event, such as a “new legal decision,” draws their decision into question. Id.
As part of its decision to remand, the Federal Circuit provided guidance to the Board for reconsideration of the dependent claims. MaxLinear, U.S. App. LEXIS 1930 at *7-8. The Court noted that collateral estoppel “generally requires the invalidation of related claims that present identical issues of patentability.” Id. As such, the Board was instructed that collateral estoppel applies if the differences between the dependent claims and the now-invalid independent claims “do not materially alter the question of invalidity.” Id. at *8. In other words, the Board must now consider whether dependent claims 4, 6-9, and 21 are “patentably distinct” from independent claims 1 and 17. Id.
However, portions of the Federal Circuit’s guidance for the Board could present logistical and procedural uncertainties upon remand. For example, the Court specifically instructed the Board to consider the patentability of the dependent claims “in view of the prior art cited in the ’728 IPR”—the previously-affirmed IPR that was based upon different prior art than the ’592 IPR at issue in this appeal. MaxLinear, U.S. App. LEXIS 1930 at *8. In other words, the Federal Circuit’s guidance potentially requires the Board to consider prior art and evidence not of record or briefed by the parties in the ’592 IPR proceeding. Furthermore, in a footnote, the Court stated that the Board on remand may consider whether the Patent Owner waived arguments concerning the dependent claims that it did not argue as separately patentable. Id. at *9, fn. 4.
In light of this precedential decision, practitioners should consider the preclusive effect of a finding of unpatentability by the Federal Circuit in an IPR proceeding. First, because collateral estoppel applies not only to the specific claims invalidated in an IPR, but also to claims that are not patentably distinct, similar claims in related patents and pending applications are also potentially at risk. For patent owners, this may counsel toward securing settlement before an IPR appeal reaches finality. For petitioners, the Court’s willingness to broadly apply collateral estoppel to related claims appears to provide ammunition for follow-on challenges to other members of a patent family. Second, given the Court’s instruction to the Board regarding waiver of un-argued dependent claims, patent owners should err on the side of caution during an IPR and present argument as to why each challenged dependent claim is separately patentable over its independent claim.