Federal Circuit Addresses Burden of Proof for IPR Estoppel | Fitch, Even, Tabin & Flannery LLP
On April 3, in Ironburg Inventions Ltd. v. Valve Corp., the Federal Circuit articulated a standard for applying inter partes review (IPR) estoppel on grounds a petitioner “reasonably could have raised” under 35 U.S.C. § 315(e)(2). Specifically, the court held that IPR estoppel applies to “invalidity grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover.” The court further held that the burden of proof “rests on the patent holder, as the party asserting and seeking to benefit from the affirmative defense of IPR estoppel.”
In 2015, Ironburg sued Valve for infringement. Valve then filed an IPR that the Patent Trial and Appeals Board (PTAB) instituted. After the PTAB issued its final written decision in the IPR, Valve presented before the district court additional invalidity grounds that it borrowed from a third party’s later-filed IPR petition. Ironburg filed a motion with the district court asserting that Valve was estopped under § 315(e)(2) from raising the additional invalidity grounds because Valve reasonably could have raised them in its own earlier-filed IPR. The district court granted Ironburg’s estoppel motion, which Valve appealed.
On appeal, the Federal Circuit vacated the district court’s estoppel ruling, finding that the burden of proving that the asserted grounds are “grounds a skilled searcher conducting a diligent search reasonably could have been expected to discover” had been improperly imposed on the Valve. The Federal Circuit reasoned that the third party that filed the later IPR may have used “many other possible ways . . . that have nothing to do with what a skilled searcher would have found,” and that if the third party’s search involved “extraordinary measures” or “‘scorched earth’ tactics,” they would have gone beyond “reasonable diligence.” The court further found that Ironburg had not produced any evidence of the reasonableness of the third party’s search, which left a hole in the record. The court remanded the case for the district court to determine whether Ironburg could meet its burden.
This decision is significant in that it was the first time the Federal Circuit fully addressed the “reasonably could have raised” standard set forth in § 315(e)(2). The fact that an invalidity ground was raised in a third party’s IPR does not appear to be enough to establish that a defendant could reasonably have raised the ground in its own petition. A patent owner seeking to assert an IPR estoppel defense may consider providing evidence showing the level of diligence the third party exercised in finding the prior art references.
