If the IPR Doesn’t Kill the Patent, There’s Always District Court

Toothless application of IPR estoppel allows losing patent challengers to challenge claims again in district court

When enacted, the purpose of Inter Partes Review (IPR) proceedings was to “provid[e] quick and cost effective alternatives to litigation.” H.R. REP. NO. 112-98, pt. 1, at 48 (2011). In practice, IPRs only become an “alternative” when they kill a patent. When a patent survives an IPR challenge, it is nearly certain that the defendant will continue to challenge the validity of the patent in district court.

To do so, the defendant may choose a “scorched earth” strategy to find prior art references that were not included as part of any of the IPR grounds. The Federal Circuit has now approved that strategy, at the same time as placing the burden on the patentee, in order to invoke estoppel, to show what the defendant could have done.

While the IPR statute precludes presenting “any ground that the petitioner raised or reasonably could have raised during that inter partes review” for consideration at the district court, the Federal Circuit held that the patentee must show that the defendant “reasonably could have raised” the challenges during the IPR. The patentee can do this by showing that “a skilled searcher conducting a diligent search reasonably could have been expected to discover” the new grounds.

Thus, the Federal Circuit’s decision relieves burdens on patent challengers and places them on patentees. The patent challenger, at the time of filing of an IPR, does not have to engage in a “scorched earth” effort to find prior art references. The Federal Circuit’s decision presumes that the patent challenger only undertook “reasonable” efforts to locate references prior to filing of the IPR. Then, after the patent challenger loses the IPR, the Federal Circuit presumes that the defendant made a “scorched earth” effort to locate the references. Even though the knowledge of what the patent challenger did rests solely in the hands of the patent challenger, the patentee is burdened with the obligation to show that what the patent challenger actually did was reasonable.

Especially without the knowledge of what was actually done to locate references at the time of filing of the IPR, this seems an impossible burden. Along the way leading up to district court challenges, a number of “a skilled searcher[s] conducting a diligent search” could have identified the references. For example, the patentee may have conducted a prefiling search. Also, the patent examiner presumably conducted a reasonable search. And the patent challenger conducted some search prior to filing its IPR.

Even in this case, where the patent challenger did volunteer evidence of its search to show that its prefiling actions were reasonable, the patentee provided evidence of another patent challenger who discovered the references sought to be relied upon when filing a different IPR. Those references were each patent documents, and not some entries in an obscure journal. To avoid this evidence of what a different IPR actually did and actually found, the Federal Circuit turned logic on its head, presuming that the search undertaken in defendant’s IPR was performed with reasonable diligence but the other IPR filer had undertaken “extraordinary measures” in its search. Thus, the Federal Circuit continued to require the patentee to investigate what the other IPR filer did and show that what the other IPR filer did was only “reasonably” diligent and did not involve extraordinary measures.

This highlights how the use of the objective standard of “a skilled searcher conducting a diligent search reasonably could have been expected to discover” could ignore the patent challenger and other realities. A patent challenger whose ability to market a key product rests on invalidating a patent could reasonably be expected to undertake a “scorched earth” approach to finding prior art references. Under the Federal Circuit’s test, even were the patent challenger to discover the reference they would later use and choose not to include it in their IPR, the reference that the patent challenger actually knew about prior to filing of the IPR could be used unless the patentee were to satisfy the “skilled searcher” standard. And, unlike a patentee who has an obligation to disclose pertinent references to the patent office during examination, there is no obligation for the patent challenger to disclose the references that they located but did not present a part of their IPR grounds during the IPR.

It will be interesting to see whether the decision is taken up for en banc review at the Federal Circuit. In any event, the Supreme Court has taken interest when the Federal Circuit has sought to create rigid, bright-line rules. See, e.g., Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016).