Federal Circuit Clarifies Scope and Timing of Collateral Estoppel for Claims Under IPR

In a recent opinion, the Federal Circuit added several new wrinkles to amendment practice in inter partes review proceedings. The court affirmed the Patent Trial and Appeal Board’s determination that most of the original claims challenged by an IPR were unpatentable as obvious, and reversed the Board’s determination as to the sole surviving claim, concluding that it too was unpatentable as obvious. As the only surviving original claim was unpatentable, and the substitute claims were not patentably distinct from the original claims, which were entirely a combination of the limitations of the original claims, the court remanded to the Board to determine if collateral estoppel applies to the substitute claims and whether to exercise its discretion to evaluate if the substitute claims are unpatentable over the relied upon prior art.

On July 22, in ZyXEL Communications Corp. v. UNM Rainforest Innovations,[1] the Federal Circuit discussed several procedural issues related to amended claims introduced during an inter partes review (IPR) proceeding, including through use of the Patent Office’s Motion to Amend Pilot Program (MTA Pilot Program).

UNM Rainforest Innovations (Patent Owner) owns US Patent No. 8,265,096 (the ’096 patent), which relates to constructing frame structures for use in orthogonal frequency-division multiple access (OFDMA) communication systems. Specifically, the ’096 patent describes a frame structure that includes two different sections that are each compatible with one of two different communication standards, so that the frame structure can properly support “faster moving users” using the newer standard while also maintaining availability of communications using the older standard for “slower moving users.”

ZyXEL (Petitioner) challenged claims 1-4, 6, and 7 of the ’096 patent in an IPR as unpatentable over a first combination of references and challenged claim 8 as unpatentable over a second combination of references, which included the same primary reference from the first combination.[2]

During the IPR, the Patent Owner filed a contingent motion to amend, requesting that if claims 1-4, 6, and 7 were found unpatentable, they should be canceled and substituted with proposed new claims 44-47, 49, and 50.

MTA PILOT PROGRAM

The Petitioner challenged the Patent Owner’s motion to amend based on a lack of written-description support—and the Patent Trial and Appeal Board (PTAB or Board) agreed, noting that support was shown only for the new features, but that the Patent Owner had “not even attempted to show support in the original disclosure for any other limitations of the proposed substitute claims.”[3] Patent Owner then filed a revised motion to amend, which the Board denied because it did not include any “new proposed substitute claims” not present in the original motion.[4] However, the Board did permit the Patent Owner to file a reply in support of its original motion and found that the reply sufficiently addressed the support issue for the substitute claims, and thus granted the original motion to amend.

The Petitioner appealed the Board’s decision granting the original motion to amend—pointing to the procedural defect impacting the revised motion and citing numerous decisions where the Board found supplementing motions to amend through reply briefing to be improper. But the Federal Circuit rejected these arguments, instead stressing that the MTA Pilot Program has a “core purpose” of allowing “for the correction of errors in the original motion.”[5]

The Federal Circuit further explained that even if the Board was wrong to allow the reply brief, any error in that regard was harmless.[6] This was so, said the Federal Circuit, because Petitioner was given ample notice and an opportunity to rebut the written-description support arguments in its sur-reply brief. Addressing Petitioner’s position that the evidence required to refute arguments from Patent Owner’s reply brief could not have been raised in a sur-reply brief, the Federal Circuit faulted Petitioner for (1) never requesting a waiver from the Board to raise the evidence, and (2) not pointing to any relevant evidence in the appeal that it would have presented if given the opportunity.

COLLATERAL ESTOPPEL

Although the Petitioner only challenged unamended claim 8 in its appeal briefing, it raised an additional issue at oral argument, contending that if the court were to find claim 8 unpatentable, that it should also find the substitute claims 1-4, 6, and 7 unpatentable due to collateral estoppel.[7] This was the first time that the Petitioner had raised the issue of collateral estoppel, even though the argument could have been first raised during the IPR proceedings in response to the Patent Owner’s motion to amend. However, the Federal Circuit cited several of its decisions in support of its decision to entertain the estoppel issue on appeal anyway—noting that failing to raise collateral estoppel before appeal “should not necessarily be work of forfeiture” and also that courts of appeal have discretion to address those issues even when a party would have otherwise forfeited the argument by not raising it earlier.

In addition, the Federal Circuit noted that the potential for collateral estoppel did not arise in this case until the Board’s finding as to claim 8 was reversed. It also observed that the substitute claims were “entirely a combination of the limitations of claims 1-4 and 6-8,” which had all now been found obvious after reversal of the Board’s finding as to claim 8.[8] Thus, the Federal Circuit remanded the case to the PTAB to determine whether collateral estoppel requires finding the substitute claims unpatentable.

The application of collateral estoppel in this context applies because the amended claims did not present any new issues or features that were materially different from those already adjudicated.

Here’s why this matters:

• Amended Claims: When the patent owner amends the claims during IPR, they often do so by incorporating features from dependent claims into independent claims or making other modifications that do not substantively change the core of the claims.
• Materially Identical Issues: If the amended claims are just a rewritten form of the original claims (such as incorporating dependent claim limitations into independent claims), then the issues of patentability for the amended claims are materially identical to those for the original claims.
• Prior Adjudication: Since the original claims were found unpatentable, the grounds for this finding (such as anticipation by prior art or obviousness) apply equally to the amended claims if those claims do not introduce any new, distinguishing features.
• No New Issues: Because the amended claims did not introduce any new issues that were not already considered in the original adjudication, the principle of collateral estoppel applies. This means that the finding of unpatentability of the original claims precludes the patent owner from arguing the validity of the amended claims.
• Judicial Efficiency: The purpose of collateral estoppel is to avoid unnecessary re-litigation of issues that have already been resolved. If the amended claims are not substantively different from the original claims, relitigating their patentability would be redundant and inefficient.

Therefore, collateral estoppel was applied because the amended claims merely included features from the original claims without introducing any new, material aspects that had not already been adjudicated. Since the original claims were found unpatentable, the same reasoning applies to the amended claims, precluding further argument on their validity.

NEW GROUNDS OF UNPATENTABILITY

The Federal Circuit also remanded the case to the Board to consider a new ground that the Petitioner raised on appeal, based on a combination of all three of the references that were cited in the two combinations noted above. In doing so, the court reminded the parties that although the ground was not raised before the Board, the Board could have addressed the issue at its own discretion, because the Board can sua sponte address a patentability issue for a proposed substitute claim “based on the prior art of record” (including prior art from the grounds raised in the IPR petition).[9]

TAKEAWAYS

When amending claims in an IPR, it’s crucial to ensure that the amendments address the reasons for the original claims being found unpatentable while also introducing new, patentable subject matter. Here are some key pieces of advice:

• Understand the Grounds for Unpatentability: Carefully analyze the PTAB's reasons for finding the original claims unpatentable. This includes understanding the prior art references and the specific elements that were lacking or considered obvious.
• Avoid Mere Rephrasing: Simply rewriting dependent claims as independent claims or making minor modifications to the language of the original claims without adding substantial new content is insufficient. The amendments should meaningfully change the scope and substance of the claims.
• Provide Supporting Evidence: When submitting amended claims, include detailed explanations and evidence supporting the patentability of the amended claims. This can involve technical explanations, expert declarations, and other supporting documentation.
• Consider the PTAB's Feedback: If possible, incorporate feedback from the PTAB or use its decisions on related cases to guide your amendments. Understanding its reasoning can help you craft stronger, more defensible claims.
• Address All Aspects of the PTAB's Decision: Ensure that the amended claims overcome all the reasons for the original claims being found unpatentable. This includes addressing any issues related to enablement, written description, or other statutory requirements.
• Seek Expert Guidance: Work closely with a patent attorney or a patent agent who has experience in IPR proceedings. They can provide valuable insights into crafting amendments that are more likely to be granted by the board and not found unpatentable in subsequent proceedings.

By following these guidelines, you can improve the likelihood that the PTAB will grant your motion to amend, and that your amended claims will be found patentable and avoid the application of collateral estoppel.