Under 35 U.S.C. § 315(e), inter partes review (IPR) estoppel applies to “any ground that the petitioner raised or reasonably could have raised during that inter partes review.” In 2018, the Federal Circuit held in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), that IPR estoppel does not apply to grounds where review was denied by the Patent Trial and Appeal Board (PTAB). Later that same year, the Supreme Court held in SAS that if the PTAB institutes review, it must review all challenged claims and asserted grounds, i.e., there cannot be partial institution. SAS Inst. Inc. v. Iancu, 138 S. Ct. 1348 (2018). In the latest line of these cases, the Federal Circuit held in California Institute of Technology v. Broadcom Ltd., Nos. 2020-2222, 2021-1527, 2022 WL 333669 (Fed. Cir. Feb. 4, 2022) (original opinion) (errata), that IPR estoppel applies to all grounds that reasonably could have been asserted against the challenged claims, including grounds that were not stated in the petition.
In this case, Caltech sued appellants Apple and Broadcom alleging infringement of three patents directed to methods of error correction coding in wireless data transmissions. Cal. Inst. of Tech., 2022 WL 333669, at *3. Apple then filed multiple IPR petitions that relied on various prior art references. Id. In its final written decisions, the PTAB concluded that Apple failed to show unpatentability. Id. Apple and Broadcom then argued invalidity in district court using prior art they were aware of but did not assert during the IPRs. Id. The district court granted summary judgment of no invalidity under 35 U.S.C. § 315(e)(2), which precludes parties from raising invalidity arguments at trial they reasonably could have raised in their IPR petitions. Id. Apple and Broadcom then appealed, arguing that the district court erred in granting summary judgment based on IPR estoppel. Specifically, Apple and Broadcom argued that they had relied on grounds the PTAB did not actually address in the IPRs. Id at *9. The district court rejected that position, holding that the “challenges were barred by estoppel because Apple and Broadcom were aware of the prior art references at the time they filed their IPR petitions and reasonably could have raised them in those petitions even if they could not have been raised in the proceedings post-institution.” Id.
The Federal Circuit affirmed. The court of appeals first pointed to its holding in Shaw, which stated that institution is what triggers the beginning of an IPR proceeding. Under the rule of Shaw, since an IPR does not begin until it is instituted, “grounds raised in a petition (or that reasonably could have been raised in a petition) were necessarily not raised ‘during the IPR.’” Id. (emphasis in original). However, the Federal Circuit recognized that, in light of the Supreme Court’s decision in SAS, “there is no partial institution authority conferred on the Board by the America Invents Act…it is the petition, not the institution decision, that defines the scope of the IPR.” Id. at *10. The court therefore concluded that, after SAS, the correct interpretation of § 315(e)(2) requires that any ground that could have been raised in a petition is a ground that reasonably could have been raised during the IPR. Id. (original; errata). Since Apple and Broadcom were aware of the references they used in district court when Apple filed its IPRs, the court concluded that those grounds reasonably could have been raised during the IPRs, and Apple and Broadcom were barred from using the references in district court. Id. at *11.
The Federal Circuit noted that, after Shaw, district courts were conflicted on how far the IPR estoppel reached. Some courts focused on the “during the IPR” language in the statute and found that the estoppel did not apply to potential arguments that could have been raised before actual institution. Id. at *10. Other courts took a more expansive view and held that a petitioner could not avoid estoppel as to any arguments it reasonably could have raised in its petition. Id. at *9. The decision here overruled Shaw and clarified that estoppel applies to any arguments that were raised or reasonably could have been raised in the petition. The Federal Circuit reasoned that the Shaw rule could no longer be justified after SAS’s ban on partial institution, and this modified interpretation of IPR estoppel is the “only plausible reading” of § 315(e)(2) after SAS. Id. at *10.