Question: Whether a prior final written decision of a Patent Trial and Appeal Board on the unpatentability of certain claims provides collateral estoppel to a district court in deciding the patentability of different but similar claims if the differences between the unadjudicated claims and the adjudicated claims do not materially alter the question of invalidity.
Finding: A prior final written decision of a Patent Trial and Appeal Board on the unpatentability of certain claims does not provide collateral estoppel to a district court in deciding the patentability of different but similar claims even if the differences between the unadjudicated claims and the adjudicated claims do not materially alter the question of invalidity. The collateral estoppel does not apply because the Board uses a preponderance of the evidence standard and the district court uses a clear and convincing evidence standard. An exception applies in this instance when there is application of a different legal standard, such as a different burden of proof.
In the district court Groupon, Inc. (“Groupon”) alleged Kroy IP Holdings, LLC (“Kroy”) infringed 13 exemplary claims of U.S. Patent No. 6,061,660 (the “’660 patent”). Kroy filed two inter partes reviews (“IPRs”) challenging 21 claims of the ’660 patent. After the deadline to file IPRs, Kroy amended its complaint to alleged infringement of additional claims, many of which were not included in Groupon’s IPRs. The Patent Trial and Appeal Board (“Board”) found all 21 of the challenged claims unpatentable the (“Unpatentable Claims”). Kroy appealed the Board’s findings, and the Federal Circuit affirmed.
Kroy then filed a second amended complaint in district court alleging infringement of 14 claims of the ’660 patent (“Newly Asserted Claims”), none of which were challenged in the IPRs. In response, Groupon filed a motion to dismiss arguing the New Claims were collaterally estopped. The district court granted the motion to dismiss with prejudice. The district court found that the Board’s final judgment of the unpatentability of a patent claim “will have an issue-preclusive effect on any pending or copending district court actions involving that same patent claim.” Kroy IP Holds., LLC v. Groupon, Inc., No. 17-1405-MN-CJB, 2022 WL 17403538 (D. Del. Dec. 2, 2022) (citing XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1294 (Fed. Cir. 2018)). The district court also found that collateral estoppel also may apply to patent claims that were not previously adjudicated if the differences between the unadjudicated claims and the adjudicated claims “do not materially alter the question of invalidity.” Id. (emphasis removed) (quoting Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1342 (Fed. Cir. 2013)). In so finding, the district court held that “four requirements must be met for collateral estoppel to apply in the Third Circuit: ‘(1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the previous determination was necessary to the decision; and (4) the party being precluded from relitigating the issue was fully represented in the prior action.” Id. (quoting Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006)). The district court focused mainly on the first issue and compared the Newly Asserted Claims to the Unpatentable Claims and found the Newly Asserted Claims were “immaterially different” for the purposes of invalidity. Kroy appealed.
The Federal Circuit found that the four factor test applied above was the correct test. Kroy IP Holdings, LLC v. Groupon, Inc., No: 2023-1359, Slip. Op. at 5 (Fed. Cir. Feb. 10, 2025). However, “collateral estoppel is ‘subject to certain well-known exceptions.’” B & B Hardware, Inc. v. Hargis Indus, Inc., 575 U.S. 138, 148 (2015). One exception is when there is application of a different legal standard, such as a different burden of proof, i.e. a prior judgment under a preponderance of evidence standard cannot give collateral estoppel effect in a subsequent matter litigated under a clear and convincing standard. Id. at 154 (citing Grogan v. Garner, 498 U.S. 279, 284-85 (1991).
The Federal Circuit compared its decision in ParkerVision, Inc. v. Qualcomm Inc., where it reviewed whether a collateral estoppel from an IPR barred Parker Vision’s expert from offering testimony to support the validity of certain method claims of a patent in district court. 116 F.4th 1345, 1360-61 (Fed. Cir. 2024). In the ParkerVision case, the Federal Circuit found that whereas the IPR proceeding is operated under a preponderance of the evidence, the district court requires a higher burden – clear and convincing – and the testimony of the expert was permissible.
Similarly, in the instant action, the Federal Circuit held that since the legal standard at the Board to prove the Unpatentable Claims invalid was a preponderance of the evidence, and in the district court the Newly Asserted Claims would need to be held invalid by clear and convincing evidence, collateral estoppel should not apply. This is a limited exception based on the differing burdens of proof. This does not overturn the law that “once this court affirms the Board’s decision that a patent claim is unpatentable, the same claim cannot be asserted in district court.”
The Federal Circuit differentiated its opinion from Ohio Willow Wood, where “collateral estoppel may apply to patent claims that were not previously adjudicated if the differences between the unadjudicated claims and the adjudicated claims “do not materially alter the question of invalidity.’” Citing Ohio Willow Wood, 735 F.3d at 1342). In Ohio Willow Wood the question was with regard to whether a prior district court (not IPR) decision provides collateral estoppel to a different district court decision of unpatentability of claims that are immaterially different for purposes of invalidity.