PTAB Estoppel May Not Stick at ITC

ITC Staff Attorney Not Bound by Estoppel

Plaintiffs are painfully aware of the Patent Trial & Appeal Board (PTAB) and its potential to derail a patent litigation. Indeed, post-SAS patent owners facing motions to stay pending PTAB review are left with even less to argue. Even where a stay is avoided, the speed of the PTAB can undermine traditional litigation pressure points that traditionally drove parties to settlement (e.g., Markman). As such, plaintiffs are increasingly viewing the International Trade Commission (ITC) as the strongest foil to a PTAB attack.

The ITC, having its own mandate for speed does not stay pending PTAB review.  Likewise, an ITC Exclusion Order can be issued within the same time frame as a PTAB Final Written Decision, or faster. These advantages are not insignificant in today’s patent monetization landscape. But, the ITC is not without its PTAB trade-offs for Patent Owners.

In a recent ITC matter, In the Matter of Certain Magnetic Tape Cartridges and Components Thereof (here), the court weighed in on both the parties’ and Staff Attorneys’ arguments regarding estoppel of certain invalidity arguments.  In a related IPR proceeding, respondent Fujifilm asserted a number of prior art references in its validity challenges of Sony’s patent.  The PTAB issued a Final Written Decision in that IPR finding that Petitioner had not established the unpatentability of Sony’s patent.  In the ITC proceeding, both Fujifilm and the Staff Attorney presented validity challenges of Sony’s patent relying on many of those same, failed IPR references.

Unsurprisingly, the ITC determined that Fujifilm was estopped from presenting those references and related arguments again, finding that they were “relied on, or could have reasonably [been] raised” during the IPR.  Even though the Staff Attorneys relied on the same art, however, the ITC arrived at a different conclusion.  It agreed with staff “that it was not a petitioner or even a party to the IPR,” and therefore was not prevented by 35 U.S.C. § 315(e)(2) from raising those references in this investigation.

The ALJ explained that Section 337 actions are “not purely private litigation ‘between the parties,’” but rather “an ‘investigation’ by the Government into unfair methods of competition or unfair acts in the importation of articles into the United States.”  Young Engineers, Inc. v. U.S. Int’l Trade Comm’n, 721 f .2d 1305, 1315 (Fed. Cir. 1983).  In this way, Staff Attorneys for the Office of Unfair Import Investigations (OUII) serve as an independent third party representing the government during the investigation. Thus, it was determined that, as a non-party (or non-real-party-in-interest) to IPR proceedings, the government is free to assert any grounds in Section 337 proceedings that would normally be estopped from a respondent of a failed IPR.

When a Respondent is the party to a failed PTAB challenge of the Complainant’s patent, the staff attorney can essentially revive the estopped invalidity arguments of the failed PTAB challenge in the public interest.  But, this forces the patent owner to re-litigate the validity of its patent on issues that were already dispatched by another, expert administrative agency. And, under much more favorable standards to the challenger. While it is certainly true that the Staff Attorney in an ITC proceeding is in a unique position — to protect the public interest — this position would not seem to be meaningfully different from that of the USPTO.

It is long established that there is no estoppel against government agencies in the sense of typical collateral estoppel. However, this precedent is qualified as excluding extraordinary situations. Time will tell if this is one such situation.

Scott A. McKeown is an author of the Patents Post Grant.