Federal Circuit Limits the Scope of PTAB Estoppel

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Anew ruling from the Federal Circuit calls into question a widely held understanding of estoppel under the America Invents Act (AIA). In Shaw Industries Group, Inc. v. Automated Creel Systems, the Federal Circuit held that estoppel under 35 U.S.C. § 315(e) only attaches to those grounds which were instituted in the inter partes review (IPR), and does not apply to grounds that were denied in the institution decision. Th e ruling appears to run contrary to the scope that practitioners and the legislators had in mind when the AIA came into effect.


The AIA introduced the trial proceeding known as IPR starting in 2012. The Patent Trial and Appeal Board (PTAB) applies IPR to review the patentability of claims with respect to prior art objections under 35 USC § 102 and § 103. IPR proceedings are restricted to questions of prior art in the form of patents or printed publications.

Many people in the patent world understood these IPR proceedings to be a cheaper, faster method of challenging the validity of patent claims. Th is benefit of IPR proceedings depends on a powerful estoppel mechanism, laid out in 35 U.S.C. § 315(e)(2), forbidding petitioners from pursuing claims that they “raised or reasonably could have raised during that inter partes review.” The scope of that estoppel provision would seem to be sharply limited by the ruling in Shaw.

The Shaw Case

Automated Creel Systems (ACS) sued Shaw Industries Group, Inc. for infringement. ACS later dismissed the infringement suit without prejudice, but Shaw still filed a petition for interpartes review. The PTAB found three of the 15 grounds in the petition relevant for appeal and granted institution on two of those three grounds. Th e PTAB labeled the third ground “redundant” and did not institute on it. Therefore, the PTAB failed to make any substantive analysis of this ground to determine its merit.

The final ruling went against Shaw with regard to the two instituted grounds. In its appeal, Shaw filed a writ of mandamus calling for the PTAB to conduct a review of the rejected ground.

Shaw argued that the PTAB had to review all of the grounds in its petition because if those grounds were ignored, Shaw would be estopped from asserting those grounds in civil litigation per § 315(e)(2). Th e Patent and Trademark Office (PTO) raised an intervenor argument that Shaw would not be estopped because the redundant ground was not actually a part of the inter partes review. Th e Federal Circuit denied Shaw’s writ of mandamus and agreed with the PTO.

The Federal Circuit interpreted § 315(e) (2) as only applying to “any ground that the petitioner raised or reasonably could have raised during that inter partes review” (emphasis in original). Under this construction, the impact of the estoppel provision is limited to grounds actually instituted by the PTAB in the inter partes review.

A Distinction Without a Difference

The Shaw ruling has interesting implications for estoppel provisions in related areas. Th e AIA includes an estoppel provision for covered business method patents (CBM). Unlike IPR estoppels, there is no language involving grounds that “reasonably could have [been] raised” during the proceedings.

Given the interpretation put forth by the court in Shaw, some could argue that the absence of “reasonably could have” language is meaningless. Would district courts allow unsuccessful petitioners to raise additional § 101 arguments that are different from the § 101 argument advanced in the CBM? Th is would seem to invalidate the goal of providing a substitute for civil litigation in deciding patentability. Th e issue did not arise in Shaw, but will likely surface at some point.

A second estoppel provision covers post grant review (PGR) proceedings, which is a mirror image of the CBM provision. Th e “reasonably could have raised” language is firmly present. Th e reviews themselves, however, contain some key differences.

The first difference is in the timing of the review. Petitioners must file PGRs within nine months of the issuance of the patent. Th e second difference is that the reviews are not restricted to prior art objections. Petitioners can consider challenges on any grounds.

The breadth of these reviews has caused many potential petitioners to shy away from PGR proceedings. Th e belief that a failed PGR would estop a petitioner from challenging the patent on almost any ground in civil court had a chilling effect. If estoppel is limited to the arguments instituted in the proceeding, petitioners may be more willing to pursue PGR.

In Conclusion

Estoppel under § 315(e) is vital to the operation of the AIA. A strong estoppel standard reduces the possibility of duplicative or serial challenges to patents. Th e Federal Circuit’s decision in Shaw may have substantial consequences for how parties use IPRs, as well as CBMs and PGRs.

Cyrus Morton

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