Holding: A final written decision of unpatentability reached under a preponderance of the evidence standard in an IPR cannot collaterally estop other, unadjudicated patent claims from being reviewed in district court.
Kroy owns US Patent No. 6,061,660 which is directed to a method of providing incentive programs over a computer network. Kroy sued Groupon for patent infringement in 2017 of 13 claims of the ‘660 Patent. In 2018, Groupon filed two inter partes reviews (IPRs), challenging the patentability of 21 of the claims of the ‘660 Patent. The PTAB found all 21 claims of the ‘660 Patent that were challenged in the IPRs to be unpatentable. This decision was affirmed by the Federal Circuit in a Rule 36 judgment.
In March 2022, Kroy filed a second amended complaint that alleged infringement of 14 claims of the ‘660 Patent, none of which were at issue in either of the IPRs. Groupon filed a motion to dismiss, arguing that the PTAB’s ruling in the IPRs collaterally estopped Kroy from asserting the new claims. The district court granted Groupon’s motion to dismiss, holding that collateral estoppel may apply to patent claims that were not previously adjudicated if the difference between those claims and adjudicated claims do not materially alter the question of invalidity.
The Federal Circuit overturned the district court’s decision, finding that collateral estoppel does not apply to patent claims that were not considered in an IPR, even when those patent claims are not materially different from the claims that were considered. Collateral estoppel applies when: (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. However, when the second action involves the application of a different legal standard, such as a different burden of proof, collateral estoppel does not apply.
In the IPR proceeding, Groupon proved the unpatentability of the challenged claims from the ‘660 Patent by a preponderance of the evidence. However, in the case before the district court, Groupon must show that the newly asserted claims from the ‘660 Patent are invalid by clear and convincing evidence. Since the burden of proof at the district court is different than the burden of proof at the PTAB, collateral estoppel cannot apply.
This case differs from a different instance where a final written decision from the PTAB may have preclusive effect. When a court affirms the PTAB’s decision that a patent claim is unpatentable, that same claim cannot then be asserted in district court. Once the claim is ruled unpatentable, it is cancelled and no longer exits. However, in this case, the claims that are asserted by Kroy were not held unpatentable by the PTAB, and therefore still enjoy the presumption of validity.
Federal Circuit Precedential 
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