Federal Circuit Precedential

Holding:  Factual findings regarding invalidity in an IPR do not have issue preclusive effect on an invalidity proceeding at the district court because the standard of proof to show invalidity in an IPR is lower than the standard of proof to show invalidity at the district court.  

In 2020, Inland filed suit against Cherry Optical, alleging patent infringement of claims 2, 4, and 6 of United States Patent No. 8,636,360 and claim 4 of United States Patent No. 9,405,130.  Each of these patents had been subject to an IPR a year earlier.  The PTAB found claims 1, 3, 7-8, and 12 of the ‘360 Patent and claims 1, 3, 6-8, and 10 of the ‘130 Patent to be unpatentable.  The asserted claims were also challenged in the IPRs, but the PTAB determined that these claims were not proven to be unpatentable.

The district court granted summary judgment that the asserted claims of the ‘360 Patent and the ‘130 Patent were invalid for obviousness.  As part of its analysis, the district court stated that since the asserted claims depend from the claims found to be unpatentable in the IPRs, issue preclusion prohibited the relitigation of validity issues as to the limitations that were contained in the claims already found unpatentable.  The district court did allow Inland to defend the validity of the remaining limitations in the asserted claims that were not included in the claims already found unpatentable in the IPRs.

The Federal Circuit found that the district court erred in applying issue preclusion in this case.  This decision was primarily based on two prior cases, ParkerVision[1] and Kroy[2].  In both of these cases issue preclusion based on a finding of unpatentability in an IPR was found to be improper.  There cannot be issue preclusion when the second action involves the application of a different legal standard that was used in the first action.  For an IPR, the standard of proof for unpatentability is a preponderance of the evidence.  However, at the district court, the standard of proof for invalidity is clear and convincing evidence.  Therefore, issue preclusion cannot apply, even if the claims are immaterially different, because the standard of proof for invalidity in an IPR is less than the standard of proof required at the district court.

In this case, the district court erred by giving issue preclusive effect to the facts determined under the lower standard of proof used in the IPR compared to the standard required at the district court.  This does not mean that summary judgment of invalidity is improper at the district court.  However, summary judgment must stand on its own merits given the evidence and argument in the case.  Summary judgment must be based on the record before the court, not solely on issue preclusion from an IPR.

The district court did not apply issue preclusion to the asserted claims, which were found to be not unpatentable during the IPRs, and allowed Inland to defend the validity of these claims.  However, the fact that these claims survived an IPR challenge is irrelevant to whether issue preclusion is applicable to those claims.  Issue preclusion would still not apply even if those claims had not been examined in the IPR or even if they had been found to be invalid.

[1] ParkerVision, Inc. v. Qualcomm Inc., 116 F.4th 1345 (Fed. Cir. 2024)

[2] Kroy IP Holdings, LLC v. Groupon, Inc., 127 F.4th 1376 (Fed. Cir. 2025)