To Petition or Not to Petition: The Role of Statutory Estoppel on Later Patent Challenges
When the America Invents Act (AIA) implemented post-grant proceedings for challenging patents in the United States in 2012, petitioners faced the risk that the AIA’s estoppel provisions could preclude subsequent validity challenges and defenses after unsuccessful proceedings. For several years now, trial courts have been analyzing and defining the scope and extent that the AIA estoppel provisions limit or completely foreclose later challenges to patent validity. In Tinnus Enterprises, LLC v. Telebrands Corp., No. 6:17-CV-00170-R (“Tinnus decision”), the United States District Court for the Eastern District of Texas decided that statutory estoppel prevented the defendants from asserting new invalidity grounds after their unsuccessful AIA validity challenge. Specifically, plaintiff-patentee Tinnus argued that several grounds could have been asserted during post-grant review (PGR) proceedings, but because they were not raised in the PGR they were forever barred. The district court agreed and granted Tinnus’s motion with respect to the AIA estoppel provision relating to PGR, which states that the “petitioner in a post-grant review of a claim … that results in a final written decision … may not assert … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that post-grant review.”
The case is one of several cases filed by Tinnus alleging infringement of water balloon products by Telebrands Corporation. In addition to previous district court cases, including trial and appeal, the dispute also involves a series of post-grant review (PGR) proceedings filed by Telebrands as petitioner in the Patent Trial and Appeal Board (PTAB), only some of which were instituted and resulted in final written decisions. The PTAB proceedings also included appeals. Telebrands was ultimately unsuccessful in proving that any asserted claims of any Tinnus patents was invalid or unpatentable, whether in the PTAB or the district court, and whether on indefiniteness grounds under 35 U.S.C. § 112 or obviousness grounds under 35 U.S.C. § 103.
In the latest case, Tinnus alleged that Telebrands’ EASY EINSTEIN Balloons infringed U.S. Patent Nos. 9,242,749 (“the ‘749 Patent”) and 9,315,282 (“the ‘282 Patent”). The ‘749 and ‘282 patents were among the Tinnus patents that had been previously litigated and were also the subjects of PGR petitions filed by Telebrands in the PTAB. In the PGR proceedings, Telebrands asserted obviousness over a combination of prior art that included a primary prior art reference referred to as Saggio.
Having failed to invalidate the Tinnus patents in PGR or previous district court proceedings, Telebrands asserted new invalidity challenges in the EASY EINSTEIN district court litigation, based on the Saggio in combination with numerous additional references that had not been asserted by Telebrands in the unsuccessful PGRs. Telebrands essentially sought to “fill the gaps” in its asserted combinations of prior art, as found by the PTAB, with different prior art references.
Tinnus responded that the PGR estoppel provision of the AIA prevents Telebrands from asserting any invalidity challenge that reasonably could have been raised in PGR proceedings, whether or not they actually were raised. Telebrands did not dispute the fact that all of its newly-identified prior art references existed at the time it filed its ultimately unsuccessful PGR petitions. The district court was required to determine the scope of the statutory phrase “or reasonably could have raised” when deciding whether the estoppel provision barred Telebrands’ new invalidity defenses. The district court noted that the statutory estoppel phrase clearly includes grounds that were not actually raised in the PGR. To separate the newly asserted, but previously unasserted grounds that “reasonably could have” been raised from those that could not, the district court used the emerging standard of what a “skilled searcher” could reasonably have been expected to find in a prior art search. This test is gaining acceptance in district courts across the United States.
More specifically, the district court ruled that “a petitioner is estopped from relying on any ground that could have been raised based on prior art that a ‘skilled searcher conducting a diligent search reasonably could have been expected to discover.’” Telebrands argued that Tinnus, the plaintiff, bore the burden of establishing that a skilled searcher would have found the newly-identified prior art references. The district court disagreed, and instead placed the opposite burden on Telebrands, that is, to demonstrate that the skilled searcher would not reasonably have been expected to find the references. Telebrands could not do so.
Thus, the district court explained that the “mere suggestion of new prior art, or the existence of grounds for invalidity that varies from that which was presented before the PTAB does not mean a petitioner can necessarily proceed with those grounds in a later civil action.” The court found that Telebrands’ “addition of twelve new prior art references in combination with Saggio appears to be nothing more than an attempt to relitigate the issue of invalidity under § 103.” Finally, the district court concluded that allowing Telebrands to assert the newly-identified grounds of invalidity would entirely undermine the post-grant review process. Understandably, the district court then held that Telebrands is “estopped from raising invalidity on all obviousness grounds containing the Saggio reference.” The district court noted that since only new combinations of prior art including Saggio were raised by Telebrands, its ruling effectively precluded any further prior-art-based patent validity challenge in the litigation.
In conclusion, the district court reiterated the importance of litigating patent validity either in federal district court or in a post-grant procedure in the PTAB. Patent challengers should not expect to have “two bites at the apple,” one in the PTAB and another subsequent in the district court. In order to subsequently rely on the same primary prior art reference used in a failed obviousness challenge at the PTAB, patent challengers will at least need to find additional secondary references that were not available at the time the original AIA post-grant petition was filed, or if they did exist at that time, that for some other reason could not reasonably have been discovered by a skilled searcher at the time of filing the PGR petition.
 Tinnus Enterprises, LLC v. Telebrands Corp., No. 6:17-CV-00170-R, Dkt. 344 (E.D. Tex. Aug. 21, 2018).
 35 U.S.C. § 325(e)(2).