Will Bettcher v. Bunzl  limit estoppel in post-grant oppositions under the America Invents Act?

November 09, 2011

A critical factor in the decision to initiate a post-grant review or inter partes review proceeding in the USPTO will be the estoppel consequences of a decision confirming the patentability of challenged claims. Following the general model of current inter partes reexamination, both new statutes provide that if a “final written decision” is issued by the USPTO, the petitioner may not assert in a patent action in district court or the ITC that the claim is invalid “on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” §§ 315, 325.

The scope of estoppel in post-grant oppositions

The scope of estoppel resulting from an unsuccessful opposition will differ in inter partes review and post-grant review, because of the vastly different grounds of invalidity that can be asserted by a challenger. Inter partes review can be based “only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.” A petitioner should not be estopped from asserting invalidity in district court litigation on any other ground, including anticipation based on prior use or sale, or other statutory defenses. However, if the petitioner unsuccessfully asserts that a claim is anticipated by a published reference, the resulting estoppel would extend, for example, to obviousness in view of any other published reference, provided that the additional reference could reasonably have been raised during inter partes review.

In sharp contrast, post-grant review may assert “any ground that could be raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim).” In post-grant review, the opposer may maintain that a claim is invalid for lack of novelty on the basis of public use or sale, for obviousness, for lack of written description or enablement, lack of utility, or patent-ineligible subject matter. The breadth of subject matter that can be raised in post-grant review dictates a similarly broad scope of estoppel, which in many cases could result in forfeiture of most if not all potential litigation defenses, if the petitioner is unsuccessful on any of these grounds raised in the opposition. A notable exception is unenforceability of the patent, including inequitable conduct, which is not a ground that could be raised under the specified paragraphs of § 282(b).

These potentially severe consequences of an unsuccessful post-grant opposition are mitigated by two important factors. Estoppel results only from review that “results in a final written decision” of the Board, and most significantly, in distinction to current inter partes reexamination, an opposition will not necessarily result in a final USPTO decision. Instead, the parties to an opposition have the power to terminate the proceeding by a settlement agreement, and the statutes provide that if a settlement is reached, “no estoppel shall attach” on the basis of the institution of the opposition. §§ 317, 327. Interferences frequently end in settlement agreements that effectively share the market in the patented invention between the parties, and a serious patentability challenge that can be withdrawn by settlement provides significant leverage in negotiating a license.

When does estoppel arise? –the Federal Circuit’s decision in Bettcher v. Bunzl

Even if the Patent Trial and Appeal Board issues a final written decision confirming the patentability of challenged claims, a critical issue remains—when does the estoppel arise? If an adverse USPTO decision is appealed to the Federal Circuit during the course of concurrent district court litigation, is the defendant estopped from asserting other defenses that could have been raised in the opposition, when the appeal is pending?

This extremely important question was recently addressed by the Federal Circuit in the context of inter partes reexamination in
Bettcher v. Bunzl
.  After Bettcher filed suit, Bunzl requested inter partes reexamination and during the course of litigation, the examiner declined to find the claims unpatentable and issued a Right of Appeal Notice. The district court considered that the examiner had issued a “final determination” in the reexamination proceedings, and precluded Bunzl from relying on certain prior art references. Bunzl maintained that the reexamination decision was not “final” until the Federal Circuit decided the appeal from the USPTO action, and that no estoppel resulted in the copending district court action.

Considering this question of first impression, the Federal Circuit concluded that the estoppel provision of section 315 is triggered “not when examination is completed but only after all appeal rights have been exhausted.” This required the court to decide the meaning of “finally determined” in § 315(c) in the context of the statute, the related regulations and the legislative history. This estoppel provision states that an inter partes reexamination requester “is estopped from asserting at a later time, in any civil [patent] action, the invalidity of any claim finally determined to be valid and patentable, on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.”

Relying principally on the right of both parties to appeal the decision of the examiner or the Board, the court considered that “this implies that estoppel requires exhaustion of all appeal rights, including appeals to this court.” It thus concluded that § 316 “defines a determination of patentability to occur only after all appeals have terminated” and a reexamination certificate is issued. The Federal Circuit accordingly vacated the denial of Bunzl’s motion for a new trial on invalidity based on the excluded references, and remanded the case to the district court.

As illustrated by Bettcher, a defendant will not necessarily be estopped from raising additional defenses in an infringement action after an adverse USPTO decision in inter partes reexamination, until the Federal Circuit finally resolves the questions of patentability raised in that post-grant proceeding. If the defendant proves that the asserted claims are invalid on a ground that was not raised in the USPTO, prior to the issuance of a reexamination certificate, it appears that the claims could properly be held invalid by the district court in the absence of estoppel.

Whether the same reasoning will be applied to estoppel resulting from a Board decision in inter partes review or post grant review is not certain, but the 2011 Act similarly refers to a “final written decision” issued by the Board as the basis for a certificate issued by the USPTO when the time for appeal has expired or any appeal has terminated. §§ 318, 328. It would be anomalous to conclude that an immediate estoppel arises from the “final” decision of the Board in the new post-grant oppositions, prior to the ultimate resolution of the issue by the Federal Circuit.

Based on the court’s reasoning in Bettcher, the possibility of estoppel from an unsuccessful opposition challenge during concurrent litigation may not present an insurmountable obstacle to the assertion of additional defenses, even if those defenses could reasonably have been raised in post-grant review. This possibility will affect not just the decision whether to challenge claims in the USPTO during litigation, but also the timing of a post-grant opposition and the specific grounds of invalidity that are raised in each proceeding.