The Federal Circuit Applies Issue Preclusion to IPRs (And Further Calls Into Question Long-Standing Precedent Against Issue Preclusion In ITC Actions)
On May 23, 2019, the U.S. Court of Appeals for the Federal Circuit decided Papst Licensing GmbH v. Samsung Elec. America, Inc.1 In that case, the Federal Circuit confirmed, based on the issue preclusion principles laid out recently by the U.S. Supreme Court in B&B Hardware, Inc. v. Hargis Indus., Inc.,2 that issue preclusion prevents a party from re-litigating a position in an inter partes review (“IPR”) previously decided in another IPR. Papst.3
In Papst, the Patent Trial and Appeal Board (“PTAB”) found the claims of Papst’s patent obvious in the underlying IPR. The primary issue was whether a particular reference, the Aytac patent, taught a disputed claim limitation. However, just prior to that PTAB ruling, the PTAB ruled in two other IPRs involving related Papst patents having the same specification and same claim limitations. In those IPRs, the PTAB found the limitation at issue disclosed in the Aytac patent, and invalidated the two related patents. All three IPRs were appealed to the Federal Circuit, but just before oral argument was to occur, Papst voluntarily dismissed the appeals from the two earlier IPRs. Those rulings, therefore, became final.4 Only the latest filed IPR remained on appeal.
On appeal, the Federal Circuit held that the final judgment of the earlier IPRs collaterally estopped Papst from re-litigating in the current appeal the issue of whether the Aytac patent disclosed the relevant limitation. The Federal Circuit relied on B&B Hardware in its analysis. In B&B Hardware, the U.S. Supreme Court held that a decision by an agency—in that case, the Trademark Trial and Appeal Board (“TTAB”) (a sister part of the same federal agency of the PTAB, namely, the U.S. Patent and Trademark Office)—would have preclusive effect to prevent re-litigation of the same issue in a district court proceeding. In particular, in an opposition proceeding in which the TTAB had decided the issue of likelihood of confusion between two trademarks, the losing party was precluded from re-litigating the same issue of likelihood of confusion in a district court as part of a trademark infringement case. The Supreme Court held that, despite the proceedings being at the agency level, and despite there being different remedies (i.e., refusal to register a mark versus infringement damages), issue preclusion would still apply.5 The Federal Circuit applied the same issue preclusion criteria to the PTAB and held that B&B Hardware compelled the application of issue preclusion (also known as collateral estoppel).6
The Federal Circuit was correct that B&B Hargis compelled a finding of issue preclusion in the IPR. All of the factors giving rise to issue preclusion were met, notwithstanding that the underlying case was an agency action. Agency actions, e.g., Executive Branch agencies (such as the U.S. Patent and Trademark Office), are treated no differently from an issue preclusion standpoint as Article III courts, so long as the proceeding in the agency has the same procedural safeguards and opportunities to litigate the issues fully as in Article III courts.7
That conclusion, however, cannot be squared with the Federal Circuit’s long-standing precedent that issues litigated at the U.S. International Trade Commission (another Executive Branch agency) do not give rise to issue preclusion in the district court. Although that issue has not been litigated at the Federal Circuit since the Supreme Court decided B&B Hardware, the issue has been ripe for reconsideration at least since that decision.
Interested readers should reference the article I wrote in the immediate aftermath of B&B Hardware, “B&B Hardware v. Hargis Industries – U.S. Supreme Court’s Roadmap For Giving Preclusive Effect To ITC Decisions In Patent Cases,” World Intellectual Property Report.8 In that article, I trace the history of that precedent, suggesting each case along the way was wrongly decided, and that the precedent could no longer survive B&B Hardware. That conclusion is even firmer today.
1 Papst Licensing GmbH v. Samsung Elec. America, Inc., No. 2018-1777, 2019 U.S. App. LEXIS 15274 (Fed. Cir. May 23, 2019).
2 B&B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293 (2015),
3 Papst, 2019 U.S. App. LEXIS 15274, at *19
4 Papst, 2019 U.S. App. LEXIS 15274, at at *10
5 B&B Hardware, 135 S. Ct. at 1303.
6 Papst, 2019 U.S. App. LEXIS 15274, at *14–15.
7 B&B Hardware, 135 S. Ct. at 1303.
8 “B&B Hardware v. Hargis Industries – U.S. Supreme Court’s Roadmap For Giving Preclusive Effect To ITC Decisions In Patent Cases,” World Intellectual Property Report (BNA) Vol. 29, No. 5, at 27 (May 2015)