District Court Applies IPR Estoppel to Physical Products That Are Materially the Same as Available Publications

In Wasica Finance GmbH v. Schrader International, et al., the US District Court of Delaware found that a defendant’s failed inter partes review (IPR) challenge estopped it from later raising invalidity theories in the district court based on physical products that are conceptually the same “ground” as could have been raised in the IPR. This decision brings the District of Delaware on one side of a split emerging between district courts on an issue the Federal Circuit has not addressed.

In July 2013, plaintiffs Wasica Finance GmbH and BlueArc Finance AG (Wasica) filed suit against several aftermarket automotive parts suppliers, including Schrader International, Inc. (Schrader), alleging infringement of Wasica’s US Patent No. 5,602,524 (ʼ524 Patent). The ʼ524 Patent generally relates to tire pressure monitoring systems that switch between normal and pairing modes.

In March 2014, Schrader filed a petition for IPR of the ʼ524 Patent asserting that certain claims of the ʼ524 Patent were anticipated or obvious over various prior art combinations including Italian Patent No. 1,219,753 to Oselin.[1] The Patent Trial and Appeal Board (PTAB) held that most of the challenged claims were unpatentable, but found that Schrader failed to demonstrate that dependent claims 6 and 9 were anticipated or obvious.[2] The US Court of Appeals for the Federal Circuit affirmed.[3]

When the case returned to the district court, Schrader sought to challenge the validity of claim 6 based on obviousness combinations that included Oselin in combination with a number of additional printed publications, as well as a tire pressure sensor product associated with the Chevrolet Corvette referred to as “ZR-1 Sensors.” Wasica moved for summary judgment that, based on 35 USC § 315(e)(2), Schrader was estopped from asserting the invalidity grounds against claim 6 because it “reasonably could have raised” the same arguments during the IPR based on a 1990 article by Siuru that disclosed all of the relevant features of the ZR-1 Sensors.

Decision

The IPR estoppel provision provides, in relevant part, that a petitioner that files an IPR resulting in a final decision may not assert in district court or International Trade Commission proceedings “that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that [IPR].”[4]

Only patents and printed publications can be used as prior art in an IPR.[5] The ZR-1 Sensor is a physical product and thus normally would not be considered evidence that could be raised in an IPR. However, Wasica argued that Schrader reasonably could have raised the same arguments based on the Siuru printed publications that was available to it and fully described the product’s relevant features.

In resolving this dispute, the court noted three key issues that Schrader did not dispute:

1. Each printed publication Schrader now raised was previously raised or reasonably could have been raised during the IPR.
2. The 1990 Siriu article disclosed all of the relevant features of the ZR-1 Sensors.
3. Schrader reasonably could have raised the Siuru article during the IPR.

Thus, the key issue, as framed by the court, became whether an “obviousness combination—whose only relevant difference from a prior IPR combination is the inclusion of a physical product as one component”—was the same “ground” as Schrader could have raised during the IPR based on the Siriu printed publication.[6] “That is, does IPR estoppel extend to invalidity ‘grounds’ that include a physical product when a patent or prior art publication—to which the physical product is entirely cumulative—was reasonably available during the IPR[?]”[7]

The court ultimately sided with Wasica[8] and found another section of the governing statute indicated a distinction between the “grounds” for the challenge and the “evidence that supports grounds.”[9] And since the IPR estoppel provision applies to “grounds” and not “evidence,” the court held that “a petitioner is estopped from proceeding in litigation on those grounds, even if the evidence used to support those grounds was not available to be used in the IPR.”[10]

Accordingly, since the ZR-1 Sensor product was “materially identical” to the ground based on the Siriu printed publication, Schrader was estopped from raising it in the district court.[11]

Other Court’s Treatment of IPR Estoppel

Currently, courts are split on whether 35 USC § 315(e) applies to product or system art and the Federal Circuit has yet to weigh in on the issue. Some courts have held products embodying patents or printed publications are not subject to Section 315(e) estoppel because only patents or printed publications can serve as grounds for invalidity in an IPR. Therefore, any grounds relying on physical product art could not reasonably have been raised during the IPR because they are precluded.[12] Other courts, like in Wasica, have rejected this interpretation as an attempt to skirt the estoppel provision, and held that estoppel applies to physical products where a printed publication corresponding to the product was reasonably available for use in an IPR.[13] However, these courts still recognize that products that disclose claimed features not present in the corresponding printed publication are “a superior and separate reference” from the printed publication and not subject to estoppel.[14]

Conclusion

The Wasica decision further divides the district court split on IPR estoppel’s application to physical products. The case is currently set for trial in 2020, and Morgan Lewis will provide updates as appropriate. Until the Federal Circuit weighs in on the issue, practitioners preparing IPR petitions should be cognizant of how estoppel is applied in their districts. Practitioners should also consider whether any printed publications exist that disclose elements found in the product, whether the physical product discloses claimed features not found in the printed publication, and whether the printed publication is even available as prior art.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors, Jason C. White (Chicago) andNicholas A. Restauri (Chicago), or any of the following lawyers from Morgan Lewis’s post-grant proceedings team:

Boston
Joshua M. Dalton

Century City
Andrew V. Devkar 

Houston
C. Erik Hawes
Rick L. Rambo

Philadelphia
Louis W. Beardell, Jr.

San Francisco
Brent A. Hawkins

Silicon Valley
Dion M. Bregman
Andrew J. Gray IV
Michael J. Lyons

Washington, DC
Jeffrey G. Killian, Ph.D.
Robert Smyth, Ph.D.