Questions Remain Regarding the Role of Estoppel Arising from Successful IPR
A recent dispute between BTG International Limited and several generics companies has raised an interesting question regarding the role of estoppel arising from successful inter partes review (IPR) challenges—specifically, the question of whether a petitioner, who is successful in invalidating patents in IPR proceedings, is estopped from raising those same arguments in pending district court litigation. This issue is particularly important to generic challengers who seek favorable review by the district court to invoke favorable Hatch-Waxman provisions (e.g., forfeiture) that can be triggered only by a district court decision, as opposed to the final written decision of an IPR. 21 USC §355(j)(5)(B)(iii)(I). After entertaining briefing on point, the Federal Circuit declined to address the issue; thus, the question remains unanswered.
BTG International Limited et al. sued Amneal Pharmaceuticals LLC et al. in the U.S. District Court of New Jersey, asserting that Amneal’s abbreviated new drug application (ANDA) for the generic version of BTG’s abiraterone product ZYTIGA® infringed claims of U.S. Patent No. 8,822,438 (the ’438 patent). Subsequently, other named defendants in the lawsuit filed three separate petitions for IPR with the U.S. Patent and Trademark Office (USPTO), alleging that the asserted claims would have been obvious under Section 103. (IPR2016-00286, -01332, -01582).
The Patent Trial and Appeal Board (PTAB) issued claim constructions in the IPR proceedings adverse to BTG and found the asserted claims obvious. In light of these decisions, BTG filed a request for rehearing.
During the infringement action and while the Board was still considering the rehearing request, BTG argued that Section 315(e)(2) barred the petitioners who were victorious in the IPR proceedings from presenting to the court the same invalidity attacks based on prior art that petitioner previously raised or could have raised during the IPRs. In other words, BTG argued that 315(e)(2) estops petitioners from presenting in district court the same arguments on which they were successful before the PTAB to the district court.
Section 315(e)(2) states:
(2) CIVIL ACTIONS AND OTHER PROCEEDINGS.—The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
§ 315(e)(2) (emphases added)
According to BTG, the statutory estoppel attached as soon as the PTAB issued its final written decision, and it applies to petitions whether or not they prevail.
Following a bench trial, the District Court of New Jersey also concluded the asserted claims would have been obvious in light of its claim construction and the same combination of prior art relied on by the PTAB in the related IPRs. In a footnote in its opinion, the court conceded that Section 315(e)(2) could be interpreted as BTG argued—that is to say petitioner may be estopped. However, the court ultimately credited what it understood to be Congress’ “manifest statutory intent”: to prevent abuse of IPRs “through the withholding of grounds and presentation of serial challenges.” BTG Int’l Ltd. v. Amneal Pharms., Inc., Case 2:15-cv-05909-KM-JBC, Paper 571, at 27–27a, n.13 (D.N.J. Oct. 31, 2018).
BTG appealed the PTAB’s decisions and the district court’s final judgment to the Federal Circuit. On appeal, BTG argued, among other things, that the district court erred in refusing to apply estoppel. The Federal Circuit invited the USPTO to address the applicability and scope of petitioner estoppel when a rehearing request is pending before the board and whether a district court may stay a case, pending the board’s decision on the rehearing request. In responding to the Federal Circuit’s inquiry, the USPTO agreed with BTG, stating that statutory estoppel applies not only to petitioners who lose an IPR but also to those who prevail, even though application to those prevailing petitioners “leads to the counterintuitive result that a district court would not be able to consider invalidity arguments that the Board found persuasive.” Invited Brief for the Director – U.S. Patent and Trademark Office as Amicus Curiae in Support of Neither Party, at 4, BTG Int’l Ltd. v. Amneal Pharms. LLC, Appeals 2019-1147, -1148, -1323, -1324, -1325 (Fed. Cir. Feb. 1, 2019).
The Federal Circuit issued its decision in May, affirming the invalidity of the patents and finding the claims obvious. However, by doing so, the Federal Circuit did not reach the remaining issues on appeal—specifically, the issue of whether a petitioner is estopped from raising arguments in district court which were persuasively presented in co-pending IPRs. Thus, it remains an open question as to whether a petitioner who was successful in the IPR proceeding is estopped from presenting the same arguments in concurrent district court litigation as a matter of law.