Jumping In Line: IPR and District Court Dance

Molly Metz is a competitive jump-roper (5-time world champ) and also an inventor of an innovative jump rope handle that allows super speed jumping loved by both competitors and cross-fit freaks.  U.S. Patent Nos. 7,789,809 and 8,136,208.  There has been massive infringement since her patents issued 10-12 years ago.  Financing an infringement lawsuit is a bit tricky, especially for a total-startup (micro entity) in a fairly small market.  After failed licensing discussions, her company Jump Rope Systems eventually sued Coulter Ventures (owners of Rogue Fitness) in 2018 for patent infringement.  Jump Rope Systems, LLC v. Coulter Ventures, LLC, 18-cv-731 (S.D. Ohio).  Coulter turned around and petitioned for inter partes review (IPR).  IPR2019-00586, IPR2019-00587.  The PTAB granted the petitions and eventually concluded that the claims were obvious compared against the prior art.  The PTAB decision here is fairly questionable as applying hindsight bias in justifying the combination of prior references. Still, the Federal Circuit affirmed without opinion.

The Federal Circuit precedent is clear that all enforcement litigation should end as soon as the PTAB finds a claim unpatentable in an IPR/PRG and the determination is affirmed on appeal.  “That affirmance … has an immediate issue-preclusive effect on any pending or co-pending actions involving the patent.” XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018).  As I write below, the Federal Circuit’s approach has some doctrinal holes.  Still, it is precedent and the district court followed that precedent–dismissing the case and siding with the accused infringer.  Jump Rope appealed, but made clear to the Federal Circuit that the purpose of its appeal was to change the law and moved for summary affirmance of the district court’s judgment.

The IPR Certificate eventually issued in August 2022 stating that the claims have been cancelled, but that time the district and appellate courts had already been treating them as cancelled for months.

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Jump Rope Systems’ case is now pending before the US Supreme Court on petition for writ of cetiorari and it argues that the Federal Circuit’s approach is in direct conflict with our law of issue preclusion.   Question presented:

Whether, as a matter of federal patent law, a determination of unpatentability by the Patent Trial and Appeal Board in an inter partes review proceeding, affirmed by the Federal Circuit, has a collateral estoppel effect on patent validity in a patent infringement lawsuit  in federal district court. 

Jump Rope Petition.  

Although the Second Restatement of Judgments is not “law” as such, the Supreme Court (and other courts) have repeatedly concluded that its statements do reflect the law.  One theory for immediately applying the PTAB judgment is the doctrine of collateral estoppel (aka “issue preclusion”).   In XY, the Federal Circuit particularly concluded that collateral estoppel applies to immediately bar a patent infringement lawsuit once the PTAB finds the claims unpatentable and that determination is affirmed on appeal.  Judge Chen’s XY decision has numerous problems. The basic concern is that the opinion fails to consider standard limitations on the application of collateral estoppel, such as differing standards of review.  One key example: the PTAB decided obviousness based upon the low standard of preponderance of the evidence; and the IPR Appeal was decided on an even lower substantial evidence standard.  But, decisions on those low standards do not tell us whether the issue would be decided the same way under a higher standard of clear and convincing evidence. Standard issue preclusion rules prohibits this sort of application.  See Grogan v. Garner, 498 U.S. 279 (1991).  But, the Federal Circuit majority simply concluded that the patentee “had its day in court” and now is bound by the outcome.  As I noted above, in my view the PTAB obviousness decision here is quite weak in the way that it combines disparate references and identifies the problem to be solved.  I mention this because it seems like a case where the standard of review might make a difference.

To be clear, in my mind all of this might be a different situation once the USPTO issues its IPR certificate that actually cancels the claims.  At that point, the patent has been cancelled, but the parties here appear to be fighting about the pre-cancellation interim period.  One additional complication to this case is the reality that obviousness is a question of law, albeit one based upon substantial subsidiary facts.  Legal decisions by the courts also become binding precedent (apart from their preclusive impact on the parties), but this area becomes complicated when the legal determinations are based upon unique underlying factual conclusions.