Federal Circuit Holds Statements During Inter Partes Review Can Be Prosecution Disclaimer

Intellectual Property Update

Date: May 23, 2017

Key Notes:

  • Federal Circuit holds that statements made during an inter partes review (IPR) can be prosecution disclaimer, even if made during the first phase of the IPR.
  • Patent holders must be careful what they argue during an IPR, as their arguments may be used against them in subsequent litigation.
  • This decision creates tension between prosecution disclaimer and the related concept of estoppel.

In a recent decision, the U.S. Court of Appeals for the Federal Circuit held that statements made by patentees during an inter partes review (IPR) can constitute prosecution disclaimer. Under the concept of prosecution disclaimer, a patentee cannot clearly and unmistakably disclaim a certain meaning for its patent claims during prosecution and then try to recapture this same meaning during claim construction in subsequent litigation. Prosecution disclaimer can be thought of as a type of estoppel. The patentee is estopped from taking a position inconsistent with its earlier position.

In 2013, the America Invents Act (AIA) went into effect, fundamentally changing U.S. patent law and raising new questions about when prosecution disclaimer can arise. The AIA created IPR, a new procedure for challenging patent validity that consists of proceedings before the Patent Trial and Appeal Board (PTAB), a body within the U.S. Patent and Trademark Office (PTO). The introduction of IPR raised the issue of whether a patentee’s disclaiming statements made during an IPR can constitute prosecution disclaimer. In Aylus Networks, Inc. v. Apple Inc., No. 2016-1599 (Fed. Cir. May 11, 2017), the Federal Circuit decided this issue of first impression in the affirmative, creating tension between prosecution disclaimer and various types of estoppel.

The Aylus case began when Aylus sued Apple for infringement of U.S. Patent No. RE 44,412. The claims of the ‘412 patent concern how media content is delivered from a media server (MS), such as a DVD player, to a media renderer (MR), such as a TV display. Either control point (CP) logic or control point proxy (CPP) logic can be used to deliver content, or both can be used cooperatively. The case focused on dependent claims 2 and 21 of the ‘412 patent, which are substantially identical. Claim 2 states: “The method of claim 1, wherein the CPP logic is invoked to negotiate media content delivery between the MS and the MR….”

After Aylus sued Apple for infringement, Apple filed two petitions for IPR with the PTAB, seeking review of the ‘412 patent’s claims. Aylus filed a preliminary response to the petitions, arguing that the PTAB should not institute IPR proceedings. Aylus distinguished Apple’s potentially invalidating prior art by explaining that, for claims 2 and 21 of the ‘412 patent, only CPP logic – and not CP logic – is invoked to deliver media content. Based on this representation, the PTAB chose not to institute IPR proceedings on claims 2 and 21.

Following this decision, Apple argued in the district court that claims 2 and 21 must be limited to the situation where only CPP logic is invoked to deliver media content – consistent with Aylus’s statements to the PTAB. The court agreed, finding the statements were a prosecution disclaimer. Based on this claim construction, the district court granted Apple summary judgment on infringement.

Aylus appealed, and the Federal Circuit affirmed. The court began by noting that it had previously applied prosecution disclaimer to statements made during other post-issuance proceedings before the PTO, such as reissue proceedings and reexamination proceedings.

Aylus argued, however, that its statements were not made as part of an IPR because they were in a preliminary response before the PTAB had decided whether to institute IPR. This argument finds support in Shaw Industrial Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016). There, the court explained that IPR consists of two phases: First, the PTAB decides whether to institute IPR, and second, it conducts the IPR proceeding and issues a decision. In Shaw, the court was addressing IPR estoppel, under which a party challenging the validity of a patent cannot, after completing an IPR, assert invalidity of a patent based on any grounds that were raised or could have been raised during the earlier IPR. For purposes of applying this rule, the Federal Circuit ruled in Shaw that IPR does not begin until it is instituted (i.e., after the first phase).

In Aylus, the Federal Circuit side-stepped Shaw, holding that, for the purposes of prosecution disclaimer, there is no meaningful distinction between the two phases of an IPR. In either phase, statements are recorded in official papers filed with the PTO and made available to the public. The public should be allowed to rely upon statements made in either phase when determining the scope of the patent.

While Aylus seems sound from a public policy perspective, it creates tension between prosecution disclaimer and various types of estoppel that are closely related to prosecution disclaimer. Courts have, for instance, noted that prosecution disclaimer is similar to judicial estoppel, which precludes a party from taking a position in a case that is contrary to a position it took in earlier legal proceedings. Indeed, in Aylus, even if the Federal Circuit had determined that prosecution disclaimer should not apply, the court might have applied judicial estoppel instead.

But maybe not. While the Aylus court had no problem applying prosecution disclaimer based on statements made in the first phase of an IPR, courts have refused to hold that the first phase of an IPR proceeding can have an estoppel effect in subsequent legal proceedings. As described above, in Shaw the Federal Circuit held that IPR estoppel could not be based on the first phase of an IPR. Similarly, in adidas AG v. Under Armour Inc., No. 14-cv-00130 (D. Del. Dec. 15, 2015), the court refused to adopt a claim construction from a PTAB decision denying institution of IPR. The district court noted that the PTAB’s decision in the first phase of an IPR was not the type of adjudication that could lead to collateral estoppel. Because prosecution disclaimer is essentially a type of estoppel, it is surprising that in Aylus the Federal Circuit gave such little consideration to these cases and reached a contrary outcome.

Aylus also stands as a warning to patent holders dealing with a petition for IPR. Prior to Aylus, many patent holders may have assumed that they had nothing to lose in opposing a petition for IPR. Aylus exposes this fallacy. Patent holders beware: Your arguments in opposition to a petition to institute IPR may come back to haunt you in subsequent litigation.


For more information, please contact:

Jesse L. Jenike-Godshalk

Michael J. Nieberding

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