IPR Estoppel Applies to Non-Instituted Grounds Included in a Petition Unless the Decision Not to Institute was Purely Procedural​

The magistrate judge recommended partially granting plaintiff's motion for summary judgment that IPR estoppel barred defendant from asserting certain prior art references and rejected the argument that IPR estoppel applied only to defenses raised after IPR institution. "The Court recommends adopting the narrow view of [Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), cert. denied, (U.S. Oct. 31, 2016)] and [HP Inc. v. MPHJ Technology Inv., LLC, 817 F.3d 1339 (Fed. Cir. 2016)]. Namely, the Court reads Shaw and HP to exempt an IPR petitioner from § 315(e)'s estoppel provision only if the PTAB precludes the petitioner from raising a ground during the IPR proceeding for purely procedural reasons, such as redundancy. . . . Section 315(e) estops [defendant] from asserting at trial: (1) grounds for which the PTAB instituted IPR and determined those grounds to be insufficient to establish unpatentability after a trial on the merits; (2) grounds included in a petition but determined by the PTAB to not establish a reasonable likelihood of unpatentability (in other words, administrative review on the merits of a ground); and (3) grounds not included in a petition that a 'skilled searcher conducting a diligent search reasonably could have been expected to discover.' . . . [Defendant] is not estopped from asserting grounds included in a petition but which the PTAB found redundant or declined to institute review for another procedural reason."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 11, 2017, Order) (Payne, MJ)