In Zynga Inc. v. IGT, IPR2022-00199, Paper 17 (Aug. 22, 2022), the Director of the USPTO granted sua sponte Director review and affirmed the decision granting Zynga's inter partes review ("IPR") petition. The Board granted Zynga's petition after determining that "to the extent Section 41.127(a)(1) applies," it was waived, and Zynga was not barred by interference estoppel. Zynga Inc. v. IGT, IPR2022-00199, Paper 11, at * (June 14, 2022).


The Patent Trial and Appeal Board ("the Board") granted Zynga's IPR petition challenging select claims of U.S. Patent No. 7,168,089. In so doing, the Board rejected Patent Owner's argument that according to 37 C.F.R. § 41.127(a)(1), interference estoppel should apply to prohibit Zynga's petition. IPR2022-00199, Paper 11, at *8 (June 14, 2022). Patent Owner had previously prevailed in an interference with petitioner Zynga. 37 C.F.R. § 41.127(a)(1) reads:

Estoppel. A judgment disposes of all issues that were, or by motion could have properly been, raised and decided. A losing party who could have properly moved for relief on an issue, but did not so move, may not take action in the Office after the judgment that is inconsistent with that party's failure to move, except that a losing party shall not be estopped with respect to any contested subject matter for which that party was awarded a favorable judgment.

The Board found that the interference had been terminated by a threshold issue, and therefore "it would be unfair to impose the consequences of interference estoppel on Zynga." Id. at *10. "[T]o the extent Section 41.127(a)(1) applie[d], pursuant to 37 C.F.R. § 42.5(b), we waive the requirements of Section 41.127(a)(1) as applied to Zynga's unpatentability challenges in this proceeding. See 37 C.F.R. 42.5(b) ("The Board may waive or suspend a requirement of parts 1, 41, and 42 and may place conditions on the waiver or suspension."). Id. at *10.

Patent Owner requested rehearing and Precedential Opinion Panel ("POP") review, arguing that

"the Board improperly waived interference estoppel under 37 C.F.R. § 41.127(a)(1), to the extent it applied, to determine that Petitioner is not barred from pursuing inter partes review of U.S. Patent 7,168,089 B2." IPR2022-00199, Paper 17, at *2.

The Director reviewed the request and sua sponte ordered Director review. Id.

Director Review:

The Director affirmed "the Board's result that Petitioner should not be barred from pursuing inter partes review based on interference estoppel." Id. at *3. IPRs are governed by Title 37, Chapter I, Subchapter A Part 42 of the Code of Federal Regulations. Part 42 incorporates certain sections of Part 1, but not Part 41, which includes the interference estoppel provision relied upon by Patent Owner. Id. "As a result, § 41.127 does not apply to trial and preliminary proceedings before the Board." Id.

Affirming on the alternative ground that Section 41.127 "does not apply" to trial and preliminary proceedings, the Director did not reach the question of whether the Board's waiver of interference estoppel was proper. Nonetheless, the Director went on to note that even if interference estoppel under 37 C.F.R. § 41.127(a)(1) applied, it would not be appropriate in this case because the interference proceeding was terminated based on a threshold issue. A substantive analysis of other issues, including patentability over the prior art, did not take place so interference estoppel would not apply. Id. at *4.

The case was remanded to the original merits panel for further proceedings. Id. The request for rehearing and POP review were dismissed. IPR2022-00199, Paper 16 (Aug. 22, 2022).

Take Aways

Unlike the statutory petitioner estoppel provisions of 35 U.S.C. §315(e)/325(e), the interference estoppel provision (37 C.F.R. 41.127(a)(1)) is a PTO-created regulation. The PTO has more discretion in deciding when interference estoppel applies.

The Director addressing the hypothetical case of "if interference estoppel applied" perhaps indicates her intention to emphasize that there cannot be interference estoppel if a challenger never had an opportunity to argue the merits of a motion it brought in the interference.

An interesting future case would be one where prior art patentability was fully litigated in a prior interference and the losing party seeks to litigate the same patentability issues in an IPR. The Director's decision that interference estoppel "does not apply" in IPR trials means that challengers may attempt to relitigate the same prior art patentability issues in an IPR, arguing interference estoppel does not apply. Such attempts may be subject to general principles of collateral estoppel and the Board's discretion to institute an IPR.

There have now been 15 IPRs with granted director review requests (https://www.uspto.gov/patents/patent-trial-and-appeal-board/status-director-review-requests). This is in contrast to 182 denials. Two of these resulted in affirmance of the Board decision and seven resulted in a remand back to the Board. Of the review requests granted, 10 were sua sponte (IPR2021-01064, IPR2021-01229, IPR2020-01016, IPR2021-00044, IPR2021-01556, IPR2022-00530, IPR2022-00861, IPR2022-00862, IPR2022-00199, PGR2022-00021). So, while only a small percentage of director review requests are being granted, the number of sua sponte reviews may indicate a willingness of the Director to actively steer the PTAB.

The deadline for comments on Request for Comments on Director Review, Precedential Opinion Panel Review, and Internal Circulation and Review of Patent Trial and Appeal Board Decisions issued July 20, 2022, was just extended to Oct. 19, 2022. 87 Fed.Reg. 43,249 (July 20, 2022), https://www.uspto.gov/patents/patent-trial-and-appeal-board/interim-process-director-review.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Barbara McCurdy
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
901 New York Avenue, NW
Washington, DC
Tel: 2024084000
Fax: 2024084400
E-mail: info@finnegan.com
URL: www.finnegan.com

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