Ingenico Patent Win Marks Shift in Available Invalidity Defenses

In this article for Bloomberg Law, Joseph Loy, Todd Baker and Brandon Weber discuss how the Federal Circuit has created a new set of questions for businesses engaged in patent litigation.

A recent federal appeals court ruling concerning patents and IPR estoppel—the legal principle that prevents someone from using the same prior-art theories in attempts to invalidate a patent in concurrent forums—could have real-world implications, such as more discretionary denials and fewer stays.

But while the US Court of Appeals for the Federal Circuit clarified the scope of that estoppel in Ingenico Inc. v. IOENGINE, LLC, it left other questions unanswered, including how district courts and the Patent Trial and Appeal Board itself will view stipulations to estoppel and attempts to reuse prior art in parallel proceedings.

IPR estoppel in patent cases applies only after a final written decision and only to “any ground” that was raised or reasonably could have been raised during a PTAB proceeding known as inter partes review, or IPR.

An IPR petitioner may request to invalidate one or more claims of a patent only on an anticipation or obviousness ground that could be raised on the basis of prior art consisting of patents or printed publications. The PTAB retains discretion to deny petitions and analyzes the overlap between issues raised in the petition and parallel proceeding.

Petitioners sometimes stipulate to estoppel early in IPR proceedings to combat discretionary denials, known as Sotera stipulations. District courts also began to consider Sotera stipulations in deciding stay motions pending IPR. As a result, estoppel in district courts became commonplace, even though the scope of IPR estoppel remained uncertain.

Case History

In May, the Federal Circuit rejected an argument from a patentee (Ingenico Inc.) that an accused infringer (IOENGINE, LLC) should have been estopped from presenting a prior-art system reference—a software product that the accused infringer argued anticipated (disclosed the same invention at an earlier date) the asserted patent.

The asserted patent at issue (US Patent No. 9,059,969) was “directed to a portable device, such as a USB thumb drive ... that causes communications to be sent to a network server in response to user interaction.”

The plaintiff-appellant had claimed that the reference “was entirely cumulative and substantively identical” to the printed publications that reasonably could have been raised during the IPR.

In reaching its conclusion, the court found that IOENGINE’s invalidity theory that included the DiskOnKey Device wasn’t a “ground” that reasonably could have been raised during IPR and that the Patent Act’s use of the term “ground” showed that grounds are the theories of invalidity such that a ground isn’t the prior art itself.

As a result, the court held that petitioners aren’t estopped from relying on the same patents and printed publications as evidence in asserting a prior-art system ground that couldn’t be raised during the IPR because only patents and printed publications may be raised within grounds at IPR.

This means that any ground (or invalidity theory) that includes at least one prior-art system is no longer estopped by statute in parallel proceedings, even if that ground contains other prior-art references that were raised during IPR.

Litigant Obstacles

Ingenico could create complications for litigants, including:

More discretionary denials: In determining whether to exercise discretion to deny an IPR petition, the PTAB weighs the breadth of petitioners’ Sotera stipulations, and broader stipulations are viewed more favorably.

The PTAB previously found a stipulation not to pursue only the specific prior-art references in the petition mitigated “the concern about overlapping issues” but “not entirely.” Now that the statute itself mirrors that narrower stipulation, the PTAB may begin weighing the “overlapping issues” factor more heavily in doling out discretionary denials.

Fewer stays: Ingenico may lead to fewer district-court stays if courts anticipate more system-based prior-art challenges.

Before Ingenico, district courts used differing standards for evaluating motions to stay proceedings with concurrent validity challenges. Some required Sotera stipulations to grant stays, while others didn’t.

Certain courts have already shown skepticism that stays increase efficiency. Because defendants aren’t now estopped from reusing IPR prior art, this skepticism may grow.

System art advantages: Ingenico could allow additional chances for independent judicial bodies to evaluate substantively similar prior-art grounds. For example, a petitioner-defendant could conduct discovery into paper prior-art references to find inventors’ prototypes and assert those prototypes as system prior-art references in district courts, even if the PTAB found that the paper “version” wasn’t invalidating.

Broader Sotera stipulations: Petitioners simultaneously litigating patent infringement allegations in parallel district court proceedings may consider including broader stipulations in their IPR petitions.

Such stipulations would preclude the use of both prior art covered by the IPR estoppel statute and substantively coextensive prior-art references (such as a physical device described by a printed owner’s manual) to combat arguments that Sotera stipulations are “inherently ineffective.”

Stipulations broader than the IPR estoppel statute could tilt the balance for courts weighing overlapping issues.

Evidentiary concerns: District courts remain split regarding admissibility of evidence from IPR proceedings. Some courts allow IPR evidence, while others have excluded it.

Prior to Ingenico, the Federal Circuit previously found no abuse of discretion where a court allowed such evidence but barred evidence the defendant requested the IPR.

Now that the Ingenico decision allows defendants to present invalidity defenses based on prior-art systems, courts that allow IPR evidence at trial could see cross-examinations about paper prior-art references analyzed during IPR (such as a device owner’s manual) used to undercut use of new, substantively similar prior-art system defenses (such as an invalidity theory involving the physical device itself).

Outlook

Patent litigators should be careful to analyze how the newly clarified scope of IPR estoppel coincides with their clients’ best interests, keeping these potential complications in mind.

While accused infringers may see promise in the new ability to present similar prior-art theories in parallel proceedings, this new ability may further restrict the chances of IPR institution, forcing would-be IPR litigants back into district courts to challenge patents’ validity, unless proactively handled.

The case is Ingenico Inc. v. IOENGINE, LLC, Fed. Cir., No. 23-01367, 5/7/25.