Federal Circuit Limits Use of PTAB Unpatentability Rulings to Estop Patentees From Asserting Claims

On February 10, 2025, the Federal Circuit issued a precedential decision in Kroy IP Holdings, LLC v. Groupon, Inc., where the Court held that a “a prior final written decision of the [PTAB] of unpatentability on separate patent claims . . . cannot collaterally estop a patentee from asserting other, unadjudicated patent claims in district court litigation,”¹even if the other claims are only “immaterially different from the unpatentable claims for purposes of invalidity.”² In doing so, the Court differentiated Kroy IP Holdings from two of its previous decisions: XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282 (Fed. Cir. 2018) and Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333 (Fed. Cir. 2013).³

In XY, the Court held that once the Federal Circuit affirms a PTAB decision that a patent claim is unpatentable, the same claim cannot be asserted in district court.⁴ Ohio Willow Wood stands for the proposition that a prior district court invalidity ruling may estop a patentee from asserting claims in district court that are immaterially different for purposes of invalidity.⁵

Kroy IP Holdings (“Kroy”) sued Groupon, Inc. (“Groupon”) in for infringement of 13 claims of U.S. Patent No. 6,061,660 in the District of Delaware in October of 2017.⁶ In response, Groupon filed inter partes review (“IPR”) petitions challenging 21 claims of the patent. After the IPR filing deadline had passed, Kroy amended its infringement complaint to allege infringement of additional claims which were not included in Groupon’s IPR petitions.⁷ The PTAB found all 21 challenged claims to be unpatentable. Kroy appealed the determination of the PTAB and the Federal Circuit affirmed.⁸

Kroy again amended its complaint to include 14 additional claims which were not challenged in the IPR proceedings, and Groupon moved to dismiss the complaint, arguing that Kroy was collaterally estopped from asserting the new claims.⁹ The district court first determined that each of the 14 newly asserted claims were immaterially different from at least one of the claims the PTAB had found unpatentable.¹⁰ Then, leaning on XY and Ohio Willow Wood, the court held that if the PTAB rules that a patent claim is unpatentable, and that claim is immaterially different for purposes of invalidity from another claim in the patent, collateral estoppel precludes the patentee from asserting the immaterially different claim. On this basis, the court granted Groupon’s motion to dismiss.¹¹

On appeal, Kroy argued that collateral estoppel should not preclude it from asserting any claims that were not specifically invalidated by the PTAB—even those that are “immaterially different” from an unpatentable claim. Kroy’s argument was based on the differing standards of proof for proving unpatentability and invalidity between the two venues, where IPR proceedings apply a preponderance of the evidence standard and district courts require proof by clear and convincing evidence.¹² In reversing the district court’s decision, the Federal Circuit looked to Supreme Court precedent dictating that collateral estoppel generally does not apply where the second action involves the application of a different burden of proof.¹³

The Court also drew support from its recent decision in ParkerVision, Inc. v. Qualcomm Inc., 116 F.4th 1345 (Fed. Cir. 2024), where it reversed a district court decision to exclude expert testimony supporting the validity of certain claims that conflicted with factual findings made by the PTAB.¹⁴ There, the Court reasoned that collateral estoppel did not apply due to the differing burdens of proof.¹⁵ In reversing the district court’s motion to dismiss, the Court in Kroy IP Holdings followed the same reasoning, noting that applying estoppel would deprive patentees of their property rights without clear and convincing evidence of invalidity.¹⁶

The Court distinguished XY by clarifying that an unpatentability decision on a claim by the PTAB, once affirmed by the Federal Circuit, results in the retroactive cancellation of the claim as a matter of law, and therefore the claim cannot be asserted in litigation.¹⁷ In contrast, claims that were not found unpatentable remain presumptively valid, and district courts cannot invalidate them based on factual findings by the PTAB made under a lower burden of proof.¹⁸ Likewise, the Court differentiated form Ohio Willow Wood by clarifying that prior district court invalidity rulings may estop patentees from asserting claims that are immaterially different for purposes of invalidity.¹⁹ This is because, unlike the PTAB-to-district-court scenario, a district-court-to-district-court scenario does not present issues with differing standards of proof.²⁰

While a district court’s invalidity decision can still serve to estop a patentee from asserting patentably immaterially different claims in subsequent litigation, the same is not true for unpatentability determinations at the PTAB. Unpatentability decisions at the PTAB will only estop a patentee from asserting the specific claims that were found unpatentable, and a defendant must prove invalidity of immaterially different asserted claims by clear and convincing evidence.