“Metz and company were never permitted to have their patent infringement claims heard by an Article III court or federal jury…. due to the ingrained and oft-repeated misapplication by the Federal Circuit of the doctrine of collateral estoppel. – Jump Rope Systems Petition
The inventor of a new jump rope system (the Rope Revolution), Molly Metz, is asking the United States Supreme Court through her company, Jump Rope Systems, LLC, for clarification of the doctrine of collateral estoppel as applied by the Court of United States Appeal for the Federal Circuit (CAFC) to restrain a patent infringement action. in district court where the CAFC upheld a decision of the Patent Trial and Appeal Board (PTAB) of non-patentability. Jump Rope Systems argues that the CAFC’s decision in XY, LLC vs. Trans Ova Genetics, LC (2018) contradicts Supreme Court decisions in B&B Hardware, Inc. vs. Hargis Indus., 575 US 138 (2015); Medtronic, Inc. v. Mirowski Family Ventures, LLC, 571 US 191 (2014); and Grogan vs. Garner498 US 279 (1991).
The petition specifically asks the High Court to consider the following question:
“If, under federal patent law, a determination of non-patentability by the Patent Trial and Appeal Board in an inter partes review proceeding, upheld by the Federal Circuit, has a collateral estoppel effect on the validity of the patent in a patent infringement action at the federal level. district court.”
Metz told his patent infringement story and his experience with the PTAB to IPWatchdog in June of this year. After filing a patent infringement lawsuit against Rogue Fitness in 2018 for infringement of its patents (U.S. 7 789 809 B2 and U.S 8,136.208 B2) for a unique jump rope grip technology, Rogue filed a motion for inter partes review (IPR) and the PTAB ultimately invalidated the patents. After an initial appeal to the Federal Circuit, Metz received a summary confirmation of Rule 36 of the PTAB’s decision.
In April 2022, following a consent judgment by the District Court, Jump Rope Systems requested an initial hearing bench asking the CAFC to reverse its own decision by XY, LLC vs. Trans Ova Genetics, LC (2018), arguing that exclusive effect cannot be given to invalidity determinations issued by the PTAB because XY conflicts with decisions of the United States Supreme Court on the doctrine of collateral estoppel. However, the CAFC denied this request without explanation. Jump Rope Systems then filed an unopposed motion for summary affirmation of the district court’s judgment acknowledging that XY, LLC estopped its appeal, and on June 28, 2022, a three-judge panel of the Federal Circuit granted that motion.
In its petition, Jump Rope Systems argues that “Metz and company were never permitted to have their patent infringement claims heard by an Article III court or federal jury…. due to the ingrained and oft-repeated misapplication by the Federal Circuit of the doctrine of collateral estoppel from XY, LLC vs. Trans Ova Genetics, LC.”
In XY SARL, the alleged infringer, Trans Ova Genetics, has appealed the district court’s dismissal of post-trial motions challenging a jury verdict that found XY’s patent claims covering the sorting of sperm carrying chromosomes. Instead of addressing Trans Ova Genetics’ invalidity arguments, the Federal Circuit spontaneously concluded that XY was incidentally precluded from asserting the validity of its patent claims, which were first invalidated in IPR proceedings before the PTAB, and then the invalidations upheld by the Federal Circuit.
Judge Pauline Newman wrote a dissent in XY SARL challenging the court’s majority decision on the disability issues in this case. Newman pointed out that there was no reciprocity of parties involved in the matter, as Trans Ova Genetics was not the petitioner challenging the validity of XY’s patent claims to the PTAB. Further, when considering exceptions to collateral estoppel under which matters are not excluded from relitigation, as provided in the (Second) reformulation of judgments §§ 28-29, Justice Newman found clear inconsistencies in the different burden of proof standards for validity issues applied to the PTAB, where validity determinations must be supported by “substantial evidence”, and the U.S. District Court validity decisions, which must be supported by “clear and compelling evidence.” Newman also raised questions of constitutional balance between administrative agencies and Article III courts. In September 2019, the Federal Circuit issued Chrimar Systems vs. FTA USAby applying the outfit XY SARL to invalidate patent claims that have been confirmed as valid by jury verdict and by post-trial motions.
“Judge Newman was clearly correct, and her dissenting opinion is fully supported by the decision of this Court in Grogan vs. Garner…,” says the Jump Rope petition. Grogan was a bankruptcy case that addressed the same issue of whether “a prior determination of a claim against a party requires the application of the prohibition of collateral estoppel where subsequent litigation involving the same party is governed by a standard of proof different from that applied in the previous decision.” The Supreme Court ultimately ruled:
“In this case, a creditor who has reduced their fraud claim to a valid and final judgment in a jurisdiction that requires proof of fraud by a preponderance of the evidence seeks to minimize further litigation by invoking collateral estoppel. If the standard of preponderance also governs the issue of non-discharge, a bankruptcy court could properly give effect of collateral estoppel to elements of the claim which are identical to the elements required for discharge and which were actually litigated and determined in the prior action. See Restatement (Second) of Judgments § 27 (1982). If, however, the clear and convincing standard applies to non-discharge, the earlier judgment could not be given the effect of collateral estoppel.
Jump Rope’s motion argues that the issue of collateral estoppel in Grogan is identical to that of XY, LLC, and that it is a bankruptcy proceeding rather than a patent infringement action is “a distinction without difference”. In a PTAB proceeding, a petitioner must prove obviousness by a preponderance of the evidence, while in a district court, invalidity must be proven by clear and convincing evidence. The petition notes that the Federal Circuit did not cite Grogan in its decision in XY, LLC.
Moreover, in B&B Hardware, Inc.., the Supreme Court stated that “the issues are not identical if the second action involves the application of a different legal standard, even though the factual background of the two actions may be the same”. And in Medtronic, Inc.. the Court explained that the “Restatement (Second) of Judgments [§ 28(4)] says that re-litigation of an issue (e.g., infringement) decided in one lawsuit “is not precluded” in a subsequent lawsuit where the burden of persuasion “has shifted” from the “party against whom exclusion is requested . . . of his opponent….’ Ultimately, these cases and the points raised in Judge Newman’s dissent support the conclusion that the PTAB’s determinations that Jump Rope’s claims are unpatentable were not subject to collateral estoppel in the patent infringement action in the District Court and the CAFC erred in finding that the PTAB’s decisions set aside Jump Rope’s patent infringement lawsuit.
A good candidate
The petition also argues that the case warrants the Court’s review because “[t]The issue of collateral estoppel raised in this case is of national significance in patent infringement litigation, as it affects countless patent litigation across the country. According to the motion, there are currently “427 pending appeals from the Federal Circuit that involve PTAB’s IPR/PGR proceedings” and “353 of those 427 pending appeals (more than 83%) have litigation pending in the courts of district where the same patents, challenged to PTAB, are claimed. These data are taken from PACER and cross-referenced with PTAB statistics collected by Unified patents.
The Jump Rope Systems case is an excellent vehicle for review because “the District Court and the Federal Circuit emphatically applied the doctrine of collateral estoppel, without any of the exceptions set forth in § 28(4) of the restatement, on the basis of the Federal Circuit’s decision in XY, LLC Jump Rope also petitioned the CAFC for en banc review and cited conflicting precedent, but “the full Federal Circuit summarily denied en banc review without any reason or dissent” .
Finally, the motion notes that, under the preponderance of the standard of proof, the respondent “convinced the PTAB to combine two pieces of prior art (patents known in the PTAB decision as ‘Wolf’ and “terper”)”. It wouldn’t have happened in the district court, Jump Rope explains:
“The PTAB found that such a combination yielded the claimed invention. But such PTAB reasoning occurred without it being found that ordinary craftsmen would have perceived a problem in the Wolf reference requiring a solution. The PTAB found rather considered a problem solved by the inventor and believed (in hindsight) that the same problem existed in Wolf’s prior art….Standard jury instructions in a trial in district court would warn the jury that hindsight cannot be used to combine the prior art in this manner under the clear and compelling standard.
At the end of the day, “[t]The inventor’s teachings should not be used against her to invalidate her patent,” the petition argues. And Snape would still have the ability to plead invalidity in an Article III tribunal depending on Jump Rope’s interpretation of the law.
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