Collateral Estoppel Does Not Apply When the Prior Proceeding Applies a Lower Burden of Proof

Written by: Justin K. Theam and Kendall Loebbaka

KROY IP HOLDINGS, LLC v. GROUPON, INC.

Before Prost, Reyna, and Taranto. Appeal from the U.S. District Court for the District of Delaware.

Summary: Because there are different burdens of proof in IPRs and district court, collateral estoppel does not preclude a patent owner from asserting claims that are immaterially different from claims canceled in an IPR.

Kroy IP Holdings (Kroy) sued Groupon for patent infringement.  Groupon filed two IPR petitions against the asserted patent, challenging only some of the claims.  The Patent Trial and Appeal Board (the “Board”) found all challenged claims unpatentable, which the Federal Circuit affirmed. However, after the deadline for Groupon to file IPRs had passed, Kroy amended its complaint to include additional claims not challenged in the IPRs. Groupon moved to dismiss, arguing Kroy was collaterally estopped because of the two prior IPR decisions. The district court granted the motion, finding that collateral estoppel prevents a patent owner from asserting immaterially different claims. Kroy appealed.

The Federal Circuit reversed, holding collateral estoppel does not apply when the second action involves a different legal standard, such as a different burden of proof. At the district court, Groupon had to prove invalidity by clear and convincing evidence. However, before the Board, Groupon was required to prove unpatentability only by a preponderance of the evidence.  Accordingly, the Federal Circuit reversed and remanded.

Editor: Sean Murray