May 7, 2021
Photographer: Andrew Harrer/Bloomberg
Schrödinger’s Patents: Can a Patent Be Valid and Invalid at the Same Time?
In quantum physics, “Schrödinger’s cat” refers to a thought experiment where a cat is simultaneously both alive and dead. But law is binary—a statement is either true or false; a litigant either wins or loses; and a patent is either valid or invalid. Or is it?
The Sanofi and Cisco Cases
In a fascinating 2019 ruling in Sanofi-Aventis v. Mylan, the federal district court in New Jersey refused, initially, to find a pharmaceutical patent invalid despite a U.S. Patent and Trademark Office finding of invalidity in an inter partes review (IPR) between the same parties.
Sanofi held that collateral estoppel— which permits a ruling from one case to be applied in a separate case—was inappropriate where the standards of proof for invalidity were different (i.e., only a “preponderance of evidence” in the PTO, versus “clear and convincing” evidence in federal courts).
Ultimately, the Sanofi court did accept the invalidity determination, but only after the Federal Circuit Court of Appeals affirmed the PTO’s decision. That appellate ruling, however, merely affirmed that the PTO had correctly found invalidity applying the lower standard.
In 2020, the Northern District of California, in Cisco Sys. v. Capella Photonics Inc., did apply collateral estoppel to find patent invalidity where the Federal Circuit had already affirmed an IPR invalidity finding. The Cisco court distinguished Sanofi as having occurred before appellate review of the IPR—citing XY LLC v. Trans Ova Genetics, where the Federal Circuit held that collateral estoppel applies once the appeals court affirms the patent office on invalidity.
Interestingly, the XY case garnered a dissent from Circuit Judge Pauline Newman who pointed to the different standards in IPRs as a reason not to apply collateral estoppel—even after appellate affirmance of an IPR holding. Newman further noted that Supreme Court jurisprudence has repeatedly held that collateral estoppel is not to be automatically applied.
The Law of Collateral Estoppel
These decisions reveal tensions as to the collateral estoppel effect of IPR decisions in federal district court litigations.
Modern day collateral estoppel law derives from a landmark patent case. In Blonder-Tongue Laboratories Inc. v. University of Illinois Foundation, the Supreme Court held that a defendant in federal court may assert patent invalidity based on collateral estoppel if a different defendant invalidated the patent in an earlier federal court case.
Before Blonder-Tongue, patentees could in theory continue to assert a patent against different defendants after an invalidity ruling—and thus a patent could be both effectively valid and invalid.
Nonetheless, as Judge Newman pointed out in her dissent in XY, the Blonder-Tonguecase did not require automatic application of collateral estoppel but instead required the trial court to examine whether there were any reasons not to apply estoppel—e.g., if the issues being litigated in the two cases were not the same. And the Supreme Court has explained, in B&B Hardware Inc. v. Hargis Indus., that “issues are not identical if the second action involves application of a different legal standard, even though the factual setting of both suits may be the same.”
Citing B&B Hardware, Sanofi held that the different legal standards in IPRs preclude estoppel. The different standards have also led the Federal Circuit to hold, in Novartis AG v. Noven Pharms. Inc., that an IPR “properly may reach a different conclusion [from a prior court ruling finding no invalidity] based on the same evidence.”
A Vehicle for Further Supreme Court Review?
These rulings seem discomforting. Our jurisprudence is premised upon “treating like cases alike.” How can a patent be both valid and invalid at the same time (even in the face of the same prior art)?
Indeed, the purpose of collateral estoppel is largely to avoid the anomaly of the same issue being adjudicated differently in different courts. Yet, are they really “like cases” if different standards are being applied? How can the patent office remove a property right—a patent—using a lower standard of proof and then effectively impose that conclusion on an Article III court that has a higher standard of proof?
If and when these issues reach the Supreme Court they may provide a vehicle for refining the doctrine of collateral estoppel, as well as for considering whether the IPR’s lower standard of proof for eliminating a property right is actually constitutionally permissible—an issue that the court has not specifically addressed when it has upheld IPRs in the face of other constitutional challenges.
For now, we live with the potential for “Schrödinger’s patents"—simultaneously valid and invalid during the time between IPR invalidation and appellate review. Like their quantum-physics feline counterparts, Schrödinger’s patents are curious creatures cloaked in uncertainty.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Jason Lief is a co-founder of Lief Parke LLP in New York where he practices patent and IP litigation and counseling.