Patent Strategy Tips from Fed. Circ. 'Kroy v. Groupon' Ruling on Collateral Estoppel

The U.S. Court of Appeals for the Federal Circuit recently addressed the usage of the doctrine of collateral estoppel in patent infringement cases. Specifically, the court considered whether a finding of invalidity of claims by the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) at an inter partes review (IPR) could be used to estop a patent holder from asserting patent infringement of different claims of the same patent in district court litigation. In Kroy v. Groupon, the Court reversed the trial court and held that a prior finding of invalidity at the PTAB cannot be used to estop a patent infringement suit in district court alleging infringement of different claims of the same patent.

Discussion by Federal Circuit on Estoppel

On Feb. 10, 2025, the Federal Circuit reversed and remanded the Kroy v. Groupon case on appeal from the District of Delaware. Kroy IP Holdings, LLC v. Groupon, Inc., 127 F.4th 1376, 1382 (Fed. Cir. 2025).
Kroy owns U.S. Patent No. 6,061,660 (the ’660 patent) entitled “System and Method for Incentive Programs and Award Fulfillment.” Id. at 1378; U.S. Pat. No. 6,061,660. The ‘660 patent issued on May 9, 2000 with 115 claims. In October 2017, Kroy sued Groupon in the District of Delaware alleging infringement of 13 claims of the ‘660 patent. Groupon, 127 F.4th at 1378. Groupon filed two IPR petitions at the PTAB challenging a total of 21 claims of the ‘660 patent in October 2018. Id. The 21 claims challenged by Groupon in the IPRs included the 13 claims asserted by Kroy in the lawsuit, and also included some additional dependent claims related to the asserted claims. Kroy IP Holdings, LLC v. Groupon, Inc., No. CV 17-1405-MN-CJB, 2022 WL 17403538, at *1 (D. Del. Dec. 2, 2022), rev'd and remanded, 127 F.4th 1376 (Fed. Cir. 2025). Kroy filed a first amended complaint in the district court case asserting infringement of additional claims of the ‘660 patent after the passage of Groupon’s IPR filing deadline. Groupon, 127 F.4th at 1378. Then, the PTAB found all of the 21 claims challenged by Groupon in the two IPRs to be unpatentable. In response to the IPR decisions, Kroy filed a second amended complaint to assert additional claims of the ‘660 patent against Groupon. Id. Groupon filed a motion to dismiss the second amended complaint under Fed. R. Civ. P. 12(b)(6) arguing that the IPR rulings on the ‘660 patent collaterally estopped Kroy from asserting the newly asserted claims in the second amended complaint. Id. The district court granted the motion to dismiss, and the Federal Circuit reversed. Id. at 1378-82.
In evaluating the motion to dismiss, the District of Delaware and the Federal Circuit each considered the same factors when analyzing the prior IPR decisions, including whether: 1) the identical issue was previously adjudicated; 2) the issue was actually litigated; 3) the previous determination was necessary to the decision; and 4) the party being precluded from relitigating the issue (Kroy) was fully represented in the prior action. See, Groupon, 127 F.4th at 1378; see also, Groupon, 2022 WL 17403538, at *4. The district court focused on the first collateral estoppel factor. Groupon, 2022 WL 17403538, at *4-5. In particular, the district court found that collateral estoppel applied because the differences between the claims invalidated in the IPRs and the newly asserted claims in the district court litigation “do not materially alter the question of invalidity.” Id.
On appeal, the Federal Circuit analogized its reasoning to its reasoning in ParkerVision, Inc. v. Qualcomm Inc., 116 F.4th 1345 (Fed. Cir. 2024). In ParkerVision, the court determined that collateral estoppel did not apply to method claims of a patent where similar apparatus claims were found invalid in an IPR proceeding. Similarly here, the Federal Circuit applied an exception to prevent the prior finding of invalidity in the IPRs from estopping the patent holder from asserting infringement of other claims in the same patent in the district court litigation. Groupon, 127 F.4th at 1380. The exception applies to the use of collateral estoppel to take a first finding from a first action — decided under a lower burden of proof — and to use the first finding in a second action that will be decided under a different and higher burden of proof. Id. In particular, at the PTAB for the IPRs, the validity of the claims of the ‘660 patent are evaluated under a preponderance of the evidence standard, and in contrast, in district court, the validity of the claims of the ‘660 patent are evaluated under a clear and convincing standard, a higher burden of proof than the preponderance of the evidence standard. The burden of proof in district court is higher when evaluating patent validity because the claims of the issued patent are presumed valid, but at the PTAB for an IPR, the claims of an issued patent do have not such a presumption.

Significance

The Federal Circuit reviewed and distinguished precedent while arriving at its decision not to apply collateral estoppel in Kroy v. Groupon.
First, the Federal Circuit cited to its 2018 decision in XY — a case argued by Groupon — which applied collateral estoppel to prevent district court litigation of the same claim that was previously held unpatentable by the PTAB in an IPR, despite the differing burdens of proof in the two forums. Id. at 1381 (citing XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1294 (Fed. Cir. 2018)). The Federal Circuit characterized XY as “establish[ing] a limited exception to the general principle that collateral estoppel does not apply when there are different burdens of proof.” Id. The Federal Circuit reconciled XY with the present decision because “once the claim is ruled unpatentable [by the PTAB in an IPR], it no longer exists.” Id. This exception does not apply when the claims of a patent at issue in an IPR are different from the claims of the patent at issue in district court litigation, even where the patents at issue are the same in both the IPR and the district court litigation.
The Federal Circuit also distinguished its prior 2013 decision in Ohio Willow Wood. Id. (citing Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1342 (Fed. Cir. 2013)). Collateral estoppel applied in Ohio Willow Wood because: a) the differences between the claims adjudicated in the first action and the unadjudicated claims in the second action did “not materially alter the question of invalidity,” id.; and b) the first and section actions in Ohio Willow Wood were both district court litigations decided under the same burden of proof. Id.
The Federal Circuit here held that collateral estoppel does not apply between an IPR action at the PTAB and a district court action for different claims of the same patent, due to the different burdens of proof at the PTAB and the district court. Id. at 1380. The clear and convincing evidence standard to prove patent invalidity at the district court level is statutorily prescribed, but IPR proceedings apply a lower burden of proof — a preponderance of the evidence — because there is no presumption of validity at the PTAB. Id. at 1381.
Kroy v. Groupon suggests several practice tips for patent owners and accused patent infringers to strategically consider before the commencement of and during patent proceedings at the PTAB and/or in district court.

Practice Tips for Patent Owners

Following Kroy v. Groupon, patent owners should consider filing patent applications with more than twenty claims and/or filing continuation applications to allow for additional claims to be obtained with the benefit of the priority date from the originally-filed parent patent application. The patent asserted by Kroy in Kroy v. Groupon included 115 claims at the time of issuance. Twenty-one of these claims were subsequently invalidated during the two IPR proceedings brought by Groupon. Given the large number of claims in the asserted patent, it would have been very expensive for Groupon to seek to invalidate all the claims of the issued Kroy patent in multiple IPRs, which would be an advantage for the patent owner. 
A patent owner also should consider the fees that the United States Patent and Trademark Office charges for applications that have more than the standard twenty total claims with three of those claims being independent claims. The patent owner should further consider the state of the technology covered by the application to determine whether the owner’s interests are best advanced by filing a patent with a large number of claims at the outset, or by filing a continuation application. Multiple continuation patents are typically more expensive than a single patent, but multiple continuation patents allow the patent holder to have time to consider the scope of the desired claims, to monitor advances or other changes in technology, to monitor competitor activities, and to investigate what the patent examiner uncovers during the prosecution of the parent application. 

Practice Tips for Accused Patent Infringers

Kroy v. Groupon suggests several practice tips for parties accused of patent infringement. First, a party accused of infringement can use the PTAB to seek to invalidate claims of an issued patent in an IPR proceeding. The PTAB applies a lower burden of proof — a preponderance of the evidence — than the clear and convincing evidence standard that applies in district court to invalidate patent claims. Groupon, 127 F.4th at 1376. More than one IPR petition may be needed to pursue invalidation of patents with robust claim sets. IPR petitions allow 14,000 words for the patent challenger to argue for invalidation of one or more claims in a patent. See, 37 C.F.R. §42.24. Patent challengers should consider including claims appearing to have immaterial differences from each other in an IPR, pursuant to the holding in Kroy v. Groupon. Currently, the official cost for filing an IPR petition, including both the request fee and the post-institution fee that must be filed with the request, is $51,875 for up to 20 claims and $1,410 to request review for each additional claim in excess of 20. 37 C.F.R. §42.15. 
Second, Kroy v. Groupon suggests other practice tips for accused patent infringers litigating patent disputes in district court. Collateral estoppel can be raised by an accused infringer at the affirmative defense stage with the filing of an answer, in a motion to dismiss, and/or at summary judgment. Groupon, 127 F.4th at 1380 (raising collateral estoppel at the motion to dismiss stage). A party accused of patent infringement in district court should consider the timing of case deadlines, including the deadline for filing an IPR petition. In Kroy v. Groupon, the patent holder amended the complaint twice after the accused infringer, Groupon, could not seek to invalidate any more claims of the asserted patent at the co-pending IPR proceedings. Some district courts may be more likely to allow for multiple amendments to the complaint. Accused infringers can mitigate risks associated with the assertion of new claims in successive amended complaints by challenging more claims in the IPR proceedings. District court patent infringement litigants should further consider other issues, such as decisions made relating to claim construction, that could benefit from the use of the doctrine of collateral estoppel based on a decision that was made in a prior IPR proceeding. District courts and the PTAB both use the Phillips standard for claim construction. 37 C.F.R. §42.100(b). Under Kroy v. Groupon, courts are more likely to apply the doctrine of collateral estoppel to limit the number of issues to be decided in district court litigation based on a previous IPR where the same legal standard applies in both tribunals.