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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.
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