Kroy IP Holdings, LLC v. Groupon, Inc

Authored by: Jeremy J. Gustrowsky

In the recent case of Kroy IP Holdings, LLC v. Groupon, Inc., the Federal Circuit addressed a key question in patent law: Does a decision by the Patent Trial and Appeal Board (PTAB) that certain patent claims are invalid automatically prevent those or similar claims from being challenged again in district court? The court’s answer: not always, especially when the legal standards used in each forum are different.

The dispute centered on U.S. Patent No. 7,054,660, owned by Kroy IP Holdings, LLC. After Groupon successfully challenged some claims of this patent in an inter partes review (IPR) at the PTAB—where the standard for proving invalidity is a “preponderance of the evidence”—Kroy tried to assert different, but similar, claims in district court, where the standard is higher: “clear and convincing evidence.” Groupon argued that the PTAB’s earlier decision should prevent Kroy from asserting these new claims, relying on the legal doctrine of collateral estoppel (issue preclusion).

The Federal Circuit, however, declined to extend collateral estoppel from the PTAB’s IPR decision to the district court case. The majority reasoned that because the PTAB and district courts use different standards of proof, a finding of invalidity in one does not automatically bind the other. The court emphasized that Supreme Court precedent does not allow issue preclusion when the legal standards differ in a way that could affect the outcome. A strong dissent argued that this approach undermines the efficiency goals of the America Invents Act, which was designed to make PTAB proceedings a meaningful alternative to court litigation.

This decision has significant implications for patent owners and challengers alike. Patent owners may now have more opportunities to assert claims in court even after losing similar claims at the PTAB, while challengers may need to be more strategic in selecting which claims to challenge in IPRs. The debate over how much weight PTAB decisions should carry in later court cases is likely to continue, especially as parties look for ways to streamline or prolong patent disputes.