October 24, 2025

Inland Diamond Products Co. v. Cherry Optical Inc., No. 2024-1106, ---F.4th--- (Fed. Cir. Oct. 15, 2025), addresses application of issue preclusion to an issue in a district court action that was previously adjudicated in an IPR.  Here, IPRs filed by a third party against two Inland patents resulted in final decisions that some challenged claims were unpatentable for obviousness and others were not shown to be unpatentable. Slip op. at 2.  No appeals were filed. Id.  The claims not shown to be unpatentable were then asserted against Cherry. Id. at 2-3.  Cherry sought summary judgment that the asserted claims were invalid. Id.  Because the asserted claims include the limitations of claims held unpatentable in the IPRs, the district court applied issue preclusion to bar invalidity of those limitations from being relitigated and did not require Cherry to perform an invalidity analysis for such limitations. Id.  The district court then focused its invalidity analysis on the limitations added by the asserted claims. Id.  Inland seemingly was allowed to defend validity of the asserted claims, at least as to issues concerning the added limitations, only because the asserted claims were not proven unpatentable in the IPRs. Id.  The issue preclusion ruling and Cherry’s asserted prior art ultimately resulted in summary judgment of invalidity being granted to Cherry. Id.

The judgment was vacated on appeal and the case remanded after the Court concluded the district court erred in applying issue preclusion.  Two decisions the Court issued after the district court’s summary judgment ruling were important to the issue on appeal: ParkerVision, Inc. v. Qualcomm Inc., 116 F.4th 1345 (Fed. Cir. 2024), and Kroy IP Holdings, LLC v. Groupon, Inc., 127 F.4th 1376, 1379 (Fed. Cir. 2025). Slip op. at 4-6.  The Court said these decisions stand for the principle that “fact findings made under a lower standard of proof do not have issue-preclusive effect in proceedings in which facts must be proven under a higher standard of proof.” Id.  The district court violated this principle when it adjudicated invalidity of the asserted claims under the applicable clear and convincing standard by giving issue-preclusive effect to facts found under the lesser preponderance standard. Id.  The district court’s error in this regard was indistinguishable from the errors in ParkerVision and Kroy. Id.  The Court declined to consider whether the claims were invalid on the merits under the clear and convincing standard, reasoning that the better course was for the district court to conduct the proper analysis in the first instance on remand. Id. at 6-7.  It also said that any Board claim constructions reached under the broadest reasonable interpretation standard have no issue-preclusive effect in the district court because a different standard, Phillips, applies in district court proceedings. Id. at 7, n.4.

The reasoning of the district court was also erroneous to the extent its decision to not preclude Inland from defending validity of the asserted claims was solely because those claims were not held unpatentable in the IPRs. Slip op. at 7-8.  The Court explained that the main reasons why issue preclusion did not apply in this case were simply: (1) the standard of proof for unpatentability in IPRs is less than that for invalidity in district court proceedings and (2) the asserted claims themselves were never held invalid or unpatentable through any appeals to the Court. Id.  That the asserted claims survived an unpatentability challenge as opposed to, for instance, having not been challenged, was irrelevant to issue preclusion’s inapplicability. Id. (noting that, while not at issue here, a claim adjudicated as not unpatentable in an IPR may be relevant to estoppel against a patent challenger under § 315(e)).

In final comments and without expressing any views as to the merits of the instance case, the Court observed that it may be that, in a given case, some of the same (or similar) evidence and argument that led the Board to determine unpatentability of one claim by a preponderance of evidence could lead a district court to grant summary judgment that another claim is invalid—i.e., to conclude that a reasonable jury could only find, by clear and convincing evidence, that the other claim is invalid. Slip op. at 8.  It cautioned, though, that any such summary judgment must stand on its own merits on the evidence and argument presented in court. Id.  Importantly, “[a] fact cannot be deemed established against the patentee in court simply because the Board found it; instead, a patent challenger must still carry its burden of proof, and a patentee may still dispute whether that burden has been met.” Id.

The Court then instructed that if the district court on remand grants summary judgment that an asserted claim is invalid (for anticipation or obviousness), it “must conclude—on the basis of evidence and argument presented in court, as opposed to issue preclusion stemming from the IPRs—that a reasonable jury could only find, by clear and convincing evidence, facts showing that the prior art disclosed or would have rendered obvious the Asserted Claim as a whole (i.e., not just whatever limitations it contains beyond the relevant Unpatentable Claim(s)).” Slip op. at 8.