Jump Rope Company Asks High Court to Weigh in on CAFC Approach to Collateral Estoppel for PTAB Invalidations

“Metz and her company have never been permitted to hear their patent infringement claims in an Article III court or federal jury… because of the Federal Circuit’s entrenched and often-repeated misapplication of the Collateral Estoppel Doctrine.” – Petition for Jump Rope Systems

supreme courtThe inventor of a novel jump rope system (Revolution Rope), Molly Metz, is asking the US Supreme Court, through her company Jump Rope Systems, LLC, to clarify the Federal Circuit’s (CAFC) collateral estoppel doctrine requested by the US Court of Appeals for a Deny a patent infringement suit in a district court if the CAFC has upheld the Patent Trial and Appeal Board’s (PTAB) finding of non-patentability. Jump Rope Systems argues that the CAFC’s decision in XY, LLC v. Trans Ova Genetics, LC (2018) contradicts the decisions of the Supreme Court in B&B Hardware, Inc. v. Hargis Indus., 575 U.S. 138 (2015); Medtronic, Inc. v Mirowski Family Ventures, LLC, 571 U.S. 191 (2014); and Grogan versus Garner498 US 279 (1991).

The petition specifically asks the High Court to consider the following question:

“Whether, within the meaning of federal patent law, a determination of non-patentability by the Patent Trial and Appeal Board in an interpartes review proceeding, affirmed by the Federal Circuit, has a concomitant effect on patent validity in a federal patent infringement suit in the District Court.”

Metz shared her patent infringement history and experience with the PTAB with IPWatchdog in June of this year. After Rogue Fitness filed a patent infringement lawsuit in 2018 alleging infringement of their patents (US 7,789,809 B2 and US 8,136,208 B2) for a unique jump rope grip technology, Rogue filed an Interpartes Review (IPR) Request, which the PTAB eventually granted invalidated patents. After an initial appeal to the Federal Circuit, Metz received summary confirmation of the PTAB’s rule 36 decision.

In April 2022, following a district court affirmative ruling, Jump Rope Systems filed for a preliminary hearing en banc calls on the CAFC to reverse its own decision XY, LLC v. Trans Ova Genetics, LC (2018) and argued that the declarations of invalidity issued by the PTAB cannot be granted exclusive effect because XY Conflicts with US Supreme Court rulings on collateral protection doctrine. However, the CAFC rejected this request without justification. Jump Rope Systems then filed a unanimous motion for summary confirmation of the district court’s judgment to honor that judgment XY, LLC completed his appeal, and on June 28, 2022, a three-judge panel of the Federal Court of Justice granted that motion.

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In its petition, Jump Rope Systems argues that “Metz and her company have never been permitted to hear their patent infringement claims in an Article III court or federal jury…. because of the Federal Circuit’s entrenched and often-repeated misapplication of the Collateral Estoppel Doctrine, beginning in XY, LLC v. Trans Ova Genetics, LC.”

Newman got it right

in the XY LLC, the alleged infringer, Trans Ova Genetics, appealed the district court’s denial of post-trial motions challenging a jury verdict that found no invalidity of XY’s patent claims for chromosome-containing sperm sorting. Instead of addressing Trans Ova Genetics’ invalidity arguments, the Federal Circuit so spontaneous found that XY was indirectly prevented from asserting the validity of its patent claims, which were first declared invalid in IPR proceedings at the PTAB and then upheld by the Federal Court of Justice.

Judge Pauline Newman wrote a dissenting opinion XY LLC Challenging the panel majority decision on the invalidity issues in this case. Newman pointed out that there was no reciprocity between the parties to the matter as Trans Ova Genetics was not the petitioner challenging the validity of XY’s patent claims to the PTAB. When considering the exemptions from collateral forfeiture under which emissions are not excluded from recycling, as in the Reformulation (Second) of judgments §§ 28-29, Judge Newman found clear contradictions in the different standards of proof of validity applied to the PTAB, where validity decisions must be supported by “substantive evidence” and validity decisions by U.S. district courts must be supported by “clear and persuasive evidence.” Proofs”. Newman also addressed issues of the constitutional balance between administrative authorities and Article III courts. In September 2019, the Federal Circuit enacted Chrimar Systems vs. ALE USAApplying Compliance XY LLC Invalidate patent claims that have been validated by jury judgment and post-trial motions.

“Judge Newman was clearly right and her dissenting opinion is fully supported by this court’s decision Grogan versus Garner…” says Jump Rope’s petition. Grogan was a bankruptcy proceeding dealing with the same issue of whether “a prior determination of a claim against a party requires the application of the foreclosure regime where a subsequent litigation involving the same party is subject to a different standard of proof than the previous one Decision .” The Supreme Court there finally ruled:

“In this case, a creditor who has reduced his fraud claim to a valid and final judgment in a jurisdiction that requires proof of fraud by preponderance of evidence seeks to minimize additional litigation by invoking forfeiture of collateral. If the standard of precedence also addressed the issue of inexcusability, a bankruptcy court could confer security on those elements of the claim that are identical to the elements required for settlement and that were actually litigated and decided in the prior lawsuit. See Restatement (Second) of Judgments § 27 (1982). However, if the clear and compelling standard of inexcusability applies, no side effect could be attributed to the earlier judgment.”

Jump Rope’s petition argues that the issue of collateral security in Grogan is identical to the in XY, LLC, and that it is a bankruptcy proceeding rather than a patent infringement suit is “a distinction without distinction.” In a PTAB proceeding, an applicant must demonstrate obviousness through a preponderance of evidence, while in a district court, invalidity must be established through clear and convincing evidence. The petition notes that the Federal Circuit has not cited Grogan in his decision XY, LLC.

Also in B&B Hardware, Inc., the Supreme Court said that “subjects are not identical if the second claim involves the application of a different legal standard, even though the factual background of both claims may be the same.” And in Medtronic, Inc. The court stated that the “recast (second) judgments [§ 28(4)] says that retrial of an issue (e.g. infringement) decided in one proceeding is “not precluded” in a subsequent proceeding if the burden of persuasion is “shifted” from the “party against whom the preclusion is sought” became. . . to his opponent….’” Ultimately, these cases and the points raised in Judge Newman’s dissent support the conclusion that the PTAB’s findings that Jump Rope’s claims are not patentable in the patent infringement suit before the District Court and the CAFC are flawed when it concluded that the PTAB’s findings should have failed Jump Rope’s patent infringement suit.

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A good candidate

The petition also argues that the case merits review by the court because “[t]The collateral estoppel issue raised in this case is of national concern in patent infringement litigation as it impacts countless patent litigation across the country.” According to the petition, there are currently “427 pending federal circuit complaints involving PTAB’s IPR/PGR litigation relate,” and “353 of those 427 pending appeals (more than 83%) have concurrent district court cases challenging the same patents PTAB are asserted.” This data was extracted from PACER and combined with PTAB statistics provided by Unified Patents were collected.

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The Jump Rope Systems case eminently lends itself to review because “Both the District Court and the Federal Court have categorically applied the collateral protection doctrine set forth in Section 28(4) of the Restatement, without exception, based on the Federal Court’s decision in XY, GMBH .” Jump Rope also asked the CAFC for an en-banc review, citing conflicting precedent, but “the entire federal circuit summarily denied the en-banc review without reason or protest.”

Finally, the Petition states that the Defendant, under the primacy of the standard of proof, “persuaded the PTAB to combine two pieces of prior art (patents known as ‘Wolf’ and ‘Terper’ in the PTAB decision)”. That would not have happened in the district court, Jump Rope explains:

“The PTAB considered that such a combination gave the claimed invention. But such PTAB consideration took place without stating that ordinary craftsmen would have recognized a problem in the Wolf reference that required a solution. The PTAB instead considered a problem solved by the inventor and noted (in hindsight) that the same problem existed in Wolf’s prior art…. Standard jury instructions in a circuit court trial would warn the jury that, in hindsight, the prior art cannot be so combined under the clear and compelling standard.”

Eventually, “[t]The inventor’s teachings should not be used against her to invalidate her patent,” the petition argues. And Rogue would still have the option to seek invalidity in an Article III court, according to Jump Rope’s interpretation of the law.

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