Instradent v. ITC: Federal Circuit Oral Argument Highlights Concerns Regarding Parallel ITC, IPR, and District Court Proceedings

Train tracksOn July 11, 2017, Federal Circuit Judges Prost, O’Malley, and Chen heard oral arguments in the appeal captioned Instradent USA, Inc. v. ITC, No. 16-2336 (Fed. Cir.), and, on July 19, 2017, issued a Rule 36 judgment affirming the International Trade Commission’s (“ITC”) decision.  Appellant-Respondent Instradent USA, Inc. (“Instradent”) appealed the Commission’s decision in Dental Implants, Inv. No. 934, finding a violation of Section 337 based on infringement of the asserted claims of U.S. Patent No. 8,714,977 (“the ’977 patent”).  Shortly after briefing was completed, the Patent Trial and Appeal Board (“PTAB”) issued a final written decision in an inter partes review (“IPR”) finding the asserted claims invalid over the same reference considered by the ITC, a decision that Intervenors-Complainants Nobel Biocare Services AG and Nobel Biocare USA, LLC (collectively, “Nobel”) appealed 12 days prior to oral argument.  The Federal Circuit twice denied Instradent’s requests to stay the appeal due to the PTAB’s final written decision and moved forward with oral argument.  Meanwhile, a district court action involving the same parties, patent, and accused product remained stayed pending the ITC investigation.

The ITC issued a limited exclusion order (“LEO”) barring importations of the accused product, Drive CM 2 Dental Implants.  Instradent did not appeal the LEO because it had already ceased importation of the accused product.  It replaced the accused product with Drive CM 4 Dental Implants, which Customs and Border Protection determined did not infringe any claim addressed by the LEO.

The parties focused their Federal Circuit arguments on the substantive merits of the invalidity case.  However, the Court probed the parties regarding the relationship among ITC, PTAB, and district court proceedings (see our prior post regarding interplay between IPR and ITC Section 337 proceedings).  Judges Prost and Chen questioned counsel as to the impact of a hypothetical affirmance of the ITC’s decision on the appeal of the PTAB’s decision.  All parties agreed that, under Texas Instruments, Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558 (Fed. Cir. 1996), affirmance of the Commission decision would have no preclusive effect on Instradent’s ability to defend the PTAB’s invalidation decision.  Because the ITC and PTAB consider different evidentiary records and employ different standards of proof, all agreed that they could come to different conclusions.  (The ITC applies a clear and convincing evidence standard to invalidate patent claims,while the PTAB applies a lower preponderance of the evidence standard.)  The ITC and Nobel’s counsel also acknowledged that, under Texas Instruments, affirmance of the Commission decision would also have no preclusive effect on the stayed district court action.

When questioned by Judge Prost as to what the point of the appeal from the ITC decision was if the judgment was of no consequence given the lack of preclusive effect or continued importations, Instradent’s counsel highlighted the pendency of Oil States Energy Services LLC v. Greene’s Energy Group, LLC, No. 16-712, before the U.S. Supreme Court, which questions the constitutionality of IPRs.  Instradent’s counsel indicated that in the event IPRs are found unconstitutional, it would then become important to have the ITC decision overturned.  Judge O’Malley pointed out that if Oil States Energy Services does find IPRs to be unconstitutional, then neither the ITC nor the PTAB’s decisions would be binding on later district court proceedings, but that the parties could present the IPR record to the district court, who may find it persuasive.

Instradent Timeline

Instradent Timeline