Decision provides new perspective and clarity in an ambiguous realm of patent law

Sunstein LLP announced that the U.S. Court of Appeals for the Federal Circuit has upheld a sweeping patent infringement defense jury verdict win for its client, Ingenico Inc., a major global provider of point-of-sale payment terminals, software, and services, affirming the trial court’s ruling that patent claims asserted against Ingenico in district court are invalid in view of a prior art device known as the DiskOnKey. The decision, in addition to being a complete vindication for Sunstein’s client, resolves a split among district courts regarding the scope of inter partes review (“IPR”) estoppel and provides noteworthy implications for patent litigants and future validity challenges.

In Ingenico Inc. v. IOENGINE LLC, case number 23-1367, the Federal Circuit held for the first time that estoppel from IPRs applies to invalidity theories based on prior art patents and printed publications, not to the actual prior art references. The ruling upholds a Delaware federal jury's 2022 verdict invalidating IOENGINE LLC's flash drive patents. The jury found that two of the asserted claims were not infringed, thus did not reach the question of validity as to those claims.

“The Federal Circuit’s decision to uphold Ingenico’s jury verdict is a complete victory for our client,” said Sunstein Managing Partner Kerry L. Timbers, who led the Sunstein team. “We are honored to represent Ingenico in this longstanding suit and to, more broadly, play a role in clarifying the reach and application of IPR estoppel.”

When PayPal was sued in 2018 by IOENGINE alleging infringement of three patents, Ingenico sued IOENGINE, seeking declaratory judgment of noninfringement. In parallel, Sunstein also filed multiple IPR petitions with the Patent Trial and Appeal Board (“PTAB”), successfully invalidating more than 150 of IOENGINE’s patent claims.

The precedent-setting aspect of the Federal Circuit’s opinion, written by U.S. Circuit Judge Todd M. Hughes, concerns IPR estoppel and clarification of the term "ground" when reviewing whether certain prior art can be asserted in a district court validity challenge after they were or could have been raised in an IPR at the PTAB. Resolving a split among district courts, the Federal Circuit held that “a ground is not the prior art asserted during the IPR;” instead, “grounds are theories of invalidity.” Thus, “while patents and printed publications are evidence that support a ground…, they are not coextensive with a ground.” In other words, “IPR estoppel does not preclude a petitioner from relying on the same patents and printed publications as evidence in asserting a ground that could not be raised during the IPR, such as that the claimed invention was known or used by others, on sale, or in public use.”

Sunstein’s litigation team in this case also included firm attorney Kevin R. Mosier.

A global leader in payment acceptance and services, Ingenico is active in 32 countries, with more than 40 million payment devices deployed worldwide, powered by over 2,500 apps. The company has more than 3,100 employees.