In Kroy IP Holdings, LLC v. Groupon, Inc., a precedential decision, the Federal Circuit reversed a district court’s dismissal of Kroy’s patent infringement claims on the grounds of collateral estoppel. The court clarified that inter partes review (IPR) decisions by the Patent Trial and Appeal Board (PTAB), which use a lower burden of proof, do not automatically preclude litigating related but unadjudicated patent claims in district court.

Kroy owns U.S. Patent No. 6,061,660, which covers incentive programs delivered over a computer network. Kroy sued Groupon in the District of Delaware, alleging infringement of several claims from this patent. Groupon responded by initiating IPR proceedings challenging 21 claims of the patent. The PTAB ruled all 21 claims unpatentable, and the Federal Circuit affirmed the decision under Rule 36.

Kroy later amended its complaint, asserting new claims from the same patent that were not part of the original IPR. Groupon argued that these claims were immaterially different from the previously invalidated claims and should be barred under collateral estoppel. The district court agreed and dismissed the case, reasoning that Kroy was precluded from asserting the newly added claims. Kroy appealed.

The Federal Circuit reversed the district court, holding that collateral estoppel does not apply due to the different burdens of proof between IPR and district court proceedings. In IPR, unpatentability must be proven by a preponderance of the evidence, whereas district court invalidity requires clear and convincing evidence.

The court emphasized that applying collateral estoppel based on IPR rulings could deprive patent holders of their rights without meeting the higher evidentiary standard required in district court. The court also distinguished the case from prior decisions, such as XY, LLC v. Trans Ova Genetics and Ohio Willow Wood Co. v. Alps South, LLC, which did not involve the same burden of proof issue.

In reversing the dismissal, the Federal Circuit reinforced its prior reasoning in ParkerVision, Inc. v. Qualcomm Inc., reaffirming that collateral estoppel should not apply when the legal standards between two proceedings differ.

“[I]n an IPR proceeding, the petitioner has a burden to prove unpatentability by a preponderance of the evidence, whereas the district court requires the higher burden of clear and convincing evidence for invalidity.”

— Kroy IP Holdings, LLC v. Groupon, Inc

The Federal Circuit’s decision highlights the importance of understanding how differing burdens of proof affect collateral estoppel in patent litigation. While IPR rulings can have preclusive effects in some cases, this decision draws a clear line—patent claims that have not been adjudicated must still meet the higher district court standard for invalidity before they can be dismissed.

This decision underscores the strategic value of having a decent number of claims in a patent. While an IPR ruling invalidates specific claims, it does not necessarily doom unadjudicated claims from the same patent. By including numerous claims with varied language and scope, patent owners can better withstand challenges and preserve enforcement opportunities. Even if some claims are invalidated in an IPR, others may remain intact for litigation, providing an additional layer of protection and flexibility in enforcement. This case serves as a reminder to draft patents with a broad range of claims to safeguard against different invalidity challenges across forums with varying legal standards.

The full decision can be found at the link below:

https://www.cafc.uscourts.gov/opinions-orders/23-1359.OPINION.2-10-2025_2465811.pdf

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