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Federal Circuit Clarifies IPR Estoppel and Vacates $1.1 Billion Verdict in Favor of Caltech Due to Improper Damages Theory


Federal Circuit Clarifies IPR Estoppel and Vacates $1.1 Billion Verdict in Favor of Caltech Due to Improper Damages Theory

Key Takeaways

  • IPR estoppel applies to claims and invalidity grounds in both the asserted petition and those the petitioner could have reasonably asserted in its IPR petition.

  • If petitioners are aware of prior art references at the time the IPR petition is filed, but do not include them in the petition, petitioners cannot use those references later in litigation at the district court for invalidity challenges.

  • There must be evidence showing that accused infringers would have had separate negotiations for an accused product at different levels in the supply chain to support damages theories that differ from the traditional single license at a single rate.


On February 4, 2022, the Federal Circuit clarified that IPR estoppel extends to all claims and invalidity grounds that the petitioner could have reasonably asserted in its IPR petition. It also vacated and remanded a $1.1 billion patent infringement jury verdict Caltech obtained against Apple and Broadcom because Caltech advanced an improper damages theory. California Institute of Technology v. Broadcom Limited, et al., 20-2222 (Fed. Cir. 2022).

Caltech alleged that Apple and Broadcom infringed three patents-in suit. Two patents claimed circuits that generate and receive irregular repeat and accumulate codes, which improve the speed and reliability of data transmissions. One patent claimed a method for generating code words by infringed all the asserted claims of the patents-in-suit, and awarded having information bits appear in a variable number of subsets. The jury found Apple and Broadcom infringed, and awarded Caltech $270,241,171 from Broadcom and $837,801,178 from Apple, for a total of $1.1 billion. The district court also made a number of rulings on IPR estoppel and other issues.

The federal circuit affirmed the district court’s extension of the scope of IPR estoppel to all claims and grounds asserted in a PTAB petition, those instituted by the board, and those that could have reasonably been included in the IPR petition but were not. This clarification was made based on the Supreme Court’s decision in SAS Institute v. Iancu, 13 S. Ct. 1348 (2018), and overruled previous precedent. Because Apple and Broadcom were aware of certain prior art references and invalidity challenges when they filed the PTAB petitions, but failed to include those grounds in the petitions, they were estopped from subsequently making such arguments at the district court.

With regard to damages, Caltech’s experts testified at trial that Caltech would have engaged in two separate, yet simultaneous, negotiations: the first would have occurred at the “chip level” with Broadcom; the second would have occurred at the “device level” with Apple. Broadcom and Apple would have conducted these discussions separately because they were separate infringers and were at different levels in the supply chain. Specifically, Broadcom developed and supplied the infringing computer chips to Apple, which Apple then placed in its devices. However, the federal circuit held that there was insufficient evidence to suggest that Apple and Broadcom would have negotiated in such a manner, rather than negotiating a single license at a single rate for the infringing chips.

In summary, accused infringers should exercise caution before filing an IPR petition. Otherwise, reasonable invalidity arguments made later in litigation for strategy purposes will be barred. Further, whether a university is a patent owner or accused infringer, it is important to conduct thorough due diligence before enforcing or invalidating patents. Failing to do so could force universities to repeat Caltech’s mistakes or to give up arguments that impact the merits of the case. To bolster damages theories, universities should determine, if possible, companies’ past activities and history of negotiations between parties at different levels of the supply chain. If there is evidence that companies would have separate negotiations at different levels of the supply chain, then a two-tier damages theory is more likely to succeed. Otherwise, damages calculations should be based upon a single hypothetical negotiation between all parties at a single royalty rate, due to general patent law principles.

If you have any questions about how these changes might affect your intellectual property matters, please contact: