Inland Diamond Products Co. v. Cherry Optical Inc.

United States Court of Appeals
for the Federal Circuit
______________________
INLAND DIAMOND PRODUCTS CO.,
Plaintiff-Appellant
v.
CHERRY OPTICAL INC.,
Defendant-Appellee
______________________
2024-1106
______________________
Appeal from the United States District Court for the
Eastern District of Wisconsin in No. 1:20-cv-00352-WCG,
Chief Judge William C. Griesbach.
______________________
Decided: October 15, 2025
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M ARK A. JOTANOVIC, Dickinson Wright PLLC, Troy,
MI, argued for plaintiff-appellant. Also represented by
JOHN S. ARTZ, Ann Arbor, MI.
TIFFANY W OELFEL, Amundsen Davis LLC, Green Bay,
WI, argued for defendant-appellee. Also represented by
S HERRY DAWN COLEY , JASON JUST.
______________________
Before P ROST, REYNA , and CHEN, Circuit Judges.
PROST, Circuit Judge.
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INLAND DIAMOND PRODUCTS CO. v. CHERRY OPTICAL INC . 2
Inland Diamond Products Co. (“Inland”) appeals from
a summary judgment of the U.S. District Court for the
Eastern District of Wisconsin. The district court relied on
issue preclusion to hold that claims 2, 4, and 6 of U.S. Pa-
tent No. 8,636,360 (“the ’360 patent”) and claim 4 of U.S.
Patent No. 9,405,130 (“the ’130 patent”) (collectively, the
“Asserted Claims”) are invalid for obviousness. We vacate
the district court’s judgment and remand.
BACKGROUND
In 2019, the Patent Trial and Appeal Board (“Board”)
issued a final written decision in each of two inter partes
reviews (“IPRs”)—one for the ’360 patent, the other for the
’130 patent.1 In these decisions, the Board determined as
unpatentable claims 1, 3, 7–8, and 12 of the ’360 patent and
claims 1, 3, 6–8, and 10 of the ’130 patent (collectively, the
“Unpatentable Claims”). The Asserted Claims—all of
which depend exclusively from Unpatentable Claims2—
were also challenged in the IPRs, but the Board deter-
mined that the Asserted Claims had not been proven un-
patentable. These decisions were not appealed.
Then, in 2020, Inland filed the instant case against
Cherry, in which it alleged that Cherry infringed the As-
serted Claims.
On Cherry’s motion, the district court granted sum-
mary judgment that the Asserted Claims are invalid for ob-
viousness. The court began by concluding that, because the
1 Appellee Cherry Optical Inc. (“Cherry”) was not the
petitioner in these IPRs.
2 Asserted Claim 2 of the ’360 patent depends from
Unpatentable Claim 1; Asserted Claims 4 and 6 of the
’360 patent depend from Unpatentable Claim 3 (which it-
self depends from Unpatentable Claim 1); and Asserted
Claim 4 of the ’130 patent depends from Unpatentable
Claim 3 (which itself depends from Unpatentable Claim 1).
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INLAND DIAMOND PRODUCTS CO. v. CHERRY OPTICAL INC . 3
Asserted Claims depend from—and thus contain the limi-
tations of—Unpatentable Claims, issue preclusion stem-
ming from the IPRs prohibited relitigating validity issues
as to those limitations. See Inland Diamond Prods. Co. v.
Cherry Optical Inc., 695 F. Supp. 3d 1031, 1039 (E.D. Wis.
2023) (concluding that issue preclusion applied, so Cherry
was “not required to perform an independent invalidity
analysis” for limitations of Unpatentable Claims contained
in the Asserted Claims). The court therefore focused on the
remaining limitations added by the Asserted Claims. See
id. at 1040–41. And while the court did allow Inland to
defend the Asserted Claims’ validity (at least as to issues
concerning those remaining limitations), it appeared to do
so only because the Asserted Claims had been adjudicated
as not unpatentable in the IPRs. See id. at 1039 (“Because
the [Asserted Claims] were adjudicated before the [Board],
the court will not estop [Inland] from disputing invalid-
ity . . . .”). Ultimately, the court’s issue-preclusion ruling
and Cherry’s asserted prior art led the court to grant sum-
mary judgment that the Asserted Claims are invalid for ob-
viousness. Id. at 1040–42.
Inland timely appealed. We have jurisdiction under
28 U.S.C. § 1295(a)(1).
D ISCUSSION
We review a district court’s grant of summary judg-
ment under the law of the regional circuit—here, the Sev-
enth Circuit, which reviews such grants de novo. See
Molon Motor & Coil Corp. v. Nidec Motor Corp., 946 F.3d
1354, 1358 (Fed. Cir. 2020) (citing and applying Seventh
Circuit law). And while we also review a district court’s
application of general principles of issue preclusion (a.k.a.
collateral estoppel) under the law of the regional circuit,
Federal Circuit law applies when substantive patent-law
issues are implicated. See, e.g., Kroy IP Holdings, LLC v.
Groupon, Inc., 127 F.4th 1376, 1379 (Fed. Cir. 2025).
Whether issue preclusion applies is reviewed de novo. See
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INLAND DIAMOND PRODUCTS CO. v. CHERRY OPTICAL INC . 4
id.; see also EEOC v. AutoZone, Inc., 707 F.3d 824, 831
(7th Cir. 2013).
Since the district court’s summary judgment, we have
issued two decisions—ParkerVision and Kroy—that re-
quire concluding that the district court erred in applying
issue preclusion here. See ParkerVision, Inc. v. Qualcomm
Inc., 116 F.4th 1345 (Fed. Cir. 2024); Kroy, 127 F.4th 1376.
In ParkerVision, the Board had determined apparatus
claims unpatentable in an IPR, and the patentee then as-
serted method claims of that same patent in district court.
The same prior art that was raised in the IPR against the
apparatus claims was raised in district court against the
method claims. When the patentee sought to present ex-
pert testimony about why that prior art did not invalidate
the method claims, the district court barred the testimony.
It reasoned that, because the Board had decided factual is-
sues concerning that prior art against the patentee when
determining the apparatus claims unpatentable, issue pre-
clusion prevented the patentee from relitigating any of
those same issues in district court. See 116 F.4th at 1354.
On appeal, we reversed. We observed that one “well-known
exception[]” to issue preclusion is where “the second action
involves application of a different legal standard.” Id.
at 1361 (quoting B & B Hardware, Inc. v. Hargis Indus.,
Inc., 575 U.S. 138, 148, 154 (2015)). And we concluded
that, because the standard of proof for unpatentability in
an IPR (preponderance) is less than that for invalidity in
district court (clear and convincing), no Board finding es-
topped the patentee from presenting evidence on the “un-
resolved question” of whether the patent challenger could
prove the prior-art-related facts by clear and convincing ev-
idence. Id. at 1362.3
3 In reversing the district court on this issue, we dis-
tinguished our decision in XY, LLC v. Trans Ova Genetics,
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INLAND DIAMOND PRODUCTS CO. v. CHERRY OPTICAL INC . 5
In Kroy, as in ParkerVision, the Board in an IPR had
determined some claims of a patent unpatentable, and the
patentee then asserted other claims of that same patent in
district court. The district court dismissed the patentee’s
complaint due to issue preclusion because it deemed the
asserted claims immaterially different (for invalidity pur-
poses) from those the Board had determined unpatentable.
Kroy, 127 F.4th at 1378–79. On appeal, we reversed. We
concluded that, “even assuming the asserted claims [were]
immaterially different from the unpatentable claims for
purposes of invalidity,” id. at 1379, issue preclusion did not
apply, because the standard of proof for unpatentability in
an IPR was less than that for invalidity in district court,
see id. at 1380–81 (citing, among other authorities, Par-
kerVision, 116 F.4th at 1361–62).
ParkerVision and Kroy both stand for the principle that
the Board’s fact findings under a lower standard of proof
(preponderance) do not have issue-preclusive effect in dis-
trict-court invalidity proceedings, where facts must be
proven under a higher standard of proof (clear and convinc-
ing). In ParkerVision, the Board had determined some
claims unpatentable, and the attempt to apply issue pre-
clusion in district court concerned the Board’s specific un-
derlying fact findings. In Kroy (as in ParkerVision), the
L.C., 890 F.3d 1282 (Fed. Cir. 2018). We explained that XY
“involved a different situation”—namely, the application of
issue preclusion to bar assertion of a patent claim that had
been adjudicated as invalid or unpatentable through any
appeals to this court. See ParkerVision, 116 F.4th at 1362;
id. (“Once we have affirmed the invalidity of a patent
claim[,] . . . the claim no longer exists and cannot be as-
serted as a basis for infringement . . . .”). In ParkerVision,
we were “dealing with claims that ha[d] not been found un-
patentable,” id. (emphasis in original), and the same is true
in the instant case.
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INLAND DIAMOND PRODUCTS CO. v. CHERRY OPTICAL INC . 6
Board had determined some claims unpatentable. And
though, on its face, the attempted district-court preclusion
in Kroy concerned other (ostensibly immaterially different)
claims in their entirety—as opposed to just specific fact
findings—it really concerned whatever fact findings sup-
ported the Board’s unpatentability determinations. That
is because, if those other claims in Kroy had been held in-
valid in district court due to issue preclusion (as was essen-
tially attempted there), such a holding would have
ultimately been on the strength of the fact findings neces-
sary for the Board’s unpatentability determinations. See
Kroy, 127 F.4th at 1381 (“[W]hen a district court would nec-
essarily rely on the Board’s fact findings, and those facts
have only been proven in a prior proceeding under a lower
[standard] of proof than what is required in district court,
collateral estoppel does not apply.”). So, although the con-
texts were somewhat different as between the cases, the
underlying principle was the same: fact findings made un-
der a lower standard of proof do not have issue-preclusive
effect in proceedings in which facts must be proven under
a higher standard of proof. See, e.g., Grogan v. Garner,
498 U.S. 279, 284–85 (1991).
The district court’s summary judgment in this case
erred by violating that principle, and that error leads us to
vacate and remand. Specifically, when adjudicating the
Asserted Claims’ invalidity under the clear-and-convincing
standard, the court gave issue-preclusive effect to facts
found under the lesser, preponderance standard. See In-
land, 695 F. Supp. 3d at 1039 (relying on issue preclusion
to relieve Cherry of having to “perform an independent in-
validity analysis” for limitations of Unpatentable Claims
contained in the Asserted Claims). In this respect, the
court’s error was indistinguishable from the errors dis-
cussed above in ParkerVision and Kroy. And, although
Cherry invites us to affirm on alternative grounds—saying
that even without issue preclusion, and even under the
clear-and-convincing standard, it is entitled to summary
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INLAND DIAMOND PRODUCTS CO. v. CHERRY OPTICAL INC . 7
judgment of invalidity on the merits—we decline its invita-
tion. Instead, the better course is for the district court to
conduct the proper analysis in the first instance on re-
mand.4
Further, to the extent the district court allowed Inland
to defend (i.e., did not estop it from defending) the Asserted
Claims’ validity only because those claims had already
been adjudicated as not unpatentable, that reasoning was
erroneous. The main reasons that issue preclusion does
not apply here are simply: (1) the standard of proof for un-
patentability in IPRs is less than that for invalidity in dis-
trict court; and (2) the Asserted Claims themselves have
never been determined invalid or unpatentable through
any appeals to this court, see, e.g., ParkerVision, 116 F.4th
at 1362 (discussing XY, 890 F.3d at 1294). That the
4 Inland also argues, and we agree, that any claim
constructions the Board reached under the “broadest rea-
sonable interpretation” standard do not have issue-preclu-
sive effect in district court, where claims are construed
under the different standard of Phillips v. AWH Corp.,
415 F.3d 1303 (Fed. Cir. 2005) (en banc). See DDR Hold-
ings, LLC v. Priceline.com LLC, 122 F.4th 911, 918–19
(Fed. Cir. 2024) (“Because the Board applies the broadest
reasonable construction of the claims while the district
courts apply a different standard of claim construction as
explored in Phillips, a party is not collaterally estopped in
district court proceedings by the Board’s constructions dur-
ing IPR.” (cleaned up)). Although the Board in 2018
changed its IPR claim-construction standard to match that
of district courts, this change applied only to petitions filed
on or after November 13, 2018. See, e.g., Immunex Corp. v.
Sanofi-Aventis U.S. LLC, 977 F.3d 1212, 1216 & n.2
(Fed. Cir. 2020). Because the petitions in the IPRs at issue
here were filed before then, the Board applied the “broad-
est reasonable interpretation” standard.
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INLAND DIAMOND PRODUCTS CO. v. CHERRY OPTICAL INC . 8
Asserted Claims happened to survive an unpatentability
challenge (as opposed to, say, having never been challenged
at all) is irrelevant to issue preclusion’s inapplicability to
those claims in this district-court setting.5
We note finally that, in a given case,6 it may be that
some of the same (or similar) evidence and argument that
led the Board to determine unpatentability of one claim by
a preponderance of evidence could lead a district court to
grant summary judgment that another claim is invalid—
i.e., to conclude that a reasonable jury could only find, by
clear and convincing evidence, that the other claim is inva-
lid. But any such summary judgment must stand on its
own merits on the evidence and argument presented in
court. A fact cannot be deemed established against the pa-
tentee in court simply because the Board found it; instead,
a patent challenger must still carry its burden of proof, and
a patentee may still dispute whether that burden has been
met.
On remand, if the district court is to grant summary
judgment that an Asserted Claim is invalid (for anticipa-
tion or obviousness), it must conclude—on the basis of evi-
dence and argument presented in court, as opposed to issue
preclusion stemming from the IPRs—that a reasonable
jury could only find, by clear and convincing evidence, facts
showing that the prior art disclosed or would have ren-
dered obvious the Asserted Claim as a whole (i.e., not just
whatever limitations it contains beyond the relevant Un-
patentable Claim(s)).
5 That a claim was adjudicated as not unpatentable
in an IPR may indeed be relevant to estoppel against a pa-
tent challenger under 35 U.S.C. § 315(e), but that statutory
provision is not at issue here.
6 We express no views as to the merits of the instant
case.
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INLAND DIAMOND PRODUCTS CO. v. CHERRY OPTICAL INC . 9
CONCLUSION
We have considered Cherry’s remaining arguments
and find them unpersuasive. For the foregoing reasons, we
vacate the district court’s judgment and remand.
VACATED AND REMANDED
COSTS
Costs to Inland.
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