Client Alert-Federal Circuit Clarifies Limits of Issue Preclusion Between IPRs and District Court Litigation. Inland Diamond Products Co. v. Cherry Optical Inc., No. 24 1106 (Fed. Cir. Oct. 15, 2025)

Inland Diamond sued Cherry Optical in the United States District Court for the Eastern District of Wisconsin for infringement of certain dependent claims from two patents. See Inland Diamond Prod. Co. v. Cherry Optical Inc., 695 F. Supp. 3d 1031 (E.D. Wis. 2023). Earlier, the Patent Trial and Appeal Board (PTAB) had found other independent claims of those patents unpatentable in inter partes review (IPR), however, the dependent claims Inland asserted in district court survived the IPR challenge. The district court held the asserted dependent claims invalid for obviousness, reasoning that issue preclusion from the IPRs barred Inland from relitigating the validity of limitations carried over from the invalidated independent claims.

The Federal Circuit vacated and remanded the district court’s judgment.

(1) Different Standards of Proof Matter: PTAB applies a preponderance of the evidence standard. District courts require clear and convincing evidence to invalidate a patent. Findings made under the lower IPR standard cannot be given issue‑preclusive effect in district court litigation.

(2) Dependent Claims Must Be Independently Assessed: Even though the asserted dependent claims incorporated limitations from invalidated claims, they had never themselves been found invalid or unpatentable on appeal. The district court erred in relieving Cherry of its burden to prove invalidity by clear and convincing evidence.

(3) Claim Construction Differences: PTAB’s use of the “broadest reasonable interpretation” (for petitions filed before Nov. 2018) does not bind district courts, which apply the Phillips standard. Thus, PTAB constructions also lack preclusive effect.

IPR outcomes do not automatically dictate district court results. Even if independent claims fall at the PTAB, dependent claims may still be viable in litigation. Burden of proof is critical. Patent challengers in court must meet the higher “clear and convincing” standard, regardless of PTAB findings. Strategic value of dependent claims. Preserving and asserting dependent claims can provide meaningful leverage, even after adverse IPR rulings. Claim construction divergence. PTAB and district courts may interpret claims differently, creating opportunities for patentees to argue narrower constructions in litigation.

TTAB provides guidance for consent agreements.

The TTAB recently issued a precedential decision in In re Ye Mystic Krewe of Gasparilla, affirming refusal of the mark GASPARILLA for mugs, glassware, and apparel based on likelihood of confusion with the registered mark GASPARILLA TREASURES. The applicant submitted a consent agreement, but the TTAB found it to be a “naked consent”—too brief and lacking substantive provisions to overcome the strong evidence of confusion.

Consent Agreements Must Be Robust: A simple statement that parties believe confusion is unlikely is not enough. Agreements should include: (1) Explanations of why confusion is unlikely in the marketplace; (2) Restrictions on trade channels, fields of use, or manner of display; (3) Commitments to cooperate in preventing confusion; (4) Evidence of coexistence without actual confusion.

Where marks are highly similar and goods overlap, the TTAB will give little weight to a bare consent agreement. The Board will not entertain collateral attacks on the validity or ownership of a cited registration. Consent agreements are not a silver bullet. They must “show the work” by demonstrating how the parties will avoid confusion in practice. Brand owners should carefully draft coexistence or consent agreements with these requirements in mind—especially when dealing with identical or closely related goods. Before filing, consider whether your consent agreement addresses trade channels, use restrictions, and real-world safeguards. A well-drafted agreement can tip the balance; a barebones one may be disregarded.

For additional information, please contact any of the following:

Alastair Warr at [email protected], and Frank Leak at [email protected], with any questions or more specific situations. Intellectual Property Litigation