Collateral Estoppel Cannot be Based on a Decision that was Subsequently Reversed

Finjan LLC, FKA Finjan, Inc., v. Sonicwall, Inc., [2022-1048] (October 13, 2023) the Federal Circuit vacated the district court’s judgment of invalidity because it was based on collateral estoppel of a decision that was subsequently reversed, and remanded for further proceedings. The Federal Circuit also affirmed the district court’s grant of summary judgment of noninfringement and the district court’s decision to exclude Finjan’s expert analysis.

Finjan asserted U.S. Patent Nos. 8,677,494, 6,154,844, 6,804,780, and 7,613,926, as well as U.S. Patent No. 8,225,408. SonicWall filed a motion seeking judgment of invalidity as to the asserted claims of the ’780, ’844, and ’494 patents due to collateral estoppel based on a decision in related proceedings finding the claims of the ’780 and ’844 patents invalid for indefiniteness.  The district court granted judgment of invalidity due to collateral estoppel and indefiniteness as to claims of the ’844, ’780, and ’494 patents. Subsequently, in the other case which provided the underlying support for the Collateral Estoppel Order, Finjan appealed the district court’s grant of summary judgment of invalidity, and on appeal the Federal Circuit vacated the district court’s grant of summary judgment of invalidity due to indefiniteness and remanded for further proceedings.

During claim construction, the parties agreed that “Downloadable” means “an executable application program, which is downloaded from a source computer and run on the destination computer.” Based on this construction, SonicWall moved for summary judgment of noninfringement of certain of the claims, arguing that its Gateway products could not infringe those claims because they never receive “Downloadables”—“executable application program[s],” which was granted.

The Federal Circuit noted that it cannot uphold applying collateral estoppel based on a vacated judgment. Accordinglv, it vacated the district court’s grant of judgment of invalidity

based on indefiniteness as to the claims of the ’844, ’780, and ’494 patents and remanded for further proceedings.


Finjan argued that the district court erred in determining that SonicWall Gateway products do not infringe the asserted claims because they receive a sequence of packets

and not the downloadables themselves.  According to Finjan, the district court took the parties’ agreed-upon construction of “Downloadable”—“an executable application

program, which is downloaded from a source computer and run on the destination computer,” and added a requirement that the downloadable also be “re-assembled by and executable at the receiver.  SonicWall contended that the district court’s conclusion

is derived directly from the parties’ agreed-upon construction, which describes a downloadable as an “executable application program.

The Federal Circuit agreed with SonicWall that the district court’s judgment of noninfringement flows from the parties’ agreed upon construction. The Federal Circuit noted that the asserted claims use “Downloadable” in different ways.  The Federal Circuit noted that parties’ construction comes verbatim from the definition of “Downloadable” in the ’844 and ’780 patents’ specifications.

Collateral Estoppel Does Not Apply Where the Accused Product is Different

In Arcelormittal Atlantique et Lorraine v. AK Steek Corp., [2017-1637] (November 5, 2018), the Federal Circuit vacated and remanded the district court’s grant of summary judgment of non-infringement of U.S. Patent Nos. 6,296,805, RE 44,153, and RE 44,940 on collateral estoppel grounds, because the product involved was materially different from the product in the prior litigation.

In January 2010, ArcelorMittal sued AK Steel for infringement, and the primary issue  of the ’805 patent (the “2010 action”).1 The primary issue in the 2010 action was whether steel sheets produced by AK Steel met the “a mechanical resistance of 1500 MPa or greater” limitation after thermal treatment.  The 2010 action ended in a jury verdict of non-infringement.

In April 2013, ArcelorMittal again sued  AK Steel, who filed a motion to dismiss the case on the basis of collateral estoppel, arguing that the action was estopped by the verdict in the 2010 action.  ArcelorMittal argued that new evidence, obtained after the verdict in the 2010 action, established that AK Steel’s new ULTRALUME products were materially different from the AXN products that were the subject of the prior action, because the ULTRALUME sheets were hot-stamped to achieve a UTS exceeding 1,500 MPa.

The Federal Circuit said that a primary issue in a collateral estoppel analysis with respect to non-infringement is whether the accused product is the same—i.e., the issue sought to be precluded is the same as that involved in the prior action—or whether the accused products have materially changed.  The Federal Circuit concluded that the evidence supports the conclusion that the products are not materially the same.  The evidence, when viewed in the light most favorable to non-movant ArcelorMittal, reflected a material difference in the accused product and AK Steel’s conduct since the 2011 verdict.  The evidence indicated that the production process was no longer “rudimentary,” and that commercial stampers were being utilized, and that the stamped steel is being commercialized. This evidence represented a material difference in the accused products and did not exist during the 2010 action.  Finally the Federal Circuit pointed out that AK Steel’s brochure, created after the 2010 action support an allegation that AK Steel is commercially marketing and supplying steel sheets to auto manufacturers that may exceed 1,500 MPa UTS after hot-stamping

Collateral Estoppel Applies in IPRs Where the Issues are the Same

In Nestle USA, Inc. v. Steuben Foods, Inc., [2017-1193] (March 13, 2018), the Federal Circuit vacated the Board’s construction of “aseptic” in U.S. Patent No. 6,481,468 because of collateral estoppel considerations, and remanded for further proceedings.

The Federal Circuit noted that Nestle had previously appealed the construction of “aseptic” in another IPR involving a related patent (U.S. Patent No. 6,945,013), and in that case, the Federal Circuit vacated the
Board’s construction, relying on binding lexicography in the specification for “aseptic” to construe the term to mean the “FDA level of aseptic.”

The Federal Circuit explained that collateral estoppel protects a party from having to litigate issues that have been fully and fairly tried in a previous action and adversely resolved against a party opponent, and that it is well established that collateral estoppel applies in the administrative
context.  The Federal Circuit said that it was undisputed that the claims at issue in the two appeals use the term “aseptic” (or its related variation
“aseptically disinfecting”) in a similar fashion.  More critically, the Federal Circuit said, the two patents also provide identical lexicography
for the term “aseptic” in their specifications.

The Federal Circuit concluded that collateral estoppel protects Nestlé and obviates the need to revisit an issue that was already resolved against Steuben Foods. The Federal Circuit said that collateral estoppel is not
limited “to patent claims that are identical; it is the identity of the issues that were litigated that determines whether collateral estoppel should apply.

Terminal Disclaimer is a Strong Clue, But Not Conclusive Proof That Continuation Claims Are Not Patentably Distinct

In Simpleair, Inc. v. Google LLC, [2016-2738] (March 12, 2018), the Federal Circuit vacated the district court’s dismissal under FRCP 12(b)(6) because the district court erred by presuming that terminally disclaimed
continuation patents are patentably indistinct variations of their parent patents without analyzing the scope of the patent claims.

This case is SimpleAir’s fourth complaint asserting infringement by Google Cloud Messaging services, this one involving U.S. Patent Nos. 8,639,838 and 8,656,048.  The district court dismissed both complaints under Rule 12(b)(6) as barred by claim preclusion and the Kessler doctrine, reasoning that patents shared the same title and specification with previously adjudicated continuation patents, and the filing of a terminal disclaimer
to overcome the PTO’s obviousness-type double patenting rejections indicated that the PTO believed the content of the patents in suit to be patentably indistinct from the earlier patents.

The Federal Circuit agree that agreed that claim preclusion was not foreclosed because SimpleAir asserted patents in this case that were not before the district court in the prior actions.  However, the Federal Circuit found that the record before it record before us wis not sufficient to sustain
the district court’s holding of claim preclusion.

The Federal Circuit said that it is the claims of the patent which define the invention, and that the district court concluded that the underlying inventions were the same without ever analyzing the claims of any patent in making that conclusion.  The Federal Circuit distinguished the situation of reexamined patents, where the claims in the reissued patent cannot be broader than the claims in the original patent.  In a continuation, even a continuation with a terminal disclaimer, the claims can be broader.

The Federal Circuit held that where different patents are asserted in a first
and second suit, a judgment in the first suit will trigger claim preclusion only if the scope of the asserted patent claims in the two suits is essentially the same.  However Federal Circuit case law forecloses the
inference that filing a terminal disclaimer functions as an admission regarding the patentability of the resulting claims.

The Federal Circuit said that the filing of a terminal disclaimer is a strong indicator that the claims are not patentably distinct, but something more is still required:

Thus, a terminal disclaimer is a strong clue that a patent examiner and, by concession, the applicant, thought the claims in the continuation lacked a patentable distinction over the parent. But as our precedent indicates, that strong clue does not give rise to a presumption that a patent subject to a terminal disclaimer is patentably
indistinct from its parent patents. It follows that a court may not presume that assertions of a parent patent and a terminally-disclaimed continuation patent against the
same product constitute the same cause of action. Rather, the claim preclusion analysis requires comparing the patents’ claims along with other relevant transactional facts.

Claim preclusion implicates both the weighty policies
of judicial economy and fairness to parties.   It “encourages reliance on judicial decisions, bars vexatious litigation, and frees the courts to resolve other disputes.  However, because claim preclusion shields the fraud and the cheat as well as the honest person, it is to be invoked only
after careful inquiry.

The Federal Circuit also found that the Kessler Doctrine does not unless (and until) the claims have been found to be patentably distinct.

Stare Decisis: Previous Claim Constriction Prevented Finding of Infringement

In Ottah v. Fiat Chrysler, [2017-1842] (March 7, 20180, the Federal Circuit affirmed the district court’s grant of summary judgment of non-infringement of U.S. Patent No. 7,152,840 on a book holder.

The Federal Circuit noted that it had previously reviewed claim construction of the ’840 Patent, and ruled that several claim limitations
require that the claimed book holder has a “removable mounting.”  This ruling on claim scope is a matter of “claim construction,” which is ultimately a question of law, and not subject to collateral review.  The Federal Circuit said that no error has been shown in this claim construction, and no reason for departing from the rules of collateral
estoppel or stare decisis as to this claim term.

The Federal Circuit discerned no error in the district court’s grant of
summary judgment of non-infringement, for no reasonable fact finder could find that the accused cameras meet the “removably attached” limitation of claim 1.  The Federal Circuit added that it had liberally
construed the pleadings, but have concluded that the Second Amended Complaint’s accusation of infringement lacks plausibility. The district court correctly dismissed Ottah’s complaint with prejudice.

Written Description Must Do More Than Make Claimed Subject Matter Obvious

In Knowles Electronics, LLC v. Cirrus Logic, Inc., [2016-2010] (March 1, 2018), the Federal Circuit affirmed the PTAB affirmance of the Examiner that claims 1−4 of U.S. Patent No. 6,781,231 were anticipated, and that new claims 23−27 for lack of an adequate written description.

Knowles argued that the term “package” should be construed to
mean an assembly that “requires a second-level connection
with a mounting mechanism.”  However, as the Federal Circuit noted, neither the claims nor the specification specify the type of connection required.  Because intrinsic evidence is not definitive, the Federal Circuit turned to extrinsic evidence, and found support in the definitions that the PTAB selected.  Although Knowles complained that the Board impermissibly selected the broadest definition, but the Federal Circuit rejected this, finding the Board reviewed all extrinsic evidence, including evidence proffered by Knowles.

Regarding the support for the new claims, the Federal Circuit said that the written description must clearly allow a PHOSITA to recognize that the inventor invented what is claimed.  A description which renders obvious a
claimed invention is not sufficient to satisfy the written description requirement of that invention.  The amended claims require solder pads “configured to mechanically attach and electrically connect the package to a surface of an external printed circuit board using a solder reflow process,” however the specification merely discloses a genus―solder pads that are capable of being connected to a board, and fails completely to disclose the newly claimed species of such pads―pads that are connectable to a board specifically by using a reflow process.

The Federal Circuit rejected the Knowles argument that the PTAB disregarded “the state of the art at the time of filing” and “prior art knowledge” that would have demonstrated that a PHOSITA knew
solder pads were “intended to be capable of reflow attachment
to a user’s board.”  Given uncertainties in the art, and at best a passing
reference to solder pads in the specification, the PTAB reasonably found that a PHOSITA would not have recognized that the inventor possessed solder pads “configured to” connect to a printed circuit board through a reflow process.  The Federal Circuit further noted that the consideration
for adequate written description asks what the applicant conveyed with reasonable clarity, and the ’231 patent “failed to even mention, much less spell out any detail of, the claimed reflow process”).

Judge Newman dissented because the claim construction adopted by the PTAB, and affirmed by the Federal Circuit was at odds with the construction of the same claims in a prior Federal Circuit case, which she believed should be binding.



Issue Preclusion: Patent Owner Does Not Get a Do Over to Assert the Claims Against Similar Products

In Phil-Insul Corp. v. Airlite Plastics Co., [2016-1982] (April 17, 2017), the Federal Circuit affirmed summary judgment of non-infringement of U.S.
Patent No. 5,428,933.  In prior litigation in which Phil-Insul asserted the patent against a different defendant, the district court construed the claims, granted summary judgment, and the Federal Circuit summarily affirmed.  In the present action, Airlite successfully argued to the district court that the accused products have the same design as the products found noninfringing in the prior litigation. The district court agreed, and granted Airlite’s motion for summary judgment of noninfringement.

Airlite raised collarateral estoppe, and Phil-Insul countered that (1) it did not have a full and fair opportunity to litigate the issues in the prior litigation because it now alleges infringement of Claim 2, rather than Claim 1; (2) the district court’s claimconstruction in the prior litigation was incorrect; and (3) the defense of collateral estoppel is not available in this case because the claim construction was not essential to the court’s noninfringement rulings.

In granting summary judgment, the district court found that all of the elements for collateral estoppel were satisfied for both the claim construction and noninfringement issues presented. Specifically,
the district court found that Phil-Insul had a “full and fair
opportunity to litigate” the claim constructions, and that those constructions resulted in a finding of noninfringement. The district court
further found that the infringement issues were “essentially indistinguishable” from those in the prior litigation, and that the accused Airlite products have the same design as the products in the prior litigation.

Collateral estoppel “precludes a plaintiff from relitigating identical issues by merely ‘switching adversaries’” and prevents a plaintiff from “asserting a claim that the plaintiff had previously litigated and lost against another
defendant.”  The Federal Circuit said that regional circuit law applies to the application of collateral estoppel, but Federal Circuit law applies to aspects peculiar to patent law.  In particular in determining whether a later infringement claim is the same as an earlier claim, the products must be “essentially the same,” in other words the differences between them are merely colorable or unrelated to the limitations in the claim of the patent.

Phil-Insul argued that the district court erred when it (1) gave collateral estoppel effect to a Rule 36 judgment; (2) relied on the oral argument transcript from the prior appeal; and (3) failed to construe claim 2.   We
address each argument in turn.  The Federal Circuit found that a Rule 36 affirmance is a valid and final judgment, and can support claim or issue preclusion.  As to the reliance on oral argument transcript, the Federal Circuit found that district court did not err in relying on the transcript to confirm the scope of what was at issue in the prior litigation.  Finally, as to the need to construe claim 2, the Federal Circuit first noted that the parties selected the terms and the claims to be construed, so Phil-Insul complaint is without merit.  The Federal Circuit further noted that claim 2 contains the same terms “adjacent” and “dimension” terms that the court construed in the prior litigation, and that these terms were dispositive, and noting that it is well-established that claim terms are to be construed consistently throughout a patent, citing Rexnord Corp. v. Laitram Corp., 274 F.3d 1336, 1342 (Fed. Cir. 2001).


It Was Over Before the Fat Lady Sang; Collateral Estoppel Applies to Partial Summary Judgment under §101

In Intellectual Ventures I LLC v. Capital One Financial Corp., [2016-1077] (March 7, 2017), the Federal Circuit affirmed judgment that all claims of U.S. Patent Nos. 7,984,081 and 6,546,002 ineligible under 35 U.S.C. § 101, and barring Intellectual Ventures from pursuing claims based on U.S. Patent No. 6,715,084.  The district court granted Summary Judgment of invalidity of the ‘081 and ‘002 patents, and on the strength of a partial summary judgment order of ineligibility under § 101 for the ’084 patent in a separate proceeding in New York, granted summary judgment as the ‘084 patent under a collateral estoppel theory.

The Federal Circuit observed that the Fourth Circuit has established five requirements for collateral estoppel: (1) the issue in the prior proceeding be identical, (2) actually determined, (3) necessary, (4) final, and (5) that the affected party was afforded a full and fair opportunity to litigate the issue. However the parties only dispute the finality requirement, for which the Fourth Circuit requires a “final and valid” judgment, Intellectual Ventrues arguing that the district court erred because it based its collateral estoppel findings on a partial summary judgment order, rather than a final judgment.  The Federal Circuit concluded that under Fourth Circuit law, collateral estoppel attaches in light of the partial summary judgment order, because
this particular issue has reached such a stage that the
district court would see no really good reason for permitting
it to be litigated again.


The Federal Circuit agreed that the claims of the ‘081 and ‘002 patents failed step 1 of the Alice/Mayo test.