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Issue Preclusion
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A New Vision: Collateral Estoppel Doesn’t Extend to Related Claims

by | Sep 19, 2024 |

The US Court of Appeals for the Federal Circuit reversed a district court order excluding expert validity testimony based on collateral estoppel stemming from an inter partes review (IPR) proceeding of a related patent, finding that an unpatentability decision in an IPR does not collaterally estop a patentee from making validity arguments about related claims in a district court litigation. ParkerVision, Inc. v. Qualcomm Inc., Case Nos. 22-1755; 24-2221 (Fed. Cir. Sept. 6, 2024) (Lourie, Mayer, Stark, JJ.)

This case has a long and complicated history. In 2011, ParkerVision sued Qualcomm for alleged infringement of eight patents related to wireless communications technology. In October 2013, a jury returned verdicts rejecting Qualcomm’s invalidity defense, finding 11 claims across four patents to be infringed by Qualcomm, and awarded $172 million in damages to ParkerVision.

In June 2014, the district court granted Qualcomm’s motion for a judgment as a matter of law on noninfringement, which the Federal Circuit affirmed in late 2015. Meanwhile, ParkerVision filed a second case against Qualcomm in May 2014 alleging infringement of 11 more patents. That case was stayed in favor of a Section 337 investigation that ParkerVision filed against Qualcomm at the International Trade Commission.

Qualcomm then filed 10 petitions for IPR, six of which targeted one of ParkerVision’s patents. While the challenged apparatus claims of that patent were found unpatentable during the IPR, the challenged method claims survived. The district court statutory stay (during the Commission proceeding) was lifted in December 2018. Prior to trial, the district court granted Qualcomm’s Daubert motions seeking to exclude ParkerVision’s expert’s testimony on invalidity due to collateral estoppel arising from the IPRs, and the expert’s testimony on infringement for being unreliable. The district court granted Qualcomm’s motion for summary judgment of noninfringement based on its finding that the asserted claims were materially similar to the claims from the first case. ParkerVision appealed.

In July 2024, after the briefing was completed and the Federal Circuit held oral argument, the Court dismissed the appeal for lack of appellate jurisdiction and returned it to the district court because Qualcomm’s invalidity counterclaims had not been adjudicated. The parties then filed a joint motion at the district court seeking entry of a final judgment, which was granted in August 2024. ParkerVision appealed again.

The Federal Circuit reinstated ParkerVision’s initial appeal and reversed the district court’s determination. On the summary judgment of noninfringement, the Court rejected the collateral estoppel finding because the district court failed to conduct claim construction to determine whether the scope of the claims was the same as in the first case. As for the district court’s exclusion of expert validity testimony due to the IPRs, the Federal Circuit concluded that because of the different legal standards for proving invalidity (preponderance versus clear and convincing), a finding underlying an unpatentability decision in an IPR does not collaterally estop a patentee from making validity arguments regarding related claims in district court litigation.

Finally, the Federal Circuit concluded that the district court had abused its discretion [...]

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Beware Equitable Doctrine of Issue Preclusion in Multiparty, Multivenue Patent Campaigns

by | Aug 1, 2024 |

Addressing for the first time whether an invalidity order merges with a voluntary dismissal for purposes of finality, the US Court of Appeals for the Federal Circuit held that an interlocutory order merges with the final dismissal, rendering the interlocutory order final for purposes of issue preclusion. Koss Corp. v. Bose Corp., Case No. 22-2090 (Fed. Cir. July 19, 2024) (Hughes, Stoll, Cunningham, JJ.). As a consequence, the Federal Circuit found that the patent owner’s appeal from an adverse decision in an inter partes review (IPR) was moot under the doctrine of nonmutual collateral estoppel.

In July 2020, Koss filed a patent infringement lawsuit against Bose in the Western District of Texas, asserting three patents whose common specification discloses a “wireless earphone that communicates with a digital-audio source, such as an iPod, over an ad hoc wireless network like Bluetooth.” The same day, Koss asserted the same patents against Plantronics. Bose filed a motion challenging venue and also petitioned for inter partes review (IPR) of the three patents. Later in 2020, Bose filed a declaratory judgment action seeking a declaration of noninfringement in the District of Massachusetts on the three patents Koss asserted against Bose in the Texas litigation. The Massachusetts litigation was stayed pending the resolution of the venue motions in the Texas case.

In 2021, the Texas court dismissed Koss’s complaint against Bose for improper venue. Koss then asserted a counterclaim of infringement of the same three patents in the Massachusetts litigation. The Massachusetts court again stayed the litigation pending the resolution of the IPRs, which (by that time) the Patent Trial & Appeal Board had instituted. Meanwhile, Koss’s case against Plantronics was transferred to the Northern District of California, and Plantronics moved to dismiss the complaint on the ground that all the asserted claims (which included all the claims asserted against Bose) were invalid under 35 U.S.C. § 101. The California court granted Plantronics’s motion, rendering all the asserted claims invalid. However, that order did not finally dispose of the case.

Koss then moved for leave to amend its complaint, which the California district court granted. In the amended complaint, Koss asserted two additional patents. Plantronics moved to dismiss the asserted claims in those patents as invalid under § 101. The parties fully briefed Plantronics’s motion, but before the district court issued a decision on the merits of that motion, Koss voluntarily stipulated to dismissal with prejudice, disposing of the lawsuit in its entirety. Koss did not ask the district court to vacate its earlier order finding certain claims invalid under § 101. The California district court then issued an order dismissing the case with prejudice. The deadline for Koss to appeal the judgment came and went – Koss did not appeal.

Arguing that the patents had been finally adjudicated invalid in the Plantronics litigation, Bose moved to dismiss Koss’s appeal from the Board in the IPR proceedings as moot. Koss opposed the motion, arguing that its amended complaint rendered the invalidity decision on the prior complaint non-final because the [...]

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When Is It Really Over? If Additional Proceedings Are Needed, Judgment Is Not Final

by | May 16, 2024 |

The US Court of Appeals for the Federal Circuit, factually distinguishing the concept of finality in this case from its earlier decision in Fresenius USA v. Baxter Int’l, vacated and remanded a district court’s amended final judgment with instructions to dismiss the case as moot in view of parallel proceedings that had found all patent claims invalid. Packet Intelligence LLC v. NetScout Systems, Inc., Case No. 22-2064 (Fed. Cir. May 2, 2024) (Lourie, Hughes, Stark, JJ.)

This dispute was originally before the Federal Circuit in 2020 when NetScout appealed a district court’s judgment that it willfully infringed multiple patents and that none of the patent claims were shown to be unpatentable or invalid. NetScout also appealed the district court’s damages award, which included enhancements. In the first appeal, the Federal Circuit reversed the damages award, vacated the enhanced damages and affirmed the remainder of the decision (Packet I). While the case was on remand to the district court, the Patent Trial & Appeal Board issued final written decisions in a series of inter partes reviews (IPRs) that had been initiated by third parties, finding all claims to be unpatentable as obvious. Packet appealed the Board’s decisions to the Federal Circuit. The district court issued an amended decision on May 4, 2022, after the Federal Circuit’s first decision remanding the case and after the Board’s final written decisions in the IPRs.

NetScout appealed again, arguing that if the Federal Circuit affirmed the Board’s findings invalidating the patents at issue, then the claims at issue in the litigation would all be unpatentable, which would trigger an immediate issue preclusion that would leave Packet unable to collect on any outstanding monetary damages awarded by the district court. Therefore, the question before the Federal Circuit was whether the decision in Packet I rendered the case sufficiently final such that it would be immune to the Board’s subsequent determination of unpatentability.

The Federal Circuit determined that Packet’s infringement judgment was not final before the Federal Circuit affirmed the Board’s unpatentability judgments. The Court discussed its prior decisions on finality, focusing on its 2013 decision in Fresenius in which the Court considered a different concept of finality. In Fresenius, the Court explained that the finality at issue was not the potential res judicata effect on another litigation. Rather, Fresenius was concerned with “whether the judgment in this infringement case is sufficiently final so that it is immune to the effect of the final judgment in the PTO proceedings, as affirmed by this court.” The Federal Circuit stated that in accordance with this concept of finality (also the one at issue in NetScout’s appeal), a litigation is sufficiently final when it is “entirely concluded” so that the cause of action is merged into a final judgment and the final judgment leaves nothing for the court to do but execute the judgment.

Applying this standard to the facts of the case at issue, the Federal Circuit found that Packet’s cause of action remained pending and [...]

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Color Me Unsurprised: No Preclusion of Plaintiff’s Claims

by | Oct 27, 2022 |

The US Court of Appeals for the Seventh Circuit reversed the lower court’s order determining that the plaintiff’s federal lawsuit was barred under the doctrines of claim and issue preclusion, noting an Illinois law exception on claim preclusion and finding no issue preclusion. Creation Supply, Inc. v. Selective Ins. Co. of the Southeast, Case No. 21-3172 (7th Cir. Oct. 19, 2022) (Rovner, Hamilton, Scudder, JJ.)

Creation Supply is a producer of markers. In 2012 one of its competitors sued it for trademark violations. Creation requested that Selective Insurance provide coverage for the lawsuit, but Selective refused. Creation entered into a settlement agreement with its competitor that prevented Creation from selling one of its primary lines of markers. As a result, Creation lost much of its business and struggled financially.

Selective did not provide coverage for Creation’s legal defense. It also sought a declaration in Illinois state court that it owed Creation no duty to defend. Creation countersued, seeking a declaration that Selective did owe it a duty to defend. Creation also alleged that Selective breached the insurance policy between the parties. The Illinois circuit court entered partial summary judgment for Creation on its duty to defend the claim and finalized an award of incidental relief in October 2017.

In 2014, during the state court litigation, Creation filed a suit against Selective in federal court for breach of contract and a claim under the Illinois Insurance Code for vexatious and unreasonable conduct. In 2016, Creation requested voluntary dismissal of the state court breach of contract claim. The Illinois circuit court granted the motion and expressly reserved Creation’s right to maintain its federal action on its breach of contract claim. After the end of the state court litigation in 2017, the federal court case continued. The district court granted summary judgment for Creation on the insurance coverage question. After a bench trial on the Illinois Insurance Code claim, the court found for Creation and awarded almost $3 million in damages. On appeal, the Seventh Circuit reversed and remanded, instructing the district court to resolve the remaining issue of contract damages.

After the remand, Creation sought to amend the complaint to seek punitive damages. The district court denied that request. Selective then moved for judgment on the pleadings, contending that the doctrines of claim and issue preclusion barred Creation’s remaining contract claim. The district court agreed and entered judgment for Selective because the Illinois state courts had resolved the issue of Selective’s duty to defend. Creation appealed.

The Seventh Circuit affirmed the district court’s denial of Creation’s leave to amend, then turned to the issue of claim preclusion, a legal doctrine that prevents a party from repeatedly litigating the same cause of action against the same adverse party. Claim preclusion requires the following:

  • A court with proper jurisdiction must have issued a final judgment on the merits.
  • The claims in the two actions must be the same.
  • The parties in the second action must be the same (or in privity with) those [...]

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Since Vacatur Seeks Equitable Relief, Clean Hands Matter

by | Jun 30, 2022 |

In an opinion related to its 2021 ruling that a decision in earlier inter partes reexaminations of related patents had a preclusive effect that collaterally estopped the Patent Trial & Appeal Board (Board) from making new findings on the same issue, the US Court of Appeals for the Federal Circuit vacated the Board’s decision on remand since the patent at issue expired. SynQor, Inc. v. Vicor Corp, Case No. 20-1259 (Fed. Cir. Jun. 17, 2022) (Chen, Prost, JJ.), (Lourie, J., dissenting) (non-precedential).

Background

After being sued by SynQor, Vicor petitioned for reexamination of several SynQor patents (including the ’021 and ’190 patents). In the ’190 patent reexamination proceeding, Vicor successfully argued that the ’190 patent claims (including new claims sought to be added by SynQor) were unpatentable over two references. After appeals to the Board (which reversed the examiner) and Federal Circuit (which reversed-in-part, vacated-in-part), the case was remanded to the Board to consider the examiner’s obviousness rejections in light of the Court’s conclusion that prior art patents anticipated certain claims.

On remand, the Board affirmed almost all of the examiner’s rejections and applied a new ground of rejection to one of SynQor’s proposed new claims. However, before the Board issued its final decision regarding the new claims, the ’190 patent expired and SynQor appealed to the Federal Circuit to vacate the Board’s decisions regarding the new claims on the ground that the ’190 patent’s expiration rendered the Board’s patentability decision moot. The Court agreed and vacated the Board’s decisions, explaining that the inability to issue the new claims meant that “the Board’s patentability determinations were unreviewable for mootness” since the Court would be “frustrated by the vagaries of circumstance” (thereby falling under the Supreme Court’s Munsingwear doctrine) from reviewing the Board’s determinations on the merits.

Similarly, in the ’021 patent’s reexamination, the examiner rejected all challenged claims, including two new claims that SynQor proposed. The Board affirmed the examiner’s rejections, and on appeal the Federal Circuit affirmed-in-part, vacated-in-part and remanded for the Board to reconsider two obviousness grounds it deemed the Board had unjustifiably reached inconsistent conclusions on (relative to a separate reexamination proceeding for another related patent). On remand, the Board again found SynQor’s proposed new claims unpatentable, unaware that the ’021 patent had expired over a year prior. In its rehearing petition, SynQor informed the Board of the ’021 patent’s expiration and asked the Board to vacate its decision on the merits. SynQor appealed after the Board declined to do so.

Appeal on the ’021 Patent

On appeal, SynQor requested that the Federal Circuit vacate the Board’s decision (for the same reasoning as in the ’190 patent appeal). Vicor argued that the Court lacked Article III jurisdiction to consider the request, and that SynQor was not entitled to equitable relief because of its failure to inform the Board of the ’021 patent’s expiration date, which caused the remand decision to be issued. Vicor also argued that the timing of the ’021 patent expiring before [...]

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Lanham Act Reaches Foreign Defendants’ Extraterritorial Conduct, but Worldwide Injunction Too Broad

by | Sep 2, 2021 |

The US Court of Appeals for the Tenth Circuit upheld a district court’s injunction barring multiple foreign companies from directly or indirectly using a US remote control manufacturer’s trade dress based on the extraterritorial reach of the Lanham Act. However, the Court narrowed the scope of the worldwide injunction to countries where the US company currently markets or sells its products. Hetronic Int’l, Inc. v. Hetronic Germany GmbH, Case Nos. 20-6057, -6100 (10th Cir. Aug. 24, 2021) (Phillips, J.)

Hetronic International is a US company that manufactures radio remote controls for heavy-duty construction equipment. Hetronic Germany GmbH, Hydronic Steuersysteme GmbH, ABI Holding GmbH, Abitron Germany GmbH and Abitron Austria GmbH (collectively, the Distributers) are foreign companies that have distributed Hetronic’s products—mostly in Europe—for almost a decade. Based on an old research and development agreement between the parties, the Distributors concluded that they, not Hetronic, owned the rights to Hetronic’s trademarks and other intellectual property. The Distributors accordingly reverse-engineered Hetronic’s products and began manufacturing and selling their own copycat products, mostly in Europe. The copycat products were identical to Hetronic’s and were sold under the Hetronic brand and the same product names. Hetronic terminated the parties’ distribution agreements, but the Distributers continued to sell their copycat products. The Distributors attempted to break into the US market, selling several hundred thousand dollars’ worth of products before backing off after Hetronic sued. They then focused their efforts on Europe.

Hetronic sued the Distributors, along with their manager and owner Albert Fuchs, under the Lanham Act. The Distributors moved for summary judgment, arguing that the district court lacked subject matter jurisdiction to resolve the Lanham Act claims because the conduct at issue occurred overseas. The Distributors asserted that Hetronic’s claims had to be dismissed because the Lanham Act applied extraterritorially only if a defendant’s conduct had a substantial effect on US commerce, and the Distributors’ conduct did not. The district court rejected that argument and denied summary judgment.

In a separate proceeding initiated by the Distributors in the European Union, the EU Intellectual Property Office (EUIPO) concluded that Hetronic owned all of the disputed intellectual property. Based on the EUIPO proceeding, the district court applied the doctrine of issue preclusion and granted Hetronic summary judgment on the Distributors’ ownership defense. After an 11-day trial, a jury found that the Distributors had willfully infringed Hetronic’s trademarks and awarded Hetronic more than $100 million in damages, mostly for trademark infringement. The district court also entered a permanent injunction prohibiting the Distributors’ infringing activities worldwide. The Distributors appealed.

On appeal, the Distributors accepted that the Lanham Act can sometimes apply extraterritorially but argued that the Lanham Act did not reach their activity as foreign defendants making sales to foreign consumers. Specifically, the Distributors argued that:

  • The district court erroneously concluded that the Lanham Act applied extraterritorially.
  • The injunction lacked the specificity required by Fed. R. of Civ. Pro. 65.
  • The injunction’s worldwide reach was too broad.

The Distributors challenged the district court’s exercise of personal [...]

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