Issue Preclusion - Klarquist Patent DefensesKlarquist Patent Defenses

Issue Preclusion (“Collateral Estoppel”): Issue Actually Litigated And Necessarily Decided By Final Judgment Cannot Be Relitigated By Party: “The Restatement explains that subject to certain well-known exceptions, the general rule is that ‘[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.’ Restatement (Second) of Judgments § 27, p. 250 (1980); see also, § 28, at 273 (listing exceptions such as whether appellate review was available or whether there were ‘differences in the quality or extensiveness of the procedures followed’).” B&B Hardware (U.S. 03/24/2015); Blonder-Tongue (U.S. 05/03/1971) (overruling 1936 S. Ct. decision; an accused infringer may assert issue preclusion bar when the asserted patent has once been declared invalid, but court “must decide in a principled way whether or not it is just and equitable to allow the plea of estoppel in the case before it.”); see Voter Verified (Fed. Cir. 04/20/18) (aff’g no issue preclusion because patent challenger in first suit did not respond to patent owner’s challenge to the Sec. 101 counterclaim and invalidity not necessary to judgment of non-infringement in first suit); VirnetX (Fed. Cir. 11/22/19) (non-precedential) (aff’g issue preclusion of invalidity allegations litigated in prior action up to trial and on which JMOL was granted during trial, despite the challenger presenting no evidence on most of the invalidity defenses); Purdue Pharma (Fed. Cir. 04/17/19) (non-precedential) (rev’g PTAB application of issue preclusion because issue was uncontested in prior action, not actually litigated); Rembrandt (Fed. Cir. 02/25/16) (non-precedential) (aff’g non-infringement but refusing to reach invalidity decision and noting that it will have no issue preclusive effect as being unnecessary to the judgment); Yufa (Fed. Cir. 11/05/15) (non-precedential) (aff’g Summ. J. issue preclusion barred infringement claim). Minor variations in factors considered in applying same legal standard (e.g., likelihood of confusion) do not bar issue preclusion. B&B Hardware (U.S. 03/24/2015) (nor does immaterial differences in the marks being addressed).
Pendency Of Appeal Or Post-Trial Motions Has No Effect On Finality Of Judgment For Issue Preclusion Purposes (Unless Judgment Of PTAB): “The pendency of an appeal has no effect on the finality or binding effect of a trial court’s holding…. [The] fact that post-trial motions are pending does not affect the finality of a judgment and thus does not prevent its preclusive effect.” Pharmacia (Fed. Cir. 03/18/99); Uniloc (Motorola) (Fed. Cir. 11/04/22) (aff’g plaintiff lacked standing based on district court findings in another action by plaintiff against a different defendant (Apple) with whom plaintiff settled and then dropped appeal; “collateral estoppel can be applied based on a district court decision that is still pending on appeal, and we have affirmed the application of issue preclusion even when the preclusive judgment was pending appeal.” But issue preclusion defense not forfeited by waiting to assert it until earlier ruling is finalized.) But different rule applied to PTAB judgments. United Therapeutics (Fed. Cir. 07/24/23) (aff’g inducement infringement despite patent being ruled unpatentable in IPR (pending appeal): “A pending, non-final litigation does not negate an intent to infringe that is otherwise supported by evidence. And we have previously held that an IPR decision does not have collateral estoppel effect until that decision is affirmed or the parties waive their appeal rights.”); Papst Licensing (Fed. Cir. 05/23/19) (applying issue preclusion based on PTAB final decision based on voluntary dismissal of appeal from that decision: “those decisions therefore became final”). But if underlying judgment is vacated on appeal, then judgment based on issue preclusion likewise will be vacated. Finjan (Fed. Cir. 10/13/23). See Cert. Petition in United Therapeutics (01/23/24) (arguing that Fed. Cir. refusal to give preclusive effect to PTAB decision pending appeal is contrary to S. Ct. and other Circuits; citing Patent Defenses commentary on decision).
Issue Preclusion (And Law Of The Case)—Change In Law Exception: “Three conditions must be satisfied to reopen a previous decision under the change of law exception for both law of the case and issue preclusion. First, the governing law must have been altered. Second, the decision sought to be reopened must have applied the old law. Third, the change in law must compel a different result under the facts of the particular case.” Dow Chem. II (Fed. Cir. 08/28/15) (claims previously held definite now held indefinite ivo Nautilus “altering the standard for indefiniteness,” so reversing award of $30.9 Million supplemental damages); Voter Verified (Fed. Cir. 04/20/18) (Alice did not constitute change in the law compared to Mayo to defeat issue preclusion, and Mayo was decided while the first appeal was still pending before Fed. Cir. (but issue preclusion does not apply for other reasons)). Cf. Feit Elec. (Fed. Cir. 02/03/20) (non-precedential) (change-in-law exception does not deny preclusion based on judicial decisions that merely clarify earlier interpretations of a statute). Intervening change in the law may occur while case on appeal but must occur before the case reaches final judgment. Dow Chem. II (Fed. Cir. 08/28/15). See generally Herrara (U.S. 05/20/2019) (issue preclusion does not apply where prior judgment based on binding precedent that since has been repudiated).
Issue Preclusion: Same Issue: Google (Hammond) (Fed. Cir. 12/08/22) (aff’g issue preclusion in an IPR based on FWD in another IPR where respective claims differed only in one requiring plural application servers and the other requiring at least one application server, which does not “materially affect” the issue of patentability); Synqor (Fed. Cir. 02/21/21) (2-1) (applying issue preclusion to reverse PTAB finding of obviousness in inter partes reexamination (based on finding motivation to combine two references and finding the references were not incompatible) based on another PTAB ruing in inter partes reexamination initiated by same petitioner of different patents in same patent family, that same prior art references were incompatible and hence there was no motivation to combine); Maxlinear (Fed. Cir. 01/25/18) (vacating PTAB patentability determination and remanding certain dependent claims due to issue preclusion effect of other already-affirmed-on-appeal PTAB unpatentability determinations for independent and certain dependent claims; noting that “an administrative decision of unpatentability generally requires the invalidation of related claims that present identical issues of patentability”); MasterObjects (Fed. Cir. 02/15/24) (non-precedential) (rev’g Summ. J. non-infringement and a finding that patent owner was collaterally estopped on claim construction by affirmed construction in another action on a patent in same patent family, in part because claim language was different and therefore issue was not identical); In re Arunachalam (Fed. Cir. 10/03/17) (non-precedential) (dismissing appeal from adverse PTAB decision; issue preclusion extends to claims in CIP patent reciting same element that a district court had found not enabled or indefinite in other claims in a parent patent); Soverain (Victoria’s Secret) (Fed. Cir. 02/12/15) (obviousness invalidation of dependent claim, while this case was on appeal, is issue preclusion against independent claim; as is obviousness invalidation of independent claim where dependent claim merely limits network to the Internet, as that does not “materially alter the question of invalidity”); E.Digital (Fed. Cir. 11/19/14) (construction of claim term in earlier action presents “identical issue” when that term remains unamended in reexamination claim asserted in later suit, and reexamination did not consider that claim term, but not when term appears in unrelated patent asserted by same patent owner); Ohio Willow Wood (Fed. Cir. 11/15/13) (aff’g Summ. J. of issue preclusion against patent owner where “the differences between the unadjudicated patent claims and adjudicated patent claims do not materially alter the question of invalidity”); Aspex Eyewear (Fed. Cir. 04/19/13) (infringement issue is same despite some different patent claims being asserted, where products are materially identical and every claim asserted in second suit has same term that was basis for non-infringement in first suit against different defendant); Allergan (Sandoz) (Fed. Cir. 03/17/17) (non-precedential) (aff’g that invalidation of claims of parent patent and other continuations of parent present same issue of obviousness as claims of later issued and now-asserted continuation patent); Furnace Brook (Fed. Cir. 07/22/11) (applying regional circuit law, aff’g Summ. J. of issue preclusion) (non-precedential).
No Issue Preclusion If Issue Was Not Necessarily Decided Or Not Necessary To Judgment In Prior Proceeding: Must show that the litigated issue was “‘actually determined in the prior proceeding’ and was a ‘critical and necessary part of the decision in the prior proceeding.’” TecSec (Fed. Cir. 10/02/13) (no issue preclusion from R. 36 affirmance of judgment with two independent grounds) (citations omitted); Phil-Insul (Fed. Cir. 04/17/17) (aff’g issue preclusion on both claim constructions and non-infringement where pat. owner lost DOE infringement of independent claim in earlier suit based on two claim constructions; as each construction was necessary for non-infringement of some accused products, each necessarily was aff’d by the R. 36 affirmance w/o opin.; distinguishing TecSec); United Access (Fed. Cir. 02/12/15) (long discussion of S. Ct. precedents; issue preclusion reversed because not certain that same issue was decided in prior case: prior case: general verdict of non-infringement, JMOL denied because jury reasonably could have found non-infringement on either of two grounds; this case: only one of those grounds applicable; “the court’s JMOL ruling in the EarthLink case was simply a decision that a rational jury could reasonably have found non-infringement based on either of two theories. The JMOL ruling did not hold that the jury had, in fact, decided in favor of EarthLink on both of those grounds”); Nissim (Fed. Cir. 03/14/14) (non-precedential) (dictum: issue preclusion unlikely in part because denial of Summ. J. was not necessary to the outcome of the suit—the withdrawal of jurisdiction to enforce settlement agreements). But there is an exception: the “Fourth Circuit would hold collateral estoppel applicable to both of two alternative grounds, when both grounds would be dispositive in the second case and when the two cases were co-pending at the time the plaintiff decided to proceed with the second case after an adverse decision in the first.” Intellectual Ventures I (Fed. Cir. 09/10/19) (long discussion of precedents; aff’g issue preclusion also because two grounds for dismissal were “integrally related”), rehearing denied opinion (Fed. Cir. 12/11/19). See Sebela Ireland (Fed. Cir. 04/20/21) (non-precedential) (in Third Circuit, each of two alternative grounds for judgment may have issue preclusive effect, but not if only one ground was basis for affirmance on appeal, whereas contingent findings do not have issue preclusive effect).
Issue Preclusion: Finality Of Earlier Ruling Depends On Regional Circuit’s Law: Decided under regional circuit law. Intellectual Ventures I (Fed. Cir. 09/10/19) (apply regional circuit law to cases “involving general principles of the law of judgments that do not implicate questions within this court’s exclusive jurisdiction.”). Compare Intellectual Ventures (Capital One) (Fed. Cir. 03/07/17) (aff’g issue preclusion, under 4^th law, based on partial summary judgment of Sec. 101 invalidity in a different case) with Vardon Golf (Fed. Cir. 06/21/02) (under 7^th Cir. law, partial summary judgment is not final).
Issue Preclusion: Full And Fair Chance To Litigate: “Determining whether a patentee has had a full and fair chance to litigate the validity of his patent in an earlier case is, of necessity, not a simple matter. In addition to the considerations of choice of forum and incentive to litigate mentioned above, certain other factors immediately emerge. For example, if the issue is nonobviousness, appropriate inquiries would be whether the first validity determination purported to employ the standards announced in Graham v. John Deere Co., supra; whether the opinions filed by the District Court and the reviewing court, if any, indicate that the prior case was one of those relatively rare instances where the courts wholly failed to grasp the technical subject matter and issues in suit; and whether, without fault of his own, the patentee was deprived of crucial evidence or witnesses in the first litigation. But as so often is the case, no one set of facts, no one collection of words or phrases, will provide an automatic formula for proper rulings on estoppel pleas. In the end, decision will necessarily rest on the trial courts’ sense of justice and equity.” Blonder Tongue (U.S. 05/03/1971).
Issue Preclusion: Not Triggered By Judgment Against Different Party In Same Or Consolidated Action: Failing to appeal adverse judgment against one defendant in action, or consolidated action, does not preclude pursuing appeal against another defendant, because judgment not in an earlier action. In re Cygnus (Fed. Cir. 04/19/08) (patent owner failed to appeal judgment of “on sale” bar against one defendant in a multi-district litigation); Power Integrations (Fed. Cir. 06/13/19) (rejecting, under the lack-of-incentive-to-litigate exception, argument that patent owner is precluded from arguing IPR was time barred for failure to appeal PTAB decision of no time bar in another IPR proceeding initiated by same petitioner on a different patent, primarily because large damages award exists on this patent but not on the other patent).
Equitable Exceptions To Issue Preclusion: “Principles of fairness negate imposing issue preclusion when the party sought to be precluded ‘had a considerably greater incentive to continue litigating’ an issue in a second case than it had in a first case.” Oren Tech. (Fed. Cir. 07/23/21) (non-precedential) (rejecting, under “equitable exception,” issue preclusion based on PTAB’s non-appealed unpatentability finding on equivalent claims in continuation patent, where one claim had been upheld and patent owner had already lost on appeal infringement against IPR petitioner). See Power Integrations (Fed. Cir. 06/13/19) (rejecting, under the lack-of-incentive-to-litigate exception, argument that patent owner is precluded from arguing IPR was time barred for failure to appeal PTAB decision of no time bar in another IPR proceeding initiated by same petitioner on a different patent, primarily because large damages award exists on this patent but not on the other patent).
Finding New Evidence Does Not Avoid Issue Preclusion: “Collateral estoppel applies ‘even if new evidence exists.’” Synqor (Fed. Cir. 02/21/21) (2-1) (applying issue preclusion to reverse PTAB finding of obviousness in inter partes reexamination).
Affirmed PTAB IPR Unpatentability Decision Has Issue Preclusion Effect In Other PTAB Proceedings: A PTAB final written decision in first IPR finding claims unpatentable, affirmed by the Fed. Cir. while second IPR was on appeal, has issue preclusive effect in second PTAB IPR, even if different prior art is asserted, and “has finally resolved the issue of the unpatentability of those claims.” Maxlinear (Fed. Cir. 01/25/18) (vacating PTAB patentability determination and remanding on dependent claims not already adjudicated unpatentable: PTAB “must decide whether the remaining claims present materially different issues that alter the question of patentability, making them patentably distinct from” the claims already adjudicated unpatentable.); Papst Licensing (Fed. Cir. 05/23/19) (applying issue preclusion in PTAB appeal based on PTAB final decision (whose appeal was voluntarily dismissed) of obviousness of patents with overlapping Spec., where patent owner made no showing of factors justifying exception to application of standard doctrine of applicability of issue preclusion, and same claim-construction and reference-teaching issues were resolved in and essential to earlier decision); VirnetX (Fed. Cir. 12/10/18) (Fed. Cir. summary affirmance of Board decisions in other IPR proceedings against patent owner, where each unpatentability ground had depended on a certain reference qualifying as a printed publication, triggers issue preclusion in present IPR on that same printed publication issue); Nestle (Fed. Cir. 03/13/18) (vacating PTAB non-obviousness decision; claim-construction issue preclusion arose from prior Fed. Cir. construction of essentially same claim term, on appeal of PTAB decision on related patent asserting priority to same provisional as patent now on appeal, and no material differences in the claim construction issue presented). “Absent a contrary indication, Congress presumptively intends that an agency’s determination … has preclusive effect.” B&B Hardware (U.S. 03/24/2015) (courts “should apply the following rule: So long as the other ordinary elements of issue preclusion are met, when the issues adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.”). Cf. AbbVie (Fed. Cir. 07/01/14) (interference board ruling not final (for issue preclusion) while sec. 146 review proceeding pending because trial court can make de novo determinations of fact).
Issue Preclusion May Be Raised On Appeal Where Preclusive Judgment Became Final After Judgment On Appeal: Google (Hammond) (Fed. Cir. 12/08/22) (PTAB FWD against another patent issued about two months before FWD on patent on appeal, but became final in USPTO after judgment on appeal. Not forfeited because long after IPR petition filed.); cf. Uniloc (Motorola) (Fed. Cir. 11/04/22) (“collateral estoppel can be applied based on a district court decision that is still pending on appeal, and we have affirmed the application of issue preclusion even when the preclusive judgment was pending appeal.” But issue preclusion defense not forfeited by waiting to assert it until earlier ruling is finalized.)
PTAB Decision In Inter Partes Reexamination Proceeding May Have Issue Preclusion Effect: “The statutory scheme governing inter partes reexamination shows no evident intent to foreclose common law estoppel” and “inter partes reexaminations [do not] categorically fail to meet the ordinary elements of issue preclusion” despite no right to cross examine witnesses. Synqor (Fed. Cir. 02/21/21) (2-1) (applying issue preclusion to reverse PTAB finding of obviousness in inter partes reexamination (based on finding motivation to combine two references and finding the references were not incompatible) based on another PTAB ruing in inter partes reexamination initiated by same petitioner of different patents in same patent family, that same prior art references were incompatible and hence there was no motivation to combine).
ITC Decisions Have No Issue Preclusion Or Claim Preclusion Effect: “The ITC’s determination of patent infringement and validity do not have claim or issue preclusive effect even if affirmed by our court.” Hyosung (Fed. Cir. 06/17/19) (dismissing part of appeal of ITC decision as moot once patent expired). “Decisions of the ITC involving patent issues have no preclusive effect in other forums.” LSI Corp. (Fed. Cir. 03/20/15) (non-precedential) (citing Texas Instruments (Fed. Cir. 07/19/96) (denying ITC decisions issue preclusion effect, relying on 1974 Senate Report (“Commission’s findings neither purport to be, nor can they be, regarded as binding interpretations of the U.S. patent laws in particular factual contexts. Therefore, it seems clear that any disposition of a Commission action by a Federal Court should not have res judicata or collateral estoppel effect in cases before such courts.”))). But see B&B Hardware (U.S. 03/24/2015) (issue preclusion “will apply except when a statutory purpose to the contrary is evident”).
Does Fed. Cir. Affirming A Claim Construction Preclude PTAB From Reaching Different Claim Construction?: In dissent, Judge Newman argues that issue preclusion applies where Fed. Cir. affirms ITC claim construction and PTAB later construes same claim element in same patent, even if a district court claim construction may not trigger issue preclusion in PTAB. Knowles Elecs. (Fed. Cir. 03/01/18) (Newman, J., dissenting op.) (majority did not address this issue directly).
Invalidity Judgment Precludes Patent Owner From Asserting Patent: Blonder Tongue (U.S. 05/03/1971) (unanimous), overturning Triplett (U.S. 03/30/1936) (invalidity determination in a suit in a different circuit against different defendants does not estop the patent owner on issue of invalidity).
Fed. Cir. Affirming Unpatentability (From PTAB) Or Invalidity (From A D. Ct.) Precludes Action Also On Appeal: XY (Fed. Cir. 05/23/18) (2-1) (sua sponte applying issue preclusion on appeal of district court “not invalid” judgment based on affirmance of PTAB unpatentability decision); Maxlinear (Fed. Cir. 01/25/18) (affirmance of two PTAB unpatentability final decisions “finally resolved” the issue of unpatentability of those claims); Chrimar (Fed. Cir. 09/19/19) (non-precedential) (Fed. Cir. affirmance of PTAB FWDs declaring unpatentable all asserted claims, applies to district court action, despite mandate having already issued from prior appeal affirming jury verdict of infringement and damages, because appeal of post-mandate orders was still pending and had various non-insubstantial assertions); U.S. Ethernet (Texas Instmt.) (Fed. Cir. 04/25/16) (non-precedential) (EDTX had overturned damages judgment on pro-patent jury verdict, based on post-judgment Summ. J. of anticipation in NDCA); Mendenhall (Fed. Cir. 06/08/94) (2-1) (Fed. Cir. first affirmed bifurcated “not invalid” decision in first case; then in second case affirmed invalidity judgment; then on appeal in first case from infringement and damages decision, “collateral estoppel” effect of Fed. Cir. affirming invalidity requires reversal of judgment in first case). Cf. Hologic I (Fed. Cir. 04/22/20) (aff’g that although assignor estoppel barred invalidity defense, it did not bar assertion of issue preclusion that claims were void ab initio, based on claims being held unpatentable by PTAB and Fed. Cir., thus avoiding an injunction and monetary relief), cert. granted (U.S. 01/08/2021) (Question Presented: “whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits”). But see Cert. Petition in Chrimar (U.S. 03/10/2020) (“This so-called ‘Fresenius / Simmons preclusion principle’ is the sole invention of the Federal Circuit, having been adopted by no other court.”).
Fed. Cir. Affirming Invalidity In One Case Supports Vacating Already-Affirmed Final Judgment Of “Not Invalid” In Another Case: Where asserted claims invalidated under Sec. 101 by Fed. Cir. in action against T-Mobile, trial court granted Sprint’s FRCP 60(b) motion for relief from $30 MM judgment even though judgment had already been affirmed by Fed. Cir. and even though Sprint had not asserted Sec. 101 defense at trial. Prism Tech. LLC v. Sprint Spectrum LP, No. 8:12-CV-123 (D. Neb. Aug. 8, 2017), aff’d, Prism Tech. (Sprint) II (Fed. Cir. 02/01/19) (“a strong federal patent policy against enforcing an unexecuted judgment of patent liability at least where all of the following circumstances are present: the patent claims underlying that judgment have been held invalid by another decision having sufficient finality for this purpose; proceedings on direct review of the judgment have not yet been completed; and no agreement exists making portions of the judgment final”).
TIPS: