Federal Circuit Leaves Controversial Noerr-Pennington Trial Court Decision Untouched

By and on January 8, 2020
Posted In Antitrust, Patents

The US Court of Appeals for the Federal Circuit denied counterclaim plaintiff’s petition for panel rehearing and rehearing en banc with respect to its decision that the counterclaim plaintiff was estopped from bringing antitrust counterclaims in a patent infringement suit. Intellectual Ventures 1, LLC v. Capital One Financial Corporation, Case No. 18-1367 (Fed. Cir. Dec. 11, 2019) (per curium). In its decision, the Federal Circuit determined that the counterclaim plaintiff could not invoke Tuttle v. Arlington County School Board (4th Cir. 1999) to save its counterclaim and left unaddressed the trial court’s decision with respect to the scope of the Noerr-Pennington doctrine, which was an alternative trial court basis for dismissal of Capital One’s counterclaim.

In its prior decision applying Fourth Circuit law, the Federal Circuit determined that Capital One, the counterclaim plaintiff, could not bring an antitrust counterclaim against Intellectual Ventures based on the doctrine of collateral estoppel. Intellectual Ventures 1, LLC v. Capital One Financial Corporation, (IP Update, Vol. 22, No. 10). In that decision, the Court reviewed Capital One’s appeal of the trial court’s denial of its counterclaims against a prior litigated case in which Capital One’s identical antitrust counterclaim had been denied by the trial court. In bringing its initial appeal, Capital One argued that the antitrust issues related to market definition and Intellectual Ventures’ market power in the initial case were different from the market definition and Intellectual Ventures’ market power issues in the instant case. In its prior decision, the Federal Circuit disagreed and held that the doctrine of collateral estoppel applied as (1) the issues in the instant case was identical to the issues in the prior case; (2) the issues were actually decided in the prior proceeding; (3) the issues were critical and necessary to the judgment in the prior proceeding; (4) the judgment was valid and final; and (5) Capital One had a full and fair opportunity to litigate the issues.

In its petition for rehearing, Capital One argued that the Federal Circuit erred by not fully considering the implications of the Tuttle case. Capital One argued that the Tuttle decision compelled a different result because the Fourth Circuit in Tuttle considered the issues in the second case not essential to the resolution of the first case and therefore collateral estoppel did not preclude the second case. Capital One argued that this same reasoning applied with respect to its counterclaims against Intellectual Ventures.

The Federal Circuit disagreed, finding Tuttle inapposite to the instant case. The Court explained that Tuttle involved an entirely different factual situation which compelled its result. In Tuttle, the Fourth Circuit was reviewing a policy of a county school board that limited participation in an education program in ways that were meant to promote racial diversity. That policy was challenged in litigation and as a result, the school board changed its policy. Tuttle involved a challenge to the revised policy. In reviewing the elements necessary for collateral estoppel, the Fourth Circuit found that no continuity in the issues decided in the initial litigation to the second litigation because the second litigation involved a “markedly different” policy.  It was that change in the school board policy that compelled the conclusion that collateral estoppel did not apply in Tuttle.

In this case, the Federal Circuit concluded that Capital One could not rely upon Tuttle because there was no change in any of the issues being litigated in Capital One’s antitrust counterclaims. In walking through the collateral estoppel elements again, the Federal Circuit determined that Capital One’s antitrust claims in the initial and instant cases were essentially the same; the trial courts’ market definition and Intellectual Ventures’ market power determinations in the initial and instant case were not separate and distinct (but rather were sufficiently intertwined that determination of either of those issues in the first case would be applicable and independently dispositive in the second case); and the market definition and impact issues were decided in the first case. As each of these issues individually are necessary the antitrust claims, the trial court in the instant case correctly considered each of the alternative grounds Capital One presented under the collateral estoppel doctrine in both the initial and instant cases. Therefore, under the framework of Tuttle and the collateral estoppel doctrine, the Federal Circuit determined Capital One could not resurrect its instant antitrust claim.

The Federal Circuit also considered Capital One’s additional argument that another portion of the trial court’s decision warranted the appellate review. Capital One argued that the trial court had “dangerously” misapplied the Noerr-Pennington doctrine far more broadly than permitted under the law. In general, the Noerr-Pennington doctrine exempts from antitrust scrutiny government petitioning activity, such as asserting patent rights in court proceedings. In the proceedings below, Capital One alleged that Intellectual Ventures had unlawfully acquired patent rights, which is not petitioning activity protected by the Noerr-Pennington doctrine. The trial court, however, decided that Intellectual Ventures’ acquisitions were protected. In the instant appeal, the Department of Justice and Federal Trade Commission filed a brief as amici curiae supporting Capital One’s arguments, stating that “if the Court reaches the Noerr-Pennington issue, it should clarify that Noerr-Pennington does not protect anticompetitive patent acquisitions from antitrust liability.”

The Federal Circuit, however, refused to address the Noerr-Pennington issue. The Court held that the determinations it made on collateral estoppel were sufficient to resolve the appeal. The Court therefore concluded that it “was not obliged to address a legal issue that is unnecessary to the decision of this case.”

Practice Note: The Federal Circuit’s explanation of why it did not address the Noerr-Pennington issue may be important for future cases that involve issues related to the acquisition of patents, as the Court clearly indicated it has not considered that issue in the context of this case.

Lisa A. PetersonLisa A. Peterson
Lisa A. Peterson focuses her practice on antitrust, regulatory and litigation matters. She assists clients across a variety of industries and has represented numerous clients in the health care, pharmaceutical, and biotechnology industries. Lisa advises clients on mergers and acquisitions, including obtaining clearance from the Federal Trade Commission (FTC) and Department of Justice (DOJ), as well as counsels clients on issues regarding antitrust compliance, pricing, and distribution. She also counsels clients on cartel prosecutions and defenses, including government investigations and the initiation and defense of civil class action litigation. Read Lisa Peterson's full bio.


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