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Applying Collateral Estoppel in IPRs

The US Court of Appeals for the Federal Circuit considered whether a dependent claim invalidated by collateral estoppel also invalidates its parental independent claim. Google LLC v. Hammond Devel. Int’l, Inc., Case No. 21-2218 (Fed. Cir. Dec. 8, 2022) (Moore, C.J.; Chen, Stoll, JJ.)

The dispute began when Hammond Development sued Google, alleging that Google infringed several of Hammond’s patents on automated voice response systems. In response, Google filed multiple inter partes reviews (IPRs), one of which targeted Hammond’s ’483 patent. In that proceeding, the Patent Trial & Appeal Board (Board) held that all claims of the ’483 patent were obvious. Hammond did not appeal the decision in this IPR, which then became final, but only after Google filed an IPR against another of Hammond’s patents—the ’816 patent. The ’816 and ’483 patents are in the same family and share the same specification. In the later-filed IPR, the Board found claims 14 through 19 of the ’816 patent nonobvious and patentable. Google appealed.

Claim 14 is an independent claim and claim 18 depends from it. The parties agreed that the patentability of both claims rose and fell together. On appeal to the Federal Circuit, Google argued that claim 18 was invalid under the doctrine of collateral estoppel based on the prior art that rendered claim 18 of the ’483 patent invalid.

A party seeking to invoke collateral estoppel must show the following:

  • The issue is identical to one decided in the first action.
  • The issue was actually litigated in the first action.
  • Resolution of the issue was essential to a final judgment in the first action.
  • The party against whom collateral estoppel is being asserted had a full and fair opportunity to litigate the issue in the first action.

Because the parties had agreed that all but the first of the elements of collateral estoppel were met, collateral estoppel would apply if the issues of patentability were identical between the adjudicated and unadjudicated claims. The Federal Circuit found that slight differences in the claim language of the involved patents were immaterial because they related only to the number of application servers, and Google’s expert had credibly testified that distributing software applications across multiple servers was well known in the art and obvious. Hammond did not mount a substantive challenge to the expert evidence. As the Court noted, “collateral estoppel may apply even if the patent claims ‘use slightly different language to describe substantially the same invention,’ so long as ‘the differences between the unadjudicated patent claims and adjudicated patent claims do not materially alter the question of invalidity.’”

Google also attacked the validity of independent claim 14 of the ’816 patent. Although Google’s attack against claim 14 was based on a different combination of references (as compared to claim 18), the Federal Circuit apparently applied collateral estoppel to find claim 14 invalid as well, citing an agreement between the parties that “if claim 18 is unpatentable, then independent claim 14 is as well.”

Finally, Google argued that dependent [...]

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Don’t Stand for It—Collateral Estoppel and Standing

In a series of related cases, the US Court of Appeals for the Federal Circuit affirmed two decisions from the US District Court for the District of Delaware regarding collateral estoppel on standing issues and reversed a decision from the US District Court for the Northern District of California regarding the effect of license termination on standing. Uniloc 2017 LLC v. Google LLC, Case No. 21-1498 (Fed. Cir. Nov. 4, 2022) (Lourie, Dyk, Hughes, JJ.); Uniloc USA, Inc. v. Motorola Mobility LLC, Case No. 21-1555 & Uniloc LLC v. Blackboard Inc., Case No. 21-1795 (Fed. Cir. Nov. 4, 2022) (Lourie, Dyk, Hughes, JJ.)

These actions arose out of a series of patent suits filed by various Uniloc entities against tech companies in the Eastern District of Texas, the Western District of Texas and the District of Delaware involving several different patents. The Eastern District of Texas case against Google was transferred to the Northern District of California, and the Western District of Texas case against Blackboard was transferred to the District of Delaware. All three cases were dismissed for lack of standing due to a prior license agreement.

In 2014, a Uniloc entity entered into a Revenue Sharing and Note and Warrant Purchase Agreement with Fortress regarding a loan Fortress made to Uniloc. Under the terms of this agreement, if Uniloc defaulted, Fortress would receive a royalty-free license with the ability to sublicense. Uniloc defaulted in March 2017. In May 2018, Uniloc and Fortress entered into a Payoff and Termination Agreement, which explicitly terminated the patent licenses.

Uniloc sued several companies, including Motorola, Blackboard and Apple, in the period between the default and the Termination Agreement. In the Apple case, the district court found Uniloc lacked standing because it had granted a royalty-free license with the ability to sublicense to Fortress. The cases involving Motorola and Blackboard were subsequently dismissed for lack of standing. Uniloc appealed the decision in the Apple case but later settled with Apple. The settlement did not address vacatur of the district court decision. When Uniloc appealed the Motorola and Blackboard decisions, Motorola and Blackboard raised collateral estoppel. Given the virtually identical factual circumstances, the Federal Circuit held that collateral estoppel applied and that Uniloc could not relitigate the standing issues.

Unlike the cases involving Motorola and Blackboard, Uniloc filed the action against Google after it entered into the Termination Agreement with Fortress. At the district court, Google argued that Uniloc lacked standing because the Termination Agreement could not terminate the irrevocable license provision and that as a consequence of the grant under the Termination Agreement Uniloc lacked standing. Applying New York law (as the law governing the contract), the district court held that the Termination Agreement could not terminate the irrevocable license and therefore dismissed the case for lack of standing. The Federal Circuit, reviewing the issue of law de novo, held that “irrevocable” referred to whether Uniloc could unilaterally terminate an agreement, and not to whether the parties could mutually agree to terminate the [...]

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No Second Bite at the Apple: Dismissal under Duplicative-Litigation Doctrine

The US Court of Appeals for the Federal Circuit affirmed a district court’s dismissal of a second case between the same parties and asserting the same patent under the duplicative-litigation doctrine. Arendi S.A.R.L. v. LG Elecs. Inc., Case No. 2021-1967 (Fed. Cir. Sept. 7, 2022) (Prost, Chen, Stoll, JJ.)

Arendi sued LG and others for infringement of several patents. Pursuant to Delaware’s local rules requiring identification of accused products, Arendi identified hundreds of LG products as infringing four asserted claims of the patent relevant on appeal. For those accused products, Arendi provided one “exemplary” infringement claim chart for LG’s Rebel 4 phone. LG objected to Arendi, stating that it should have provided charts for all accused products.

As the litigation proceeded, the parties agreed on eight products as representative but, despite LG’s repeated objection, Arendi did not provide claim charts for any additional products during fact discovery. Instead, Arendi’s opening expert report on infringement provided claim charts for seven non-Rebel 4 representative products for the first time. LG moved to strike those portions of the expert report. The district court granted that motion. Arendi did not supplement its claim charts in response to the court’s order and instead filed another complaint in Delaware, thus creating a second concurrent case asserting the same patent against LG. After the district court granted LG’s motion to dismiss the second suit, Arendi appealed.

The Federal Circuit explained the standard for assertion of the duplicative-litigation doctrine, which “prevents plaintiffs from ‘maintain[ing] two separate actions involving the same subject matter at the same time in the same court … against the same defendant.’” Whether two cases involve the same subject matter depends on the extent of factual overlap of the asserted patents and accused products. There was no dispute that the same patent was asserted in both cases, but Arendi disputed that the cases involved the same accused products, citing the district court’s order striking its expert report as evidence that the non-Rebel 4 products were not at issue in the first case.

Like the district court, the Federal Circuit disagreed. The Court distinguished between accusing products and satisfying discovery obligations regarding those products. Arendi listed the non-Rebel 4 products in its disclosure of accused products, served interrogatories about them, received discovery on them and included non-Rebel 4 products in its expert report. Thus, even though Arendi “failed to fulfill its discovery obligations” as to those products, which made its expert report untimely, the non-Rebel 4 products were still accused, at issue and litigated in the first case. Thus, dismissal of the second case under the duplicative-litigation doctrine was not an error.

Practice Note: In a footnote, the Federal Circuit acknowledged the similarity of the duplicative-litigation doctrine to res judicata (claim preclusion). Although both doctrines involve an inquiry into whether claims in the second suit are repetitious, unlike res judicata, the duplicative-litigation doctrine does not require a final judgment in the first case.

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Willfulness Allegation, Failure to Appear Lead to Nondischargeable Judgment

The US Court of Appeals for the Sixth Circuit affirmed that a state court’s finding of “willful and malicious injury” in connection with the misappropriation of trade secrets entitled the plaintiff, in the defendant’s subsequent bankruptcy proceeding, to summary judgment of nondischargeability on collateral estoppel grounds. In re Hill, Case No. 19-5861 (6th Cir. May 4, 2020) (Donald, J.).


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Federal Circuit Leaves Controversial Noerr-Pennington Trial Court Decision Untouched

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.


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