March 7, 2017

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

By Bryan K. Wheelock, Principal

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 are ineligible under 35 U.S.C. § 101, and barred 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.  The parties only disputed the finality requirement, however, for which the Fourth Circuit requires a “final and valid” judgment.  Intellectual Ventures argued 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 not see a 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.