April 17, 2017

Issue Preclusion: Patent Owner Does Not Get a Do Over to Assert the Claims Against Similar Products

By Bryan K. Wheelock, Principal

In Phil-Insul Corp. v. Airlite Plastics Co., [2016-1982] (April 17, 2017), the Federal Circuit affirmed summary judgment of non-infringement of U.S. Patent No. 5,428,933.  In prior litigation in which Phil-Insul asserted the patent against a different defendant, the district court construed the claims, granted summary judgment, and the Federal Circuit summarily affirmed.  In the present action, Airlite successfully argued to the district court that the accused products have the same design as the products found noninfringing in the prior litigation.  The district court agreed, and granted Airlite’s motion for summary judgment of noninfringement.

Airlite raised collarateral estoppel, and Phil-Insul countered that, (1) it did not have a full and fair opportunity to litigate the issues in the prior litigation because it now alleges infringement of Claim 2, rather than Claim 1; (2) the district court’s claim construction in the prior litigation was incorrect; and (3) the defense of collateral estoppel is not available in this case because the claim construction was not essential to the court’s noninfringement rulings.

In granting summary judgment, the district court found that all of the elements for collateral estoppel were satisfied for both the claim construction and noninfringement issues presented.  Specifically, the district court found that Phil-Insul had a “full and fair opportunity to litigate” the claim constructions, and that those constructions resulted in a finding of noninfringement.  The district court further found that the infringement issues were “essentially indistinguishable” from those in the prior litigation and that the accused Airlite products have the same design as the products in the prior litigation.

Collateral estoppel “precludes a plaintiff from relitigating identical issues by merely ‘switching adversaries’” and prevents a plaintiff from “asserting a claim that the plaintiff had previously litigated and lost against another defendant.”  The Federal Circuit said that regional circuit law applies to the application of collateral estoppel, but Federal Circuit law applies to aspects peculiar to patent law.  In determining whether a later infringement claim is the same as an earlier claim, in particular, the products must be “essentially the same.”  In other words, the differences between them are merely colorable or unrelated to the limitations in the claim of the patent.

Phil-Insul argued that the district court erred when it (1) gave collateral estoppel effect to a Rule 36 judgment; (2) relied on the oral argument transcript from the prior appeal; and (3) failed to construe claim 2.  We address each argument in turn.  The Federal Circuit found that a Rule 36 affirmance is a valid and final judgment, and can support claim or issue preclusion.  As to the reliance on oral argument transcript, the Federal Circuit found that district court did not err in relying on the transcript to confirm the scope of what was at issue in the prior litigation.  Finally, as to the need to construe claim 2, the Federal Circuit first noted that the parties selected the terms and the claims to be construed, so Phil-Insul complaint is without merit.  The Federal Circuit further noted that claim 2 contains the same terms “adjacent” and “dimension” terms that the court construed in the prior litigation, and that these terms were dispositive, and noting that it is well-established that claim terms are to be construed consistently throughout a patent, citing Rexnord Corp. v. Laitram Corp., 274 F.3d 1336, 1342 (Fed. Cir. 2001).