United States: What A Rational Jury "Could Have Found" Does Not Trigger Collateral Estoppel To Bar New Litigation

United Access Tech., LLC v. CenturyTel Broadband Servs., LLC, No. 2014-1347, 2015 U.S. App. LEXIS 2204 (Fed. Cir. Feb. 12, 2015) (Bryson, J.). Click Here for a copy of the opinion.

In 2002, United's predecessor alleged that EarthLink's internet service, based on its "industry standard" Asymmetrical Digital Subscriber Line ("ADSL") technology, infringed three patents. EarthLink argued that the ADSL system did not have a "telephone device" as required by United's patent claims, and ADSL technology did not infringe. The jury returned a general verdict of non-infringement but did not indicate its reasons. The district court denied a motion for JMOL, holding that the verdict "could be upheld" on either: 1) the jury's conclusion that the plaintiff "failed to carry its burden" of showing infringement, or 2) the jury's conclusion that "Earthlink did not infringe" because its system did not include an element of the claims - a telephone.

In 2011, United sued CenturyTel and Qwest ("CenturyTel"), alleging infringement of the same patents and claims as previously asserted against EarthLink. The district court dismissed the action on collateral estoppel grounds. The court concluded that the JMOL ruling in EarthLink established two grounds for noninfringement.  Under Third Circuit law, "independently sufficient alternative findings [are] given preclusive effect." Accordingly, even though CenturyTel's services included telephone devices, the alternative basis -- failure to show that industry standard ADSL infringes -- was sufficient to bar a new litigation. 

The Federal Circuit reversed. A party asserting collateral estoppel must establish that: 1) "the previous determination was necessary to the decision; 2) the identical issue was previously litigated; 3) the issue was actually decided in a decision that was final, valid, and on the merits; and 4) the party being precluded from relitigating the issue was adequately represented in the previous action."  The main issue on appeal was whether the EarthLink litigation actually decided that standard ADSL does not infringe United's patents. The Federal Circuit's answer was no.

According to the Federal Circuit, the district court's JMOL ruling in EarthLink "was simply a decision that a rational jury could reasonably have found non-infringement based on either of two theories." This was not a decision that the jury had actually decided in favor of EarthLink on both grounds. Collateral estoppel "depends on the second court's concluding that the issue in dispute was clearly resolved by the first tribunal," which was not the case here. "[T]he trial court's decision on JMOL was simply that the jury could reasonably have concluded that the standard ADSL system did not infringe, not that the jury necessarily did so conclude." 

Furthermore, the Supreme Court has previously held that "if the jury could have based its verdict on a ground other than the one in dispute, collateral estoppel would not bar litigation of the disputed issue," which was the case here.  Ultimately, the Federal Circuit concluded that EarthLink "did not necessarily decide that the standard ADSL technology did not infringe the asserted claims." Thus, "there is no decision in the first case to which collateral estoppel can be applied to this one."

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Helferich Patent Licensing, LLC v. The New York Times Company,  No. 2014-1196, -1197, -1198, -1199, -1200, 2015 U.S. App. LEXIS 2047 (Fed. Cir. Feb. 10, 2015) (authorizing sales to persons practicing "handset claims" does not exhaust patentee's rights to enforce "content claims" against different persons).  Click Here for a copy of the opinion.

Fenner Investments, Ltd. V. CellCo Partnership,  No. 2013-1640, 2015 U.S. App. LEXIS 2203 (Fed. Cir. Feb. 12, 2015) (affirming claim interpretation that "personal identification number" and "billing code" are different and the granting summary judgment of non-infringement).  Click Here for a copy of the opinion.

Severain Software LLC v. Victoria's Secret Direct Brand Management, LLC, Avon Products, Inc.,  No. 2012-1649, -1650, 2015 U.S. App. LEXIS 2202 (Fed. Cir. Feb. 12, 2015) (reversing district court holding that issue preclusion applies to the invalidity determination of the asserted claims).  Click Here for a copy of the opinion.

Pacing Tech., LLC v. Garmin Int'l, Inc., No. 2014-1396, 2015 U.S. App. LEXIS 2393 (Fed. Cir. Feb. 18, 2015) (preamble and patentee's statements of disavowal limited the claims and therefore summary judgment on non-infringement was correctly granted). Click Here for a copy of the opinion.

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