As a general proposition, a patent owner need not sue all infringers at the same time; different infringers may be pursued individually (or in groups) in multiple suits. However, the U. S. Court of Appeals for the Federal Circuit recently explained that judicial doctrines such as claim preclusion can prevent a patent owner from suing separate infringers successively. Transclean Corp. v. Jiffy Lube International, Inc. et al., Case No. 06-1077 (Fed. Cir., Jan. 18, 2007) (Plager, S. J.).
In prior litigation, Transclean, the exclusive licensee of a patent directed to an automatic transmission fluid changing machine, asserted its patent against Bridgewood, which manufactured and sold infringing machines. In that case, Transclean won a motion for summary judgment of infringement. Transclean then brought infringement actions against Jiffy Lube and about 30 other fast-lube businesses that had bought infringing machines from Bridgewood. Apparently, Bridgewood failed to pay the judgment against it.
Transclean filed a motion for summary judgment against the defendants in the new litigation, asserting that Jiffy Lube was precluded by the doctrine of issue preclusion from asserting a non-infringement defense against Transclean because the Bridgewood litigation concluded with a judgment of infringement by the accused machines. The trial court denied Transclean’s motion.
Jiffy Lube filed its own motion for summary judgment, asserting that Transclean was precluded under the doctrine of claim preclusion from suing Jiffy Lube. In ruling for Jiffy Lube, the court held that the elements of claim preclusion were satisfied: the Bridgewood litigation ended with a final decision on the merits, the district court had proper jurisdiction, the litigation in both cases involved the same cause of action and Jiffy Lube was in privity with Bridgewood. Moreover, Transclean conceded that, during the Bridgewood litigation, it was aware that Jiffy Lube had bought and was using Bridgewood’s infringing machines.
On appeal the Federal Circuit held that the plaintiff may not pursue litigation against users of an infringing product where the plaintiff had already won an infringement suit against the manufacturer of the allegedly infringing product, and (in the earlier suit) had argued that the manufacturer and its users were in privity for the purposes of issue preclusion.
The Federal Circuit focused on the third and fourth elements of claim preclusion. As to the third element, Transclean argued that litigation against infringing users involves a different cause of action than litigation against an infringing manufacturer and seller. The Federal Circuit rejected this distinction because both lawsuits involved the same patent and the same infringing machines.
As to the fourth element, Transclean argued that the users of the infringing machine were not in privity with the infringing manufacturer and seller. The Federal Circuit noted that typically a manufacturer or seller of a product who is sued for patent infringement is not in privity with a party who purchases and uses the product. However, the Court did not reach the question of privity on its merit, instead it found that Transclean was estopped from even making the argument because (in the earlier suit) Transclean argued in its motion for issue preclusion that they were in privity.
Practice Note: The claim preclusion/issue preclusion holdings in this case are based on the unusual facts. Typically a patent owner is able to pursue separate claims against manufacturers, sellers and users of allegedly infringing devices until it receives full recovery for the infringement somewhere along the distribution channel.
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