United States: Later Induced Infringement Claims May Not Be Barred By Earlier Direct Infringement Claims

In Inguran, LLC V. ABS Global, Inc., No. 22-1385 (Fed. Cir. July 5, 2023), the Federal Circuit reversed a district court's dismissal of Inguran's induced infringement claims based on res judicata and it's ruling on the scope of an ongoing royalty.

In 2014, ABS filed an antitrust lawsuit ("ABS I") against Inguran, dba STGenetics, ("ST"). ST filed counterclaims alleging direct infringement of U.S. Patent No. 8,206,987 ("the '987 patent"). ABS stipulated to direct infringement and an ongoing royalty was ordered after trial. The district counter later clarified the royalty order. In 2017, ST filed a second patent infringement lawsuit ("ABS II"), which resulted in another ongoing royalty. In 2020, ST filed yet another patent infringement lawsuit ("ABS III"), alleging induced infringement of the '987 patent and infringement of two other related patents. ABS moved to dismiss the induced infringement claims, arguing that they were precluded by the district court's judgment in ABS I. The district court agreed, dismissing the induced infringement claims and holding that the ongoing royalty from ABS I could be reasonably interpreted to cover the third-party conduct identified in ABS III. ST appealed the district court's determination regarding the finding of claim preclusion and the scope of the ongoing royalty.

On appeal, the Federal Circuit determined that the induced infringement claims in ABS III were not precluded because they were separate causes of action and were not based on the same transactional facts as the direct infringement claims presented in ABS I. In particular, the Court found no support in the record that ST had asserted or cited induced infringement against ABS in ABS I and that the induced-infringement claims centered on the direct infringement of third parties occurring after the ABS I trial. The Court also found that the plain language of the ongoing royalty and clarification in ABS I were limited to direct infringement by ABS and could not reasonably be interpreted to cover actions by third parties in an induced infringement claim.

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