Collateral Estoppel Does Not Apply To Construction of Unrelated Patent: Federal Circuit | Practical Law

Collateral Estoppel Does Not Apply To Construction of Unrelated Patent: Federal Circuit | Practical Law

In e.Digital Corporation v. Futurewei Technologies, Inc., the US Court of Appeals for the Federal Circuit affirmed the US District Court for the Southern District of California's grant of a motion to apply the doctrine of collateral estoppel to the construction of a reexamined patent that included a limitation that was previously construed in an earlier litigation involving the patent, but reversed the court's application of collateral estoppel to the construction of the same limitation in an unrelated patent.

Collateral Estoppel Does Not Apply To Construction of Unrelated Patent: Federal Circuit

by Practical Law Intellectual Property & Technology
Published on 24 Nov 2014 • USA (National/Federal)
In e.Digital Corporation v. Futurewei Technologies, Inc., the US Court of Appeals for the Federal Circuit affirmed the US District Court for the Southern District of California's grant of a motion to apply the doctrine of collateral estoppel to the construction of a reexamined patent that included a limitation that was previously construed in an earlier litigation involving the patent, but reversed the court's application of collateral estoppel to the construction of the same limitation in an unrelated patent.
On November 19, 2014, in e.Digital Corporation v. Futurewei Technologies, Inc., the US Court of Appeals for the Federal Circuit affirmed in part and reversed in part the US District Court for the Southern District of California's grant of a motion to apply collateral estoppel to the construction of two asserted patents, US Patent Nos. 5,491,774 (the '774 patent) and 5,839,108 (the '108 patent), which disclose audio recording and playback devices (Nos. 2014-1019, -1242, -1243 (Fed. Cir. Nov. 19, 2014).
Before the California case, e.Digital Corp. asserted the '774 patent in the US District Court for the District of Colorado. The '774 patent claims include a limitation of a "flash memory module which operates as sole memory" for the device. The Colorado court construed the "sole memory" limitation as requiring the device to use only flash memory, and not RAM or any other memory system, and granted the parties' stipulation of non-infringment after claim construction.
Following the Colorado case, the USPTO cancelled the '774 patent claims in ex parte reexamination and reissued claim 33, which includes the "sole memory" limitation and new limitations. e.Digital then sued several companies in the Southern District of California claiming infringement of reissued claim 33, as well as two claims of the unrelated '108 patent, which discloses an improvement to the '774 patent but includes the "sole memory" limitation. The district court held that the Colorado court's claim construction applied to both patents and the parties' stipulated to a final judgment of non-infringement.
The Federal Circuit affirmed the district court's application of collateral estoppel to the '774 patent but reversed its application to the '108 patent. The court reasoned:
  • Collateral estoppel applies to the reexamined claim of the '774 patent because:
    • the reexamined claim recites the same "sole memory" limitation and presents an identical claim construction question; and
    • The USPTO did not address the "sole memory" limitation or the presence of RAM during reexamination.
  • Collateral estoppel does not apply to the '108 patent because:
    • the Colorado court's claim construction was based on the written description and prosecution history of the '774 patent, and since the '108 patent has a distinct written description and prosecution history, the claims of the '108 patent must be construed independently; and
    • though the '108 patent incorporates by reference the '774 patent as prior art, this does not change the fact that the patents are unrelated.
The Federal Circuit warned that its holding should not be construed to mean that collateral estoppel always applies to the construction of related patents. Rather, the court stated that all requirements for collateral estoppel must be met in each case, namely that:
  • The issue necessarily decided in the previous litigation is identical to the one sought to be relitigated.
  • The first proceeding ended with a final judgment on the merits.
  • The party against which collateral estoppel is asserted was a party or in privity with a party at the first proceeding.