Multiple Non-infringement Positions and General Jury Verdict Doom Collateral Estoppel Request in Second Suit: Fed. Cir. | Practical Law

Multiple Non-infringement Positions and General Jury Verdict Doom Collateral Estoppel Request in Second Suit: Fed. Cir. | Practical Law

In United Access Technologies, LLC v. CenturyTel Broadband Services LLC, the US Court of Appeals for the Federal Circuit reversed the district court's dismissal of the action on collateral estoppel grounds. The Federal Circuit held that because two theories supported a general jury verdict of non-infringement in a prior lawsuit, collateral estoppel did not preclude the patent owner's later lawsuit against new defendants who sold accused products similar to those in the earlier lawsuit.

Multiple Non-infringement Positions and General Jury Verdict Doom Collateral Estoppel Request in Second Suit: Fed. Cir.

by Practical Law Intellectual Property & Technology
Published on 13 Feb 2015 • USA (National/Federal)
In United Access Technologies, LLC v. CenturyTel Broadband Services LLC, the US Court of Appeals for the Federal Circuit reversed the district court's dismissal of the action on collateral estoppel grounds. The Federal Circuit held that because two theories supported a general jury verdict of non-infringement in a prior lawsuit, collateral estoppel did not preclude the patent owner's later lawsuit against new defendants who sold accused products similar to those in the earlier lawsuit.
On February 12, 2015, the US Court of Appeals for the Federal Circuit issued an opinion in United Access Technologies LLC v. CenturyTel Broadband Services LLC, reversing the US District Court for the District of Delaware's dismissal of the patent infringement action (No. 2014-1347, (Fed. Cir. Feb 12, 2015)). The district court concluded the suit was precluded by collateral estoppel based on a non-infringement verdict in a prior action between Inline Connection Corporation, United Access Technologies LLC's predecessor in interest, and a third-party, EarthLink, Inc. The Federal Circuit reversed this ruling, finding that collateral estoppel was not available because the EarthLink jury could have based its general verdict on either of two non-infringement grounds.
The Federal Circuit first summarized relevant facts concerning the EarthLink lawsuit, explaining that:
  • The asserted patents cover systems for using a landline telephone connection for both voice communications and data transmissions.
  • Inline brought suit against EarthLink for direct patent infringement, alleging infringement by EarthLink's internet connection service using Asymmetrical Digital Subscriber Line (ADSL) technology. EarthLink argued it did not infringe because:
    • the ADSL technology itself did not infringe Inline's patents; and
    • the accused ADSL system did not include a telephone as required by the asserted claims.
  • The jury returned a general verdict of non-infringement. The verdict did not indicate what non-infringement position the jury adopted in reaching its verdict.
  • The district court denied Inline's motion for judgment as a matter of law (JMOL), finding that either non-infringement theory supported the jury's verdict.
In 2011, United Access, Inline's successor in interest, filed suit against CenturyTel Broadband Services LLC and Qwest Corp. (collectively CenturyTel), alleging infringement of the same patent claims it asserted in the EarthLink action. CenturyTel moved for dismissal based on collateral estoppel, claiming the EarthLink jury verdict established as a matter of law that the accused ADSL technology does not infringe United Access's patents. The district court agreed and dismissed the action on collateral estoppel grounds.
On appeal, United Access claimed that the district court misapplied the collateral estoppel doctrine because:
  • The EarthLink JMOL order only established that the jury could have reached its verdict based on either non-infringement position.
  • The JMOL order did not conclude that the jury necessarily found no infringement by the ADSL technology itself.
The Federal Circuit agreed with United Access's arguments, noting that the case turned on the third of the following four requirements for applying the collateral estoppel doctrine, which are that:
  • The previous determination was necessary to the decision.
  • The identical issue was previously litigated.
  • The issue was actually decided in a final, valid decision on the merits.
  • The party being precluded from relitigating the issue was adequately represented in the previous action.
The Federal Circuit found that the issue in dispute (whether the ADSL technology infringes) was not actually decided in the EarthLink case, explaining that:
  • A jury verdict can only give rise to collateral estoppel if it is clear that the jury necessarily decided a particular issue in the course of reaching its verdict. If there are several possible grounds for a jury's general verdict and the record does not indicate which ground the jury adopted, collateral estoppel will not attach to any of the possible theories (see Novartis Pharm. Corp. v. Abbott Labs., 375 F.3d 1328 (Fed. Cir. 2004)).
  • There is no evidence that the jury actually considered both theories and regarded each as independently sufficient to justify the verdict. The EarthLink court did not conclude that the jury found in favor of EarthLink on both non-infringement arguments. Rather, it held that the jury could have based its verdict on the other non-infringement defense (that the accused system lacks a telephone).
Accordingly, the Federal Circuit held it was error for the district court to apply collateral estoppel to the EarthLink jury verdict because the jury did not necessarily decide whether the ADSL technology infringes.