Fresh From the Bench: Precedential Patent Cases From the Federal Circuit - April 21, 2017
In Phil-Insul, collateral estoppel precludes IntegraSpec from relitigating claim construction in a second case involving a different defendant, different claims and “somewhat” different accused products. In Rembrandt v. Samsung, the Circuit reverses and remands the district court’s handling of the patent marking statute regarding the effect of a subsequent patent claim disclaimer and as to whether the statute applies on a claim-by-claim basis.
Thanks to my colleague Martin Garthwaite for his help with this week’s report.
Pete
Phil-Insul dba IntegraSpec v. Airlite Plastics, Fed. Cir. Case 2016-1982 (April 17, 2017)
The Circuit rules that collateral estoppel precludes IntegraSpec from relitigating claim construction previously litigated in a case with another defendant even though the previously-construed claim is not the one presently being litigated.
IntegraSpec’s patent is directed to insulating concrete forms that are used in building construction. In a prior case against Reward Wall involving very similar concrete forms, the district court granted summary judgment of noninfringement, which was affirmed by the Circuit under Rule 36 (without a written opinion). In the present case, Airlite successfully moved for summary judgment of noninfringement based upon collateral estoppel and the narrow claim construction rendered by the district court in Reward Wall.
The opinion first lays out the test for collateral estoppel under Eighth Circuit law:
(1) the party sought to be precluded must have been a party, or in privity with a party, to the original lawsuit; (2) the issue sought to be precluded must be the same; (3) the issue sought to be precluded must have been actually litigated; (4) the issue sought to be precluded must have been determined by a valid and final judgment; and (5) the determination in the prior action must have been essential to the prior judgment.
IntegraSpec argued on appeal that there was no final judgment since the appeal was decided under Rule 36 and that the determination in the prior action was not essential to the prior judgment. Specifically, IntegraSpec argued that the Circuit’s 2013 TecSec case created a rule that a Rule 36 affirmance cannot have preclusive effect because the court could have affirmed based on any number of grounds and not only claim construction. The Circuit rejects this argument and rules that the TecSec holding only applies where the appellate court affirmed, without explanation, the judgment of a trial court that determined two issues, either of which could independently support the result.
In the Reward Wall appeal, IntegraSpec raised issues as to the construction of two terms: “adjacent” and “substantially the same dimension.” The Rule 36 affirmance in Reward Wall necessarily meant that the Circuit found no error in either of the district court’s claim constructions. Therefore, the case is easily distinguished from TecSec.
The panel also dismisses IntegraSpec’s argument that claim 1 and not claim 2 was construed in Reward Wall, noting that the same disputed claim terms in this case—“adjacent” and “substantially the same dimension”—were at issue in both claims. It is well-established that claim terms are to be construed consistently throughout a patent, so the fact that a different claim is now being asserted is not relevant, as both the district court and the Circuit previously considered and rejected IntegraSpec’s arguments regarding the two terms.
Rembrandt Wireless Technologies v. Samsung Electronics, Fed. Cir. Case 2016-1729 (April 17, 2017)
The Circuit agrees with Rembrandt and the district court that the per-unit royalty award is appropriate as to Samsung’s infringing Bluetooth-compatible phone and television products, but is troubled by the court’s application of the patent marking statute. Rembrandt did not require its licensee to mark products covered by one claim of the patent, which Rembrandt subsequently disclaimed to attempt to avoid the damages limitation of 35 U.S.C. § 287. The Circuit reverses the ruling that such a disclaimer is an effective means to avoid § 287 but remands on the issue of whether the patent marking requirement is on a claim-by-claim or entire patent basis.
Samsung unsuccessfully argued for a broader interpretation of the claims that would include prior art it asserted in support of its obviousness argument. The panel also affirms a determination of what constitutes a reasonable royalty, first agreeing that it was correct to consider the difference between what Samsung paid Texas Instruments for two different Bluetooth chips, one including Bluetooth Enhanced Data Rate functionality such as claimed in the patents-in-suit, and without. The Circuit also agrees it was appropriate for the district court to consider a settlement between Rembrandt and BlackBerry involving the same patents.
As an NPE, Rembrandt would normally not have had a problem with § 287, which provides that if a patentee fails to mark patented products with the patent number, damages are limited to those incurred after an infringer receives notice of the infringement (such as upon the filing of the suit in the present case). However, patentees must require licensees to mark their products, and Rembrandt failed to require its licensee Zhone to do that here. Rembrandt subsequently disclaimed claim 40 and argued that the obligation to mark the product embodying claim 40 had therefore vanished. The district court relied on Circuit precedence holding that a disclaimed patent claim is treated as if it had never existed, and denied a motion by Samsung that damages should exclude pre-notice damages. The Circuit rejects that holding, noting that while a disclaimer may relinquish rights of the patent holder, “we have never held that the patent owner’s disclaimer relinquishes the rights of the public” and the provision requiring marking in order to collect pre-notice damages.
However, the Circuit has never ruled on whether the marking requirement applies on a “claim-by-claim” basis (as argued by Rembrandt) or a “patent-by-patent” basis (as argued by Samsung). Applying Rembrandt’s claim-by-claim approach would permit Rembrandt to recover pre-notice damages for infringement of claims other than claim 40, which is the only claim that Samsung alleges the unmarked Zhone product embodied. The case is remanded for the district court to consider whether claim-by-claim or patent-by-patent is the correct approach.