Looking Ahead: Preclusive Effect of Prior Claim Construction

Shire v. Sandoz, M-893 (Fed. Cir. 2009)

In a recent order, the Federal Circuit agreed to hear an interlocutory appeal considering the issue preclusive effect of a prior claim construction decision. The patent in suit has been construed at least twice before, but the lower court here “refused to give preclusive effect” to either prior ruling. This will be an interesting case to follow.

2009-M893.2-6-09.1.PDF

32 thoughts on “Looking Ahead: Preclusive Effect of Prior Claim Construction

  1. “Claim preclusion — preventing the litigation of an issue — rests more on due process considerations, with a nod to judicial economy. ”

    Great, someone left the law library door unlocked again.

  2. I’m sorry, I mean “guys” – one master, many puppets…

    “Puppet number 1: I agree with Puppet number 2, ”

    …you get the idea.

  3. Zak, you are making the mistake of assuming that Mooney knows anything… Its like arguing with the crazy guy in the subway. Its never a good idea.

  4. Zak “if the patent holder felt that the Markman ruling was incorrect but settled rather than appealed, why should he be allowed to appeal the ruling in a district court by trying to convince a new district judge that the previous district court judge was in error?”

    The question is improper. The patent holder is not “appealing the ruling in a district court.” The patent holder is sueing another defendant.

    Settlement is generally encouraged in civil cases. The patentee has likely been damaged by the district court’s findings in the first case. Binding a patentee to a particular district court’s claim construction would only encourage further litigation and appeals. On the other hand, I think many jurisdictions require that “deference” be given to prior claim constructions by other district courts and this is probably enough to encourage certain patentees to fight to the death, rather than settle following an unfavorable Markman hearing.

  5. Zak: “Why would it be a good idea to protect the patent holder’s ability to bring an argument that could have been, but was not, presented in an earlier litigation regarding the same issues of claims construction?”

    Because doing so conserves judicial resources in cases where particular issues don’t matter between the parties doing the litigation.

    Should a party be allowed take up court time fighting about claim term B when a narrow construction of claim term A means that the party has already lost? I don’t think so.

    Alternatively, what if the patentee loses on ten separate issues but disagrees with district court on 8 of the 10? Should the patent holder be able to drag the defendant through an appeal on those 8 issues on the grounds that those issues might matter against other defendants? Again, I think not.

    I understand your desire to get claim constructions out there for the rest of the defendants, but that isn’t always the primary focus of litigants. I agree with Mooney that the rules ought to prevent lying, but not every position change consitutes lying.

  6. “Somebody please educate me here–how often does the Federal Circuit hear appeals from Markman orders? Does this generally fall under the collateral order doctrine?”

    Never, as far as I know. That’s why it’s not uncommon to see one party stipulate on the infringement issue after Markman, to make the case ready for appeal.

    One of the requirements of the collateral order doctrine is that the subject decision is to an important question that is effectively unreviewable on appeal from final judgment in the underlying action. Digital Equipment Corp. v. Desktop Direct, Inc., 114 S.Ct. 1992 (1994). That is clearly not the case with claim construction.

  7. Somebody please educate me here–how often does the Federal Circuit hear appeals from Markman orders? Does this generally fall under the collateral order doctrine? If interlocutory appeals from claim construction orders are the exception rather than the rule (I don’t know if that’s true), then there would be an important distinction between patentees who settle and those who go to trial on the merits.

  8. Malcolm,

    You wrote: “The trickier case is where the patentee lost its proposed construction, then the case settled. In that instance, it seems the patentee could argue that it “learned” that its previous construction was incorrect and argue for a different one, or it could make the same arguments again and try to convince the new judge that the previous judge blew it.”

    If I understand you correctly, and please correct me if I am wrong, you are worried about protecting the patent holder’s right to later raise an argument that could have been made, but was not made, concerning the proper construction of the claims.

    Why would it be a good idea to protect the patent holder’s ability to bring an argument that could have been, but was not, presented in an earlier litigation regarding the same issues of claims construction?

    Additionally, if the patent holder felt that the Markman ruling was incorrect but settled rather than appealed, why should he be allowed to appeal the ruling in a district court by trying to convince a new district judge that the previous district court judge was in error? Is not the proper place for such an argument before the CAFC? Having failed to appeal the Markman ruling, hasn’t the patent holder forfeited his right to challenge the correctness of the ruling?

  9. smashmouth: “So you generally would not distinguish between cases that settled and cases that went to trial, insofar as the patentee was concerned, if I read you correctly.”

    Yes, generally, but especially where a Markman hearing was held and the patentee’s position prevailed. The patentee should be stuck. The trickier case is where the patentee lost its proposed construction, then the case settled. In that instance, it seems the patentee could argue that it “learned” that its previous construction was incorrect and argue for a different one, or it could make the same arguments again and try to convince the new judge that the previous judge blew it.

  10. MM-
    I remember the distinction between issue preclusion (collateral estoppel) and claim preclusion (res judicata), but thanks for the reminder. I was thinking about issue preclusion above and should have made that clear.

    So you generally would not distinguish between cases that settled and cases that went to trial, insofar as the patentee was concerned, if I read you correctly. I suspect you’re right, but I’m looking forward to reading the briefs in this case to see if I’m overlooking contrary arguments.

  11. Mix this issue with the now *mandatory* post trial reexamination of the patent – denovo review at CAFC – USPTO taking its own denovo stand on the claims in a reexam – you have got yourself a patent system that only a patent attorney on the billable hour could love. Not an industrial policy that is going to encourage risk/job creation and get this economy back on it’s feet. President hope and change where are you?

  12. Zak “I would think that a a patentee who settles an earlier infringement case after a Markman ruling has issued is precluded from relitigating claim-constructions issues determined in the prior case.”

    It’s not that simple, as I noted in my comments. The patentee can certainly re-litigate the issues. But the patentee should not be allowed to take positions that are inconsistent with those it took previously.

  13. smashmouth, remember there is a key distinction between so-called “claim preclusion” (don’t confuse with patent “claims”!) and “issue preclusion.”

    Whether a case is settled or goes to trial or is appealed does not change the FACT that a party, e.g., admitted on the record that it engaged in an activity, or admitted on the record that a term meant “blah blah” and did not cover “frew frew.” Collateral estoppel serves to keep parties from taking inconsistent positions (i.e., lying) in various disputes arising from the same nexus of facts. Claim preclusion — preventing the litigation of an issue — rests more on due process considerations, with a nod to judicial economy.

  14. BigGuy,

    You are right. The issue is “whether a patentee who settles an earlier infringement case after a Markman ruling has issued is precluded under the doctrine of collateral estoppel from relitigating claim-constructions issues determined in the prior case.”

    As I stated previously, “If a patent holder is barred from expanding his claim scope in a re-issue or reexamination proceeding initiated more than 2 years after grant of the patent, then why should the patent holder be allowed to expand the scope of the claims in subsequent litigation after the scope of the claims has been adjudicated.” Accordingly, I would think that a a patentee who settles an earlier infringement case after a Markman ruling has issued is precluded from relitigating claim-constructions issues determined in the prior case. Regarldess of the preclusive effect of the prior Markman ruling, it will always have to be determined if the accused device of a new defendant is within the scope of the claims of the asserted patent except in the rare cases were the device of the new defendant is the same as the device of the previous defendant. Thus, even with collateral estoppel that patent holder will still have to litigate whether the new accused device is within the scope of the claims as previously construed by a court.

    But then I primarily prosecute patents, so what do I know about litigation.

  15. Just peeked at the order. The issue here is whether the patentee (Sandoz) should be precluded from re-arguing claim construction in light of the settlement of a previous case, following a Markman decision, against a different defendant.

    I think it’s fair to hold the patentee to its previous positions. If there are new claim construction issues raised by the defendant, then obviously the patentee should have the chance to respond. But if the patentee in the prior case said “term X means blah blah” then the patentee shouldn’t be allowed to argue now that “term X means frew frew” (unless the law re claim construction has changed dramatically in the interim). The patentee should be stuck with “blah blah”, for the same reasons the patentee is estopped from switching claim interpretations in the prosecution versus litigation context.

    Note that this doesn’t meant that the district court is obliged to accept the patentee’s construction as the CORRECT construction. But if the defendant doesn’t object to the patentee’s previous proposed construction, then that’s the construction that the court should adopt.

  16. Zak said:
    “There seems to be a consensus forming that a new accused infringer / defendant should be allowed to argue against and not be bound by a previous claim construction render by a district court.”

    Shouldn’t there be a distinction between the hypo discussed earlier in this thread, where a district court issues a Markman order and the parties settle, and a case where the district court issues a Markman order, and the parties proceed to trial and verdict? In the latter case, it would seem the issue was actually litigated and the argument for collateral estoppel is much stronger. In that case, why should patent claim construction be any different from any issue of fact in a run-of-the-mill civil case? (And noting that claim construction is a legal question would only tend to strengthen the argument for collateral estoppel after a full trial on the merits, with the possibility of direct appeal if necessary, IMHO.)

  17. “There seems to be a consensus forming that a new accused infringer / defendant should be allowed to argue against and not be bound by a previous claim construction render by a district court.”

    That’s nice. However, I believe that is already the law. And not an issue in this case.

  18. “But no way should a DEFENDANT be bound by a prior court’s construction when the defendant was not previously present.”

    “Public policy is generally best served by continuing to allow the validity and claim scope of a patent to be challenged by new defendants.”

    “On the other hand, the patent holder shouldn’t be allowed to rely very much on previous claim constructions just because some defendant caved.”

    “Today’s accused infringer, unaffiliated to yesterday’s accused infringer, ought not to be precluded from inviting the court to take a different view about the construction of the claim.”

    There seems to be a consensus forming that a new accused infringer / defendant should be allowed to argue against and not be bound by a previous claim construction render by a district court.

  19. Mark, in the relevant “No No Words” thread I posted a link to the Boehringer v Amirall case in England, and the postings which then followed provide comment on it.

  20. I agree that the courts should not be bound by prior courts’ claim construction.

    MaxDrei:

    This is off the topic, but can you please explain what European pharmaceutical cases you were referring to when you argued against the use of “surprisingly, it has been found that” language? Thanks a lot!

  21. Whatever the caselaw might decree, it just seems like *** common sense *** that a patent owner ought to be “precluded” from arguing in today’s case that his claim means something different from what he said it meant in yesterday’s case, whereas today’s accused infringer, unaffiliated to yesterday’s accused infringer, ought not to be precluded from inviting the court to take a different view about the construction of the claim. Mind you, if SCOTUS or the CAFC had already said yesterday what the claim means, I don’t see how the District Court today is free to take a different line, regardless how persuasive is the line today’s accused infringer is pushing.

  22. Just Visiting,

    You maybe right about what I have proposed doing little to quickly end or stop future infringement litigation against new defendants. In any patent infringement action, however, it must be determined if the accused device is within the scope of the claims of the asserted patent. Except for the rare cases of when a new defendant is selling the same accused device as the previous infringer, I do not see how the normal preclusion rules would prevent this issue from being litigated against a new defendant. My practice, however, focuses on patent prosecution rather than litigation. So there may be something about the preclusion rules I forgotten since law school that would quickly end or stop future infringement litigation against new defendants. I would appreciate it if someone could tell me what that could be.

  23. Anonymous,

    Let me summarize my points then.

    1) It appears to me that regardless of preclusions rules, it will always have to be determined if the accused device of a new defendant is within the scope of the claims of the asserted patent except in the rare cases were the device of the new defendant is the same as the device of the previous defendant.

    2) Public policy is generally best served by continuing to allow the validity and claim scope of a patent to be challenged by new defendants.

    3) If a patent holder is barred from expanding his claim scope in a re-issue or reexamination proceeding initiated more than 2 years after grant of the patent, then why should the patent holder be allowed to expand the scope of the claims in subsequent litigation after the scope of the claims has been adjudicated.

  24. “From the stand point of the could be infringer attempting to avoid infringement, he should be allowed to rely on previous claim construction holding that the claims do not cover his attempted design around”

    I think the normal preclusion rules should be used. Your proposed rule would require parties to fight an issue to an ultimate conclusion even when the issue is 1) one of a plurality of other losing issues, or 2) irrelevant to winning the case. Those outcomes would be unfair to the patent holder.

    On the other hand, the patent holder shouldn’t be allowed to rely very much on previous claim constructions just because some defendant caved.

  25. This is actually an interesting issue that affects the patent holder and the could be infringer. From the stand point of the could be infringer attempting to avoid infringement, he should be allowed to rely on previous claim construction holding that the claims do not cover his attempted design around. For instance, if a court ruled that element X in a claimed invention means the presence of A+B and that the presence of A+C is not the same as element X (i.e. B != C) then the could be infringer should not have to face litigation for selling a device in which element X was replaced with A+C.

    When, however, the could be infringer attempts to design around by replacing element X with A+D then the issue becomes a little more grey. A determination will have to be made as to whether D is more like B or C. Such a determination should be permissible as the issue what is D has not yet been determined by a court. If D is just another C (i.e. D = C) then could be infringer should be able to rely on the previous claim construction ruling in support on non-infringement. On the other hand, if D is variant of B (i.e. D = B) then patent holder should be able to rely on the previous claim construction ruling in support of infringement. However, this should not bar the could be infringer from arguing that construction of element X should exclude A+D or that the previous construction of X as A+B is erroneous. After all, public policy is generally best served by continuing to allow the validity and scope of a patent to be challenged.

    Along that line of reasoning, the public policy would be disserved if were allowed to argue for a broader construction of element X then previously allowed. The expansion of claim scope is not allowed in re-examination or reissue proceedings initiated 2 years after the grant of the patent. This bar should also apply to the judicial construction of a patent’s claims. Accordingly, if equating A+D to A+B, in the above example would broaden the scope of the element X, then the patent holder should be estopped from arguing in a subsequent infringement action that the could be infringer’s A+D design around infringes the patent. This would often by the case when A+B is really A+(b1+b2) and A+D is A+(b1). This estoppel, however, should not apply if A+D is within the scope of the previously adjudicated construction of element X. For instance, if A+D can be equated to A+(b1+b2) or A+(b1+b2+b3) then patent holder should be allowed to assert an infringement claim against the could be infringer. Of course, in keeping with public policy, the could be infringer should still be allowed to argue that element X should not be construed as A+B or A+D and that the patent is invalid.

  26. Mooney on February 9 at 1:42 PM on the Fed. Circ. dispositions topic:

    “Could it be that district court judges are more often correct than not? ;)”

    Mooney on February 11 at 12:16 AM on the preclusive effect of claim construction:

    “I’ve seen enough district court claim constructions that were less than half-baked”

    I guess that district court judges are more often correct than not, but when they’re incorrect, they’re less than half baked.

    Great analysis.

  27. Blonder Tongue–defensive non-mutual collateral estoppel
    Parklane Hosiery–offensive non-mutual collateral estoppel

    Generally, offensive is disfavored, and its applicability more restricted.

  28. “I’ve seen enough district court claim constructions that were less than half-baked”

    LOL

    “I can never keep them straight”

    ROFLMAO

  29. “patent in suit has been construed at least twice before, but the lower court here “refused to give preclusive effect” to either prior ruling.”

    Good for the lower court here. Obviously the patentee should not be allowed to change its previous positions with respect to its interpretation of the claims. But no way should a DEFENDANT be bound by a prior court’s construction when the defendant was not previously present.

    I’ve seen enough district court claim constructions that were less than half-baked lead to settlements behind the patentee and Party A. But to allow the patentee to take that judge’s bogus construction and go after Party B and Party C is, well, unconstitutional. Parklane Hosiery? Blonder Tongue? I can never keep them straight.

  30. Aside from any preclusive effect of a construction ruling, I as a party would be much more concerned about potential estoppel effect of arguments in favor of various constructions. Such arguments could prove to have far more impact IMHO.

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