SpeedTrack v. Office Depot (Fed. Cir. 2015)
In a civil procedure focused decision, the Federal Circuit has affirmed that SpeedTrack’s infringement action is precluded under an expanded version of the “Kessler doctrine” originally created by the Supreme Court in Kessler v. Eldred, 206 U.S. 285 (1907). As interpreted by the Federal Circuit, Kessler generally operates to preclude “a patent infringement action against a customer of a seller who has previously prevailed against the patentee because of invalidity or noninfringement of the patent.” Quoting MGA, Inc. v. Gen. Motors Corp., 827 F.2d 729, 734 (Fed. Cir. 1987). In Brain Life, the Federal Circuit affirmed that the Kessler Doctrine extends beyond ordinary issue preclusion — particularly holding that, since a first defendant won final judgment of non-infringement of some claims in the asserted patent, those non-infringing products are now immune from all claims of the patent.
The allegedly infringing Information Access Platform software in this case originated at Endeca Tech but is now owned by Oracle. The patentee sued a number of customers for infringement. In the first case to be decided on the merits, the district court judge held that Walmart’s implementation of the IAP did not infringe the asserted claims (affirmed on appeal). The question is whether this second case should not be cut-short based upon that final judgment.
In its decision, the Federal Circuit “reaffirmed the continued vitality” of the Kessler doctrine – and seemingly expanded the doctrine to find that a win by one customer on at least one claim applies to protect all customers against all claims of the asserted patent. “Given these circumstances, the judgment in the Walmart case ‘settled finally and everywhere’ that the IAP software does not infringe the [asserted] Patent.” (quoting Kessler). The court also held (extending Kessler), that the doctrine is available to be invoked by a customer even if the manufacture has not intervened:
We conclude that the rationale underlying the Kessler doctrine supports permitting customers to assert it as a defense to infringement claims. Although the Supreme Court in Kessler focused exclusively on the manufacturer’s rights, and expressed no opinion on whether a customer could assert the defense, it recognized the fact that the manufacturer and customer’s interests are intertwined, remarking that ‘[n]o one wishes to buy anything if with it he must buy a law suit.’ Allowing customers to assert a Kessler defense is consistent with the Court’s goal of protecting the manufacturer’s right to sell an exonerated product free from interference or restraint. A manufacturer cannot sell freely if it has no customers who can buy freely. . . Because it is a right that attaches to the noninfringing product, and it is a right designed to protect the unencumbered sale of that product, SpeedTrack’s argument that the Kessler doctrine can only be invoked by a manufacturer must fail.