by Dennis Crouch
VirnetX Inc. v. Apple Inc., (Fed. Cir. December 10, 2018)
The PTAB sided with Apple in the underlying IPR proceedings, finding that VirnetX patent claims were obvious. U.S. Patent No. 8,504,696 (claims 1–11, 14–25, and 28–30). On appeal, the Federal Circuit has refused to consider the patentability merits — rather holding that the appeal is barred by issue preclusion (collateral estoppel).
Issue preclusion involves two separate legal actions — and operates to bar a party from relitigating an issue of law or fact already decided in a separate case involving the same party. Elements:
- A prior action presents an identical issue to an issue in the later action;
- The prior action actually litigated and adjudged that issue;
- The judgment in that prior action necessarily required determination of the identical issue; and
- the prior action featured full representation of the estopped party.
The case here started in December 2015 when Apple filed two separate IPR challenges to VirnetX’s ‘696 patent — both relied upon a 1998 Request for Comments from the Internet Engineering Task Force (IETF) – RFC 2401 – as a key prior art reference. The PTAB followed Apple’s suggestions and determined that RFC 2401 was a prior art printed publication that rendered the claims unpatentable (when combined with other references).
Meanwhile, the RFC 2401 had already been used by the PTAB to cancel several other VirnetX patents. In March 2018, the Federal Circuit affirmed those decisions in a R.36 No-Opinion Judgment.
Often, a R.36 Judgment (without opinion) cannot be used for issue preclusion purposes because it is impossible to tell whether the issue-at-issue was the reason for the judgment. However, the court has ruled that “a Rule 36 judgment may serve as a basis for collateral estoppel so long as … the resolution of the issue was essential or
necessary to the Rule 36 judgment.” Citing Phil-Insul Corp. v. Airlite Plastics Co., 854 F.3d 1344 (Fed. Cir. 2017).
Here, collateral estoppel works since – in the prior appeal – each ground of unpatentability relied upon RFC 2401. Thus, the court’s affirmance required an implicit rejection of VirnetX’s argument that the reference was not prior art. The court explains:
Indeed, in three of the seven final written decisions appealed in VirnetX I, the only issue raised was whether RFC 2401 was a printed publication. Accordingly, by affirming all
seven of the Board’s decisions, this court in VirnetX I necessarily found that RFC 2401 was a printed publication.
I’ll note here that the court particularly focused on this issue at oral arguments in the second case and the litigating attorney was forced to admit that the issue was necessary to the decision.
Other Federal Circuit decisions make clear that a R.36 judgment cannot be used for issue preclusion when there are alternative explanations for the judgment.
= = = =
As an interesting inside-issue. Oral arguments in this case were heard in September 2018. On November 28, 2018, VirnetX filed a motion with the Federal Circuit asking the appeal to be dismissed — expressly admitting that the Rule 36 judgment had collateral estoppel effect. By then, the court had already written its almost-final-draft opinion and so denied the motion. In this circumstance, is the decision only advisory (and thus not precedential?)
In 3.2, 2.1.1, 2.2.1.1.1, and every post under 2.2.1.1.1 you were clearly writing about the result in this case – if only because you chose to reply to posts that were specifically about the result in this case.
It’s odd to be agreeing with Malcolm, but your attempts to fluidly switch between discussing this particular result versus “the larger issue here” are transparently disingenuous.
“…and (with no comment from the reviewing court), numoristy IS key. See Jonathan above at 3:23 pm.”
Wrong.
Issue 1: invalid over A + B
Issue 2: invalid over A + C
Appeal: Rule 36.
Collaterally estopped: A is not prior art.
“Clark v. Bear Stearns & Co., Inc., 966 F. 2d 1318, 1321 (9th Cir. 1992) (“We must decide whether a rational factfinder could have reached a conclusion based upon an issue other than that which the defendant seeks to foreclose. See Ashe v. Swenson, 397 U.S. 436, 444 (1970). When the issue for which preclusion is sought is the only rational one the factfinder could have found, then that issue is considered foreclosed, even if no explicit finding of that issue has been made. Id.”
Your lodestar has already spoken. This case has already spoken. Directly rebut the authority. Or don’t.
Reply to 2.2.1.1.1.1.1. Apparently the system loses track if you submit prior to filling in the user info.
“were clearly writing about the result in this case”
3.2 – yes.
2.1.1 and all others?
No.
…and even 3.2 I was translating for someone else (so “I” was not speaking directly)
Not an ounce of disingenuousness from me.
I see lots of “I” and “my” in 3.2, but no indication that you were translating for someone else. Are you now saying that you lied in 3.2? You don’t believe it? It’s not your guess? You are fully convinced?
I see that several replies on this thread never made it out of the ‘count’ filter..,,
Additionally, the comment that you “called me out on” for “Snark” was directly on a larger topic.
You called me out in error. Then YOU try to dissemble by lumping in multiple comment strings.
Bad form my friend.
Malcolm: “I’m talking about this case.”
You: “It is quite evident that you do not know what you are talking about (and yet again, celebrating an Ends reached without understanding the Means at hand).”
No error, I’ve got your number.
You: “Then YOU try to dissemble by lumping in multiple comment strings.”
Oh no, multiple pieces of evidence bound by a common theme! Unfair!
You: Bad form my friend.
Hurting your feels is hardly bad form.
Directly rebut the authority. Or continue not to.
Or maybe you should try harder to follow along.
Instead of spending so much effort trying to parse my words.
I’m following along just fine.
However, it’s true I need to spend less effort parsing your words. You constantly run away from them, so there’ not much point in holding you to them.
You do understand how parsing is improper here right? Or are you that intent on misrepresenting what I am talking about?
Malcolm: “I’m talking about a district court case holding that a patent is invalid because it’s obvious in view of a reference. If the only issue appealed is whether that reference is prior art and there is a Rule 36 affirmation of the lower court’s holding of invalidity, then the issue of the prior art status of the reference is necessarily decided. How can it be otherwise?”
You: quoting “ If the only issue appealed,” then replying “Wake up son – and try reading what has actually been written.”
I did. Malcolm was right. Only one issue was appealed, therefore the Rule 36 affirmance could only concern that issue, and collateral estoppel attaches to the necessary elements of that issue. Full stop.
Except not – Malcolm’s reply was to the cases from Iohnathon – let’s see your own logic at 5 put in play…
Or else you can actually look at my words (the complete and unparsed version) and see that I am right.
Or maybe you don’t care about that, eh?
No, Malcolm’s reply was about this case, and you remain wrong.
I remain correct.
Feel free to quote my error. (I notice that you have not followed up in your “logic” of post 5, in that you think to whom one responds to captures ALL of the content of the comments (which of course, is clearly wrong).
Malcolm wanted to present the rule of law in a singular issue setting. But that is not a proper presentation of the rule of law – and I provide reasons why.
You however seem to not grasp this and for some odd reason want to champion Malcolm’s (errant by way of being too limited) view.
Here’s your follow up: you haven’t rebutted it.
Malcolm wanted to present the rule of law in a singular issue setting.
LOL Nice try, Carnak.
No, I wanted to express my agreement with the result (singular) in this case and the reasoning behind it. I also wanted Jonathan to explain what appeared to be his disagreement with the decision. I’m not sure how I could have been more clear about that but I was certainly clear enough.
“you haven’t rebutted it”
Was that part of my discussion thread?
Your “follow-up” is not on point.
Try again.
“Was that part of my discussion thread?
Your ‘follow-up’ is not on point.”
It was part of mine. You appear to believe that you can solely dictate what is being discussed. Wrong again.
Nothing that you have posted disproved the holding in this case or the propriety of my hypothetical. I am done discussing “the larger issue.” Discuss this case. Or don’t. It’s not as if you’re persuading me of anything in the manner that you’ve chosen.
“It was part of mine. You appear to believe that you can solely dictate what is being discussed. Wrong again.”
You are wrong in both what you think I appear to believe and in regards to what I am discussing.
That the point may be part of your discussion is perfectly fine and dandy. I have NO problem with that or with you holding any type of discussion with anyone else. I DO have a problem with you having a discussion and somehow wanting to make ME be a part of that discussion, especially when that OTHER discussion is unrelated to the discussion that I AM having.
Funny how you want o be done discussing the larger issue when you have not yet even begun to discuss the larger issue.
And why would I be considered with persuading you? Of what use would persuading you provide? You have shown a complete lack of ability to even follow what I have been talking about, yammering away with some other conversation that you are having, and not paying attention in the first place. As they say, don’t let the door hit you on your way out.
“You are wrong in both what you think I appear to believe and in regards to what I am discussing.”
No, I’m not. You keep replying to Malcolm, and then me, and then pretending that you’re not writing to address what Malcolm, and then me, chose to discuss in our posts.
If you want to address other issues (*as if I believe for a moment that you were actually doing so*), don’t post off-topic replies. Problem solved.
My replies to you are how off you are. You being off does not make it on just because I tell you that you are off.
You are doing that “you must have my conversation” thing that you just got done accusing me of.
And the topic was the larger rule of law (just in case you forgot).
No, the topic that Malcolm and I have been discussing this entire time is this case, which you keep deeming wrongly decided without any explanation beyond references to other “issues” that you never actually identify.
Malcolm did not want “to present the rule of law in a singular issue setting.” Malcolm wanted to discuss how it applied in this particular case. Yet you persist in replying to posts attempting to discuss that application with unhelpful rants concerning the “larger rule.”
Explain how the holding in this case is wrong. Show your work.
You continue to be wrong – and you continue to want to force me to have some other conversation than the one that I have had.
Your request for “show my work” suffers from both of these errors of yours.
I made it perfectly clear to you I was talking about this case.
Even in my first comment I was certainly not talking about “cases” or “decisions”. Do you — of all people — need another lecture on singular versus plural?
Just go away.
This post is a big non-issue, and Dennis buries the lede in the penultimate paragraph. Listen to the oral argument. Counsel admitted that the issue was necessarily decided in the previous case. Thus, the Rule 36 decision is properly the basis for collateral estoppel here.
Not a non-issue, an informative post because you can see how confusing collateral estoppel can be to some.
I agree with my historical pseudonym friend – but for a slightly different reason in that the rule of law is NOT a “singular issue” rule. Stating it so is misstating the crux of the matter (when one has more than a singular issue).
If one only ventures so far as “singular issue,” one misses out on understanding the more interesting aspects of the rule of law.
A party wants to dismiss its appeals but the court won’t allow it because it has a draft opinion? I’ve never heard of such a thing.
I’d say that opinion is clearly advisory. Courts don’t decide cases in the abstract. There must be a controversy and if the appellant wants to dismiss, then there is NO controversy.
This is very disturbing. Not kosher at all.
The motion to dismiss was opposed, so there was an existing controversy between the parties. Maybe that was enough.
I believe that the Federal Circuit slightly the facts on this particular point. According to the briefing, Apple did not “consent” to the motion, but also did not file or provide any affirmative opposition.
The Fed. Cir. misrepresented facts? Horrors! A friend at the PTO’s Solicitor’s office, when reading an opinion reversing one of his assigned appeals, would observe aloud that “if those were the facts, I would agree with the outcome.”
Simply put:
VirnetX was robbed.
Yet again.
How is it that you people actually get comments published? A secret handshake? Slush fund?
No offense intended at 4.1, Pro Say. I was only pondering why my comments were being held in limbo. Now appearing below, now that they are moot.
Jonathan,
I may just be missing the obvious, but I would be interested in further explication of the rationale for the conclusion that “[w]ithout the admission at oral arguments, applying the Bies test, no issue preclusion effect should have been found.”
JCD
My apologies, as this was intended to be a reply to 1. To to the extent that the intervening post at 2 outlines the rationale, please ignore this post. To the extent that there is an additional rationale based on Bies, I would still be curious.
I believe that the explication is that THAT admission on the record is what provides the “necessary” particularity that preclusion requires.
Had that not been there, any of a multitude of items below may have (and, critically, may NOT have) provided too broad a view for the reviewing court’s “non-answer” (Rule 36) to imbue the effect of preclusion.
That’s my guess, at least, and one I am not fully convinced of (as a Rule 36 decision is NOT one that actually speaks to any additional testimony in the reviewing phase). IF there was some (any) non-Rule 36 reviewing court highlighting such post-below exchange, then THAT would be neither a Rule 36 affirmance, nor lack the particular reasoning provided by the court to imbue preclusion.
THAT admission on the record is what provides the “necessary” particularity
The “admission” that the reference was determined to be prior art was made because there was no other alternative explanation for the result (i.e., the invalidation of the patent). I believe even that fact (the lack of any alternative explanation) was admitted by the patentee.
Anon you are correct.
Clark v. Bear Stearns & Co., Inc., 966 F. 2d 1318, 1321 (9th Cir. 1992) (“We must decide whether a rational factfinder could have reached a conclusion based upon an issue other than that which the defendant seeks to foreclose. See Ashe v. Swenson, 397 U.S. 436, 444 (1970). When the issue for which preclusion is sought is the only rational one the factfinder could have found, then that issue is considered foreclosed, even if no explicit finding of that issue has been made. Id. The party asserting preclusion bears the burden of showing with clarity and certainty what was determined by the prior judgment. United States v. Lasky, 600 F.2d 765, 769 (9th Cir.), cert. denied, 444 U.S. 979 (1979). “It is not enough that the party introduce the decision of the prior court; rather, the party must introduce a sufficient record of the prior proceeding to enable the trial court to pinpoint the exact issues previously litigated.” Id. Where the record before the district court was inadequate for it to determine whether it should apply the doctrine of collateral estoppel, we will not consider the issue on appeal. Id. See also Hernandez v. City of Los Angeles, 624 F.2d 935, 937 (9th Cir.1980).”). Rule 36 should not have preclusive effect unless there is a single holding in the lower court’s final judgment/opinion.
A nice overview of issue preclusion and multiple prior lower court holdings in a final judgment; see National Satellite Sports, Inc. v. Eliadis, Inc., 253 F. 3d 900 (6th Cir. 2001); there is also an internal Federal Circuit conflict. The Federal Circuits usually refused to give preclusive effect to alternative findings that were each independently sufficient to support a judgment. See Comair Rotron, Inc. v. Nippon Densan Corp., 49 F.3d 1535, 1538-39 (Fed.Cir. 1995) (holding that a finding was not essential to a judgment for collateral estoppel purposes where judgment was supportable on other (multiple) grounds). Based on the Comair Rotron opinion, no issue preclusion effect attached to a Rule 36 affirmance.
When the issue for which preclusion is sought is the only rational one the factfinder could have found, then that issue is considered foreclosed, even if no explicit finding of that issue has been made.
Please explain how a rational person could have found that the issue as to whether the cited reference was prior art had not been resolved by the court below. Thanks in advance.
Re your suggestion that “Rule 36 should not have preclusive effect unless there is a single holding in the lower court’s final judgment/opinion,” do you think this should still be the case even if all of the holdings or rationales necessarily rely on a particular issue that was the only issue raised and that would have been outcome determinative?
Here, do you think that issue preclusion might apply given that “[e]ach ground of unpatentability that VirnetX appealed in VirnetX I relied on RFC 2401,” “in three of the seven final written decisions appealed in VirnetX I, the only issue raised was whether RFC 2401
was a printed publication,” and “by affirming all seven of the Board’s decisions, this court in VirnetX I necessarily found that RFC 2401 was a printed publication”? VirnetX Inc. v. Apple Inc., no. 17-2490, slip op. at 4-5 (Fed. Cir. December 10, 2018).
The Supreme Court in Bobby v. Bies, 556 U.S. 825 (2009) warned against “conflat[ing] a determination necessary to the bottom-line judgment with a subsidiary finding that, standing alone, is not outcome determinative.” Bobby v. Bies, 556 U.S. 825, 835 (2009). Here, though, if “[e]ach ground of unpatentability that VirnetX appealed in VirnetX I relied on RFC 2401,” VirnetX I, slip op. at 5, doesn’t this suggest that the Fed. Cir.’s prior “f[i]nd[ing] that RFC 2401 was a printed publication,” Id., was not only “necessary to the bottom-line judgment,” Bies, 556 U.S. at 835, but would have been “outcome determinative,” Id., if RFC 2401 was not a printed publication.
In contrast to more general situations involving multiple rationales in which “a judgment does not depend on a given determination, [and thus] relitigation of that determination is not precluded,” Bies, 556 U.S. at 834, isn’t this arguably a situation where the Fed. Cir.’s prior Rule 36 judgment necessarily depended on its “f[i]nd[ing] that RFC 2401 was a printed publication”? VirnetX I, slip op. at 5.
“do you think this should still be the case even if all of the holdings or rationales necessarily rely on a particular issue that was the only issue raised and that would have been outcome determinative?”
If there be only one issue, there be only one holding.
I think that too many people are trying too hard to NOT accept the simple fact of the matter that if more than one issue and Rule 36, then no preclusive effect.
Based on Bies and Restatement (Second) of Judgments § 27 cmt. i., if all 7 IPR proceeds have the same issue at dispute and all 7 IPRs have a single rational and the same single holding in their respective final administrative adjudication, then there can be a preclusive effect attached to all of the seven IPRs, even if only 3 out of the 7 IPRs are appealed, and affirmed under Rule 36. Possible but very unlikely/rare. If this is need the (unlikely) scenario, then the Court should have said so in a brief 1/2 – 1 page opinion, and not issued a Rule 36 Summary Affirmance.
“Rule 36 should not have preclusive effect unless there is a single holding in the lower court’s final judgment/opinion.”
I apparently have to take this up with you since otherwise certain others are going to continue to rant. The collateral estoppel is based upon the appellate decision, not the lower court’s final judgment/opinion. Nothing that you have cited limits collateral estoppel to trial court proceedings.
This case: “Accordingly, we have held that a Rule 36 judgment may serve as a basis for collateral estoppel so long as these elements—including the element that the resolution of the issue was essential or necessary to the Rule 36 judgment—are carefully observed. Phil-Insul, 854 F.3d at 1356–57.”
The issues essential or necessary to the Rule 36 judgment are readily discernable from the appealing parties’ briefs.
“The issues”
Issues?
Issues?
Plural?
Yes. There can be more than one, especially when people such as you interchangably swap “issue” and “finding of fact.”
Patent held invalid over reference A + reference B.
Issues necessarily decided in holding: reference A is prior art, and reference B is prior art.
Laugh it up, fuzzball.
You are the one doing the interchange and yet want to accuse me and then you say laugh it up….?
You are trying way to hard to “win” something here…. (it’s not working for you).
(by the way, your attempts at subverting the notion of numerosity are noted, but hey, that might be too much for you to handle, and you already appear to be out the door….)
Oh I’m still here. Explain how the example is wrong. Show your work. Explain how the example in post 7 is wrong. Show your work.
You’re going to great lengths to avoid applying and deconstructing any actual examples of applying the precedent that has been included in the comments here. Why is that?
Your example of post 7 was not a true plurality of issues.
Your resolution (the conjoined reference status of A) was an item in each of the options, thereby making it not a subject of numerosity.
You are still trying W A Y too hard for a “win” that will not be coming your way.
DRJLaw You’re going to great lengths to avoid applying and deconstructing any actual examples of applying the precedent that has been included in the comments here. Why is that?
The mystery of the ages. Even after seeing this bizarre backpedaling/dust-kicking performance from “anon” literally hundreds of times over the years, it’s still really weird every time it happens.
No dustkicking Malcolm.
My points remain – and they remain correct.
One more point why Rule 36 Summary Affirmance do not have preclusion effect. First, De Sollar v. Hanscome, 158 U.S. 216, 221 (1895) (Brewer, J. for an unanimous Court) (“making clear that issue preclusion is available only where `it is certain that the precise fact was determined by the former judgment.'”). Second, Fayerweather v. Ritch, 195 U.S. 276, 300 (1904) (issue preclusion and the importance of “actually decide” any attempt to do otherwise would violate due process) (“Where the evidence is that testimony was offered at the prior trial upon several distinct issues, the decision of any one of which would justify the verdict or judgment, then the conclusion must be that the prior decision is not an adjudication upon any particular issue or issues, and the plea of res judicata must fail.”) In Fayerweather, the Court confirmed that the “actually decided” requirement of the issue preclusion doctrine is mandated by due process. And more recently, Jones v. City of Alton, Ill., 757 F.2d 878, 885 (7th Cir. 1985) (“When a court seeks to determine what issues were necessarily decided by the jury, the party asserting issue preclusion [collateral estoppel] bears the burden of showing with clarity and certainty what was determined by the prior judgment.”); O’Reilly v. County Board of Appeals for Montgomery County, Md., 900 F.2d 789, 792-93 (4th Cir.1990) (“Because the language of the [prior court’s] opinion is ambiguous, we cannot say with any degree of certainty that it decided the identical issue raised in [the current] action”) and thus the application of issue preclusion was denied.”). There is nothing in the lower court’s holding nor in the Rule 36 Summary Affirmance indicating which issue were clearly and unambiguously decided. No issue preclusive effect should be attached to Rule 36 affirmance without opinion, unless the lower court’s holding is unambiguous and crystal clear.
The right result for the right reasons.
I have to chuckle as I think that you have miscomprehended what Jonathan has posted here (to the tune that is opposite of your typical positions).
You may want to read post 2 again a bit more slowly.
There is nothing in the lower court’s holding nor in the Rule 36 Summary Affirmance indicating which issue were clearly and unambiguously decided.
?
How do you find invalidity under 102/103 without prior art? The issue as to whether the reference was prior art or not was necessarily decided in the earlier cases. The “admission” of the resolution of the issue by the patentee at oral argument was not a slip up. It was “forced”, i.e., there was no way of not admitting it without dissembling before the court (which is another way to lose a case and credibility before the court in future cases — not a great plan).
You HAVE misconstrued the post above, Malcolm.
Think of it this way: in those cases having more than one single basis, ANY Rule 36 affirmance necessarily fails to distinguish among those alternative basis, and thus NO single basis below can be held to be the type that forces preclusion effect.
in those cases
I’m talking about this case.
It is quite evident that you do not know what you are talking about (and yet again, celebrating an Ends reached without understanding the Means at hand).
It is quite evident that you do not know what you are talking about
I’m talking about a district court case holding that a patent is invalid because it’s obvious in view of a reference. If the only issue appealed is whether that reference is prior art and there is a Rule 36 affirmation of the lower court’s holding of invalidity, then the issue of the prior art status of the reference is necessarily decided. How can it be otherwise? If you can answer this question, then you will have accomplished something that the patentee was unable to do. Good luck.
“ If the only issue appealed”
Wake up son – and try reading what has actually been written.
The moment you go to two issues and have a Rule 36, NEITHER issue can generate preclusion, because it may have been the other that “really” decided the matter (but not knowable, because… Rule 36).
I know that you do not like putting effort into the Means portion of legal analysis, but this is really easy to do here.
Anon you are correct again.
See Restatement (Second) of Judgments states in the context of issue preclusion that “if a judgment of a court of first instance is based on determinations of two issues, either of which standing independently would be sufficient to support the result, the judgment is NOT conclusive with respect to either issue standing alone.” Restatement (Second) of Judgments § 27 cmt. i. Many jurisdictions, following the Second Restatement of Judgments, never treat alternative findings as preclusive. See e.g., In re Microsoft Corp. Antitrust Litig., 355 F.3d 322, 328 (4th Cir.2004).
“The moment you go to two issues . . . .”
To quote Judge Rader, “Yes, and if the court had a brother, he might like buttermilk.”
TFA: “Here, collateral estoppel works since – in the prior appeal – each ground of unpatentability relied upon RFC 2401. ”
@anon
What was the second of the “two issues” which did not involve RFC 2401 being prior art?
Mere numerosity is not enough. The question is whether there was an alternate basis of decision that did not require that the finding have been made in the prior action. As per Jonathan’s post: Clark v. Bear Stearns & Co., Inc., 966 F. 2d 1318, 1321 (9th Cir. 1992) (“We must decide whether a rational factfinder could have reached a conclusion based upon an issue other than that which the defendant seeks to foreclose.”).
In this case, where was not such a basis or other issue, and you have offered nothing but snark as a rebuttal.
DRJLaw,
The snark is to one that refuse to think.
Clearly, I am discussing the larger issue here.
In this particular case, I do not know of below there was but one issue.
That matters not at all though — and you would recognize that if you read what I actually wrote.
…and (with no comment from the reviewing court), numoristy IS key. See Jonathan above at 3:23 pm.
Clearly, I am discussing the larger issue here.
Clearly you are a piece of human waste. Go f ck yourself.
Stay classy – and learn to read before you jump in thinking that I got something wrong.
learn to read before you jump in
ROTFLMAO