Sowinski v. California Air Resources Board (CARB), Docket No. 19-01558 (Fed. Cir. 2020) (en banc petition)
When I first wrote about this case, I explained my view that the Federal Circuit issued “a really poor decision” in the way that it recklessly expanded-out the scope of claim preclusion without consideration of the impact. The case was decided just after Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc., 140 S. Ct. 1589 (2020). In that case, the court clamped-down on expansion of issue or claim preclusion beyond their traditional bounds.
The setup is explained in Sowinski’s petition for en banc rehearing:
Petitioner brought an earlier infringement action against the defendant that was dismissed [with prejudice] under the district court’s local rules for failure to prosecute [without addressing] the underlying merits of the infringement allegations.
After that earlier litigation was final, petitioner brought a second suit against the same defendant, asserting the same patent against the same infringing activity—but limited to “damages only for infringement after the decision in Sowinski I.”
In this setup, there is no issue preclusion because no issues were actually decided in the first lawsuit — rather the case was dismissed for procedural grounds. Claim preclusion does apply, but is limited to claims that were brought (or should have been been brought under the same-transaction test) in the first action.
This is where we get into some patent law doctrine regarding post-judgment acts of infringement:
[T]raditional notions of claim preclusion do not apply when a patentee accuses new acts of infringement, i.e., post-final judgment, in a second suit—even where the products are the same in both suits.
Brain Life, LLC v. Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014).
This is where the Kessler doctrine comes into play (although not actually cited or addressed in the opinion).
Under the panel’s disposition, petitioner’s infringement suit is barred despite presenting new issues and new claims that no court has ever resolved. In past cases, this Court readily acknowledged that this result is squarely at odds with ordinary principles of issue and claim preclusion. But this Court has nevertheless barred such actions entirely, applying its own unique understanding of the so-called Kessler doctrine: under this Court’s decisions, once a defendant obtains any prior judgment of non-infringement, all future litigation over the same product is forever barred, even if it involves issues unadjudicated by any court and claims arising after the initial judgment (i.e., post-judgment acts of infringement)—a fact-pattern that would permit litigation to proceed in every other circuit in all non-patent cases.
Petition. Note here that the Federal Circuit decision does not cite to the Kessler Decision, but instead appears to shift its approach to capturing the post-judgment actions as captured by claim preclusion. That shift makes sense when considering the Lucky Brand warning against non-uniform preclusion principles.
As the Supreme Court just reiterated, the world of preclusion “comprises two distinct doctrines”—issue preclusion and claim preclusion. There is no third doctrine “unmoored from th[ose] two guideposts.” Lucky Brand (“our case law indicates that any such preclusion of defenses must, at a minimum, satisfy the strictures of issue preclusion or claim preclusion”).
Id.
The panel decision is difficult to square with the earlier 2014 Brian Life decision, but I think the outcome here is easily justifiable in situations where there is zero difference in the accused products. It appears to have been undisputed that the accused products/activities were identical.
Dennis’ criticism rests on the assumption that damages for post-judgment infringement could not have been addressed in the earlier action that was dismissed with prejudice. Because res judicata only bars claims that “were or could have been brought” in that first action, the argument goes, the plaintiff’s claim for damages based on infringement after the judgment in the first action should not have been barred.
But the assumption behind this reasoning has been untrue for many, many, years, and the law of res judicata needs to catch up to the reality of how patent cases are actually tried in district courts. The plaintiff in this action sought damages and a prospective injunction preventing further (post-judgment) infringement. If the district court declined to award an injunction, the plaintiff could have asked for a prospective royalty to cover post-judgment infringement. The defendant in turn, could have asked the jury to award a lump sum covering all past, present, and future infringement. Either way, the first case (had it gone forward) absolutely could have addressed post-judgment infringement based on the same accused product, whether through injunctive relief, post-judgment ongoing royalties, or a one-time lump sum royalty. In fact, it is now standard practice in cases in which the accused product is still being made at the time of trial, to litigate prospective appropriate prospective remedies for post-judgment infringement.
I am not sure that a blanket “catch up to reality” is what is best (given the detriment of many elements of ‘reality’ that SHOULD be continuously sought to be pushed back upon).
Your view has a sense of “sh ut up and just take it.”
I say “No thank you” to that sense.
“This is where the Kessler doctrine comes into play (although actually cited or addressed in the opinion).”
Did you mean “…although NOT actually cited…”?
Yes! Thanks.
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