By Dennis Crouch
Claim preclusion and issue preclusion are conceptually difficult, but the Federal Circuit has further confused preclusion doctrines in its patent law jurisprudence. In a series of recent decisions, the appellate court improperly created and then expanded upon a separate-and-distinct form of res judicata that it labels the Kessler Doctrine. We argued recently that this expansion is in error and should be eliminated as an improper destabilization of settled res judicata principles.[1] In a recent amicus filing, the United States Solicitor General agreed that the Federal Circuit’s precedent is in error.[2] Despite that core agreement, the SG brief is rife with misleading guidance. The SG asserted the non-legal maxim “two wrongs make a right” to effectively conclude that the Kessler expansion error was rendered harmless by compounding errors in the court’s claim preclusion doctrine. The SG’s brief implicitly calls for a wholesale reevaluation of preclusion doctrine rather than addressing the issues at hand. The brief includes other doublespeak. At one point, for example, the SG argues that Kessler remains “practically significant” and “relevant as a practical matter.” Later, the same document concludes that the question presented—i.e., the viability of Kessler—“does not have practical importance.” Of course, the law of judgments remains critically important to both ensure justice and stability.
On May 12, 2022, the Supreme Court is set to decide whether to move forward with the pending case of PersonalWeb Technologies, LLC v. Patreon, Inc., No. 20-1394 which focuses on the Federal Circuit’s aforementioned doctrinal expansions.
Kessler and its Progeny: Kessler v. Eldred is an old and largely dormant 1907 Supreme Court case permitting a manufacturer to bring an equity action to stop an infringement lawsuit against its customers.[3] The manufacturer (Kessler) had already won on non-infringement grounds against the patentee (Eldred), thus freeing Kessler to continue freely commercialize his product. The Supreme Court saw the subsequent lawsuit against Kessler’s customers as an affront to Kessler’s right to manufacture and sell as guaranteed by the non-infringement judgment.[4] A lot has happened in procedural law 1907. Some of the relevant changes here include the merger of law and equity; adoption of the Federal Rules of Civil Procedure and its expansion of claim preclusion under the broader “transaction or occurrence” test; adoption of the Declaratory Judgment Act and its expanded use in counterclaims; and allowance of non-mutual issue preclusion, especially in the defensive setting. These changes are major, but they had had all been recognized as the Restatement (Second) of Judgments was being adopted in the early 1980s. In the 40 years since, the law of judgments has remained remarkably stable, with the courts adopting the stated principles of the Restatement embodied in the two preclusion principles of claim and issue preclusion.
But, the Federal Circuit has taken the law of judgments on a major tangent: Particularly, the court has identified a third form of preclusion, the Kessler doctrine, that it offers as separate and distinct from standard principles of preclusion. The court’s Kessler doctrine operates applies to bar litigation in situations where these traditional forms of preclusion do not. Despite its references to the 1907 decision, the appellate court’s Kessler decisions are also unmoored from that original precedent. In particular, the court has applied Kessler to situations where the issue of infringement was not actually litigated or even decided; as well as apply non-mutually. The effective approach is an odd blend of issue preclusion and claim preclusion where the due process safeguards of each are relaxed or removed.
The effect of judgment is inherent to every litigation, and the confusion created by the Federal Circuit in these cases is ripe for resolution.
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[1] See, Dennis Crouch and Homayoon Rafatijo, Resorbing Patent Law’s Kessler Cat into the General Law of Preclusion, 55 Akron L. Rev. 51 (2022). We argue that the newly expanded doctrine is improper for several reasons. Most pointedly, the Supreme Court has chastised lower courts from fashioning new rules of preclusion “unmoored from the two guideposts of issue preclusion and claim preclusion.” Lucky Brand Dungarees, Inc. v. Marcel Fashions Grp., Inc., 140 S. Ct. 1589, 1595 (2020).
[2] SG Brief in PersonalWeb Techs. [20220408144608169_20-1394PersonalWeb-CVSG-final].
[3] Kessler v. Eldred, 206 U.S. 285 (1907).
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