Docket No. 2013-1239
O’MALLEY, BRYSON, WALLACH
March 25, 2014
Brief Summary: Claim and issue preclusion found inapplicable but the Kessler Doctrine applies because “all of the claims were or could have been asserted against Elekta” and the devices are “essentially the same”.
Summary: Brain Life (patent licensee) appealed from DC finding for Elekta on res judicata grounds. Barr successfully argued that neither claim nor issue preclusion bars its claims but the FC found the “Kessler doctrine” (Kessler v. Eldred, US 1907) precludes the majority of Brain Life’s method claims. In an earlier appeal regarding “system” claims (involving the original patent owner MIDCO), “the key dispute…[was] whether the district court was correct in including software for digital-to-digital conversion as a corresponding structure for the converting means.” The FC found that it was not correct and reversed the infringement decision and ordered the DC to enter judgement of noninringement as a matter of law in favor of Elekta. On remand, MIDCO unsuccessfully attempted to revive the previously dismissed (without prejudice) method claims (although according to this opinion it could have continued to assert those claims but chose not to). MIDCO then licensed the patent to another company that in turn licensed it to Brain Life. Brain Life then sued several defendants for infringement of the method claims. The DC held the primary dispute to be whether the products in each suit were the same “and, consequently, barred from further litigation”. It found Brain Life’s “complaint sufficiently pleaded that the accused products were materially different” but, after discovery by both parties, found Brain Life’s claims to be barred. Brain Life argued that the method claims were not addressed in that dispute but the DC concluded that this would have “amount[ed] to impermissible claim splitting.” In this appeal, Brain Life argued “claim preclusion is inapplicable” because the limitations are different (system vs. method claims), it can sue on the same claim because it was dismissed without prejudice, and Elekta’s allegedly infringing product “did not exist until after the first suit reached final judgment.” The FC panel found that the method claims were not “fully, fairly, and actually litigated to finality” and Brain Life could not have asserted infringement against products that postdate the final judgment (therefore, no claim or issue preclusion), but explained that the Kessler Doctrine “precluded some claims that are not otherwise barred by claim or issue preclusion”. Under that doctrine, which “may have [been] created…as an exception to the strict mutuality requirement that existed at that time” (“judge-made doctrine” in which “both parties (or their privies) in a second action [were] bound by a judgment in a previous case, neither party (nor his privy) in the second action may use the prior judgment as determinative of an issue in the second action”), “when an alleged infringer prevails in demonstrating noninfringement, the specific accused device(s) [“when the devices in the first and second suits are ‘essentially the same’”] acquires the ‘status’ of a noninfringing device”. Therefore, Brain Life cannot bring suit with respect to “essentially the same” device under the Kessler Doctrine because “MIDCO…could have continued to assert [the method] claims” at the DC (“all of the claims were or could have been asserted against Elekta”).