Docket No. 2014-1347
NEWMAN, BRYSON, O’MALLEY
February 12, 2015
Brief Summary: DC decision that the doctrine of collateral estoppel applied even though the jury could have based its verdict on one of two separate grounds reversed and remanded.
Summary: United Access appealed DC holding that a jury verdict in a prior action (United Access Techs., LLC v. EarthLink, Inc, FC 2011) was entitled to collateral estoppel effect in this case. The patents-at-issue are US 5,844,596; 6,243,446; and 6,542,585 relating to the use of landline telephone connections for voice and data transmission. CenturyTel/Quest argued that “the jury’s verdict in the Earthlink case established as a matter of law that the industry standard ADSL technology did not infringe United’s patents.” The DC dismissed the action on collateral estoppel grounds, finding “the ADSL services sold by CenturyTel and Qwest [did not differ] in any material respect from the ADSL services that had been sold by EarthLink” and rejected UA’s “proposed distinction” that “EarthLink’s services did not include telephone devices” as doing “nothing to account for the fact that the issue whether industry standard ADSL infringes the patents-in-suit was litigated, and lost, by the Plaintiff in the EarthLink action.” In this appeal, United argued that “[t]he EarthLink JMOL decision…did not establish that the jury necessarily based its verdict on a conclusion that the standard ADSL technology did not infringe” and the FC panel agreed even though “[t]o be sure, United’s argument in the district court was not nearly as focused as it is in this court.” The opinion explains that to apply the doctrine of collateral estoppel, it must be shown that: 1) the previous determination was necessary to the decision; 2) the identical issue was previously litigated; 3) the issue was actually decided in a decision that was final, valid, and on the merits; 4) the party being precluded from relitigating the issue was adequately represented in the previous action (here, based on 3d Cir. law). And “[w]hen there are several possible grouds on which a jury could have based its general verdict and the record does not make clear which ground the jury relied on, collateral estoppel does not attach to any of the possible theories” (Ashe, US 1970; Novartis, FC 2004). Here the defendants argued that collateral estoppel applied even though the jury could have based its verdict on one of two separate grounds which was found to be “squarely contrary to the reasoning of one of the Supreme Court’s leading decisions on collateral estoppel” (Ashe, US 1970, also citing Packet Co., US 1866) (if the jury could have based its verdict on a ground other than the one in dispute, collateral estoppel would not bar litigation of the disputed issue). Thus, the FC panel found the application of collateral estoppel here to be error, and reversed and remanded the decision.