Patent Infringement Claim Preclusion: Only When Accused Device is "Essentially the Same" as Prior Adjudicated Device

Acumed v. Stryker 07–1115 (Fed. Cir. 2008)

Acumed and Stryker have been battling for years over patented orthopedic surgery equipment.  The original suit ended with a final judgment in April 2006 for Acumed. This second suit, filed in May 2006, alleges that one of Stryker’s new orthopedic nails infringes the patent.  The new version (named T2) was developed and put on the market during the original litigation, and Acumed deliberately chose not to include allegations against that product for fear of delaying the first trial.

The Oregon federal district court dismissed Acumed’s second lawsuit – finding the claim precluded by the prior judgment on the merits.

On appeal, Acumed successfully argued that its second infringement action is not precluded by the first action even though (1) the original action was concluded by a final judgment on the merits; (2) the parties and patents of the second suit are identical to those of the original suit; and (3) Acumed was in a position to assert infringement against T2 in the original suit but consciously chose not to pursue an infringement claim against T2. 

Claim Preclusion: Following a final judgment on the merits, claim preclusion binds parties from re-litigating the merits presented and also from raising “any other admissible matter which might have been offered” on the merits.  Although the particular elements of claim preclusion may vary, the Ninth Circuit finds preclusion only when the original litigation was terminated by a final judgment on the merits and second action has the same parties or privies as the original and the same claim or cause of action.

Taking a narrow view of “same claim or cause of action” – the Federal Circuit held that in patent law, claim preclusion can only be found where the accused products in the two actions are “essentially the same.”

‘[C]laim preclusion does not apply unless the accused device in the action before the court is "essentially the same" as the accused device in a prior action between the parties that was resolved by a judgment on the merits… Accused devices are “essentially the same” where the differences between them are merely “colorable” or “unrelated to the limitations in the claim of the patent.”…Finally, the party asserting claim preclusion has the burden of showing that the accused devices are essentially the same.’ 

In its opinion, the court rejected a “could have” defense — instead holding that “claim preclusion does not bar a claim merely because it could have been raised in a prior action between the parties that was resolved by a final judgment on the merits.”  Along this same line, a patentee therefore does not lose rights by filing suit against only some of an accused infringer’s products (because “two claims for patent infringement do not arise from the same transactional facts unless the accused devices in each claim are ‘essentially the same’”).

Stryker admitted that the T2 was not essentially the same as its prior product — thus eliminating any possibility of claim preclusion. Stryker’s admission is the result of a tough litigation decision. To win on claim preclusion, it must argue that the new product is the same as the old product. However, if it did not win on claim preclusion, that argument would place the defendant’s non-infringement argument in serious peril. 

Notes:

• As the court noted, claim preclusion refers to a legal action rather than a patent claim.
• 2006 Acumed appeal on claim construction

 

Comments

[Curious]

DC, suppose that Stryker had argued the two nails were the same, and then lost on the preclusion argument b/c the court decided the two things *aren't* the same. Why would that have prejudiced them? If the court rejected the assertion that the two items are the same, why couldn't Stryker then argue non-infringement on the basis of the differences?

[Just Visiting]

"In its opinion, the court a “could have” defense--"

A word or two appears to be missing from this sentence.

[Jim H.]

As a self-confessed groupie of Judge Pauline Newman, I actually thought she had the holding wrong after my initial reading of the opinion. I thought that Acumed should have lost because it was afforded the "opportunity" to litigate the T2 long but decline to do so. I was actually in disagreement with her. However, Pauline's wisdom transcends my first impression.

Acumed did not amend its complaint to include the T2 Long. Acumed's original complaint alleged Styker's T2™ PHN as infringing. Acumed alleged only Styker's T2J as infringing in its amended complaint. At no time was the T2 Long alleged to have infringe. In other words, it was never placed into issue. Stryker was not placed on notice of the T2 Long as infringing even though Acumed could have amended the amended complaint.

Interesting, if Stryker wanted to save the expense of a second litigation in return for a delay of the first, it could have sought a declaratory judgment action given Acumed's judicial admission that "the T2 Long was 'substantially similar'" Given the court's offering "to allow Acumed to add a claim of infringement based on the T2 Long[,]" Stryker would likely have prevail in a motion for leave to amend.

[Jim H.]

After thought...

I realize that Judge Newman did not author the opinion, but her agreement of it speaks volumes.

[RP]

Dennis - this case was about claim preclusion, but in two places in the summary you use the term "issue preclusion". These are different concepts. See Footnote 2 of the decision. The summary should be revised to only refer to claim preclusion to avoid (lessen?) confusion.

[Jim H.]

RP comment raises an interesting point related to collateral estoppel, aka, issue preclusion.

Stryker should be estopped from another Markman hearing or revisting the claim construction under the doctrine of collateral estoppel. Using Black's Law Dictionary definition as guidance (being too lazy to look up 9th Circuit or Federal Circuit case law), collateral estoppel is "[t]he binding effect of a judgment as to matters actually litigated and determined in one action on later controveries between the parties involving a different claim from that on which the original judgment was based. . . . A doctrine barring a party from relitigating an issue determined against that party in an earlier action, even if the second action differs significantly from the first one."

Under collateral estoppel, Stryker would be barred from relitigating the claims construction, especially since the Federal Circuit affirmed the district court's construction in Acumed I and finality has been reached.

[Malcolm Mooney]

"Under collateral estoppel, Stryker would be barred from relitigating the claims construction"

I think that generally speaking that would be true under these circumstances. However, if Acumed's infringement arguments vis a vis this new product raise issues of construction that were not addressed in the previous case, collateral estoppel might not be appropriate.

[Jim H.]

Malcolm,

I agree. If the parties now dispute claim terms that were not construed in the Markman Order, then collateral estoppel should not apply.