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Fresh From the Bench: Precedential Patent Cases From the Federal Circuit

April 21, 2017

Overview

In Phil-Insul, collateral estoppel precludes IntegraSpec from relitigating claim construction in a ‎second case involving a different defendant, different claims and “somewhat” different accused ‎products. In Rembrandt v. Samsung, the Circuit reverses and remands the district court’s ‎handling of the patent marking statute regarding the effect of a subsequent patent claim ‎disclaimer and as to whether the statute applies on a claim-by-claim basis.‎

Thanks to my colleague Martin Garthwaite for his help with this week’s report.‎

Pete

Phil-Insul dba IntegraSpec v. Airlite Plastics, Fed. Cir. Case 2016-1982 (April 17, ‎‎2017)‎

The Circuit rules that collateral estoppel precludes IntegraSpec from relitigating claim ‎construction previously litigated in a case with another defendant even though the previously-‎construed claim is not the one presently being litigated. ‎

IntegraSpec’s patent is directed to insulating concrete forms that are used in building ‎construction. In a prior case against Reward Wall involving very similar concrete forms, the ‎district court granted summary judgment of noninfringement, which was affirmed by the Circuit ‎under Rule 36 (without a written opinion). In the present case, Airlite successfully moved for ‎summary judgment of ‎noninfringement based upon collateral estoppel and the narrow claim ‎construction rendered by the district court in Reward Wall. ‎

The opinion first lays out the test for collateral estoppel under Eighth Circuit law:‎

‎(1) the party sought to be precluded must have been a party, or in privity with a party, to ‎the original lawsuit; (2) the issue sought to be precluded must be the same; (3) the issue ‎sought to be precluded must have been actually litigated; (4) the issue sought to be ‎precluded must have been determined by a valid and final judgment; and (5) the ‎determination in the prior action must have been essential to the prior judgment.‎

IntegraSpec argued on appeal that there was no final judgment since the appeal was decided ‎under Rule 36 and that the determination in the prior action was not essential to the prior ‎judgment. Specifically, IntegraSpec argued that the Circuit’s 2013 TecSec case created a rule that ‎a Rule 36 affirmance cannot have preclusive effect because the court could have affirmed based ‎on any number of grounds and not only claim construction. The Circuit rejects this argument and ‎rules that the TecSec holding only applies where the appellate court affirmed, without ‎explanation, the judgment of a trial court that determined two issues, either of which could ‎independently support the result. ‎

In the Reward Wall appeal, IntegraSpec raised issues as to the construction of two terms: ‎‎“adjacent” and “substantially the same dimension.” The Rule 36 affirmance in Reward Wall ‎necessarily meant that the Circuit found no error in either of the district court’s claim ‎constructions. Therefore, the case is easily distinguished from TecSec.‎

The panel also dismisses IntegraSpec’s argument that claim 1 and not claim 2 was construed in ‎Reward Wall, noting that the same disputed claim terms in this case—“adjacent” and ‎‎“substantially the same dimension”—were at issue in both claims. It is well-established that claim ‎terms are to be construed consistently throughout a patent, so the fact that a different claim is ‎now being asserted is not relevant, as both the district court and the Circuit previously ‎considered and rejected IntegraSpec’s arguments regarding the two terms. ‎

Read the full opinion

Rembrandt Wireless Technologies v. Samsung Electronics, Fed. Cir. Case 2016-1729 (April 17, ‎‎2017)‎

The Circuit agrees with Rembrandt and the district court that the per-unit royalty award is ‎appropriate as to Samsung’s infringing Bluetooth-compatible phone and television products, but ‎is troubled by the court’s application of the patent marking statute. Rembrandt did not require its ‎licensee to mark products covered by one claim of the patent, which Rembrandt subsequently ‎disclaimed to attempt to avoid the damages limitation of 35 U.S.C. § 287. The Circuit reverses ‎the ruling that such a disclaimer is an effective means to avoid § 287 but remands on the issue of ‎whether the patent marking requirement is on a claim-by-claim or entire patent basis.‎

Samsung unsuccessfully argued for a broader interpretation of the claims that would include ‎prior art it asserted in support of its obviousness argument. The panel also affirms a determination ‎of what constitutes a reasonable royalty, first agreeing that it was correct to consider the ‎difference between what Samsung paid Texas Instruments for two different Bluetooth chips, one ‎including Bluetooth Enhanced Data Rate functionality such as claimed in the patents-in-suit, and ‎without. The Circuit also agrees it was appropriate for the district court to consider a settlement ‎between Rembrandt and BlackBerry involving the same patents. ‎

As an NPE, Rembrandt would normally not have had a problem with § 287, which provides that ‎if a patentee fails to mark patented products with the patent number, damages are limited to ‎those incurred after an infringer receives notice of the infringement (such as upon the filing of the ‎suit in the present case). However, patentees must require licensees to mark their products, and ‎Rembrandt failed to require its licensee Zhone to do that here. Rembrandt subsequently ‎disclaimed claim 40 and argued that the obligation to mark the product embodying claim 40 had ‎therefore vanished. The district court relied on Circuit precedence holding that a disclaimed ‎patent claim is treated as if it had never existed, and denied a motion by Samsung that damages ‎should exclude pre-notice damages. The Circuit rejects that holding, noting that while a ‎disclaimer may relinquish rights of the patent holder, “we have never held that the patent owner’s ‎disclaimer relinquishes the rights of the public” and the provision requiring marking in order to ‎collect pre-notice damages. ‎

However, the Circuit has never ruled on whether the marking requirement applies on a “claim-by-‎claim” basis (as argued by Rembrandt) or a “patent-by-patent” basis (as argued by Samsung). ‎Applying Rembrandt’s claim-by-claim approach would permit Rembrandt to recover pre-notice ‎damages for infringement of claims other than claim 40, which is the only claim that Samsung ‎alleges the unmarked Zhone product embodied. The case is remanded for the district court to ‎consider whether claim-by-claim or patent-by-patent is the correct approach.‎

Read the full opinion

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