01/03/14

Orenshteyn v IBM: Patent Collateral Estoppel Depends on Issues not Claims Litigated


Category: Civil Procedure 
 
 
 
 By: Abby Lin, Contributor 
 
TitleOrenshteyn v. Int’l. Business Machines, Corp., No. 02 Civ. 5074 (JFK), 2013 BL 295952 (S.D.N.Y. October 25, 2013).
Issues“IBM’s summary judgment motion asserts the invalidity of [2] Claims 14 and 56 of the ‘942 Patent, as well as [1] Claim 1 of the ‘569 patent. To decide the motion, the Court must determine the extent to which Plaintiff is collaterally estopped by the opinion from the Southern District of Florida affirmed by the Federal Circuit, which invalidated Claim 1 of the ‘942 Patent. If the Florida decision has preclusive effect, then any issues decided by that court cannot be relitigated here. If collateral estoppel does not apply, or if there are issues here that were not decided in Florida, then the Court must independently make a validity determination based on those outstanding issues” Orenshtyen at *10 (text added).
Holdings
[1] “[B]ecause Claim 1 of the ‘569 Patent contains no limitations that were not present in invalid Claim 1 of the ‘942 Patent, it presents no new issues to decide, and collateral estoppel bars Plaintiff’s argument.” Id. at *15.
[2] “[The ‘simultaneous connection’ limitation of Claims 14 and 56] is the only limitation not considered in the Florida ruling. [However, Plaintiff is estopped from arguing that the prior art] ‘lacks many of the other claim limitations’ of his patents, because the Florida court has already determined that those limitations (all of which were present in Claim 1 of the ‘942 Patent) were anticipated by the [] prior art.” Id. at *18 (text added).
 

 
Procedural History
1. ComplaintPlaintiff Orenshteyn sues IBM for infringing patents 5,889,942 (“’942 patent”) and 6,393,569(“’569” patent) on a complaint dated July 1, 2002.
2. Case Stayed
The current case was stayed pending outcome of a similar infringement case involving the same patents brought by Plaintiff against Citrix Systems in the Southern District of Florida (Orenshteyn v. Citrix Sys., Inc., 265 F. Supp. 2d. 1323 (S.D. Fl. 2003), aff’d in part, rev’d in part, 341 F. App’x 621 (Fed. Cir. 2009).
The Florida district court granted summary judgment in favor of Citrix concluding that Plaintiff failed to show that Citrix's product infringed on his patents.
On appeal, the Federal Circuit agreed on '569 patent, but remanded on the '942 patent because the district court misconstrued part of Claim 1.
Orenshteyn v. Citrix Sys., Inc., 265 F. Supp. 2d. 1323 (S.D. Fl. 2003), aff’d in part, rev’d in part, 341 F. App’x 621 (Fed. Cir. 2009)
3. Stay Lifted but Citrix’s Remand Decision Published a Day Later"[On remand for Citrix,] the Florida district court again granted summary judgment to Citrix, holding that five pieces of prior art rendered Claim 1 of the '942 Patent invalid." Orenshteyn v. Citrix Sys., Inc., No. 02-60478-CIV (S.D. Fl. Mar. 9, 2011) (ECF 371), aff'd, 501 F. App'x 981 (Fed. Cir. 2013)(per curiam).
4. Defendant’s Motion for Summary JudgmentDefendant IBM files motion arguing “that the basis for the Florida court’s ruling as to Claim 1 of the ‘942 Patent ‘applies equally to all of the Orenshteyn patent claims asserted in this case.’” Orenshteyn v. IBM, at *3.
Contributor Note: For brevity and clarity, the procedural history and relevant decisions are presented in time line format without using direct quotes from the decision. The Court describes the procedural history on pages 1-3.
 
 
 
Legal Reasoning (Keenan)
Background
Comparison between Florida Case and Citrix Case
Prior Art Used[Florida Citrix Case]: 5 References (CoSession, pcANYWHERE, ReachOut, Wabi, WinView)
[Current IBM Case]: 8 References (The same 5 from Florida’s Case and 3* additional pieces of prior art. 
However, the additional IBM references were ultimately not addressed because the summary judgment decision was based on the Florida case prior art.)
Expert Witness for Defendant[Florida Citrix Case]: Dr. Fortes
[Current IBM Case]: Dr. Fortes
Relevant Claims to the IBM case[Florida Citrix Case]: ‘942 - Claim 1, held to be invalid
[Current IBM Case]: ‘942 – Claims 14 and 56; and ‘569 - Claim 1 
Legal Standard: Collateral Estoppel
"[A party may not relitigate an issue where] (1) the identical issue was raised in a previous proceeding; (2) the issue was actually litigated and decided in the previous proceeding; (3) the party had a full and fair opportunity to litigate the issue; and (4) the resolution of the issue was necessary to support a valid and final judgment on the merits.”
Orenshteyn at * 6-7 (text added, internal citations omitted).
“[In patent law,] collateral estoppel may apply to patent claims that were not previously adjudicated, because the ‘issues’ litigated, not the specific claims around which the issues were framed’ are determinative.” Medinol Ltd. v. Guidant Corp., 341 F. Supp. 2d 301, 314 (S.D.N.Y. 2004). [Additionally, courts in the Southern District of New York] have further noted that collateral estoppel “forecloses patent claims that are ‘patentably indistinct’ from rejected claims.” Purdue Pharma L.P. v. Ranbaxy Inc., No. 10 Civ. 3734, 2012 WL 3853640, at *3 (S.D.N.Y. Sept. 5, 2012).
Id. at * 7.
Legal Standard: Infringement Burden of Proof and Anticipation"Patents are presumed valid, and a defendant must demonstrate invalidity by clear and convincing evidence. [...] A patent claim is invalid if it is anticipated by the prior art, that is, “where ‘each and every limitation is fond either expressly or inherently in a single prior art reference.’” [...]."
Id. at *7, 8-9 (internal citations omitted).
[1] Collateral Estoppel Applies to Claim 1 of the ‘569 Patent Because Issues were Actually Litigated in Florida and No New Issues are Raised in This Proceeding.
A. No Default Judgment because Issue was Actually Litigated by Plaintiff’s Counsel
“[Plaintiff argues that the Florida court’s decision should not be applied reflexively because it was not a judgment on the merits and was a default judgment.] Plaintiff asserts that his prior counsel neglected to fully litigate the summary judgment motion in the Florida action, which prevented the Florida court’s from assessing the validity of Plaintiff’s patents [because counsel did not meet its burden by offering an expert or evidence rebutting Dr. Fortes’s testimony for the defense]. Orenshyten at *11 (internal citations omitted, text added).
“Default occurs when the non-movant ‘has failed to plead or otherwise defend.’ Fed. R. Civ. P. 55(a). … The issue of whether the limitations of Claim 1 of the ‘942 Patent were anticipated by the prior art was thus actually litigated in the Southern District of Florida [because Plaintiff pled and lost in Florida, and then lost again on appeal to the Federal Circuit.] Plaintiff is therefore properly bound by the Florida court’s decision [and] estopped from now asserting the validity of Claim 1 of the ‘942 Patent [and from litigating the issues he lost in Florida].” Id. at *12(text added).
B. Identical Issue Raised in Previous Proceeding; No New Issues Raised
“IBM argues that with respect to the Claim 1 of the ‘569 Patent, all of the relevant issues have been decided because this Claim 1 and the invalid Claim 1 of the ‘942 Patent are so similar.” Id. at *12.
“[IBM attempted to use a terminal disclaimer between the two patents, but] the law is clear that the terminal disclaimer cannot be treated as an admission [that two patents are no patentably distinct.] See U.S. Patent & Trademark Office, Manual of Patent Examining Procedure 804.02 (8th ed. Rev. 9 Aug. 2012).” Id. at *13 (text added).
“[IBM provided a line by line comparison to show the similarity of the two claims.] As noted, the only substantive changes in Claim 1 of the ‘569 Patent are to delete various requirements, which cause the claim to be broader, and thus even more susceptible to disclosure by the prior art, than the already invalidated Claim 1 of the ‘942 Patent. It is therefore clear that Claim 1 of the ‘569 Patent is not distinct from invalid Claim 1 of the ‘942 Patent in any way that raises a separate issue of material fact as to its validity.” Id. at *13 (text added).
“[Plaintiff argues that several limitations in Claim 1 of the ‘569 are not in the present art.] But Plaintiff is precluded from making these arguments now because the Florida court rejected them when it found these same limitations(as listed in Claim 1 of the ‘942 Patent) to be present in the prior art.” Id. at *13 (text added).
[2] No Collateral Estoppel Applies to Claims 14 and 56 of the ‘942 Patent Because They Have Added Limitations not Litigated in Florida District Court, but Plaintiffs are Limited to Arguing those Added Limitations.
The limiation 'simultaneous connection' is the only one not considered in the Florida ruling
“Plaintiff states that the requirement of more than one client in Claims 14 and 56 allows for each client station to cooperate with the other(s) and share data or devices [which is an added limitation which distinguishes Claims 14 and 56 from invalid Claim 1 and was not litigated in Florida…] As mentioned above, the new limitation of Claim 14 is the requirement of “At least two client stations.” In Claim 56, this is referred to as “a plurality of client stations.” Orenshtyen at *16-17.
“The Court agrees with the parties that WinView teaches the added limitation of simultaneous connection to more than one client station. Accordingly, this limitation of Claims 14 and 56 is anticipated by WinView. This is significant, because simultaneous connection is the only limitation not considered in the Florida ruling. Plaintiff is estopped from arguing that WinView ‘lacks many of the other claim limitations’ of his patents, because the Florida court has already determined that those limitations (all of which were present in Claim 1 of the ‘942 Patent) were anticipated by the WinView prior art. And the Florida decision is plainly inconsistent with Plaintiff’s argument that Wabi does not teach a client/server system. ” Id. at *18 (emphasis added, internal citations omitted).
Conclusion
"For the foregoing reasons, Defendant's motion for summary judgment is granted. Claims 14 and 56 of the '942 Patent, as well as Claim 1 of the '569 Patent, are invalid." Orenshteyn, at *19.
 
 
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