11/27/14

e.Digital v. Futurewei Tech.: Collateral Estoppel as to Claim Construction


Category: Civil Procedure 
 
 
 
By: Jesus Hernandez, Blog Editor/Contributor  
 
Titlee.Digital Corp. v. Futurewei Tech., Inc., No. 2014-1019, -1242, -1243 (Fed. Cir. Nov. 19, 2014).
Issues
[1: Collateral Estoppel] Based on the Colorado Court’s previous construction, the defendants moved to apply collateral estoppel to the construction of the sole memory limitation in the ’774 and ’108 patents. The district court granted the motions and adopted the Colorado Court’s construction. The court reasoned that the ’774 patent reexamination never addressed the sole memory limitation, and further held that the ’108 and ’774 patents are “closely related.”
e.Digital Corp., at *4.
[2: Conversion of Partial Judgment to Final Judgment] e.Digital stipulated to non-final partial judgment of non-infringement with Pantech, GoPro, and Apple, who moved to stay their respective cases pending the Huawei appeal. Apple then moved to convert its judgment to a final judgment, and GoPro, but not Pan- tech, joined the motion.
Id. at *4-5.
Holdings
[1: Collateral Estoppel] We hold that the district court correctly applied collateral estoppel to the ’774 patent because reexamined claim 33 recites the sole memory limitation identical to claims 1 and 19, and because the ’774 patent reexamination never addressed that limitation or the presence of RAM.
Id. at *5.
[2: Conversion of Partial Judgment to Final Judgment] We also hold that the court did not abuse its discretion when it converted a stipulated partial judgment into a final judgment pursuant to Fed. R. Civ. P. 54(b).
Id. at *3 (text added).
 
 
Procedural Historye.Digital Corporation appeals from a U.S. District Court for the Southern District of California judgment of non-infringement based on a determination that e.Digital was collaterally estopped from seeking a construction of a claim limitation in e.Digital’s U.S. Patent Nos. 5,491,774 and 5,839,108 different from another court’s previous construction of the same limitation in the ’774 patent.
e.Digital Corp., at *3.
 
 
Legal Reasoning (MOORE, O’Malley, Reyna)
Background
Colorado Court Litigation
Prior to the cases at issue in this appeal, e.Digital asserted claims 1 and 19 of the ’774 patent in the U.S. District Court for the District of Colorado (Colorado Court). The ’774 patent discloses a device with a micro- phone and a removable, interchangeable flash memory recording medium that allows for audio recording and playback. […] Asserted claims 1 and 19 recited “a flash memory module which operates as sole memory of the received processed sound electrical signals” (sole memory limitation). […] The court construed the sole memory limitation to require “that the device use only flash memory, not RAM or any other memory system” to store the “received processed sound electrical signals.” […] The Colorado Court held, however, that the existence of a microprocessor did not require the use of RAM because certain types of flash memory “could be directly addressed by the microprocessor in the same way that RAM could, such that one could replace that RAM with the appropriate flash memory.” […] Based on the claim construction, the parties to the Colorado litigation stipulated to dismiss the case with prejudice, which the Colorado Court granted.
e.Digital Corp., at *3-4.
After the Colorado case, the United States Patent and Trademark Office cancelled claims 1 and 19 of the ’774 patent in an ex parte reexamination. ’774 patent col. 2 l. 58–col. 4 l. 38 (ex parte reexamination certificate). It issued reexamined claim 33, which recites the limitations of cancelled claims 1 and 19, including the identical sole memory limitation, and added additional limitations like a microprocessor. […] Based on the Colorado Court’s previous construction, the defendants moved to apply collateral estoppel to the construction of the sole memory limitation in the ’774 and ’108 patents. The district court granted the motions and adopted the Colorado Court’s construction.
Id., at *4.
[1: Collateral Estoppel]
Collateral Estoppel, generallyCollateral estoppel applies if: (1) the issue necessarily decided in the previous proceeding is identical to the one which is sought to be relitigated; (2) the first proceeding ended with a final judgment on the merits; and (3) the party against which collateral estoppel is asserted was a party or in privity with a party at the first proceeding. Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000).
e.Digital Corp., at *5.
‘774 patentThe reexamination instead focused exclusively on a limitation in claim 33 that is completely unrelated to the sole memory limitation. Though we do not hold that reexamination history cannot ever create a new issue that would preclude the application of collateral estoppel, such a scenario does not exist here because the reexamination history in no way modifies, clarifies, or even informs the construction of the sole memory limitation. Furthermore, though claim 33 adds a microprocessor not recited in claims 1 and 19, the Colorado Court already considered, at length, whether existence of a microprocessor required the presence of RAM, and decided that it did not. Thus, despite e.Digital’s arguments to the contrary, the addition of a microprocessor was expressly considered by the Colorado Court. Because reexamined claim 33 presents the identical claim construction inquiry as decided in the Colorado action, the district court properly applied collateral estoppel to the ’774 patent.
Id. at *5-6.
'108 patentThe ’108 patent, on the other hand, presents a sepa- rate claim construction issue. The ’108 patent is not related to the ’774 patent, but does disclose a purported improvement to the ’774 patent. ’[…] While the ’108 patent may incorporate by reference the ’774 patent as prior art, it does not change the fact that the patents are not related. The ’108 patent discloses a separate invention, includes a distinct prosecution history, and is supported by a different writ- ten description—including Figures 3 and 4 which clearly depict RAM. These distinctions reinforce the well- understood notion that claims of unrelated patents must be construed separately. […] Because the asserted patents are not related, the ’108 patent requires a new claim construction inquiry and the court therefore erred in applying collateral estoppel to the ’108 patent.
Id. at *6 (internal citations omitted).
[2: Conversion of Partial Judgment to Final Judgment]
Rule 54(b)[T]he district court did not abuse its discretion in converting Pantech’s partial judgment of non- infringement to a final judgment under Fed. R. Civ. P. 54(b). […] Rule 54(b) provides that a district court “may direct entry of a final judgment as to one or more, but fewer than all, claims . . . only if the court expressly determines that there is no just reason for delay.” We see no error in the district court’s determination that there was no just reason for delay because “[a]s the Huawei case [was] already on appeal, certifying the balance of cases ensure[d] that the collateral estoppel order [would] be appealed only once.” […]
e.Digital Corp., at *7 (internal citations omitted).
Conclusion
The district court correctly applied collateral estoppel to the ’774 patent, but erred in imposing the doctrine as to the unrelated ’108 patent, which requires an independent claim construction. The court did not abuse its discretion when it certified Pantech’s case for appeal pursuant to Rule 54(b).
e.Digital Corp., at *7.
 
 
 
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