Judge Stark has granted a motion for judgment on the pleadings under Rule 12(c) in a patent infringement case involving patents related to transmitting video signals over telephone lines. The plaintiff, United Access Technologies, filed cases against several defendants in 2011. Two defendants, CenturyLink, Inc. and Qwest Corp., filed motions for judgment on the pleadings and their cases were stayed pending the outcome of those motions. It was undisputed that Plaintiff’s predecessor, a prior owner of the patents-in-suit, had filed a previous suit on the patent-in-suit, that a jury had returned a verdict of non-infringement, and that the District Court and the Federal Circuit had denied a motion for judgment of infringement as a matter of law. The question for the Court, therefore, was whether the current cases should be dismissed based on collateral estoppel. United Access Technologies, LLC v. Centurytel Broadband Services, LLC, et al., C.A. No. 11-339-LPS, Memo. Op. at 1-3 (D. Del. Dec. 20, 2013).
Third Circuit law applied and required that “(1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the previous determination was necessary to the decision; and (4) the party being precluded from relitigating the issue was fully represented in the prior action.” Id. at 3 (quoting Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006)). “The Third Circuit has ‘also considered whether the party being precluded had a full and fair opportunity to litigate the issue in question in the prior action, and whether the issue was determined by a final and valid judgment.’” Id. (quoting Jean Alexander, 458 F.3d at 249).
Judge Stark first found that the identical issue of infringement had been adjudicated in the prior suit with the plaintiff’s predecessor. Furthermore, Judge Stark agreed with the defendants that the plaintiff had “waived its opportunity to try to identify meaningful differences between their accused products and those at issue in” the prior litigation. Id. at 3-4. Because the collateral estoppel issue was identified early in the case, the scheduling order had been tailored to require the plaintiff to “specifically identify any features that form the basis for Plaintiff’s allegation that Defendants’ systems are distinguishable from the systems found not to infringe the patents-in-suit in” the prior litigation. In response, the plaintiff distinguished the cases on the basis that the prior judgment had found that the accused system was distinct from any telephone devices. Judge Stark found, however, that this distinction “does nothing to account for the fact that the issue of whether industry standard ADSL infringes the patents-in-suit was litigated, and lost.” “At best, [this argument] would only allow Plaintiff to overcome one of the bases on which it lost in [prior litigation]. Another reason a judgment of non-infringement was entered in that earlier action is that Plaintiff failed to show that industry standard ADSL was within the scope of the patents-in-suit.” This was “fatal to Plaintiffs case, as the Third Circuit ‘follow[s] the traditional view that independently sufficient alternative findings should be given preclusive effect.’” Id. at 3-8 (quoting Jean Alexander, 458 F.3d at 255).
Judge Stark also rejected the plaintiff’s argument that only the specific ADSL system accused in the previous litigation was at issue and therefore “industry standard” ADSL was not necessary to the decision. Based on the testimony of the expert in the previous litigation, however, Judge Stark found that the “industry standard” ADSL had been at issue and necessary to the prior judgment. Id. at 8-10. Furthermore, it was undisputed that direct infringement had been “actually litigated” previously, and because direct infringement claims were estopped, the plaintiff could not prove its indirect infringement claims, which it asserted had not been actually litigated. Id. at 10. Finally, the plaintiff was “fully represented” in the previous litigation because the plaintiff’s predecessor had “a full and fair opportunity to litigate the issue.” Id. at 10-11.
Finally, Judge Stark rejected the suggestion that the motion was really a summary judgment motion in disguise, emphasizing that the Court relied on the material from the prior litigation “only to show that the identical issue was actually and necessarily litigated, and not for the truth of facts averred in those proceedings.” Id. at 11-12. Accordingly, all of the elements of collateral estoppel were satisfied, and Judge Stark granted the motion for judgment on the pleadings.
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