No Claim Preclusion. No Issue Preclusion. No Problem. The Kessler Doctrine Fills the Gap.
| March 26, 2014
Brain Life, LLC v. Elekta Inc.
March 24, 2014
Before O’Malley, Bryson, Wallach. Opinion by O’Malley
Summary:
In a prior case, Medical Instrumentation Diagnostics Corporation (MIDCO) brought a patent infringement suit against Elekta asserting the apparatus claims and the method claims of US Patent No. 5,398,684 (“the ‘684 patent”). The method claims were later dropped from the suit “without prejudice.” MIDCO ended up losing the infringement action. Brain Life, the successor-in-interest of the ‘684 patent, brought a suit against Elekta alleging infringement of the method claims of the same patent against the same products except for one additional product.
The CAFC held that claim preclusion did not bar the suit with regard to alleged acts of infringement occurring after the judgment in the first suit brought by MIDCO. The CAFC also held that issue preclusion did not bar the suit with regard to the method claims because the method claims were not “actually litigated.” However, under the “Kessler Doctrine,” Elekta has a right to use the products held not to be infringing the ‘684 patent in the first action freely and without harassment. Thus, the CAFC affirmed the District Court’s determination that the suit is barred with regard to the products involved in the first action, albeit, on different grounds from the District Court. The CAFC vacated the District Court’s decision and remanded the case with regard to the product that was not previously litigated in the MIDCO case.
Details:
The ‘684 patent is to a “Method and Apparatus For Video Presentation From Scanner Imaging Sources.” The patent deals with generating a video image from a variety of separate scanner imaging sources such as a computerized axial tomography image, a nuclear magnetic resonance image, and an X-ray image. Claim 1 of the patent is to an apparatus and claim 53 is to a method. The claims are provided below:
1. An apparatus for generating a presentation of images from a variety of imaging sources, the apparatus comprising:
means for acquiring a plurality of images from a plurality of separate imaging sources;
means for converting said plurality of images into a selected format;
means for storing said plurality of images;
means for selectively recalling and displaying at least two images of said plurality of images upon a single display device;
means for manipulating at least one of said at least two images independently of the other image;
means for comparing said at least two images;
means for determining stereotactic coordinates and performing volumetric determinations from said at least two images; and
means for determining distances and areas from said at least two images.
53. A method for generating a presentation of images from a variety of imaging sources, the method comprising the steps of:
acquiring a plurality of images from a plurality of separate imaging sources;
converting the plurality of images into a selected format;
storing the plurality of images;
selectively recalling and displaying at least two images of the plurality of images upon a single display device;
manipulating at least one of the at least two images independently of the other image;
comparing the at least two images;
determining stereotactic coordinates and performing volumetric determinations from the at least two images; and
determining distances and areas from the at least two images.
MIDCO sued Elekta alleging that Elekta’s GammaKnife, GammaPlan and SurgiPlan products infringed the ‘684 patent including the apparatus and method claims. Later, MIDCO focused only on the apparatus claims and the District Court dismissed the method claims “without prejudice.” The District Court construed the “converting means” of claim 1 as including “analog-to-digital” conversion and “software based digital-to-digital conversion,” and found Elekta’s products to be infringing. On appeal at the CAFC, the converting means was held not to include the digital-to-digital conversion, and as a result, Elekta’s products were held to be non-infringing. MIDCO unsuccessfully attempted to revive the method claims.
Brain Life acquired an exclusive license to the ‘684 patent and sued several defendants including Elekta alleging that the GammaKnife, GammaPlan, SurgiPlan which were part of the first action brought by MIDCO, and the ERGO++ system which was not part of the first action, infringed the method claims of the ‘684 patent. Elekta sought to dismiss the suit on res judicata and collateral estoppel grounds. On summary judgment, the District Court granted Elekta’s request stating that Brain Life’s claims were barred because MIDCO chose to forgo the method claims in the first suit, and that once final judgment was entered in the first suit, Elekta could proceed to develop and sell its products with an understanding that its products did not infringe the ‘684 patent. Brain Life appealed this decision to the CAFC.
As a side note, Brain Life’s suit against the other remaining defendants moved forward. The District Court construed method claim 53 as being broader than apparatus claim 1. The “converting” step was construed to include analog-to-digital conversion and digital-to-digital conversion. A reason for the narrower construction in claim 1 could be because the limitation in claim 1 is a “means” limitation that requires corresponding structure in the disclosure. The CAFC in the MIDCO case held that the disclosure did not include corresponding structure for the digital-to-digital conversion because “it was not clearly linked to the claimed function of converting images into a selected format.”
Claim Preclusion
CAFC applied Ninth Circuit law with regard to claim preclusion which applies “where the prior suit: (1) involved the same claim or cause of action as the later suit; (2) reached a final judgment on the merits; and (3) involved the same parties or privies.” “Claim preclusion bars both claims that were brought as well as those that could have been brought.”
The CAFC explained that claim preclusion bars the assertion of infringement of either the method or apparatus claims to the extent that the alleged acts of infringement predate the final judgment in the MIDCO suit. However, Brain Life argued that they are not barred from asserting the method claims because the method claims were dismissed “without prejudice” in the MIDCO suit. The CAFC stated that the dismissal without prejudice allowed for a cause of action on the method claims to be brought with regard to future acts of infringement, but they were barred from bringing a cause of action on the method claims that pre-date the MIDCO suit.
For acts that postdate the MIDCO judgment, however, Brain Life is not barred from an infringement action because Brain Life “could not have asserted infringement claims against the products in question for acts of alleged infringement that postdate the final judgment in the MIDCO Litigation.” So claim preclusion was not a bar to Brain Life’s patent infringement suit.
Issue Preclusion
“Issue preclusion bars subsequent litigation on an issue of law or fact that was actually litigated.” In the MIDCO case, MIDCO focused only on the apparatus claims. Elekta requested that the method claims be dismissed prior to trial and MIDCO did not oppose. The District Court dismissed the method claims “without prejudice.” Thus, method claims were not “fully, fairly, and actually litigated to finality between the parties,” and issue preclusion does not bar Brain Life from the infringement action with regard to the method claims.
Kessler Doctrine
“The Kessler doctrine fills the gap between [claim preclusion and issue preclusion] doctrines, however, allowing an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post-final judgment in a patent action where circumstances justify it.” The Kessler doctrine is based on a 1907 Supreme Court case (Kessler v. Eldred, 206 U.S. 285) that essentially gives rights with respect to specific products that had been held to be non-infringing, even when the specific acts of infringement would not be barred by claim preclusion because they occurred post-final judgment.
Under Kessler, the judgment of non-infringement in the MIDCO case gave Elekta the right to freely continue engaging in the accused commercial activity as a non-infringer with regard to the entire ‘684 patent including the method claims since MIDCO asserted all of the claims of the ‘684 patent against Elekta even though MIDCO later abandoned the method claims. Thus, the accused devices in the Brain Life suit that were part of the MIDCO case (GammaKnife, GammaPlan, SurgiPlan) have acquired a non-infringing status and Elekta is free to continue using those products. The judgment with regard to these products was affirmed.
However, Brain Life is not barred from the infringement action with regard to the ERGO++ product which was acquired by Elekta after the MIDCO case was final. In other words, the ERGO++ product has not acquired the status of a non-infringing product in connection with the ‘684 patent. The judgment with regard to this product was vacated and remanded.
Takeaway:
Claim preclusion applies to claims that were brought and claims that “could have been brought,” but is limited only to acts that pre-date the judgment. Issue preclusion applies to subsequent litigation, but issue preclusion is limited to issues of law or fact that were “actually litigated.” The Kessler doctrine fills in this gap giving continuing “non-infringing status” to products held non-infringing in a prior action.
When acquiring patent rights as an exclusive licensee or assignee make sure you understand the limitations on the enforceability of the patent due to prior lawsuits. Even if claim preclusion or issue preclusion do not apply, the Kessler doctrine provides a right to use a product that has already been found non-infringing to some claims of a patent extending to all claims of the patent. Also, as patent owner, make sure you understand the consequences of the Kessler doctrine when dropping claims from a lawsuit even if the claims are dismissed “without prejudice.”
