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No claim preclusion unless second accused product essentially the same as product in first suit
May 14, 2008
In a Tuesday decision, the Federal Circuit reversed a district court finding that a patent infringement suit was barred by claim preclusion. At issue was whether a claim for patent infringement was barred under the doctrine of claim preclusion when that claim could have been brought in a prior case. The patentee sued for infringement on the basis of one product, and during that lawsuit, learned of a second product that was the subject of the second infringement suit. The district court held the claim precluded because a claim of infringement based on the second product could have been added in the first case, and that the Federal Circuit's "essentially-the-same" test for preclusion only applied where the second claim could not have been brought in the first action.The Federal Circuit reversed, and the court disagreed with the district court's interpretation that the "essentially-the-same" test was limited to cases where the accused device could not have been included in the prior action. The proper test of claim preclusion, according to the court, is that a claim for patent infringement based on a second accused product or method can only be barred where the second product or method is essentially the same as an accused product or method in a prior action. The accused infringer admitted this was not the case here, so the court reversed the finding of preclusion.More concerning Acumed LLC v. Stryker Corp. after the jump.Acumed owns a patent directed to an intermedullary nail for fixing fractures of the proximal humeral cortex. In April 2004, Acumed sued Stryker for patent infringement due to Stryker's T2 Proximal Humeral Nail ("T2 PHN"). The T2 PHN is also used to treat proximal humeral bone fractures. During discovery, Acumed learned that Stryker had developed a longer version of the T2 PHN named the T2 Long. However, Stryker was not marketing the T2 Long in the U.S. during discovery and Acumed declined to amend its complaint to add an infringement claim based on the T2 Long.In April 2005, some four months after the close of discovery, Stryker began publicly marketing and selling the T2 Long in the U.S. In July 2005, Acumed inquired as to the commercial status of the T2 Long. Stryker rebuffed this inquiry, prompting Acumed to file a motion to compel production of a physical sample of the T2 Long and information relating to its status. Stryker provided the T2 Long sample and sales information after the court ordered it to do so. After inspecting the sample, Acumed determined that the T2 Long might infringe its patent as it was "substantially similar" to the T2 PHN. The district court offered to add a claim of infringement based on the T2 Long but warned that this would necessitate postponing the trial for up to one year.Preferring to avoid this delay, Acumed proceeded to trial solely on the T2 PHN infringement claim. The trial concluded with a jury verdict of infringement of the Acumed patent and that Stryker's infringement was willful. Final judgment was entered on April 20, 2006, and that decision was affirmed on appeal (that decision blogged here). Less than a month later, Acumed brought suit alleging patent infringement by the T2 Long. The district court dismissed the suit on the grounds of claim preclusion.Notably, the district court did not compare the T2 PHN and T2 Long to determine whether they were essentially the same for purposes of infringement. Rather, the district court distinguished relevant precedent and concluded that the essentially-the-same test is limited to cases where the accused device could not have been included in the prior action. Because the T2 Long nail could have been litigated in the previous case with the T2 PHN nail, claim preclusion applied.The Federal Circuit reversed. This interpretation, according to the court, was fundamentally wrong. The court emphasized language from an 1876 Supreme Court case explaining that claim preclusion does not bar a claim merely because it could have been raised in a prior action. The language relied on by the district court—"claims that were raised or could have been raised"—refers to legal theories arising out of the same transactional nucleus of facts, rather than distinct causes of action. Thus, the proper test is that claim preclusion only applies in patent cases where later accused device is essentially the same as an accused device in a prior action. Because the district court failed to compare the T2 nails, the court conducted its own comparison. The accused devices are essentially the same where the differences between them are merely colorable or unrelated to the limitations in the claim of the patent. This standard was sufficiently satisfied by Stryker's admissions that the T2 Long and T2 PHN are not essentially the same:
Stryker does not now nor has Stryker ever taken the position that the T2 Long is "essentially the same" as the T2 PHN. Stryker has repeatedly explained that the T2 Long introduces noninfringement defenses that were not available with respect to T2 PHN, and thus cannot be "essentially the same" . . . .
Based on Stryker's admissions that the T2 Long and T2 PHN were not "essentially the same," the court reversed the judgment of the district court and remanded for further proceedings.To read the full decision in Acumed LLC v. Stryker Corp., click here.
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