ITC Administrative Ruling of Non-Infringement in a 337 Patent Case Given Preclusive Effect by District Court

Any residual sense that the International Trade Commission (ITC) rulings on patent infringement are of lesser import than those of the District Courts should be dispelled forthwith, and clients advised accordingly. While it is true that res judicata (claim preclusion) and collateral estoppel (issue preclusion) are proprietary to the judiciary branch (Article III courts), it is not true that when it comes to patent infringement rulings from the executive branch (ITC) there is no finality or preclusive effect to such rulings. The District Courts will not abide relitigating the same infringement issues that reach finality from the ITC.

Thus it was that Solomon Technologies, Inc. learned this lesson first hand on January 26, 2010, when it sought to proceed in District Court against Toyota Motor Corporation in a second round of litigating patent infringement of hybrid engines. In Solomon Tech. Inc., v. Toyota Motor Corp., 8:05-cv-01702-T-MAP, slip op., (M.D. Fla. Jan. 26, 2010) the Court granted Toyota summary judgment of non-infringement based on the earlier non-infringement ruling of the ITC as affirmed by the Federal Circuit. Eschewing the traditional preclusive tools of res judicata and collateral estoppel, due to the Article III nature of the ITC/Federal Circuit ruling, the Florida Court applied judicial estoppel in ruling for Toyota, citing to the Federal Circuit's admonition that: "District courts are not free to ignore holdings of this court (Fed. Cir.) that bear on cases before them."

Solomon was caught up in the traditional ITC complainant posture of filing both an ITC action and a District Court action, but was missing due respect for the ITC. Typically, ITC Section 337 complainants file patent infringement cases at both the ITC and District Court because the ITC cannot deal with such issues as damages and willfulness. The filing of a companion case in District Court is meant to capture such issues as well as leverage money settlements from the ITC proceedings. Despite the two filings there is little danger that the two cases will proceed at the same time as ITC cases enjoy preferential treatment. In fact, the District Court cases are usually stayed pursuant to statute. When the ITC issued its agency ruling of non-infringement against Solomon, affirmed by the Federal Circuit, Solomon believed that it could retry the matter, even with a different theory, in a separate branch of the government. The District Court in Florida refused to entertain such a position.

The Solomon case serves as a reminder of the many benefits of litigating patent infringement at the ITC. The rulings can become final, quicker and cheaper, with broader, stronger and easier to obtain injunctions.

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