Fitch Even IP Alert: Kessler Doctrine Bars Claims Against the Same Accused Products in Repeated Litigation

 In a decision earlier this week, Brain Life, LLC v. Elekta Inc. [an enhanced version of this opinion is available to lexis.com subscribers], the Federal Circuit applied a rarely used equitable doctrine to bar claims of patent infringement based on prior litigation. This doctrine, which was enunciated in the 1907 Supreme Court case Kessler v. Eldred and known as the “Kessler Doctrine,” bars an infringement suit when an accused infringer’s specific activities have been held to be non-infringing in prior litigation, and when the accused activities in a second suit are essentially the same as those in the prior litigation. The Kessler Doctrine operates to bar such claims even where the defendant’s specific acts occurred after the final judgment in the prior litigation, and therefore would not be barred by the doctrines of claim or issue preclusion.
 
In a first litigation filed in 1997, plaintiff Medical Instrumentation Diagnostics Corporation (“MIDCO”) sued defendant Elekta, alleging infringement of U.S. Patent No. 5,398,684. The patent included both method and system claims. Elekta moved for dismissal of the method claims, and MIDCO did not oppose. The trial court dismissed the method claims without prejudice. The parties proceeded to trial on the system claims, and the jury found that Elekta’s products infringed the patent and awarded $16 million in damages. On appeal, the Federal Circuit reversed and found no infringement. MIDCO then attempted to revive the method claims at the trial court, but the trial court refused, and the Federal Circuit affirmed the trial court’s decision.

In 2009, MIDCO licensed the ’684 patent to a third party, which, in turn, licensed the patent to plaintiff Brain Life. Brain Life then filed a suit against several defendants, including Elekta, alleging infringement of the ’684 patent. Elekta moved to dismiss Brain Life’s complaint on claim preclusion grounds. The trial court granted summary judgment in favor of Elekta, and Brain Life appealed.

The Federal Circuit segregated its analysis into activities that had occurred before and after the final judgment in the first suit. For pre-judgment activities, the Federal Circuit affirmed that claim preclusion barred Brain Life’s infringement claims—including both the system and method claims. The Federal Circuit explained that although the prior plaintiff had dismissed the method claims without prejudice, this did not give the plaintiff “carte blanche” to reassert those claims. Instead, the court held that the prior final judgment had cut off the right to further assert the method claims.

With regard to post-judgment activities, the Federal Circuit held that neither claim nor issue preclusion doctrines were a bar to Brain Life’s infringement allegations. The court reasoned that claim preclusion did not prevent Brain Life from asserting the system or method claims against post-judgment activities, or against one product that was entirely new to Elekta after the prior judgment in the first case. The court further held that issue preclusion did not bar the assertion of the method claims, because these method claims had not been fully, fairly, and actually litigated to finality between these parties in the first case. For example, neither party requested that any terms of the method claims be construed, nor did either party move for a determination of summary judgment regarding infringement, validity, or enforceability of the method claims. Issue preclusion also did not bar the Brain Life’s assertion of the claims against defendant’s post-judgment activities.

However, the court held that the Kessler Doctrine barred the assertion of the system claims against devices manufactured and sold after the final judgment in the first suit that were essentially the same as the products accused in the prior litigation. After acknowledging that its “past reliance” on the Kessler Doctrine has been “sparse,” the Federal Circuit explained that the Kessler Doctrine allows an adjudged non-infringer to avoid repeated “harassment for continuing its business as usual” post-final judgment. Through the prior litigation, an accused infringer has obtained rights with respect to specific products that have been held to be non-infringing and the specific accused devices acquire the status of a non-infringing device. When the accused devices in the first and second suits are essentially the same, the new devices also acquire the status of a non-infringing device with respect to the same accusing party or its privies. The justification for the Kessler Doctrine is that after final judgment of non-infringement in litigation, a defendant should be allowed to conduct its business without the harassment of additional litigation.

The court further held that the Kessler Doctrine barred the assertion of the method claims against these devices, despite the prior dismissal without prejudice. The Federal Circuit explained that even though the prior plaintiff abandoned the method claims prior to trial, it could have continued to assert those claims. The district court had entered a final judgment as to all claims, leaving Elekta free to continue engaging in the accused commercial activities as a non-infringer.

Finally, the court held that the Kessler Doctrine did not bar the plaintiff’s claims against the one product that was entirely new to Elekta after the prior judgment in the first case. Having not been a part of the prior litigation, it never acquired the status of a non-infringing device in connection with the ’684 patent.

The Brain Life case is of interest to those parties involved in repeated litigation on the same or related products. For more information, please contact Fitch Even partner Alison Aubry Richards, the author of this alert.

© Copyright 2006-2014 Fitch, Even, Tabin & Flannery LLP - All Rights Reserved Disclaimer

For more information about LexisNexis products and solutions connect with us through our corporate site.