Under the doctrine of claim preclusion, also known as res judicata, “a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action.” Acumed LLC v. Stryker Corp., 525 F.3d 1319, 1323 (Fed. Cir. 2008). Under Seventh Circuit law, which includes Wisconsin, there are three elements to claim preclusion: “(1) an identity of the parties or their privies in the first and second lawsuits; (2) an identity of the cause of action; and (3) a final judgment on the merits in the first suit.” Adams v. City of Indianapolis, 742 F.3d 720, 736 (7th Cir. 2014).
Claim preclusion requires that the claim either was asserted, or could have been asserted, in the prior action. Aspex Eyewear, Inc. v. Marchon Eyewear, Inc., 672 F.3d 1335, 1342 (Fed. Cir. 2012). If, for example, the claim did not exist at the time of the earlier action, then it could not have been asserted in that action and is not barred. Id.
The policy behind claim preclusion is to prevent repetitive litigation and ensure consistent decisions. In order to encourage parties to litigate all their related claims at once, courts may adopt a broad understanding of what claims are part of the same-cause-of-action.
Claim Preclusion for Patent Suits
For patent infringement lawsuits, “same cause of action” is interpreted by the Federal Circuit to mean that “the second claim is based on the same set of transactional facts as the first.” Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1362 (Fed. Cir. 2000). Even so, a suit may not be barred by claim preclusion, even where the same transactional facts are present in both suits, if infringement allegations are “temporally limited to acts occurring after final judgment was entered in the first suit.” Brain Life, LLC v. Elekta Inc., 746 F.3d 1045, 1054 (Fed. Cir. 2014).
Below are some examples from Professor Crouch:
- Accusing one product in a first case; and a different product in a second case — different causes of action.
- Asserting one patent in a first case, and an entirely different patent in a second case — different causes of action.
- Asserting claim 1 of a patent in one case, and claim 2 of the same patent in a second case — same causes of action.
In Inguran, LLC v. ABS Global, Inc., No. 22-1385, — F.4th — (Fed. Cir. July 5, 2023), the Federal Circuit held that a final judgment of direct patent infringement does not preclude a subsequent lawsuit between the same parties for indirect inducement of patent infringement on the same patent because “an induced infringement claim rests on evidence and elements beyond those required by direct infringement.”
Direct Infringement
The patent covered gendered bovine sperm straws used for artificial insemination. Inguran (doing business as ST) sued ABS for direct infringement and won an award of $750k past damages and an ongoing royalty of $1.25 per straw. The parties later agreed to a lump sum payment to satisfy the entire original judgment.
Although ABS also was planning to license its technology for the straws, such licensing was prospective at the time of trial. The final judgment made no determination as to ABS’s indirect liability for infringement by licensees.
Induced Infringement
Years later, ST again sued ABS for inducement of infringement based on ABS’s licensing for others to make its straws.
ABS argued that the licensing activity was part of the original judgment and thus subject to claim preclusion. The Western District of Wisconsin agreed, and dismissed the lawsuit.
On appeal, the Federal Circuit reversed the district court, finding that (1) a claim of inducement of infringement was not automatically precluded because it is a different cause of action from direct infringement; and (2) an inducement claim would have been based on speculation at the time of the original lawsuit and thus could have been asserted, in part because the parties stipulated to direct infringement and the question of inducement was not before the jury.
Because the scope of direct infringement allegations cannot reasonably be expanded to cover actions of third-party licensees making their own straws, the Federal Circuit held that the district court improperly broadened the scope of the original judgment to address induced infringement activity.
Accordingly, the Federal Circuit reversed the district court’s dismissal with respect to claim preclusion.
The patent attorneys at Thomas P. Howard, LLC enforce patents and defend against infringement in litigation nationwide including in Colorado.