Your First Shot to Invalidate a Patent May be Your Last—District of Minnesota Holds Issue Preclusion Bars Party from Presenting ANY Invalidity Arguments
The District of Minnesota recently held that the doctrine of issue preclusion bars a party from making any invalidity arguments or re-construing claims of a patent it has previously litigated.
In 2005, August Technology Corp., a maker of semiconductor wafer inspection systems, sued its competitor Camtek, Ltd. (Camtek) for infringement of claims 1 and 3 of U.S. Patent No. 6,826,298. The parties raised 11 disputed terms for claim construction. Eventually, the case proceeded to trial and the jury found that (1) Camtek failed to prove the ’298 Patent was invalid and (2) Camtek’s Falcon inspection system infringed both asserted claims of the patent.
After purchasing August Technologies, Rudolph Technologies, Inc. sued Camtek, alleging Camtek’s Eagle inspection system infringes claims 1 and 3 of the ’298 Patent. As part of its defense, Camtek asserted several invalidity arguments and sought to re-construe some of the claim terms construed in the earlier litigation. Applying the doctrine of issue preclusion, the Honorable Wilhelmina Wright rejected Camtek’s arguments on both issues.
The doctrine of issue preclusion precludes a party from re-litigating an issue previously litigated and decided between the same parties, regardless of whether it involves the same claim. In the Eighth Circuit, the doctrine requires a showing on five elements:
1. the party sought to be precluded in the second suit must have been a party, or in privity with a party, to the original lawsuit;
2. the issue sought to be precluded must be the same as the issue involved in the prior action;
3. the issue sought to be precluded must have been actually litigated in the prior action;
4. the issue sought to be precluded must have been determined by a valid and final judgment; and
5. the determination in the prior action must have been essential to the prior judgment.
Sandy Lake Band of Mississippi Chippewa v. United States, 714 F.3d 1098, 1102-03 (8th Cir. 2013) (quoting Robinette v. Jones, 476 F.3d 585, 589 (8th Cir. 2007)).
Issue Preclusion and Patent Invalidity
The only element in dispute before Judge Wright regarding Camtek’s invalidity assertions was the scope of the “issue” previously litigated. Was Camtek precluded from making any invalidity argument or just those arguments made in the prior litigation? Although the name of the doctrine is issue preclusion—not argument preclusion—as Judge Wright noted, other district courts have come down on both sides and the Federal Circuit has not weighed in. After considering the arguments of the parties, the reasoning of other courts, the historical purpose of the doctrine, and the four Restatement factors for determining whether an issue is identical, Judge Wright held issue preclusion bars any invalidity arguments: “the Court concludes that patent invalidity is a single issue for the purpose of issue preclusion.”
Judge Wright acknowledged a narrow exception to the doctrine of issue preclusion, which applies when there is a change in the controlling law. However, Judge Wright found that the exception did not apply in this case because the law at issue changed while the prior litigation was still ongoing and Camtek could have raised it at that time. Although “Camtek had ample opportunity and incentive” to raise the issue, “[i]t chose not to.” Having stayed silent at the time, Camtek “abandoned” the argument.
Issue Preclusion and Claim Construction
Judge Wright also rejected Camtek’s arguments for adding additional language to the claim constructions applied in the prior litigation. Although the parties agreed that the prior constructions were binding, Camtek argued for clarification and interpretation of the prior constructions. Finding that the ultimate issue—the construction of the terms—was the same, the Court rejected the attempt to re-litigate the issue and modify the prior construction.
Judge Wright’s order appears to be the first in the District of Minnesota regarding the applicability of issue preclusion to patent invalidity arguments. The decision provides an important reminder that a party may only get one shot at attacking the validity of a patent, even if the party is later sued under the same patent for infringement of a different product. Thus, your first shot to invalidate a patent may be your last. A copy of Judge Wright’s order can be found here.