Patent Litigation

• Published in: The IP Litigator : Devoted to Intellectual Property Litigation and Enforcement Vol. 27; no. 5; pp. 27 - 29
• Main Authors: Holtman, Andrew, Gibson, Melissa, Price, Hannah
• Format: Trade Publication Article
• Language: English
• Published: New York Aspen Publishers, Inc 01.09.2021
• Subjects: Adjudication; Agreements; Boundaries; Content delivery networks; Customers; Electric utilities; Land surveys; Law; Litigation; Manufacturers; Manufacturing; Prejudice; Res judicata; State court decisions
• ISSN: 1086-914X

Overlooked Patent Cases: Using the Federal Circuit's Reinvigoration of the Kessler Doctrine to Impact Settlement Negotiations The Federal Circuit expanded the century-old Kessler Doctrine in In re PersonalWeb Technologies LLC to give preclusive effect to issues that were not "actually litigated," but were finally decided through voluntary dismissal with prejudice in a prior litigation.1 As recent district court decisions demonstrate, parties must consider the potentially longreaching preclusive impact of dismissing a litigation with prejudice when drafting terms of settlement agreements. "9 The court rationalized that if the Kessler doctrine were limited solely to adverse decisions resulting from a contested adjudication, patent owners would be free to harass manufacturers and their customers, which is exactly the conduct the Supreme Court sought to prevent in Kessler.10 Moreover, the court rejected the patent owner's argument that applying the Kessler doctrine to voluntary dismissal would stifle patent litigation settlements.11 Critically, the Court explained that parties wishing to settle litigations can preserve their rights to sue after a dismissal by crafting the settlement agreement to limit the preclusive effect of dismissal.12 District Courts Delineate the Metes and Bounds of the Kessler Doctrine In the wake of the appellate court's expansion of the Kessler Doctrine, district courts have begun to articulate how the newer scope applies. [...]the Central District of California explained that the Kessler Doctrine is limited to "claims that were brought or could have been brought" in the previous litigation.13 In Uniloc2017, LLC v. Ubisoft, Inc., the patent owner, Uniloc, voluntarily dismissed with prejudice two infringement suits against Akamai's content delivery network (CDN) product due to a license that effectively prevented Uniloc from suing Akamai for infringement.14 Uniloc instead filed a follow-on infringement action against Akamai's customer, Ubisoft, for its use of Akami's CDN technology.15 The court was unpersuaded by Uniloc's contention that Mentor Graphics Corporation v. EVE-USA, Inc.16 stood for the proposition that the Kessler Doctrine does not apply to an infringement action when a license that is no longer in effect ended the first lawsuit.17 Of critical importance, noted the court, was the Kessler Doctrine does not apply to alleged acts of infringement that did not exist at the time of the previous action.18 Here, however, the alleged infringement existed at the time of the initial suit, so Uniloc could have filed an infringement action at that time.19 Accordingly, Uniloc was barred from advancing this suit under the Kessler Doctrine. In CFL Technologies LLC v. General Electric Company, the District Court of Delaware further elucidated the contours of the Kessler Doctrine.20 First, the court found that, similar to claim preclusion, a change in the law exception does not apply to the Kessler Doctrine.21 Specifically, the court declined to accept that a change in inequitable conduct law following a final judgment that negated the basis for entering into a voluntary dismissal with prejudice was a barrier to the application of the Kessler Doctrine.22 Next, the court further expanded the Kessler Doctrine to apply to an earlier final judgment that the asserted patents are unenforceable.23 The Court, however, stopped short of expanding the Kessler Doctrine to bar subsequent infringement actions involving patents that were not at issue when the case was dismissed with prejudice.24 Here, the court denied the accused infringer's motion to dismiss because it failed to demonstrate that the asserted patents were subject to the prior dismissal with prejudice.25 Specifically, the court found the record was not clear as to whether the asserted patents were withdrawn early in the case without prejudice, or were still at-issue when the case was dismissed with prejudice.26 Simply put, despite the breadth of the preclusive effect of the Kessler Doctrine, it stops short of precluding subsequent infringement actions asserting patents that were not the subject of the dismissal with prejudice.