In July, the Federal Circuit decided SkyHawke Technologies, LLC v. Deca International Corp.,1 finding that a patentee who prevails in an inter partes reexamination, but who is nonetheless dissatisfied with the claim construction given by the USPTO, may not then challenge that claim construction in an appeal to the Federal Circuit. The Federal Circuit hewed to the general rule that a prevailing party cannot challenge the underlying claim construction, while not challenging the judgment itself.2
At the outset of this controversy, SkyHawke sued Deca in district court for patent infringement. In response, Deca filed a request for inter partes reexamination of the asserted patent. The district court stayed the litigation pending the outcome of the inter partes reexamination.
The claims were upheld in the inter partes reexamination, but based on a narrower claim construction than that advocated by SkyHawke. Despite prevailing in the reexamination, SkyHawke attempted to appeal the claim construction to the Federal Circuit, arguing that the narrow claim construction potentially impacted its patent rights, particularly with respect to the ongoing district court proceeding.3 As discussed below, the Federal Circuit in SkyHawke considered both the doctrine of issue preclusion, as well as that of judicial estoppel, before determining that SkyHawke could not obtain appellate review.
Issue preclusion, also known collateral estoppel, can bar a party from re-litigating an identical issue that was actually litigated, if that party had a full and fair opportunity to litigate and a final judgment was rendered as to which the issue was essential.4 Judicial estoppel, on the other hand, bars a party from taking a position contrary to an earlier-advocated position after that position has been adopted by a tribunal.5 Each of issue preclusion and judicial estoppel can bar a party from taking its desired position in a later proceeding, but through slightly different mechanisms. These principles can play out differently depending upon the context and procedural posture.
The Federal Circuit Decision
In deciding that SkyHawke could not obtain appellate review of the USPTO’s claim construction, the Federal Circuit emphasized that SkyHawke was free to advocate its preferred claim construction in subsequent proceedings, particularly the ongoing district court proceeding. First, the Federal Circuit noted that issue preclusion would not be a factor between the two proceedings, as claim construction under the district court’s standard of claim construction had not been “actually litigated” and moreover, a judgment cannot have preclusive effect if there was no right to appeal the judgment.6 With respect to judicial estoppel, the Federal Circuit remarked that “SkyHawke clearly did not advocate the claim construction ultimately adopted,” and will not be bound since “judicial estoppel only binds a party to a position that it advocated and successfully achieved.”7 Although SkyHawke is thus free to promote a different claim construction, the decision raises interesting considerations regarding a party’s ability to argue for different claim constructions in various proceedings.
District Court and USPTO Proceedings
The first scenario to consider involves separate proceedings before the USPTO and one or more district courts. Generally, a party is free to promote a different claim construction before the USPTO as compared to a district court, and vice versa.8 In SkyHawke Technologies, the USPTO’s claim construction was based on the broadest reasonable interpretation of the claims, and, as a result, the district court in the co-pending litigation was not bound by that determination. Not only could the District Court give the patent claims a different construction (even, perhaps, a broader construction9), but SkyHawke was not estopped from taking any position it wanted before the district court.10
Multiple District Court Proceedings
Although judicial estoppel can only bar a second, inconsistent claim construction if the party was successful in persuading the court to adopt the first one, as discussed above, issue preclusion can attach regardless of the ultimate claim construction reached in the first proceeding. In particular, there can be issue preclusion if the claim construction ruling was essential to the judgment, for example, essential to the ultimate judgment of infringement or validity.11
An important caveat is that the proceeding must reach final judgment in order to prompt issue preclusion in a later proceeding.12 Even though a Markman hearing or a partial summary judgment on claim construction can often be determinative of the issues, such a claim construction ruling will generally not have a preclusive effect if the case settles before reaching final judgment.13
Issue preclusion can apply in a subsequent district court proceeding asserting a different, but related patent or patent claim.14 However, in e.Digital Corp. v. Futurewei Technologies, Inc.,15 the Federal Circuit faced the question of whether issue preclusion can apply between claim constructions of unrelated patents, albeit patents including the same claim terms.
e.Digital had previously asserted certain claims of a first patent (the ’774 Patent) in district court, which resulted in an unfavorable claim construction. After the claim construction ruling, the parties stipulated to the dismissal of the case with prejudice, which the court granted. Subsequently, in an ex parte reexamination, the USPTO cancelled two claims that were asserted in the district court litigation and reissued the claims combined together as a reexamined claim, adding certain limitations consistent with the district court’s opinion. e.Digital then asserted this reexamined claim, along with claims in a second patent (the ’108 Patent). The ’108 Patent included several claim terms that were previously construed in the first proceeding in connection with the ’774 Patent. The ’108 Patent did not claim a priority relationship to the ’774 Patent, but it concerned the same subject matter and provided improvements to the ’774 Patent.
The Federal Circuit concluded that issue preclusion barred e.Digital from asserting a different claim construction for the reexamined claim of the ’774 Patent, but not did apply to the claims of the ’108 Patent. For the ’774 Patent, the Federal Circuit concluded that issue preclusion was appropriate because the reexamined claim included an identical limitation to the previously-litigated claims and the reexamination history did not create any new issues with respect to this limitation.16 Regarding the ’108 Patent, the Federal Circuit determined that “collateral estoppel cannot apply to the construction of a claim in one patent based on a previous claim construction of an unrelated patent.”17 However, the Federal Circuit implied that, for patents within the same family, a claim construction ruling in one can often result in issue preclusion in another.18 Accordingly, the claim construction ruling on one proceeding can be binding, not only on other claims within the same patent, but potentially on other patents within the same family.
Keeping in mind issue preclusion and judicial estoppel, there may be limited opportunity to pursue an alternative claim construction, particularly in subsequent district court proceedings. Accordingly, it is important to think strategically and take the long view of claim construction arguments, including both the arguments made during patent prosecution and those made in subsequent infringement or invalidity proceedings. Particularly where proceedings in multiple forums are anticipated, it is important to carefully consider a claim construction strategy in the first proceeding. including a strategy for settling or otherwise terminating a proceeding, understanding that the claim construction could be binding in subsequent proceedings. Additionally, it may be beneficial to consider patent portfolio structure to diminish the potential negative effects of issue preclusion. In sum, claim construction is not a process that is isolated within one patent or one proceeding. Rather, it is an ongoing strategy that should be approached systematically and strategically.