Sustaining a grant of summary judgment based on collateral estoppel, the U.S. Court of Appeals for the Federal Circuit held that the district court properly granted summary judgment that the patent owner had already litigated a similar case and the Federal Circuit had previously found that accessing a catalog website over the internet with a computer or cell phone did not infringe the asserted claims.  Furnace Brook LLC v. Aeropostale, Inc., Case No. 11-1025 (Fed. Cir,. July 22, 2011) (Moore, J.) (O’Malley, J., dissenting).

Furnace Brook sued Aeropostale for infringing a patent related to an interactive computer catalog accessed by telephone that also has a communication link between the telephone and the computer.  Furnace Brook had previously asserted this patent against Overstock.com.  In the prior litigation, the Federal Circuit construed the same patent claim to require “a dial-up connection to the catalog server” and that “the communication link be established over a telephone network by dialing the computer system directly.”  In the Overstock.com case, the Federal Circuit found that accessing a website over the internet without directly dialing the computer system did not infringe the patent.  The first Federal Circuit panel also found that Furnace Brook had not presented any evidence of infringement under the doctrine of equivalents.  The district court granted Aeropostale’s motion for summary judgment of non-infringement based on collateral estoppel.  Furnace Brook appealed.

The Federal Circuit began the analysis by reviewing the U.S. Court of Appeals for the Seventh Circuit’s standard for collateral estoppel, which it applied in this case.  Furnace Brook argued that the prior litigation was not based on the “telephone terminal” limitation, but was instead based on the “selective communication link” element of the claim.  Furnace Brook argued that it had never had the opportunity to litigate the “selective communication link” element of the claim and thus could not be collaterally estopped from litigating that element in this case.  The Court disagreed and noted that the holding in the prior litigation was based on the “telephone terminal” element, and that Furnace Brook admitted that it had the opportunity to fully litigate that element.  Therefore, since Furnace Brook had already been given the opportunity to litigate the dispositive claim element, collateral estoppel applied.  The Court noted that even if they disagreed with the holding of the prior case, an earlier decision of the Federal Circuit is binding on a later panel.  Therefore, the district court properly granted summary judgment.

Judge O’Malley dissented, writing that the majority had not properly considered the procedural history of the case.   Judge O’Malley found that since the Federal Circuit had changed the construction of the claims in the prior litigation and did not remand the case to the district court, Furnace Brook was not given an opportunity to fully litigate whether a “telephone terminal” could include a personal computer or a cellular phone.  Judge O’Malley found that these issues were not in dispute in the previous case until after the Federal Circuit modified the claim construction, and therefore Furnace Brook had no reason to present evidence on the issue at the district court.  Accordingly, Judge O’Malley found that Furnace Brook and did not fully litigate the issue in the prior case.