Relying on the doctrine of judicial estoppel in determining the real party in interest, the U.S. Court of Appeals for the Second Circuit found that Intellivision’s founders improperly attempted to insert themselves into the litigation at the eleventh hour.  Intellivision et al. v. Microsoft Corp., Case No. 11-1657 (2nd Cir., June 11, 2012) (Summary Order).

Intellivision sued Microsoft for fraudulent inducement, negligent misrepresentation and breach of fiduciary duty over a dispute relating to an agreement for assignment of patent applications. The plaintiffs brought suit in Connecticut by representing that Intellivision, having its principal place of business in Connecticut, was the owner and assignor of the patent applications. The district court denied a motion to dismiss in reliance on that representation, finding that Intellivision’s claims, although not viable in New York, were preserved in Connecticut. The plaintiffs persisted with these representations throughout the majority of the litigation, only to later reverse course and assert that the principals of Intellivision owned and assigned the patent applications in their individual capacity to avoid summary judgment in favor of Microsoft based on Connecticut’s statute of limitations.

The district court concluded that all three factors for judicial estoppel articulated by the Supreme Court in New Hampshire were satisfied:  the party’s new position was “clearly inconsistent” with its earlier position, the party asserting the new position previously persuaded the court to accept its earlier position and (3) that party “would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” Intellivision appealed. 

The 2d Circuit, in affirming the district court, rejected the argument that plaintiffs’ position was not “clearly inconsistent,” citing the plaintiff’s contradictory arguments made in the motion to dismiss and the summary judgment motion. The court also rejected the argument that judicial estoppel requires a party’s position to have been adopted by a different court in a “prior separate proceeding.”  The 2d Circuit, citing Supreme Court precedent, stated that judicial estoppel is a flexible equitable doctrine without fixed requirements and that judicial estoppel “generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase.”

Practice Note:  As judicial estoppel may not be limited to a “prior proceeding,” practitioners should consider the doctrine in analyzing their opponent’s inconsistent arguments in the midst of litigation.