On December 8, 2016, ALJ Theodore R. Essex issued the public version of Order No. 33 (dated Dec. 1, 2016) granting Complainants’ motion for summary determination that Respondents cannot prove their collateral estoppel defense as a matter of law in Certain Beverage Brewing Capsules, Components Thereof, and Products Containing the Same (Inv. No. 337-TA-929).

By way of background, the underlying investigation is based on an August 4, 2014 complaint filed by Adrian Rivera and Adrian Rivera Maynez Enterprises, Inc. (collectively, “ARM”) alleging violation of Section 337 in the importation into the U.S. and sale of certain beverage brewing capsules, components thereof, and products containing the same that infringe one or more claims of U.S. Patent No. 8,720,320. See our August 6, 2014 and September 11, 2014 posts for more details on the complaint and Notice of Investigation, respectively. On March 17, 2016, the Commission issued its final determination and issued a limited exclusion order (“LEO”) and cease-and-desist orders (“CDOs”) directed at Eko Brands, LLC (“Eko”) and other respondents based on their infringement of claims 8 and 19.

As summarized in the order, on June 1, 2016, ARM filed an enforcement complaint alleging that Eko and Espresso Supply, Inc. have violated the LEO and CDOs. See our June 6, 2016 post for more details regarding the enforcement complaint. Respondents’ answer to the complaint included, among other things, a collateral estoppel defense, asserting that ARM should be collaterally estopped from enforcing claims 8 and 19 because these claims depend from independent claims found invalid for failure to meet the written description requirement.

According to the order, ARM filed a motion seeking summary determination that Respondents cannot prove their collateral estoppel defense as a matter of law. ARM asserted that Respondents’ collateral estoppel defense must be dismissed because the Commission already found claims 8 and 19 valid and infringed and the ALJ has already stricken Respondents’ invalidity and noninfringement defenses. As summarized by ALJ Essex, “the crux of ARM’s argument is that collateral estoppel cannot apply in this instance because the Commission has already rendered a decision on the issue for which Respondents seek estoppel, i.e., the validity (or lack thereof) of claims 8 and 19.”

Respondents argued that the collateral estoppel defense is separate and distinct from the stricken invalidity and noninfringement defenses, arguing that a ruling of non-infringement in the concurrent district court proceeding and the Commission’s decision invalidating the independent claims are independent bases for preventing enforcement.

The Commission Investigative Staff (“OUII”) opposed ARM’s motion, asserting that ARM should not be allowed to re-litigate the validity of the phrase in claims 8 and 19 that was found to fail the written description requirement in the independent claims. OUII agreed with Respondents that collateral estoppel may be applied to the claims at issue in the enforcement proceeding.

The ALJ began his analysis by clarifying the scope of the dispute, noting that Respondents never relied on the district court proceeding in their answer with regard to collateral estoppel, and including hedging language “does not give Respondents carte blanche to expand the basis of its collateral estoppel defense without amending its pleadings.” Thus, the ALJ determined that collateral estoppel based on invalidity is the only collateral estoppel defense at issue.

With that clarification, ALJ Essex undertook the traditional collateral estoppel analysis, which requires establishing four elements: (1) identity of the issue(s); (2) the issue(s) was actually litigated in the first action; (3) resolution of the issue(s) was essential to a final judgment in the first action; and (4) plaintiff had a full and fair opportunity to litigate the issue(s).

Here, ALJ Essex summarized the situation stating “[i[ssue preclusion, which is designed to prevent relitigation of the same issue in multiple forums, requires that identical issues be raised in two separate actions. Put simply, Respondents’ issue preclusion defense must fail because ARM is not attempting to relitigate the invalidity issue. Ironically, if any of the parties is attempting to relitigate an issue from the violation phase of this proceeding, it is Respondents, not ARM.” In the absence of an identity of issues, the ALJ determined that the remaining elements of collateral estoppel all fail. The ALJ also distinguished the many cases relied upon by Respondents, noting that none of these cases compel or suggest a different outcome.

As such, while acknowledging “the tension between finding claims 8 and 19 not invalid, while simultaneously finding the independent claims upon which they depend invalid for lack of written description,” the ALJ determined that this tension does not give rise to a collateral estoppel defense and thus ARM’s motion for summary determination was granted.