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Res Judicata Applies When Device Accused in Second Suit Remains Unchanged with Respect to Claim Limitations at Issue in First Suit

09-1026
September 08, 2009

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Last Month at the Federal Circuit - October 2009

Judges: Michel, Rader (author), Prost

[Appealed from: E.D. Va., Judge Davis]

In Nystrom v. Trex Co., No. 09-1026 (Fed. Cir. Sept. 8, 2009), the Federal Circuit affirmed the district court’s judgment of noninfringement of U.S. Patent No. 5,474,831 (“the ’831 patent”) on alternative grounds, holding that plaintiff Ron Nystrom was precluded on res judicata grounds from litigating his infringement claim against Trex Company, Inc. (“Trex”), Home Depot USA, Inc. (“Home Depot”), and Snavely Forest Products Inc. (“Snavely Forest”) (collectively “Defendants”).

The ’831 patent is directed to an outdoor wood-flooring board shaped to shed water from its upper surface while still maintaining a comfortable surface upon which to walk. Trex manufactured a first generation of boards (“Trex I boards”) and a second generation of boards (“Trex II boards”). Home Depot and Snavely Forest each distribute Trex boards.

In 2001, Nystrom initiated a suit naming Trex as the sole defendant and alleging that the Trex I boards infringed the ’831 patent. The district court entered judgment of noninfringement. On appeal, the Federal Circuit affirmed the district court’s constructions of the terms “board” and “manufactured to have,” but reversed on the construction of a third claim limitation. On remand, Nystrom attempted to pursue his infringement claim under the DOE, which the district court concluded Nystrom had waived. Nystrom again appealed, and the Federal Circuit affirmed the district court’s holding that Nystrom had waived his infringement claim based on the DOE.

Nystrom then filed a second suit in the same district court naming the Defendants and alleging solely that the Trex II boards infringed the ’831 patent under the DOE. Trex moved for SJ to bar Nystrom under the doctrine of res judicata from relitigating infringement because the Trex II boards were essentially the same as the Trex I boards. Trex also moved for summary adjudication to prohibit Nystrom from relying on the DOE because of (1) claim vitiation, (2) argument-based estoppel, and (3) amendment-based estoppel. The district court granted SJ on claim vitiation and argumentbased estoppel, but denied Trex’s motion on res judicata and amendment-based estoppel.

On appeal, the Federal Circuit reminded that, for claim preclusion in a patent case, an accused infringer must show that the accused product or process in the second suit is essentially the same as the accused product or process in the first suit, and that “[c]olorable changes in an infringing device or changes unrelated to the limitations in the claim of the patent would not present a new cause of action.” Slip op. at 6 (quoting Foster v. Hallco Mfg. Co., 947 F.2d 469, 480 (Fed. Cir. 1991)).

Defendants conceded material differences between the Trex I boards and the Trex II boards, but maintained that the only two limitations leading to the noninfringement judgment in the suit—“board” and “manufactured to have”—are in all material respects the same in the Trex I boards and the Trex II boards.

The Court observed that this case presents “a slightly new angle on claim preclusion,” asking “whether the accused infringer may assert claim preclusion when the sole claim limitations issue in the first suit remain unchanged in the at second suit.” Id. at 6-7. The Court noted that, although it had previously emphasized that the focus for claim preclusion should be on “material differences” between the two accused devices, it had not addressed directly whether the focus of the “material differences” test is on the claim limitations at issue in each particular case.

Turning to that question, the Court noted that it had already determined in the earlier case that the Trex I boards do not infringe the ’831 patent, either literally or, as a result of Nystrom’s waiver, by equivalents. The Court observed that for Nystrom to succeed on his infringement claim against the Trex II boards in the second suit, he would have to prove infringement of each claim limitation. The Court noted that the only claim limitations at issue in the first suit were “board” and “manufactured to have,” that the constructions for these terms in the second suit were the same as the constructions in the fi rst suit, and that the bases of noninfringement in the first suit were these constructions. The Court explained that “[i]f, therefore, the accused device of the second suit remains unchanged with respect to the corresponding claim limitations at issue in the first suit, then Nystrom has no remaining avenue to pursue his claims now.” Id. at 7. The Court observed that Nystrom would be attempting to prove infringement of the same claim limitations as to the same features of the accused devices, which is the exact situation that res judicata seeks to prevent. The Court concluded that res judicata thus barred this second attempt to adjudicate the same issues.

The Court pointed out that its analysis assumed the Trex I and Trex II boards to be insubstantially different with respect to the pertinent claim elements. Although Nystrom argued differences in added wood grain and color between the Trex I and Trex II boards, the Court noted that Nystrom’s alleged differences fell squarely within the “colorable changes” category. The Court added that simply adding a wood grain and changing the board’s color did not materially alter the infringement analysis of the “wood cut from a log” construction of the limitation “board” or the
“manufactured utilizing woodworking techniques” construction of the limitation “manufactured to have.”

Judge Rader wrote separately to address the doctrine of claim vitiation, reminding that the “all elements” rule established in Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 39 n.8 (1997), forecloses resort to the DOE when a limitation would be read completely out of the claim (i.e., would be vitiated). Judge Rader further noted that, nonetheless, the Federal Circuit has warned that an overly broad application of the “all elements” rule may improperly swallow the DOE entirely and limit infringement to “a repeated analysis of literal infringement.” Rader Dissent at 2 (quoting Ethicon Endo-Surgery, Inc. v. U.S. Surgical Corp., 149 F.3d 1309, 1317 (Fed. Cir. 1998)). Because claim vitiation limits the DOE, which, by definition, acknowledges that a specific claim limitation is not expressly found in the accused product, in Judge Rader’s view, the vitiation doctrine is subsumed within the test for equivalents itself and the “all elements” rule is “simply a circular application of the doctrine of equivalents.” Id.

Judge Rader went on to explain that while the test for equivalents and vitiation are coterminous, juries decide the test for equivalents as a question of fact, but judges decide vitiation and apply the “all elements” rule as a question of law. Judge Rader noted that although the tests are the same, the testers are different, which could produce different results in application of the same rules.

Summary authored by Stephen L. Keefe, Esq.