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Divorce Decree Conveying Ownership Interest in Asserted Patents Deemed to Have Preclusive Effect in Patent Infringement Suit

09-1167
August 03, 2010

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Last Month at The Federal Circuit - September 2010

Judges: Newman (concurring-in-part, dissenting-in-part), Bryson, Prost (author)

[Appealed from: C.D. Cal., Judge Lew]

In Enovsys LLC v. Nextel Communications, Inc., No. 09-1167 (Fed. Cir. Aug. 3, 2010), the Federal Circuit affirmed the district court’s determination that Enovsys LLC (“Enovsys”) had standing to sue and the district court’s denial of the postverdict JMOL motions filed by Sprint Nextel Corporation and its subsidiaries (collectively “Sprint Nextel”).    

Mundi Fomukong is part owner of Enovsys and a coinventor named in U.S. Patent Nos. 5,918,159 (“the ’159 patent”) and 6,560,461 (“the ’461 patent”).  The ’159 patent is directed to a system for determining the physical location of a call receiver, such as a cellular telephone, using a network of space satellites and ground stations.  The asserted claims of the ’461 patent are directed to systems for disclosing a mobile device’s physical location only to authorized requestors.  

Fomukong was married to Fonda Whitfield in 1997 when Fomukong and his coinventor filed the application that later issued as the ’159 patent.  Two years later, Fomukong and his coinventor filed a second application that issued as the ’461 patent.  In 2001, Fomukong and Whitfield filed for divorce in California.  In California, all assets acquired during a marriage, including any income earned or property created, are presumptively community property.  

Fomukong and Whitfield divorced by summary dissolution, a procedure available only to couples that either (1) have no community property, or (2) have signed a property settlement agreement listing and dividing all community assets and liabilities.  In their petition, Fomukong and Whitfield certified that they had no community assets or liabilities.  A California state court finalized their divorce by entering a judgment of dissolution in October 2002. 

Several months after the divorce was finalized, the ’461 patent issued.  In 2006, Fomukong and his coinventor assigned their interests in the ’159 and ’461 patents to Enovsys.  Enovsys subsequently sued Sprint Nextel, alleging that its Integrated Digital Enhanced Network (“iDEN”) and Code Division Multiple Access (“CDMA”) systems infringed claim 1 of the ’159 patent and claims 1, 2, 23, 25, and 28 of the ’461 patent.  Sprint Nextel moved to dismiss, arguing that Enovsys lacked standing to sue because it failed to join Whitfield, who acquired an ownership interest in the patents during her marriage to Fomukong.  The district court denied the motion after concluding that Enovsys held full legal title to the patents.

The district court also construed various claim terms, including a “means to resolve” limitation in the ’159 patent and a “pre-authorized” limitation in the ’461 patent.  The district court found that the “means to resolve” limitation invoked 35 U.S.C. § 112, ¶ 6 and proceeded to determine the claimed function.  Based on its examination of the specification, the district court determined that the corresponding structure was a “transceiver, connecting circuitry, CPU, satellite receiving means, terrestrial receiving means, decoders, and temporary storage.”  The district court construed “pre-authorized” in the ’461 patent to mean “authorized to submit a request in advance of determining whether the request will be granted.”

 

 

“Fomukong and Whitfield alleged that they had no community property.  The judgment of dissolution entered by the California court was based on this admission; under California Family Code § 2404, the judgment constituted a complete and final adjudication of Fomukong and Whitfield’s property rights.”  Slip op. at 18.

 

At trial, the dispute with respect to the ’159 patent centered on whether Sprint Nextel’s iDEN system contained the structure corresponding to the “means to resolve” limitation.  With regard to the ’461 patent, the parties disputed whether Sprint Nextel’s systems satisfied the “pre-authorized” limitation in the asserted claims.

The jury found that Sprint Nextel infringed claim 1 of the ’159 patent and claims 11 and 28 of the ’461 patent.  After trial, Sprint Nextel renewed its motion to dismiss.  It also moved for postverdict JMOL on the issue of infringement with respect to both patents.  The district court denied Sprint Nextel’s motions and entered judgment for Enovsys.

On appeal, the Federal Circuit first considered the question of standing.  The Court determined that the district court correctly gave effect to the judgment of dissolution, under which Whitfield retained no community property interest in the asserted patents at the time the suit was filed.  Although prior to the divorce, the patents were presumptively community property, the Court determined that the presumption was overcome by Fomukong and Whitfield’s divorce petition, in which they affirmatively stated they had no community assets or liabilities.

The Court then considered whether the state court judgment, which was entered on the basis of the petition, is entitled to preclusive effect.  Under California law, the doctrine of collateral estoppel (issue preclusion) applies if (1) the issue sought to be precluded from relitigation is identical to the issue decided in the earlier proceeding; (2) the issue was actually litigated in the former proceeding; (3) the issue was necessarily decided in the former proceeding; and (4) the person against whom collateral estoppel is asserted was a party, or in privity with a party, to the earlier proceeding.

The Court found the first three requirements satisfied because Sprint Nextel sought to relitigate Whitfield’s property rights in the patents, which was the same issue resolved by the court.  The Court found that the state court judgment was a complete and final adjudication of Fomukong and Whitfield’s property rights.  The Court also found that Sprint Nextel was in privity with Whitfield because she assigned any property interest she had in the patents to Sprint Nextel.  The Court reasoned that privity arose from Whitfield’s express assignment of any property interest she had in the patents to Sprint Nextel.  The Court noted that because Whitfield had no property interest to assign, Sprint Nextel had no interest in the asserted patents and, thus, the district court did not abuse its discretion in denying Sprint Nextel’s request to present evidence of the assignment at trial.  Based on this analysis, the Court held that the divorce decree was entitled to res judicata effect. 

Turning to claim construction, the Court affirmed the denial of Sprint Nextel’s JMOL motions, holding that Sprint Nextel had waived its arguments related to two aspects of claim construction by not raising them below.  Sprint Nextel first argued that it was entitled to JMOL on infringement because the iDEN system does not include the same “connecting circuitry” shown in Figure 2 of the ’159 patent.  The Court held that Sprint Nextel waived any error associated with the “connecting circuitry” structure because Sprint Nextel never asked the district court to construe “connecting circuitry” or offered a construction of the term.  Sprint Nextel also argued that it was entitled to JMOL on infringement with respect to the ’461 patent because its accused systems do not satisfy the “pre-authorized” limitation.  The Court again held that Sprint Nextel waived its right to argue its new claim construction of “pre-authorized” by waiting until after the jury returned its verdict to raise any issues. 

In a separate opinion, Judge Newman concurred in the holding related to standing but disagreed that Sprint Nextel waived its arguments related to claim construction.  Specifically, Judge Newman stated that the majority had confounded “claim construction” with “infringement” and improperly ruled that Sprint Nextel had waived aspects of its noninfringement defense because they were not raised in the guise of “claim construction.”  Newman op. at 2.  Judge Newman reasoned that during claim construction, there is often an intermingling of the relationship between the claim as construed in light of the description in the specification and the question of infringement by the accused device.  In Judge Newman’s view, any flaw in the framing of an argument should be considered more a matter of procedural imprecision than of substantive waiver.

 

Summary authored by Eric C. Jeschke, Esq.