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Claim Preclusion Does Not Bar an Infringement Claim That Could Have Been Brought in a Prior Case Unless the Accused Devices in Both Cases Are “Essentially the Same”

May 13, 2008

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Last Month at the Federal Circuit - June 2008

Judges: Newman, Gajarsa (author), Linn

[Appealed from: D. Or., Judge Brown]

In Acumed LLC v. Stryker Corp., No. 07-1115 (Fed. Cir. May 13, 2008), the Federal Circuit reversed the district court’s decision dismissing Acumed LLC’s (“Acumed”) infringement action against Stryker Corporation, Stryker Sales Corporation, Stryker Orthopaedics, and Howmedica Osteonics Corporation (collectively “Stryker”), holding that Stryker had failed to show that a previous action between the parties barred the present action under the doctrine of claim preclusion, and remanded.

In the previous action (“Acumed I”), Acumed sued Stryker, alleging that Stryker’s T2 Proximal Humeral Nail (“T2 PHN”) product infringed its U.S. Patent No. 5,472,444 (“the ’444 patent”). During that case, Acumed learned that Stryker had developed and begun selling in the United States a longer version of the T2 PHN named the “T2 Long.” However, to avoid delaying trial, Acumed did not amend its Acumed I complaint to add an infringement claim based on the T2 Long. The district court eventually entered a final judgment in favor of Acumed following a jury verdict that the T2 PHN infringed the ’444 patent and that Stryker’s infringement was willful. The Federal Circuit affirmed.

Two weeks after the district court entered final judgment in Acumed I, Acumed filed the present case, alleging that Stryker’s T2 Long nail infringed the ’444 patent. The district court dismissed it on the ground that Acumed’s T2 Long infringement claim was precluded by the judgment of infringement with respect to the T2 PHN in Acumed I. Acumed appealed.

On appeal, the Federal Circuit observed that under the doctrine of claim preclusion, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action. It noted that to the extent a case turns on general principles of claim preclusion, it applies the law of the regional circuit—here, the Ninth Circuit. It noted further that the Ninth Circuit applies claim preclusion where: (1) the same parties or their privies were involved in the prior litigation, (2) the prior litigation involved the same claim as the later suit, and (3) the prior litigation was terminated by a final judgment on the merits. It explained that only the second requirement—the same claim requirement—was at issue in this case. It noted that whether two claims for patent infringement are identical is a claim preclusion issue that is particular to patent law and, therefore, it would analyze it under Federal Circuit law.

The Court explained that under its law, a claim, for purposes of claim preclusion, is defined by the transactional facts from which it arises. It noted that claim preclusion does not apply unless the accused device in an action is “essentially the same” as the accused device in a prior action between the parties that was resolved by a final judgment on the merits. Slip op. at 6. It noted further that accused devices are “essentially the same” where the differences between them are merely “colorable” or “unrelated to the limitations in the claim of the patent.” Id. at 6-7.

Applying these principles to the present case, the Federal Circuit found that the district court did not compare the accused device in this case with the accused device in Acumed I to determine whether they were “essentially the same.” Instead, the district court concluded that the “essentially the same” test did not apply here because the accused device, the T2 Long nail, could have been litigated in Acumed I. The Federal Circuit disagreed, noting that claim preclusion did not bar a claim merely because it could have been raised in a prior action between the parties that was resolved by a final judgment on the merits. The Court reiterated that two patent infringement claims do not arise from the same transactional facts unless the accused devices in each claim are “essentially the same.”

The Court noted that Stryker had conceded in its brief that the T2 Long and the T2 PHN had differences that were related to the limitations of the ’444 patent and that the two products were not “essentially the same.” Because of this concession, the Court concluded that Stryker had failed to meet its burden to show that the infringement claim in Acumed I was the same as the infringement claim in the present action. Accordingly, the Court held that Stryker had failed to show that Acumed I barred the present action under the doctrine of claim preclusion, reversed the district court’s decision dismissing Acumed’s complaint, and remanded.