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Res Judicata Does Not Bar Patent Infringement Litigation Where the Accused Devices Did Not Exist at the Outset of the Prior Litigation

March 14, 2012
Smyth, Jeffrey D.

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Last Month at the Federal Circuit - April 2012

Judges: Radar, Bryson (author), Reyna

[Appealed from: S.D. Fla., Judge Cooke]

In Aspex Eyewear, Inc. v. Marchon Eyewear, Inc., No. 11-1147 (Fed. Cir. Mar. 14, 2012), the Federal Circuit reversed the district court’s grant of SJ in favor of the defendants premised on res judicata and remanded for further proceedings.

Aspex Eyewear, Inc. (“Aspex”) and the codefendants, Marchon Eyewear, Inc. (“Marchon”) and Revolution Eyewear, Inc. (“Revolution”), have been engaged in patent litigation off and on for the past decade. Aspex is the owner of U.S. Patent No. RE 37,545 (“the ’545 patent”) titled “Auxiliary Lenses for Eyeglasses.” The ’545 patent discloses eyeglass frames designed to allow auxiliary frames (often containing sunglass lenses) to magnetically attach. Revolution is a manufacturer of eyeglass frames that employ magnets for the purpose of attaching auxiliary frames to the primary frames. Marchon sells primary and auxiliary frames pursuant to a license obtained from Revolution.

In an earlier iteration of this litigation, a jury awarded over $4 million in damages to Aspex for Revolution’s infringement of the ’545 patent. In late 2006, during the pendency of that earlier action, Aspex also sued Marchon, alleging infringement of the ’545 patent based on the same accused devices. In 2007, Revolution redesigned its frames and ceased manufacturing or distributing frames according to the old design. In 2008, Aspex and Marchon entered into a settlement agreement resolving all of the claims asserted in the 2006 action.

In April 2008, the PTO concluded an ex parte reexamination of the ’545 patent, confirming the patentability of claim 23 as amended and allowing Aspex to add claim 35. In 2009, Aspex filed the present action, charging Marchon, Revolution, and several other defendants with infringement of claims 23 and 35, accusing the redesigned frames.

Revolution moved to dismiss the action as barred by the doctrine of res judicata in light of its previous litigation with Aspex. Marchon also moved to dismiss the action based on res judicata, and alternatively, based on the terms of its 2008 settlement agreement with Aspex. The district court granted SJ in favor of all of the defendants, finding that Aspex’s claims in the present action were identical to the claims that either were, or could have been, raised in the earlier litigation activities. The district court further held that the settlement agreement alternatively barred Aspex’s current claim against Marchon.

On appeal, Aspex argued that the district court improperly barred its claims because, due to the reexamination amendments, claims 23 and 35 were not in existence at the time of the prior litigation against the defendants and thus could not have been pursued at that time. The Federal Circuit disagreed, explaining that reexamination of the ’545 patent did not create new causes of action separate from the causes of action created by the original patent. Rather, the two claims were merely new versions of claims that were part of the ’545 patent prior to reexamination. The Court further agreed with the district court’s finding that any changes to the claims were insubstantial and at most narrowed the scope of the claims in respects not affecting the products at issue. Finally, the Court pointed out Aspex’s flawed reliance on cases involving reissue patents, drawing several distinctions between the two distinct PTO proceedings.

Despite rejecting Aspex’s primary argument, the Court found Aspex’s secondary argument persuasive. Both Revolution and Marchon argued that res judicata was appropriate in this instance because the accused products at issue in the present case are “essentially the same” as the products accused in the earlier litigation. The Court rejected this argument, finding that res judicata did not bar the present lawsuit with respect to products that were not in existence at the time of the earlier litigation “for the simple reason that in order for a particular claim to be barred, it is necessary that the claim either was asserted, or could have been asserted, in the prior action.” Slip op. at 12. “If the claim did not exist at the time of the earlier action, it could not have been asserted in that action and is not barred by res judicata.” Id. The Court noted that it has regularly applied this principle to patent cases, particularly in cases involving sequential acts of infringement. The Court held that res judicata did not apply here, because Aspex accused products were made and sold only after the earlier litigation commenced.

In rejecting the defendant’s arguments on this secondary point, the Court noted that the main case relied on by Revolution and Marchon effectively applied the doctrine of collateral estoppel, not res judicata. The Court noted that collateral estoppel doctrine may be applicable to the present case, but that since neither party had the opportunity to brief it, the district court needed to address it on remand. The Court also noted that the district court needed to determine whether Aspex and Revolution consented to have the court in the prior litigation adjudicate their rights as to the products created during the pendency of that case.

The third issue addressed by the Court was whether Marchon’s SJ motion was properly granted in light of the 2008 settlement agreement. After reviewing the terms of the agreement, the Court concluded that the motion was improperly granted and that the terms of the settlement agreement did not expressly encompass the newly designed products. The Court reasoned that when parties decide to depart from the normal rule that the products at issue in a patent infringement case are those in existence at the time the suit was filed, the departure “must be express” in the terms of the agreement. Slip op. at 20. The Court found that not only did the agreement fail to expressly include the newly designed products, but several of the terms of the agreement suggested to the contrary that the focus of the agreement was solely on products manufactured according to the old design. Thus, the Court concluded that the settlement agreement did not bar Aspex’s claims in the present litigation.

Finally, the Court considered the proper claim construction of the claims of the ’545 patent. The Court noted that although it was not compelled to review the district court’s claim construction during these proceedings, because there was no judgment of noninfringment, it would do so anyway to conserve judicial resources.

With respect to the first disputed term, the Court held that the term “eyeglass device” found in the preamble of the independent claims should not be construed to add a limitation to any of the claims, but should instead be interpreted as generally referring to the combination of a primary and auxiliary frame. The Court noted that, generally, preamble language is not treated as limiting, and in this case the defendants had not adequately justified a departure from the general rule.

The Court next construed the term “magnetic member.” Aspex argued that the term should not only include permanent magnets, but also ferromagnetic substances, which are affected by magnetic fields. The Court agreed with Aspex, finding its argument based on claim differentiation persuasive. Specifically, the Court found that claim 35, a dependant claim of claim 23, added the limitation that the “magnetic members of the auxiliary spectacle frame are magnets.” The Court found that the claims would be entirely duplicative, should it adopt the defendants’ proposed construction.

The Court next considered the term “rearwardly directed free end,” and again agreed with Aspex, holding that the district court’s construction effectively wrote the term “free” out of the limitation. The Court noted that although the patent specification does not use the term “free” when describing the rearwardly directed end portion, the figures clearly illustrate that each arm has a free end.

Finally, the Court construed the term “said arms and said pair of magnetic members adapted to extend across respective side portions of a primary spectacle frame.” Aspex primarily challenged the district court’s construction as related to the term “adapted to.” Aspex argued that the phrase “adapted to” should be interpreted to mean “suitable for” rather than “made to.” The Court rejected the plaintiff’s contentions, recognizing that the phrase “adapted to” is sometimes used in accordance with this broader definition, but that in this case the narrower interpretation is appropriate.

The Court reasoned that in the context of the ’545 patent, the language of the claim itself is “most naturally” understood to mean that the arms and magnetic members are designed or configured to accomplish the specified objective. Further lending support to this interpretation,claim 22 used the phrase “capable of engaging” in relation to magnetic members. The Court found that the use of different terminology in adjacent claims suggests that the narrower interpretation is appropriate.
In sum, having reversed the district court’s grant of SJ on the basis of res judicata, the Court remanded the case for further proceedings consistent with its opinion.

Summary authored by Jeffrey D. Smyth, Esq.