Board’s Claim Construction Collaterally Estopped Patent Owner’s Claim Construction Argument in the District Court

Holding

The trial court determined it was collaterally estopped from adopting patent owner’s proposed construction because the Board’s final decision previously construed the term.

Background

Patent Owner Regents of the University of Minnesota (“UMN”) asserted U.S. Patent No. 5,859,601 (the “’601 Patent”) against Defendants LSI Corporation and Avago Technologies U.S. Inc. (collectively, “LSI”) in the District Court of the Northern District of California.[1] The trial court stayed proceedings pending LSI’s inter partes review (“IPR”),[2] which challenged all 21 claims of the ’601 patent.[3]

During the IPR, UMN statutorily disclaimed all but three claims.[4] The IPR involved a claim construction dispute regarding the term “transition.”[5] LSI’s petition did not propose a construction for this term but UMN’s patent owner response provided two alternative constructions: (1) “a reversal in the magnetic orientation of adjacent bit regions along a recording track of a magnetic recording medium,”[6] and (2) “a change from one state or stage to another,” specifically requiring an actual, physical change in state of the recording medium.[7] The Board rejected UMN’s proposed constructions and instead applied the plain and ordinary meaning.[8] In its final decision, the Board held one of the three claims unpatentable but upheld the remaining two claims, both of which depend from the claim that the Board found to be unpatentable.[9]

Trial Court Decision

After the Federal Circuit affirmed the Board’s decision, the trial court lifted the stay and the case proceeded to claim construction.[10] The parties again presented constructions for “transition”—UMN arguing for the “alternative” argument it presented during the IPR and LSI asserting that the plain and ordinary meaning applies, as the Board held.[11] The court analyzed whether it is collaterally estopped from adopting UMN’s construction in light of the Board’s decision.[12] The court first determined that the Board’s final IPR decision can have a collateral estoppel effect because the Board analyzed the claims under the Phillips standard—the same standard district courts apply.[13]

Next, the court analyzed whether the “traditional elements of collateral estoppel are met,” applying a three-part test set by the Ninth Circuit given that estoppel is a procedural issue governed by regional circuit law.[14] Under that test, collateral estoppel applies when “(1) the issue necessarily decided at the previous proceeding is identical to the one which is sought to be relitigated; (2) the first proceeding ended with a final judgment on the merits; and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the first proceeding.”[15] UMN only argued that the issue was not “necessarily decided”—conceding the remaining elements, which the court found to be clearly met, as the term at issue was the same term the Board construed, the IPR proceedings concluded with a final judgment, and the parties in the IPR proceedings and infringement action were the same.[16] Specifically, UMN argued that the Board’s holding “did not logically require the Board to reject [UMN’s] alternative construction that [it] advances now.”[17] Ultimately, however, the court was unpersuaded, finding that “necessarily decided” means only that the previous tribunal specifically ruled on the issue  after considering the evidence and arguments from both parties, as the Board did in the IPR.[18] The court also directly addressed UMN’s argument, holding that “a party may not escape [the] binding effect [of a ruling] on the ground that it was not logically essential to the [previous tribunal’s] ultimate determination.”[19]

Take Aways

Practitioners must carefully consider the collateral estoppel effect of constructions presented to  the Board on subsequent proceedings in district court. Even though the Board’s final decision may only decide issues of patentability, practitioners must be cognizant of the potential impact of a proffered claim construction on infringement or non-infringement positions in other proceedings. When making these considerations, practitioners should also consider the collateral estoppel law in the regional circuit of the district court at issue.

Endnotes

[1] Regents of the Univ. of Minn. v. LSI Corp., No. 5:18-CV-00821-EJD, 2023 WL 5520958, at *1 (N.D. Cal. Aug. 25, 2023).

[2] Id. at *2.

[3] LSI Corp. v. Regents of Univ. of Minn., No. IPR2017-01068, Pap. 58, 2 (PTAB May 3, 2023).

[4] Id.

[5] Id. at 10-21.

[6] Id. at 10-16.

[7] Id. at 10, 16-18.

[8] Id. at 20-21.

[9] Id. at 44-45.

[10] Regents of the Univ. of Minn. v. LSI Corp., 2023 WL 5520958 at *2.

[11] Id. at *6.  

[12] Id. at *7.

[13] Id.

[14] Id.

[15] Id.

[16] Id. at *7-8.

[17] Id.

[18] Id.

[19] Id.