Opinion ID: 422177
Heading Depth: 2
Heading Rank: 1

Heading: Blonder-Tongue: Collateral Estoppel and the Appropriate Inquiry.

Text: 10 As noted by the district court, the appropriate legal test for determining whether a plaintiff-patentee should be collaterally estopped from asserting his alleged patent right is set forth in Blonder-Tongue, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788. There the Supreme Court held that a prior determination of patent invalidity may be asserted as a defense to a subsequent attempt to enforce the patent, and that this defense must be accepted by a court unless the patentee demonstrates that he was denied a full and fair opportunity to litigate the validity of his patent in the prior unsuccessful action. The Court recognized that [d]etermining whether a patentee has had a full and fair chance to litigate ... in an earlier case is of necessity not a simple matter. Id. at 333, 91 S.Ct. at 1445. The Court, however, listed some factors to be considered: (1) whether the patentee was the plaintiff in the prior suit and chose to litigate at that time and place; (2) whether the patentee was prepared to litigate and to litigate to the finish against the defendant there involved; (3) if the issue is obviousness, whether the first validity determination purported to employ the standards announced in Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966); (4) whether the prior case was one of those relatively rare instances where the courts wholly failed to grasp the technical subject matter and the issues in suit; and (5) whether without fault of his own the patentee was deprived of crucial evidence or witnesses in the first litigation. Id. 402 U.S. at 332-33, 91 S.Ct. at 1444-45. 11 These are but some of the appropriate inquiries for the trial court. There is no automatic formula. In the end, [the] decision will necessarily rest on the trial courts' sense of justice and equity. Id. at 334, 91 S.Ct. at 1445. Although there is no exhaustive list of appropriate inquiries, it is clear from the case law that has developed since Blonder-Tongue that an inappropriate inquiry is whether the prior finding of invalidity was correct; instead, the court is only to decide whether the patentee had a full and fair opportunity to litigate the validity of his patent in the prior unsuccessful suit. See Kaiser Industries Corp. v. Jones & Laughlin Steel Corp., 515 F.2d 964, 978, 185 USPQ 343, 354 (3d Cir.), cert. denied, 423 U.S. 876, 96 S.Ct. 150, 46 L.Ed.2d 110 (1975); Carter-Wallace, Inc. v. United States, 496 F.2d 535, 542, 182 USPQ 172, 178, 204 Ct.Cl. 341, (1974); Blumcraft of Pittsburgh v. Kawneer Co., 482 F.2d 542, 546, 178 USPQ 513, 516 (5th Cir.1973); Sampson v. Ampex Corp., 478 F.2d 339, 342, 178 USPQ 65, 67 (2d Cir.1973). 12 This is the rule not only when there is but one prior determination--that of invalidity--as in Blonder-Tongue, see, e.g., Carter-Wallace, Inc., 496 F.2d 535, 182 USPQ 172, 204 Ct.Cl. 341, but also when there are two seemingly inconsistent prior determinations: one holding the patent valid, 3 the other invalid, see Blumcraft, 482 F.2d 542, 178 USPQ 513. 13 We believe this is the proper rule. As stated by the Fifth Circuit in Blumcraft: 14 The fact that a prior inconsistent ruling of validity raises a question as to the correctness of the invalidity determination does not create an exception to Blonder-Tongue and in fact is fully supported by the facts in Blonder-Tongue. 15 .... 16 ... For instance, under our ruling today it would be technically possible to apply collateral estoppel where a prior finding of invalidity was preceded by several rather than by just one finding of validity. In such instances there would be a red flag warning a court to apply the full and fair criteria very carefully to determine if the court finding the patent invalid had adequately comprehended and applied the appropriate substantive standards. Ultimately, of course, there is appeal to the Supreme Court from the finding of invalidity; and, while we recognize the apparent difficulty in obtaining relief through this channel, we cannot predicate an exception to a rule mandated by the Supreme Court on the basis of our assessment of the Court's further performance. In any event, the injustice to the patentee in such cases is no greater and in fact is arguably less than in a situation such as Blonder-Tongue, where the determination of invalidity came prior to any validity rulings. In Blonder-Tongue, despite the explicit fact that, absent the application of collateral estoppel, further successful suits on the patent would have been possible after the first unsuccessful suit, the Supreme Court sanctioned, and ultimately the Seventh Circuit allowed collateral estoppel to be applied. It follows that the fact of a prior successful suit, as here, should not, in itself, be permitted to undermine the numerous policy reasons expounded in Blonder-Tongue in favor of applying estoppel. 17 .... 18 Blonder-Tongue did not throw merely a jab at the multiplicity of patent litigation; rather, it intended a knockout blow through the doctrine of collateral estoppel so that any time a patent was found invalid in a fair fight with a knowledgeable referee, the courts could count ten and the patent holder could no longer maintain that he was champion. 19 Id. at 548-49, 178 USPQ at 517-18 (emphasis in text). 20 We also add, as stated earlier, that the prior holding of validity is not necessarily inconsistent with the subsequent holding of invalidity. In one action, the defendants did not overcome the statutory presumption of validity; in the other they did. The difference in result could be attributable to many neutral facts: e.g., different prior art references or different records. It cannot always be said that of two inconsistent determinations, one is correct and one is incorrect. Thus, we do not believe that the existence of a seemingly inconsistent prior holding on validity should change the inquiry from a full and fair opportunity to litigate to one of correctness; rather, it should serve only as a red flag warning to the court to apply the full and fair criteria more carefully. 21 It should be noted, however, that in Blumcraft the Fifth Circuit was confronted with prior inconsistent determinations from two different courts: the Court of Claims (patent valid) and the Fourth Circuit (patent invalid). They were not, as we are here, confronted with two seemingly inconsistent determinations, one of which--the determination of validity--being our court's own precedent. 22 Because of this factual distinction, Stevenson argues that we should collaterally estop Sears, rather than him, and that we are bound by stare decisis to our prior determination of validity. We consider these arguments below. 23