Opinion ID: 2657684
Heading Depth: 2
Heading Rank: 3

Heading: kessler doctrine

Text: There exists a separate and distinct doctrine, known as the Kessler Doctrine, that precludes some claims that are not otherwise barred by claim or issue preclusion. Elekta identifies the doctrine, but does so under the 16 BRAIN LIFE, LLC v. ELEKTA INC. general rubric of claim preclusion. As explained above, however, traditional notions of claim preclusion do not apply when a patentee accuses new acts of infringement, i.e., post-final judgment, in a second suit—even where the products are the same in both suits. Such claims are barred under general preclusion principles only to the extent they can be barred by issue preclusion, with its attendant limitations. The Kessler Doctrine fills the gap between these preclusion doctrines, however, allowing an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post-final judgment in a patent action where circumstances justify that result. While our past reliance on the Kessler Doctrine has been sparse, we have applied it before. In Kessler v. Eldred, 206 U.S. 285 (1907), Eldred filed suit against his competitor Kessler alleging infringement of U.S. Patent No. 492,913 (“the ’913 patent”) directed to an electric lighter. Eldred first filed suit against Kessler in the District of Indiana, but the court found that Kessler’s product did not infringe, a ruling that the Seventh Circuit affirmed. See id. at 285–86. Eldred subsequently filed suit in the Western District of New York against Breitwieser for infringement of the ’913 patent. Breitwieser was a customer of Kessler and was selling the same electric lighters at issue in the Indiana action. See id. Kessler stepped in to indemnify its customer, but also filed a separate suit in Illinois to enjoin Eldred from filing suit in any court alleging infringement of the ’913 patent in connection with those of Kessler’s lighters that had already been found to be non-infringing in the Indiana action. See id. at 286–87. Both the district court and Seventh Circuit agreed with Kessler’s position and granted the injunction in the Illinois action. See id. at 287. The Supreme Court agreed with Kessler and stated that the final judgment in the first action between Eldred and Kessler “settled finally and everywhere . . . that Kessler has the right to manufacture, use, and sell the BRAIN LIFE, LLC v. ELEKTA INC. 17 electric cigar lighter” in question. Id. at 288. Flowing from that final decision in the first suit, the Court held that Kessler is entitled to sell its electric lighters unmolested by Eldred because those rights were established by the final judgment in the Indiana action. See id. at 289. In sum, the Court granted Kessler a limited trade right to continue producing, using, and selling the electric lighters that were the subject of the first suit and to do so without fear of allegations of infringement by Eldred—even when the acts of infringement occurred post-final judgment and even when it was third-parties who allegedly engaged in those acts of infringement. The Supreme Court concluded that Kessler was entitled to continue the same activity in which it engaged prior to the infringement allegations once it had defeated those contentions in the first suit. The Court did not rely on traditional notions of claim or issue preclusion in crafting this protection for Kessler. We recognized the Kessler Doctrine in MGA, Inc. v. General Motors Corp., 827 F.2d 729 (Fed. Cir. 1987). In that case, MGA, Inc. (“MGA”) owned U.S. Patent No. 3,570,656 (“the ’656 patent”). See id. at 761. In 1979, MGA and LaSalle Tool (“LaSalle”) executed a license agreement under the ’656 patent for LaSalle’s accumulator conveyer machines which LaSalle sold to General Motors Corporation (“GM”). See id. LaSalle then developed and manufactured a newly designed machine that it claimed was outside the scope of the claims of the ’656 patent. See id. MGA sued LaSalle in Michigan state court for non- payment of royalties under the license agreement stemming from the sales of the new machines. See id. Following a bench trial, the state court found that the new machines were not covered by the license agreement. In affirming that decision, the Michigan Court of Appeals noted that the trial judge implicitly found that the new machines were not covered by the relevant claims of the ’656 patent. See id. Meanwhile, MGA filed suit in the 18 BRAIN LIFE, LLC v. ELEKTA INC. United States District Court for the Eastern District of Michigan against GM for infringement of the ’656 patent based on GM’s use of LaSalle’s new machines. See id. LaSalle intervened on GM’s behalf and asserted that the suit against GM was barred by claim and issue preclusion, as well as the Kessler doctrine, by virtue of the Michigan state court ruling. See id. The district court granted summary judgment in favor of LaSalle (and GM), holding that relitigation of infringement was barred by the state court final judgment. See id. On appeal, we held that the Kessler Doctrine applied to bar MGA’s suit against GM. We noted that Kessler granted “a limited trade right which is ‘the right to have that which [a court has determined] it lawfully produces freely bought and sold without restraint or interference. It is a right which attaches to its product—to a particular thing—as an article of lawful commerce.” Id. at 734 (alteration in original) (quoting Rubber Tire Wheel Co. v. Goodyear Tire & Rubber Co., 232 U.S. 413, 418–19 (1914)). And, because the new machines were “admittedly the same in both suits it [was] LaSalle[’s] right that the accused machines be freely traded without interference by MGA.” Id. at 734–35. The Kessler Doctrine, therefore, gave LaSalle (an accused infringer) rights with respect to specific products that had been held to be noninfringing, even when the specific acts of infringement would not be barred by claim preclusion because they occurred postfinal judgment. The principle that, when an alleged infringer prevails in demonstrating noninfringement, the specific accused device(s) acquires the “status” of a noninfringing device vis-à-vis the asserted patent claims is “[a]n essential fact of a patent infringement claim.” See Foster, 947 F.2d at 479. “[T]he status of an infringer is derived from the status imposed on the thing that is embraced by the asserted patent claims.” Id. And, when the devices in the first and second suits are “essentially the same,” the BRAIN LIFE, LLC v. ELEKTA INC. 19 “new” product(s) also acquires the status of a noninfringing device vis-à-vis the same accusing party or its privies. See id. at 479–80. As we recognized in MGA, Kessler “was handed down by the United States Supreme Court in the heyday of the federal mutuality of estoppel rule.” See MGA, 827 F.2d at 733 (citing Blonder-Tongue Labs., Inc. v. Univ. of Illinois Found., 402 U.S. 313, 320–27 (1971)). At the time Kessler was decided, “the judge-made doctrine of mutuality of estoppel, ordain[ed] that, unless both parties (or their privies) in a second action [were] bound by a judgment in a previous case, neither party (nor his privy) in the second action may use the prior judgment as determinative of an issue in the second action.” Blonder-Tongue, 402 U.S. at 320–21. The Supreme Court, therefore, may have created the Kessler Doctrine as an exception to the strict mutuality requirement that existed at that time, rather than to espouse a specific doctrine of substantive patent law. Since that time, state and federal courts have created exceptions to the mutuality requirement, primarily when estoppel is pleaded defensively. See id. at 324–26. And, the continuing force of the Kessler Doctrine in the face of the development of defensively applied issue preclusion may be questionable on the precise set of facts presented in the case at bar. But, the Kessler Doctrine exists, and we are bound by it, even if its viability under current estoppel law may be of less value now than it was at the time it was handed down. Whether the Kessler Doctrine is an exception to the mutuality of estoppel rule or a matter of substantive patent law is a question we cannot answer. We may only apply the law as it continues to exist. The Kessler Doctrine, therefore, is directly applicable to the case at bar. Brain Life’s predecessor-in-interest asserted all of the ’684 patent claims against Elekta in the MIDCO Litigation. See Brain Life II, ECF No. 43 at 2. 20 BRAIN LIFE, LLC v. ELEKTA INC. While MIDCO ultimately abandoned the method claims prior to trial, it could have continued to assert those claims. Thus, once the accused devices in the MIDCO Litigation were adjudged to be noninfringing with respect to the asserted claims and judgment was entered as to all claims, Elekta was free to continue engaging in the accused commercial activity as a non-infringer. See MIDCO, 344 F.3d at 1209; MIDCO, 128 F. App’x. at 774. Elekta, thereafter, continued manufacturing and selling products accused in the MIDCO Litigation post-final judgment. Consequently, some of the accused devices in this suit have acquired a noninfringing status vis-à-vis the ’684 patent by virtue of the first case, and Elekta is entitled to continue manufacturing, using, and selling those products without molestation from MIDCO or Brain Life. Simply, by virtue of gaining a final judgment of noninfringement in the first suit—where all of the claims were or could have been asserted against Elekta—the accused devices acquired a status as noninfringing devices, and Brain Life is barred from asserting that they infringe the same patent claims a second time. 2 The district court found that Brain Life’s current allegations of infringement are directed to “subsequent versions” of the previously litigated Elekta GammaKnife, GammaPlan, and SurgiPlan products. Brain Life II, ECF No. 43 at 5. The court also stated that it was undisputed that there are “no material differences between the currently accused products and the previously adjudicated 2 Notably, though it asserts only method claims in the current litigation, it is the making, using, or selling of the Elekta products that Brain Life asserts infringe or induces infringement of those method claims. In other words, if the products are materially the same, it would be the same allegedly infringing commercial activity that is at issue in both proceedings. BRAIN LIFE, LLC v. ELEKTA INC. 21 non-infringing products as to the limitations of claim 1.” Id. During the summary judgment proceedings, moreover, Brain Life conceded that the products in the two suits were materially the same. See J.A. at 1271. And, Brain Life does not contend otherwise on appeal. As such, because Elekta’s GammaPlan, GammaKnife, and SurgiPlan are essentially the same accused products, Brain Life’s claims are barred under the Kessler Doctrine. As noted, Brain Life does not dispute that the new iterations of Elekta’s GammaPlan, GammaKnife, and SurgiPlan are essentially the same as the previously litigated versions. Brain Life instead focuses its efforts on demonstrating that the patent claims in the two suits are not essentially the same. That is beside the point under the Kessler Doctrine because Elekta’s GammaKnife, GammaPlan, and SurgiPlan products have acquired the status of noninfringing products as to the ’684 patent, i.e., all claims that were brought or could have been brought in the first suit. Brain Life’s allegations of infringement as to Elekta’s GammaKnife, GammaPlan, and SurgiPlan, therefore, are barred. Elekta’s ERGO++ treatment planning system, however, is a different matter. Brain Life, and its predecessor MIDCO, have never accused Elekta’s ERGO++ product of infringing any of the ’684 patent claims. Indeed, Elekta only acquired the ERGO++ product after the MIDCO Litigation was finalized. Accordingly, the ERGO++ has never acquired the status of a noninfringing device in connection with the ’684 patent. Unlike Elekta’s other products, neither claim preclusion, issue preclusion, nor the Kessler Doctrine stand as a bar to Brain Life’s current allegations of infringement regarding the ERGO++. The district court’s judgment regarding Elekta’s ERGO++ product, therefore, must be reversed and remanded for further proceedings. 22 BRAIN LIFE, LLC v. ELEKTA INC.