Opinion ID: 210864
Heading Depth: 2
Heading Rank: 1

Heading: Participating Defendants

Text: 18 Transclean's primary argument against the application of claim preclusion as a bar to its infringement claims against the Participating Defendants is that the law generally allows a patentee to sue manufacturers or sellers and users of an infringing device as joint tortfeasors, and that the law permits multiple suits, just not multiple (i.e., double) recoveries. This rule has its genesis in Birdsell v. Shaliol, 112 U.S. 485, 5 S.Ct. 244, 28 L.Ed. 768 (1884), in which the Supreme Court held that a patentee who had recovered only nominal damages against the manufacturer of an infringing product could subsequently sue users of the infringing product. The Court indicated that a patentee may not sue users of an infringing product for damages if he has collected actual damages from a manufacturer or seller, and those damages fully compensate the patentee for infringement by users. Id. at 488-89, 5 S.Ct. 244; see also Glenayre Elecs., Inc. v. Jackson, 443 F.3d 851, 864 (Fed.Cir.2006) (citing Birdsell and holding that a patentee 19 [474 F.3d 1304] 20 could not sue users for damages because actual damages covering the use of the product had already been recovered from the manufacturer); Shockley v. Arcan, Inc., 248 F.3d 1349, 1364 (Fed.Cir.2001) (Each joint tort-feasor is liable for the full amount of damages (up to a full single recovery) suffered by the patentee. (citing Birdsell, 112 U.S. at 488-89, 5 S.Ct. 244)). 21 In light of Birdsell and its progeny, Transclean contends it is free to sue users of the T-Tech machine because it has not collected on the judgment against Bridgewood. That is true as far as it goes, but Transclean's argument fails to take into account the separate issue of claim preclusion, under which such a second suit, otherwise available, may be barred. As the trial court correctly noted, the issue in this case is not whether Transclean may sue both the manufacturer and users of the T-Tech machine. The issue is whether, having failed to bring infringement claims against the users in the first litigation, Transclean should be barred under the doctrine of claim preclusion from bringing those claims in a second suit. [A] plaintiff who chooses to bring two separate actions against two tortfeasors who are jointly responsible for the same injury runs the risk that the court will find the parties sufficiently related that the second action is barred by claim preclusion. Mars Inc. v. Nippon Conlux Kabushiki-Kaisha, 58 F.3d 616, 620 (Fed.Cir.1995). Despite Transclean's protestations to the contrary, Birdsell and the other cases relied on by Transclean involve only the doctrine of full compensation. See Glenayre, 443 F.3d at 862-64; 7 Donald S. Chisum, Chisum on Patents § 20.03[7][b][iii] (2002). They do not address the added question of when and how claim preclusion may arise in such second suits. 22 We now turn to that question—whether claim preclusion principles bar Transclean's claims against the Participating Defendants in this case. As an initial matter, the parties disagree about whether the claim preclusion issues in this case should be decided under the law of the Federal Circuit or the applicable regional circuit, here the Eighth Circuit. Transclean argues that the question before us is specific to patent law—whether a patentee may sue the users of an infringing device when it cannot recover on a judgment awarded against the manufacturer of the same infringing device. As discussed, that question and the cases relied on by Transclean do not relate to claim preclusion but instead involve the doctrine of full compensation. 23 Rather, as we shall explain, the key question before us is whether Transclean should be bound by its repeated statements that the defendants were in privity with Bridgewood, against whom Transclean obtained a judgment in an earlier litigation. This question is not one peculiar to patent law, and therefore we will look to Eighth Circuit law for guidance in deciding the issue. See Mars, 58 F.3d at 618 (looking to regional circuit law to determine whether claim preclusion may be invoked by corporate parent following patent infringement judgment against wholly owned subsidiary). 24 Under the doctrine of claim preclusion in the Eighth Circuit, an earlier suit bars a party from asserting a claim in a later suit if (1) the first suit resulted in a final judgment on the merits; (2) the prior judgment was rendered by a court of competent jurisdiction; (3) both suits involve the same cause of action; and (4) both suits involve the same parties or their privies. Banks v. Int'l Union Elec., Technical, Salaried & Mach. Workers, 390 F.3d 1049, 1052 (8th Cir.2004). Two suits are based on the same cause of action if they arise out of the same nucleus of operative 25 [474 F.3d 1305] 26 facts. Id. The parties do not dispute that the first two elements are satisfied. 27 Transclean argues in its briefs that its cause of action against the Participating Defendants is different from its cause of action in the Bridgewood litigation. In the earlier case, according to Transclean, Bridgewood was accused of infringing the '080 patent by making and selling T-Tech machines. Here, in contrast, Transclean alleges that the defendants infringe by using T-Tech machines. However, this case concerns the same patent and the exact same devices that were the subject of the Bridgewood litigation. There is little doubt that a second suit against Bridgewood itself for using the same T-Tech machines that were the subject of the earlier infringement judgment would involve the same cause of action as the prior litigation under the doctrine of claim preclusion. Indeed, Transclean's attorney conceded this point at oral argument. 28 In our view, the real question is whether the relationship between the defendants and Bridgewood was so close that they were in privity for claim preclusion purposes. If the answer is yes, it would follow that the case before us involves the same cause of action as the Bridgewood litigation, and Transclean would be precluded from maintaining the claims in this suit. Thus, in the context of this case, we need not decide whether infringement by making and selling a patented invention and infringement by using the patented invention generally involve the same cause of action; the privity issue answers the question for us. 29 The issue of privity was not in dispute before the trial court because Transclean admitted several times that the defendants in this case were in privity with Bridgewood. In its amended complaint, Transclean alleged that the defendants were bound by the infringement judgment in the Bridgewood litigation. To support this claim, Transclean took the position that issue preclusion principles barred the defendants from relitigating the infringement issue. Accordingly, Transclean asserted in an interrogatory answer that Jiffy Lube and Bridgewood were in privity because Jiffy Lube purchased infringing T-Tech machines manufactured by Bridgewood. Transclean continued to press its issue preclusion theory in a summary judgment motion, alleging again that the defendants were in privity with Bridgewood. As Transclean put it, Bridgewood and the defendants in this case are closely related and have an identical interest in defeating Transclean's infringement allegations and invalidating the '080 Patent. J.A. at 895. 30 Having already alleged that the defendants and Bridgewood were in privity when it argued that issue preclusion barred the defendants from raising a non-infringement defense, Transclean apparently felt compelled to admit that the parties were also in privity for claim preclusion purposes. Significantly, in its opposition to Jiffy Lube's motion for summary judgment, Transclean admitted that for purposes of claim preclusion Jiffy Lube and Bridgewood are in privity because Bridgewood was a manufacturer of the infringing product and Jiffy Lube is a user of the same infringing product. J.A. at 670. And in its appeal brief to this court, Transclean expressly stated that the first [i.e., privity] element [of claim preclusion] is met. As the District Court noted, and as they admitted themselves, the Participating [Defendants] have a `special ... relationship' of privity with Bridgewood. Appellant's Br. at 25. Only in its reply brief and at oral argument did Transclean begin to retreat from its position that privity exists between Bridgewood and the Participating Defendants, at least insofar as it would bar through claim preclusion Transclean's infringement claims. 31 [474 F.3d 1306] 32 The term `privity' is a label that expresses the conclusion that a particular nonparty in earlier litigation should be treated the same as a party to that litigation for claim preclusion purposes. Mars, 58 F.3d at 619. In the Eighth Circuit, privity exists when the parties are so closely related and their interests are so nearly identical that it is fair to treat them as the same parties for purposes of determining the preclusive effect of the first judgment. Ruple v. City of Vermillion, 714 F.2d 860, 862 (8th Cir.1983). 33 It is important to recognize that under this standard, a manufacturer or seller of a product who is sued for patent infringement typically is not in privity with a party, otherwise unrelated, who does no more than purchase and use the product. Cf. Mars, 58 F.3d at 619 (concluding that corporate parent and its wholly owned subsidiary, defendants in separate patent infringement suits, were in privity for claim preclusion purposes). In other words, ordinarily such parties are not so closely related and their litigation interests are not so nearly identical that a patentee's suit against one would bar a second action against the other under the doctrine of claim preclusion. 34 The question facing us, therefore, is how to treat Transclean's representations that Bridgewood, the manufacturer and seller of the T-Tech machine, was in privity with its customers when the actual circumstances do not necessarily support that conclusion. Transclean made a tactical decision to admit that such a special relationship existed, first in connection with its issue preclusion argument and then for purposes of claim preclusion as well. Should Transclean be bound by its litigation strategy—its concession that Bridgewood and its customers were in privity? 35 The Participating Defendants argue that Transclean's admission is binding because privity is a question of fact that can be admitted. While there is a split of authority as to whether privity is a question of law or fact, see Matter of L & S Indus., Inc., 989 F.2d 929, 932 (7th Cir.1993) (citing cases from different circuits), the Eighth Circuit has treated privity as a factual question, see Kolb v. Scherer Bros. Fin. Servs. Co., 6 F.3d 542, 544 (8th Cir. 1993). As previously explained, privity was not disputed before the trial court— Transclean agreed with the defendants that they were in privity with Bridgewood for purposes of claim preclusion. Because there were no disputed issues of material fact with respect to privity or any other elements of claim preclusion, the trial judge correctly granted summary judgment on the claim preclusion issue in view of the record before him, including Transclean's repeated admissions that Bridgewood and the defendants in this case were in privity. See Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). 36 Transclean, relying on its argument that under Birdsell it could sue Bridgewood's customers since it had not collected on the judgment against Bridgewood, initially believed it could avoid the application of claim preclusion even though it conceded the existence of privity between Bridgewood and its customers. Apparently recognizing the problem with that position, Transclean now contends in its reply brief that privity cannot be admitted because it is a question of law and that we are free to determine that Bridgewood and the Participating Defendants were not in privity if that conclusion is supported by the actual facts. However, even if Transclean is correct that the issue should be characterized as a legal conclusion, we think Transclean should be bound by its concession under the doctrine of judicial estoppel. 37 [474 F.3d 1307] 38 The doctrine of judicial estoppel prohibits a party from taking inconsistent positions in the same or related litigation. The underlying purpose of the doctrine is `to protect the integrity of the judicial process.' Hossaini v. W. Mo. Med. Ctr., 140 F.3d 1140, 1142-43 (8th Cir.1998) (citations omitted); see also Key Pharms. v. Hercon Labs. Corp., 161 F.3d 709, 715 n. 1 (Fed.Cir.1998) (collecting cases and other relevant authority). Judicial estoppel is an equitable doctrine that may be invoked by a court at its discretion. New Hampshire v. Maine, 532 U.S. 742, 750, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001). The Supreme Court recently acknowledged the viability of the doctrine and identified several non-exclusive factors that guide a court's decision whether to apply judicial estoppel: (1) the party's later position must be clearly inconsistent with its earlier position; (2) the party must have succeeded in persuading a court to adopt the earlier position, thereby posing a risk of inconsistent court determinations; and (3) the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped. Id. at 750-51, 121 S.Ct. 1808. 39 While some circuits have limited application of judicial estoppel to inconsistent factual assertions, others have applied the doctrine to legal conclusions as well. See 18 James Wm. Moore et al., Moore's Federal Practice § 134.30 (3d ed.2006). The Eighth Circuit has not specifically addressed whether judicial estoppel extends to legal positions, but the majority of circuits that have spoken on the issue have either squarely held that the doctrine may be applied to inconsistent legal positions or indicated that the doctrine would apply to questions of law, or at least the application of law to fact. See Kira A. Davis, Note, Judicial Estoppel and Inconsistent Positions of Law Applied to Fact and Pure Law, 89 Cornell L.Rev. 191, 202-08 (2003). In particular, the Federal Circuit has stated that a party may be judicially estopped from asserting clearly inconsistent positions on claim construction, which is a question of law. See Interactive Gift Express, Inc. v. Compuserve Inc., 256 F.3d 1323, 1346 (Fed.Cir.2001); Key Pharms., 161 F.3d at 715. In the absence of Eighth Circuit law to the contrary, we conclude that judicial estoppel may be applied to the question of privity, whether considered a legal conclusion or a question of fact. 40 In this case, we find it appropriate to invoke judicial estoppel to hold Transclean to its concession that Bridgewood and its customers were in privity for claim preclusion purposes. The determination Transclean asks us to make—that Bridgewood and the defendants were not in privity for claim preclusion purposes—is clearly inconsistent with the position it advocated before the trial court and in its opening brief on appeal. The trial court accepted Transclean's admission of privity, and the defendants relied on that admission during both the trial and appellate phases of this litigation. As part of its litigation strategy, Transclean made the choice to concede privity between Bridgewood and its customers after choosing not to join the customers in the first litigation. Under the circumstances presented by this case, we believe Transclean should be held to the consequences of its choices. Transclean should not be permitted to reverse course this late in the proceedings simply because it now realizes its litigation strategy was unsuccessful. Accordingly, we affirm the trial court's grant of summary judgment in favor of the Participating Defendants.