Court Opinion

ID: 9487915
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:29:53.880599+00
Date Added: 2024-06-11T17:52:33.547147
License: Public Domain

RADER, Circuit Judge,
concurring.
The New Jersey district court’s use of the Panduit test was not “essential to the judgment” below. Therefore, as this court correctly notes, collateral estoppel did not compel the Connecticut district court to grant Nidec summary judgment. I write separately to underscore the implications of the Pan-duit test in this setting.
I.
To invoke collateral- estoppel, a defendant must show that the prior action: (1) decided the identical issue; (2) actually litigated that issue; (3) afforded the plaintiff a full and fair opportunity to litigate the issue; and (4) resolved the issue as an essential step in reaching final judgment. A.B. Dick Co. v. Burroughs Corp., 713 F.2d 700, 702, 218 USPQ 965, 967 (Fed.Cir.1983). Nidec did not make this showing in the Connecticut action.
II.
First, the issue of Nidec’s infringement arose in the New Jersey and Connecticut actions in two entirely different contexts, with two different patents. In New Jersey, the court did not perform an infringement analysis at all, but merely determined whether Nidec made acceptable non-infringing products in a damages analysis. The Special Master passingly discussed infringement of the ’028 patent to set damages. The Special Master did not perform an infringement *1540analysis to determine liability. In Connecticut, the district court assessed infringement to determine liability. Each court assessed infringement differently for a different reason.
Furthermore, the New Jersey decision concerning the claims of the ’028 patent cannot bar a later suit on the separate and distinct claims of the ’069 patent. “[I]n-fringement must be decided with respect to each asserted claim as a separate entity.” W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540, 1559, 220 USPQ 303, 318 (Fed.Cir.1983), cert. denied, 469 U.S. 851, 105 S.Ct. 172, 83 L.Ed.2d 107 (1984). The issues in the New Jersey and Connecticut actions were hardly similar, let alone identical.
Second, the New Jersey court did not actually litigate the issue of whether Nidec infringed Rotron’s patents. In fact, the Special Master did not purport to make a formal finding of infringement. At no point did the New Jersey court interpret the claims or apply them to Nidec’s “accused device.” Therefore, the Special Master’s findings in the New Jersey action did not “actually litigate” the infringement issue as required for collateral estoppel.
Third, Rotron had no opportunity to litigate fully the issue of infringement in the New Jersey action. For instance, Rotron received no opportunity to obtain discovery from Nidec in New Jersey. Cf. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 n. 15, 99 S.Ct. 645, 651 n. 15, 58 L.Ed.2d 552 (1979). Furthermore the New Jersey court had no subpoena power over Nidec (of Connecticut) and Nippon Densan (of Japan). No representatives from Nidec or Nippon Densan appeared as witnesses in the New Jersey action. Therefore, Rotron did not have a full and fair opportunity to litigate the issue of Nidec’s infringement in the New- Jersey action.
Fourth, the issue of Nidec’s alleged infringement of the ’028 patent was not essential to the Special Master’s finding in the New Jersey case. The Special Master simply determined the existence of acceptable non-infringing alternatives to Rotron’s ’028 rotor as required by the Panduit test for lost profits.1
The Panduit test itself is merely “an acceptable, though not an exclusive ” test for determining “but for” causation as to lost profits. BIC Leisure Prods. Inc. v. Windsurfing Intern. Inc., 1 F.3d 1214, 1218, 27 USPQ2d 1671, 1674 (Fed.Cir.1993) (emphasis added); accord State Indus., Inc. v. Mor-Flor Indus., Inc., 883 F.2d 1573, 1577, 12 USPQ2d 1026, 1028 (Fed.Cir.1989), cert. denied, 493 U.S. 1022, 110 S.Ct. 725, 107 L.Ed.2d 744 (1990). This court acknowledges alternative methods of proving damages. For instance, under a market share approach for calculating lost profits, a fact-finder may properly award lost profits if the patentee shows an established market share in lieu of the absence of non-infringing alternatives. State Indus., 883 F.2d at 1580. Thus, with alternative ways of proving causation for lost profits, the New Jersey ruling was not essential to proving damages in that case.
Finally, and perhaps most important, before applying the Panduit test, a court must determine whether the accused device competes with the patentee’s product in the marketplace. If not, the court should not employ the Panduit test. The New Jersey and Connecticut courts did not determine whether Rotron’s and Nidec’s products competed in the same market.
The first Panduit factor — demand for the patented product — presupposes that demand for the accused and patented products is interchangeable. However, if the products are not sufficiently similar — in terms of price, product characteristics, and marketing channels — to compete for the same customers, the infringer’s customers will not necessarily transfer their demand to the patentee’s product in the absence of the infringing product. See BIC, 1 F.3d at 1218-19.
*1541The second Panduit factor — absence of acceptable, noninfringing alternatives — also presupposes that the patentee and the in-fringer compete for the same customers. Cf. Yarway Corp. v. Eur-Control USA, Inc., 775 F.2d 268, 276, 227 USPQ 352, 357 (Fed.Cir.1985). However, if the products do not compete in the same market niche, the second Panduit factor will also frustrate the “but for” test for causation.
Neither the New Jersey nor the Connecticut court analyzed whether Nidec’s and Ro-tron’s products compete for the same customers. Thus, neither court conducted the fact-intensive economic inquiry that must precede use of the Panduit test.

. Panduit requires the patentee to prove: (1) a demand for the patented product; (2) the absence of acceptable, noninfringing substitutes; (3) the patentee’s capacity to exploit the demand; and (4) the profits he would have made. Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156, 197 USPQ 726, 720-30 (6th Cir.1978).