Fans of civil procedure will want to check out our case of the week, which offers an interesting discussion of the requirements for claim preclusion in patent infringement suits—and a reminder about the distinctions between direct and induced infringement.
Case of the week: Inguran, LLC v. ABS Global, Inc., No. 22-1385
Panel: Judges Lourie, Bryson, and Reyna, with Judge Reyna writing the opinion
You should read this case if: you have a matter involving claim preclusion
A company doing business as STgenetics owns a patent on methods for preselecting the gender of a domestic animal’s offspring by sorting reproductive cells. ST filed three lawsuits against its competitor, ABS, for patent infringement based on ABS’s system for making certain “straws” used in animal reproduction.
The first lawsuit was based on ABS’s own use of its system to manufacture and sell these straws. ABS stipulated to direct infringement, and the district court awarded an ongoing royalty on each straw ABS sold that was made with the infringing technology. ST then brought another lawsuit against ABS; during discovery, ST learned that ABS had begun licensing its system to third parties and teaching them how to use it to produce their own straws. So ST filed a third lawsuit against ABS, this time alleging that ABS induced infringement by these third parties.
The district court dismissed ST’s complaint in this third lawsuit, concluding that claim preclusion barred ST’s claims. Claim preclusion (sometimes called res judicata) generally applies when (1) there is a final judgment on the merits in an earlier suit, (2) the two suits involve the same parties, and (3) the two suits involve the same cause of action. The district court determined that ST’s first lawsuit met these requirements—including, as relevant here, that the first and lawsuits were based on the same cause of action.
The Federal Circuit reversed. The Court explained that the same-cause-of-action requirement turns on whether the two lawsuits involve the same set of “transactional facts.” In a patent case, these include both the asserted patents and the accused activity.
The Court held that ST’s first and third lawsuits were based on distinct causes of action because they involved different accused activities. In particular, the first lawsuit alleged only direct infringement by ABS, while the third lawsuit accused ABS of inducing its licensees’ infringement.
To be sure, the Court emphasized, claim preclusion encompasses not only claims that were actually asserted in the earlier action, but also claims that could have been asserted. But the Court concluded that ST “could not have asserted an inducement claim” during the first lawsuit. When ST filed its first complaint (and even by the time of the first trial), ABS had not begun licensing its system to third parties. At most, ABS had created an internal “brainstorming” document that suggested pursuing commercial licensing. But ABS had not yet taken any actions to encourage others to infringe, as is required for induced infringement. In other words, “[a]n induced patent infringement claim brought at the time of trial” in the first suit “would have been based on speculation.” Thus, the judgment in the first action did not preclude ABS from asserting induced infringement claims in the third lawsuit.
OTHER WEEKLY STATS
Precedential opinions: 1
Non-precedential opinions: 2
Rule 36: 0
Longest pending case from argument: Inguran, LLC v. ABS Global, Inc., No. 22-1385 (65 days)
Shortest (non-Rule 36) pending case from argument: Edwards v. MSPB, No. 22-1967 (28 days)