DYK, Circuit Judge.
Victoria's Secret Direct Brand Management, LLC ("Victoria's Secret") and Avon Products, Inc. ("Avon") (collectively, "defendants") appeal from a judgment of the District Court for the Eastern District of Texas. The district court found that defendants infringed claims 34 and 51 of U.S. Patent No. 5,715,314 (the "'314 patent") and claims 15, 17, and 39 of U.S. Patent No. 5,909,492 (the "'492 patent") and that those claims were not invalid.
After the district court's judgment, this court decided Soverain Software LLC v. Newegg Inc., 705 F.3d 1333 (Fed.Cir.2013), amended on reh'g, 728 F.3d 1332, 1336 (Fed.Cir.2013) (hereinafter "Newegg"). There, we held invalid as obvious claims 34 and 51 of the '314 patent and claims 17, 41, and 61 of the '492 patent. Id. at 1341, 1344. We hold that issue preclusion applies as a result of the Newegg case, and that the asserted claims here are therefore invalid. Accordingly, we reverse.
Soverain Software LLC ("Soverain") is the assignee of the '314 and '492 patents. It brought an infringement action against defendants in the Eastern District of Texas. The asserted claims fall into two categories. Claims 34 and 51 of the '314 patent and claim 17 of the '492 patent are directed to virtual shopping carts.
On November 18, 2011, a jury determined that defendants infringed the asserted claims and that those claims were not invalid as anticipated or obvious. The district court subsequently entered judgment in favor of Soverain. Defendants appealed on September 7, 2012.
Subsequent to the filing of the appeal, on January 22, 2013, this court decided Newegg, a case from the Eastern District of Texas in which Soverain also alleged infringement of the '314 and '492 patents. There, the district court had entered judgment that the asserted claims were infringed and not invalid. On appeal, we reversed, holding invalid as obvious claims 34 and 51 of the '314 patent and claims 17, 41, and 61 of the '492 patent. Newegg, 705 F.3d 1333 at 1347. In a subsequent panel rehearing decision, we clarified that claim 35 is also invalid. We "confirm[ed] that claim 34 is representative of the `shopping cart' claims, including claim 35, and conclude[d] that dependent claim 35 is invalid on the ground of obviousness." Soverain Software LLC v. Newegg Inc., 728 F.3d 1332, 1336 (Fed.Cir.2013) (hereinafter "Newegg II").
We apply the law of the regional circuit to the general procedural question of whether issue preclusion applies. RF Del., Inc. v. Pac. Keystone Techs., Inc., 326 F.3d 1255, 1261 (Fed.Cir.2003). We apply this court's precedent to questions involving substantive issues of patent law, issues of issue preclusion that implicate substantive patent law issues, or issues of issue preclusion that implicate the scope of our own previous decisions. Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1342 (Fed.Cir.2013) (citing Aspex Eyewear, Inc. v. Zenni Optical Inc., 713 F.3d 1377, 1380 (Fed.Cir.2013)). "[T]he issue of whether to apply collateral estoppel is a question of law, making our review de novo." Bradberry v. Jefferson Cnty., Tex., 732 F.3d 540, 549 (5th Cir.2013) (citation omitted).
The first question is whether issue preclusion, or collateral estoppel, should
Id. (quoting Shanbaum, 10 F.3d at 311). Our own law is similar. Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1366 (Fed.Cir.2000) (issue preclusion requires four conditions: "(1) identity of the issues in a prior proceeding; (2) the issues were actually litigated; (3) the determination of the issues was necessary to the resulting judgment; and, (4) the party defending against preclusion had a full and fair opportunity to litigate the issues" (citations omitted)).
In Newegg, we explicitly held that claims 34 and 51 of the '314 patent and claim 17 of the '492 patent were obvious. 705 F.3d at 1341. Although claim 15 of the '492 patent, at issue here, was not explicitly invalidated in Newegg, we invalidated claim 41, which depends from claim 15. Id. at 1344. Therefore, the invalidity determination as to claim 41 extended to claim 15, as well. See Callaway Golf Co. v. Acushnet Co., 576 F.3d 1331, 1344 (Fed. Cir.2009) ("A broader independent claim cannot be nonobvious where a dependent claim stemming from that independent claim is invalid for obviousness.") (citation omitted).
The Supreme Court has held that a defense of issue preclusion applies where a party is "facing a charge of infringement of a patent that has once been declared invalid," even though the party asserting the defense was not a party to the action where the patent was invalidated. Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 349-50, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). We have similarly held that "once the claims of a patent are held invalid in a suit involving one alleged infringer, an unrelated party who is sued for infringement of those claims may reap the benefit of the invalidity decision under principles of collateral estoppel." Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1577 (Fed.Cir.1994); see In re Cygnus Telecomms. Tech., LLC, Patent Litig., 536 F.3d 1343, 1349 (Fed.Cir. 2008); Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170 F.3d 1373, 1379 (Fed. Cir.1999). It is also established that issue preclusion applies even though the precluding judgment (Newegg) comes into existence while the case as to which preclusion is sought (this case) is on appeal. Mendenhall, 26 F.3d at 1583-84 (invalidity decision rendered while case on appeal); Dana Corp. v. NOK, Inc., 882 F.2d 505, 508 (Fed.Cir.1989) (invalidity decision at Federal Circuit issued while case being briefed on appeal).
As to the four claims listed above, Soverain agrees that issue preclusion would normally be applicable but argues that it should not apply here because Soverain has not had a full and fair opportunity to litigate the issue of obviousness.
Under issue preclusion law generally and under both our law and Fifth Circuit law, a judgment of invalidity will not have a preclusive effect if a patentee
We need not here review the various grounds that are relevant to whether a party had a full and fair opportunity to litigate because most are inapplicable here. See generally Blonder-Tongue, 402 U.S. at 332-34, 91 S.Ct. 1434; Restatement (Second) of Judgments §§ 28, 29. For example, the issue of incentive to litigate arises where "[t]he stakes in the first action may be so small that extensive effort is not reasonable if the risk is limited to the first action." 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4423 (2d ed.2002). That circumstance does not exist here. Soverain does not dispute that it was represented by distinguished counsel in that appeal and that the amount in controversy was significant.
The unusual full and fair opportunity argument made here requires an understanding of the appeal in Newegg. In the district court in Newegg, at the close of evidence, Soverain and the defendant Newegg Inc. ("Newegg") filed cross-motions for judgment as a matter of law ("JMOL"); the district court granted Soverain's JMOL motion of non-obviousness and denied Newegg's JMOL motion of obviousness. See Newegg, 705 F.3d at 1336. As a result of the grant of Soverain's motion, the jury did not address obviousness. Id.
After the jury's verdict, the district court denied Newegg's renewed JMOL motion and alternative motion for a new trial. Id. Newegg appealed from the district court's judgment of non-obviousness. Id. While Newegg had preserved in the district court the argument that it should have been granted JMOL on the issue of obviousness, on appeal Newegg explicitly argued only that the district court erred in granting JMOL for Soverain on the issue of non-obviousness and in not granting Newegg's motion for a new trial.
We acknowledged that Newegg on appeal had argued only for a new trial but noted that, "[h]owever, questions of law must be correctly decided...." Newegg, 705 F.3d at 1337. On "th[o]se premises, we determine[d] the question of obviousness."
Soverain petitioned for rehearing and rehearing en banc. Soverain argued that the court improperly ordered JMOL when, on appeal, Newegg had asked only for a new trial. Additionally, Soverain and Newegg both noted that claim 35 of the '314 patent had not been addressed in our decision, even though it had been included in the district court's judgment of no invalidity. We subsequently granted panel rehearing and, after considering supplemental briefing and arguments, "confirm[ed] that claim 34 is representative of the `shopping cart' claims, including claim 35, and conclude[d] that dependent claim 35 is invalid on the ground of obviousness." Newegg II, 728 F.3d at 1336. We implicitly rejected the patentee's argument that the court should have granted a new trial rather than JMOL, id., implicitly rejecting the idea that Soverain did not have a full and fair opportunity to litigate. Rehearing en banc was denied. Soverain Software LLC v. Newegg Inc., No. 2011-1009 (Fed. Cir. Sept. 4, 2013) (order denying en banc rehearing). Soverain's petition for a writ of certiorari to the Supreme Court was denied. Soverain Software LLC v. Newegg Inc., ___ U.S. ___, 134 S.Ct. 910, 187 L.Ed.2d 779 (2014).
We note that Soverain does not argue that it was deprived of crucial evidence or witnesses in the first litigation or that it would present additional evidence at a new trial. See Blonder-Tongue, 402 U.S. at 333, 91 S.Ct. 1434. Nor is there any contention that Soverain did not have a full and fair opportunity to litigate the question of obviousness at the district court. Rather, Soverain's argument is that it did not have the incentive to fully litigate the issue of non-obviousness on appeal.
Specifically, Soverain contends that it would have raised different or additional arguments on appeal if it had known that this court might reverse the district court on invalidity rather than only granting a new trial. But Soverain does not cite any case to support the notion that a full and fair opportunity to litigate is lacking where a party might have argued differently on appeal. In Newegg, the same basic issue of obviousness was central whether the focus was on insufficiency of the evidence as a ground for JMOL or on insufficiency of the evidence as a ground for a new trial. Not surprisingly, Soverain has not identified any significant new arguments that were not in fact raised in the earlier appeal.
With respect to the shopping cart patents (claims 34 and 51 of the '314 patent and claim 17 of the '492 patent), Soverain argues that it did not have a full and fair
Soverain also argues that it did not have the opportunity in Newegg to present its arguments that the confirmation numbers from the CompuServe Mall system did not satisfy the limitations of the hypertext statement claims (claims 15 and 39 of the '492 patent). Soverain argues that its expert testimony established that the CompuServe system did not provide online access to information or suggest providing hyperlinked transaction documents, as required by the claims. But Soverain made this same argument in its Newegg briefing, stating that "[t]he CompuServe Mall did not have the capability for customers to review their order status or transaction history online." Brief of Plaintiff-Appellee Soverain Software LLC at 46, Newegg, 705 F.3d 1333 (No. 2011-1009). In Newegg, we addressed Soverain's argument that, in the "CompuServe Mall[,] it might be necessary to resort to the telephone or email to get the transaction information...." 705 F.3d at 1343. We reasoned that the patentee "did not invent the Internet, or hypertext, or the URL.... [T]he use of hypertext to communicate `a statement document' or `transaction detail document' was a routine incorporation of Internet technology into existing processes." Id. at 1344 (citations omitted).
Soverain further argues that it did not focus on the credibility of Newegg's expert witness "because Soverain was seeking to affirm JMOL of non-obviousness by relying on [Newegg's expert's] failure to establish that certain claim elements were prima facie present." Appellee's Br. 29. Specifically, Soverain argues that it would have presented evidence that Newegg's expert, Mr. Tittel, was discredited on cross-examination because he admitted that he did not conduct an element-by-element
The remaining question is whether issue preclusion applies to invalidate claim 39 (a hypertext statement claim) of the '492 patent. Claim 39 depends from claim 15. Claim 15 was invalidated as obvious in Newegg. See Newegg, 705 F.3d at 1344 (invalidating as obvious claim 41, which depends from claim 15). The only additional limitation in claim 39 concerns the Internet. Claim 39 recites "[a] hypertext statement in accordance with claim 15,
Soverain argues that issue preclusion should not apply because claim 39 was not previously found obvious and does not present identical issues. Complete identity of claims is not required to satisfy the identity-of-issues requirement for claim preclusion. Ohio Willow Wood, 735 F.3d at 1342; see Aspex v. Marchon Eyewear, Inc., 672 F.3d 1335, 1341 (2012) (in the claim preclusion context). "If the differences between the unadjudicated patent claims and adjudicated patent claims do not materially alter the question of invalidity, collateral estoppel applies." Ohio Willow Wood, 735 F.3d at 1342 (citing Bourns, Inc. v. United States, 537 F.2d 486, 493 (Ct.Cl.1976)). In Ohio Willow Wood, we applied issue preclusion to invalidate a claim where a different claim in another patent had previously been invalidated because "the[] patents use[d] slightly different language to describe substantially the same invention." Id. We also found that a difference in claim scope was not fatal to the application of estoppel. Id. at 1343. The previously-invalidated claim contained a limitation requiring only polymeric gel, whereas the unadjudicated claim required, more specifically, block copolymer gel. Id. We held that, because the patentee failed to explain how the additional limitation would change an invalidity analysis, the patentee had not met its burden in opposing summary judgment. Id.
The additional limitation here — transmitting a hypertext statement over the Internet, rather than over a generic network — does not materially alter the question of the validity of claim 39. In Newegg, as to the hypertext statement claims, the court noted that Newegg's expert Tittel had testified that CompuServe was not on the Internet. Newegg, 705 F.3d at 1343. We explained that, as conceded by Soverain's expert Shamos, the patentee "did not invent the Internet, or hypertext, or the URL." Id. at 1344 (citing Shamos testimony). "[T]he use of hypertext to [perform the limitations of the hypertext
The invalidity of the asserted claims of the '314 and '492 patents is established by issue preclusion. The judgment of infringement and no invalidity accordingly is reversed.
Costs to appellants.
'314 patent col. 13 l. 62-col. 14 l. 28.