Acumed LLC v. Stryker Corp.

• Decision Date: 13 May 2008
• Docket Number: No. 2007-1115.,2007-1115.
• Citation: 525 F.3d 1319
• Parties: ACUMED LLC, Plaintiff-Appellant, v. STRYKER CORPORATION, Stryker Sales Corporation, Stryker Orthopaedics, and Howmedica Osteonics Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

525 F.3d 1319

ACUMED LLC, Plaintiff-Appellant, v. STRYKER CORPORATION, Stryker Sales Corporation, Stryker Orthopaedics, and Howmedica Osteonics Corporation, Defendants-Appellees.

No. 2007-1115.

United States Court of Appeals, Federal Circuit.

May 13, 2008.

Paul K. Vickrey, Niro, Scavone, Haller & Niro, of Chicago, Illinois, argued for plaintiff-appellant. With him on the brief were Robert A. Vitale, Jr., Richard B. Megley, Jr., and Frederick C. Laney.

Sharon A. Hwang, McAndrews, Held & Malloy, Ltd., of Chicago, Illinois, argued for defendants-appellees. With her on the brief was Gregory J. Vogler.

Before NEWMAN, GAJARSA, and LINN, Circuit Judges.

GAJARSA, Circuit Judge.

The issue in this case is whether a claim for patent infringement should have been brought in a prior case between the parties and is now precluded by the prior judgment. Plaintiff-Appellant Acumed LLC ("Acumed") appeals a decision of the United States District Court for the District of Oregon dismissing its action against Defendants-Appellants Stryker Corp., et al., ("Stryker") as barred by claim preclusion. Specifically, the district court held that Acumed's present infringement suit against Stryker was precluded by a prior infringement suit between the parties which was resolved by a final judgment on the merits, namely Acumed LLC v. Stryker Corp., No. 04-CV-513, 2006 WL 3409074 (D. Or. April 21, 2006) ("Acumed I"). Because the district court misconstrued this court's precedent regarding the manner in which claim preclusion applies to successive claims for patent infringement, we reverse and remand for further proceedings consistent with this opinion.

BACKGROUND

In April 2004, Acumed sued Stryker for infringement of United States Patent No 5,472,444 ("the '444 patent"). The '444 patent is directed to an intermedullary nail for fixing fractures of the proximal humeral cortex. '444 patent col.1 11.6-8. The accused product in Acumed I was Stryker's T2 Proximal Humeral Nail ("T2 PHN"), which is used to treat proximal humeral bone fractures.

During discovery in Acumed I, Acumed learned that Stryker had developed a longer version of the T2 PHN named the "T2 Long." Acumed also obtained manufacturing drawings, development documents, and other information about the T2 Long. However, Stryker was not marketing the T2 Long in the United States during discovery, and presumably for this reason, Acumed did not amend its Acumed I complaint to add an infringement claim based on the T2 Long.

In April 2005, roughly four months after the close of fact discovery in Acumed I, Stryker began publicly marketing and selling the T2 Long in the United States. Acumed, however, did not inquire as to the commercial status of the T2 Long in the United States until July 2005. After receiving Acumed's inquiry, Stryker informed Acumed that it did not view the T2 Long to be part of the litigation over the T2 PHN and refused to respond substantively as to the commercial status of the T2 Long.¹ Having failed to obtain a response from Stryker, Acumed filed a motion to compel production of a physical sample of the T2 Long and disclosure of sales data regarding the T2 Long. In its motion to compel, Acumed stated that—

[i]f the long version [i.e., the T2 Long] is substantially similar to the regular nail [i.e., the T2 PHN] but for its length, the parties' existing infringement contentions would adequately embrace that nail. If, on the other hand, the nail is materially different, Acumed will decide at a later date whether a second suit is appropriate.

J.A. at. 179-80. At the district court's behest, Stryker provided the requested T2 Long sample and sales information. After inspecting the sample, Acumed argued to the district court that the T2 Long was "substantially similar" to the T2 PHN and that the T2 Long might also infringe the '444 patent. J.A. at 695. The district court then offered to allow Acumed to add a claim of infringement based on the T2 Long but warned that adding the T2 Long claim would necessitate postponing the trial date for up to one year. Preferring to avoid this delay, Acumed decided to postpone its T2 Long infringement claim and the parties proceeded to trial solely on the T2 PHN infringement claim. The trial concluded with a jury verdict that the T2 PHN infringed the '444 patent and that Stryker's infringement was willful. The district court entered final judgment in Acumed I on April 20, 2006. The judgment of infringement and willfulness was affirmed by this court in Acumed LLC v. Stryker Corp., 483 F.3d 800 (Fed.Cir.2007).

On May 3, 2006, Acumed filed its complaint in the case presently on appeal, Acumed LLC v. Stryker Corp., No. 06-CV-642, 2006 WL 3253115 (D.Or. Nov. 6, 2006) ("Acumed II"), alleging that Stryker's T2 Long nail infringes the '444 patent. The district court dismissed Acumed's suit pursuant to Federal Rule of Civil Procedure 12(b)(6) on the ground that Acumed's T2 Long infringement claim was precluded by the judgment of infringement with respect to the T2 PHN in Acumed I. Acumed appeals that dismissal. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

ANALYSIS

Under the doctrine of claim preclusion,² "a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327 n. 5, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). The Supreme Court has also explained:

The rule [of claim preclusion] provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound "not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose."

Comm'r of Internal Revenue v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 92 L.Ed. 898 (1948) (quoting Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L.Ed. 195 (1876)). Whether a claim is barred by claim preclusion is a question of law that appellate courts review de novo. See, e.g., Faust v. United States, 101 F.3d 675, 677 (Fed.Cir. 1996); E & J Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1287 (9th Cir.1992).

To the extent that a case turns on general principles of claim preclusion, as opposed to a rule of law having special application to patent cases, this court applies the law of the regional circuit in which the district court sits—here the Ninth Circuit. See Media Tech. Licensing, LLC v. Upper Deck Co., 334 F.3d 1366, 1369 (Fed.Cir.2003). The Ninth Circuit applies claim preclusion where: "(1) the same parties, or their privies, were involved in the prior litigation, (2) the prior litigation involved the same claim or cause of action as the later suit, and (3) the prior litigation was terminated by a final judgment on the merits." Cent. Delta Water Agency v. United States, 306 F.3d 938, 952 (9th Cir.2002) (citing Blonder-Tongue Labs. v. Univ. of Ill. Found., 402 U.S. 313, 323-24, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971)). In this case, only the second requirement — i.e., the same claim requirement — is at issue.

Whether two claims for patent infringement are identical is a claim preclusion issue that is "particular to patent law," and therefore we analyze it under Federal Circuit law. Hallco Mfg. Co. v. Foster, 256 F.3d 1290, 1294 (Fed.Cir.2001) (hereinafter "Hallco") (citing Foster, 947 F.2d at 478-80). In applying the doctrine of claim preclusion, this court is guided by the Restatement (Second) of Judgments. Foster, 947 F.2d at 477 n. 7, 478-79.³ Under the Restatement approach to claim preclusion, a claim is defined by the transactional facts from which it arises. Id. As explained in the Restatement:

(1) When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger or bar ..., the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.

(2) What factual grouping constitutes a "transaction", and what groupings constitute a "series", are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.

Restatement (Second) of Judgments § 24. In Foster, this court held that one of the essential transactional facts giving rise to a patent infringement claim is "the structure of the device or devices in issue." 947 F.2d at 479. In so holding, the Foster court relied on Young Engineers, Inc. v. United States International Trade Commission, which held:

With respect to patent litigation, we are unpersuaded that an "infringement claim," for purposes of claim preclusion, embraces more than the specific devices before the court in the first suit. Adjudication of infringement is a determination that a thing is made, used or sold without authority under the claim(s)[⁴] of a valid enforceable patent. Thus, the status of an infringer is derived from the status imposed on the thing that is embraced by the asserted patent claims, the thing adjudged to be infringing.

721 F.2d 1305, 1316 (Fed.Cir.1983); see also Del Mar Avionics, Inc., v. Quinton Instrument Co., 836 F.2d 1320, 1324 (Fed. Cir.1987) (holding that claim preclusion did not apply because a "device not previously before the court, and shown to differ from those structures previously litigated, requires a determination on its own facts"). It follows from Young Engineers that claim preclusion does not apply unless the accused device in the action before the court is "essentially the same" as the accused device in a prior action between the parties that was resolved by...