Mendenhall v. Barber-Greene Co.

• Decision Date: 08 June 1994
• Docket Number: BARBER-GREENE,Nos. 91-1109,91-1131,91-1317 and 92-1244,s. 91-1109
• Parties: , 31 U.S.P.Q.2d 1001 Robert L. MENDENHALL and CMI Corporation, Plaintiffs-Appellants, v.COMPANY, Defendant/Cross-Appellant. Robert C. MENDENHALL and CMI Corporation, Plaintiffs-Appellees, v. ASTEC INDUSTRIES, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1573

26 F.3d 1573

63 USLW 2016, 31 U.S.P.Q.2d 1001

Robert L. MENDENHALL and CMI Corporation, Plaintiffs-Appellants, v. BARBER-GREENE COMPANY, Defendant/Cross-Appellant.

Robert C. MENDENHALL and CMI Corporation, Plaintiffs-Appellees, v. ASTEC INDUSTRIES, INC., Defendant-Appellant.

Nos. 91-1109, 91-1131, 91-1317 and 92-1244.

United States Court of Appeals, Federal Circuit.

June 8, 1994.

As Corrected on Grant of Rehearing

Sept. 14, 1994.

Richard S. Florsheim, Foley & Lardner, Milwaukee, WI, argued for plaintiffs-appellants in Nos. 91-1109, -1131, and plaintiffs-appellees in Nos. 91-1317 and 92-1244. Jerry J. Dunlap and Gary Peterson, Dunlap, Codding & Lee, P.C., Oklahoma City, OK, were on the briefs for plaintiffs-appellants and plaintiffs-appellees. George E. Quillin, Foley & Lardner, Alexandria, VA, represented plaintiffs-appellants and plaintiffs-appellees. Fred H. Bartlit, Jr. and Mark E. Ferguson, Kirkland & Ellis, Chicago, IL, represented plaintiffs-appellants and plaintiffs-appellees. Phillip C. Swain, Kirkland & Ellis, Los Angeles, CA, represented plaintiffs-appellants and plaintiffs-appellees.

Richard W. Bethea, Jr., Stophel & Stophel, P.C., Chattanooga, TN, argued for defendant/cross-appellant in Nos. 91-1109, -1131 and defendant-appellant in Nos. 91-1317 and 92-1244. With him on the brief was Andrew J. Nilles, Nilles & Nilles, S.C., Milwaukee, WI.

Jerry J. Dunlap, Dunlap, Codding & Lee, P.C., of Oklahoma City, OK, Richard S. Florsheim and George E. Quillin, Foley & Lardner, of Milwaukee, WI, Attorneys for plaintiffs-appellees and plaintiffs-appellants, were on the Combined Petition of Robert L. Mendenhall and CMI Corporation, for Rehearing and Suggestion for Rehearing In Banc.

Andrew J. Nilles, Nilles & Nilles, S.C., of Milwaukee, WI and Richard W. Bethea, Jr., Stophel & Stophel, P.C., of Chattanooga, TN Before NIES, ^* MAYER and LOURIE, Circuit Judges.

Attorneys for Astec Industries, Inc. and Barber-Greene Company, were on the Response to Petition for Rehearing and Suggestion for Rehearing In Banc.

NIES, Circuit Judge.

Appellants, Astec Industries, Inc., and its subsidiary Barber-Greene Company, invoke principles of collateral estoppel as enunciated in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788, 169 USPQ 513 (1971), as the basis for overturning the judgments against each of them, entered in separate suits for infringement of United States Patents No. Re. 31,904 ('904) and Re. 31,905 ('905), owned by Robert L. Mendenhall and his exclusive licensee CMI Corporation (collectively Mendenhall). The collateral estoppel defense arises from the final judgment of invalidity of the '904 and '905 patents entered in a suit against a third party. See Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 28 USPQ2d 1081 (Fed.Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1540, 128 L.Ed.2d 192 (1994). We hold that collateral estoppel applies. Accordingly, the district court judgments holding these defendants liable for infringement of the two Mendenhall patents are reversed. Other issues in these appeals are mooted by this disposition.

I. BACKGROUND

The '904 and '905 patents in suit have been extensively litigated. ¹ Mendenhall sued Barber-Greene in the United States District Court for the Northern District of Illinois and sued Astec in the United States District Court for the Eastern District of Tennessee. Astec counterclaimed for infringement of several patents it owned. During the litigation Astec acquired Barber-Greene, and Barber-Greene acknowledged that, as a subsidiary, it would be bound by the ruling respecting validity of the '904 and '905 patents in the Astec litigation and agreed that the issue would not be litigated in its case. Concurrently, Mendenhall began litigation against an unrelated party, Cedarapids, Inc., for infringement of the '904 and '905 patents in the United States District Court for the Northern District of Iowa. The Astec suit was the first to proceed to trial, inter alia, on the issue of validity of the '904 and '905 patents, damages having been bifurcated. Mendenhall moved for a stay of the Cedarapids case until the validity issue was resolved in Astec. The Astec trial resulted in a judgment in favor of Mendenhall respecting validity issues, and that judgment was affirmed by this court in an interlocutory appeal. ² The stay of the Cedarapids proceedings was then lifted, and that case was tried to a jury on all issues, resulting in a judgment on March 4, 1991, of invalidity of all claims of both patents, except Claim 13 of the '904 which was found not infringed. At the time the Cedarapids judgment of invalidity was entered, the Astec case was still pending before the Tennessee district court for determination of damages and other issues. Astec promptly moved to vacate the previously entered unfavorable liability judgment on the ground that Mendenhall was collaterally estopped from continuing to assert the patents under Blonder-Tongue, supra, and decisions of this court, particularly, Dana Corp. v. NOK, Inc., 882 F.2d 505, 11 USPQ2d 1883 (Fed.Cir.1989), and Thompson-Hayward Chemical Co. v. Rohm & Haas Co., 745 F.2d 27, 223 USPQ 690 (Fed.Cir.1984). The trial court denied Astec's motion stating:

1. Astec's motion to modify the injunction in this cause is DENIED. [Doc. 356]

2. Astec's motion for entry of an order vacating the judgment of October 31, 1988 which was affirmed by the Federal Circuit is DENIED. [Doc. 366] This court finds that if the Iowa jury verdict is inconsistent with the judgment affirmed by the Federal Circuit in this cause, that conflict should be Astec filed an interlocutory appeal (No. 91-1317) under 28 U.S.C. Sec. 1291(c)(1), which was stayed on Mendenhall's motion. After consideration of post-trial motions and entry of a final judgment by the Astec trial court on all claims and counterclaims, Astec again appealed, asserting error in the district court's ruling on the collateral estoppel issue as well as on various damages issues (No. 92-1244). These two appeals were consolidated. Mendenhall filed no appeal of the adverse judgment on Astec's counterclaims. The judgment was stayed pending appeal.

resolved by the Federal Circuit when the Iowa verdict goes up on appeal.

Meanwhile, Mendenhall appealed the final judgment in favor of the defendant in the Cedarapids case to this court, asserting a right to a new trial because the Cedarapids trial court allegedly erred in excluding the opinion of the Astec judge as probative evidence in the Cedarapids case and in improperly instructing the jury. Mendenhall did not appeal the trial court's denial of its JNOV (now JMOL) motion on any issues. On September 13, 1993, this court rendered its decision affirming the Cedarapids judgment holding invalid claims 1-12 of '904 and all claims of '905 for obviousness and public use. In addition, this court ruled on Cedarapids cross-appeal that claim 13 of the '904 patent was also invalid. ³ In making its ruling in the Cedarapids appeal, this court took into account the prior validity decision in the Astec proceedings. Indeed, the effect to be given the Astec opinion of the district court and the decision of this court respecting validity was the major issue in Cedarapids. As a result of the Cedarapids litigation, all claims of both the '904 and '905 patents have now been finally adjudged invalid.

The Barber-Greene trial had been stayed pending the interlocutory appeal of validity issues in Astec. Upon affirmance in that appeal, the Barber-Greene case proceeded to trial on the issues of infringement, Barber-Greene was held liable and damages and an injunction were awarded. It was not until the Barber-Greene case was on appeal that the Cedarapids district court entered a final judgment holding all of the claims which Mendenhall had asserted against Barber-Greene invalid. ⁴ The issue of collateral estoppel in Barber-Greene has, therefore, been raised for the first time on appeal.

The Barber-Greene, Astec, and Cedarapids appeals were heard on the same day but were not consolidated for disposition. As indicated, the Supreme Court denied review of the Cedarapids judgment holding the '904 and '905 claims invalid and the mandate in that case has issued. The Astec and Barber-Greene appeals are now consolidated for disposition.

II.

A. Blonder-Tongue and Its Progeny

In Blonder-Tongue, supra, the Supreme Court ruled 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. Mutuality of estoppel is no longer required. Thus, the benefits of collateral estoppel (now generally termed issue preclusion) arising from a final judgment of patent invalidity were extended to an alleged infringer other than the defendant who earlier successfully litigated the matter and those in privity therewith.

The final judgment in the Cedarapids case held that all claims of Mendenhall's '904 and '905 patents are invalid. Astec and Barber-Greene assert that the Cedarapids judgment should be given collateral estoppel effect in the infringement suits brought by Mendenhall against each of them. The defense of collateral estoppel clearly would have been available to these defendants had their cases been stayed until the Cedarapids case proceeded to its ultimate judgment holding the '904 and '905 patents wholly invalid. Instead, the Cedarapids case was stayed while the others proceeded. Thus, the invalidity judgment in Cedarapids was entered Because its patents are invalid and were determined to be invalid after full and fair litigation, ⁵ Mendenhall is collaterally estopped from recovering for infringement of those patents in these pending cases.

                just prior to entry of final judgment by the trial court in the Astec suit and only after appeal to this

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