Stevenson v. Sears, Roebuck & Co.

• Decision Date: 27 July 1983
• Docket Number: No. 83-746,83-746
• Parties: Richard Lawrence STEVENSON, Appellant, v. SEARS, ROEBUCK & COMPANY, Appellee. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 705

713 F.2d 705

218 U.S.P.Q. 969

Richard Lawrence STEVENSON, Appellant, v. SEARS, ROEBUCK & COMPANY, Appellee.

Appeal No. 83-746.

United States Court of Appeals, Federal Circuit.

July 27, 1983.

Keith D. Beecher, Santa Monica, Cal., argued, for appellant.

Ellsworth Roston, Los Angeles, Cal., argued, for appellee. With him on brief was Bruce A. Jagger, Los Angeles, Cal.

Before RICH, BALDWIN, KASHIWA, BENNETT and SMITH, Circuit Judges.

BENNETT, Circuit Judge.

This appeal is from a judgment of the United States District Court for the Central District of California. Stevenson v. Sears, Roebuck & Co., No. 77-4518 (C.D.Cal. Jan. 14, 1983). In the district court, the appellant (Stevenson) unsuccessfully attempted to enforce a patent that had been the subject of seemingly inconsistent determinations in two previous suits. In 1979, the Court of Customs and Patent Appeals (one of our predecessor courts) held that certain foreign corporations had "failed to carry their burden of persuasion in asserting the invalidity of the subject claims of the Stevenson patent." Stevenson v. International Trade Commission, 612 F.2d 546, 555, 67 CCPA 109, 204 USPQ 276, 284 (1979). In 1981, however, the United States Court of Appeals for the Ninth Circuit held that a different defendant--Grentec, Inc.--had carried its burden of persuasion and that therefore Stevenson's patent was invalid because the invention would have been obvious. Stevenson v. Grentec, Inc., 652 F.2d 20, 23, 211 USPQ 1020, 1022 (9th Cir.1981), cert. denied, 456 U.S. 943, 102 S.Ct. 2008, 72 L.Ed.2d 465 (1982). Applying the law 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 (1971), the district court in the present case held that Stevenson had a full and fair opportunity to litigate the validity of his patent in the prior unsuccessful suit against Grentec, Inc., and that therefore he was collaterally estopped from asserting the validity of his patent against the defendant-appellee, Sears, Roebuck & Company (Sears). The court also held that Sears was entitled to attorney fees in the amount of $5,000. For the reasons that follow, we affirm in part and reverse in part.

I. Background.

In 1977, appellant, Richard L. Stevenson (Stevenson) filed an amended complaint with the International Trade Commission (ITC) pursuant to section 337 of the Tariff Act of 1930 (codified as amended at 19 U.S.C. § 1337 (1976 & Supp. V 1981)), contending that unfair methods of competition existed in the importation and distribution of certain skateboards alleged to infringe claims 1, 2, 7, and 8 of U.S. Patent No. 3,565,454 to Stevenson. The subject device of the claims is commonly known as a kicktail skateboard. The ITC held that there was no violation of section 337 of the Act. On appeal, the Court of Customs and Patent Appeals (CCPA) reversed. After reviewing the evidence submitted by Stevenson and the various defendants-appellees (certain foreign corporations), the CCPA found that "there is no evidence of record that would have suggested to one having ordinary skill in the art at the time of appellant's invention that the up-swept tail of the rocker board would function to provide improved maneuverability." Stevenson v. International Trade Commission, 612 F.2d at 554, 67 CCPA at ---, 204 USPQ at 283. Therefore, on the evidence of record, the CCPA held that the appellees had "failed to carry their burden of persuasion in asserting the invalidity of the subject claims of the Stevenson patent." Id. at 555, 67 CCPA at ---, 204 USPQ at 284. It is important to note that this decision did not hold Stevenson's patent valid; it merely held that the appellees in that case had not carried their statutory burden of proving Stevenson's patent invalid. See 35 U.S.C. § 282 (1976), amended by the Federal Courts Improvement Act of 1982, Pub.L. No. 97-164, § 161(7), 96 Stat. 25, 49 ("A patent shall be presumed valid.... The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.").

Prior to the filing of the ITC action, Stevenson had brought a patent infringement suit in the United States District Court for the Central District of California against Grentec, Inc., and certain other defendants. For convenience, this action will be labeled "Suit I." On November 30, 1979 (3 weeks before the CCPA's decision in Stevenson v. International Trade Commission ), the district court granted Grentec's motion for summary judgment in Suit I and declared Stevenson's patent invalid. Shortly after this adverse determination, a different district judge in the central district of California held that Stevenson was collaterally estopped from relitigating the validity of his patent in another patent infringement suit that had been brought by Stevenson ("Suit II"). Stevenson v. Gottschlich, No. 77-2974 (C.D.Cal. April 25, 1980).

Stevenson appealed from the district court's judgment of invalidity in Suit I. On appeal, the Court of Appeals for the Ninth Circuit gave great weight to the decision of the CCPA but affirmed the district court's determination of invalidity on different evidence. See Stevenson v. Grentec, Inc., 652 F.2d at 22-23, 211 USPQ at 1022. The court noted that the CCPA had advanced two reasons for not holding Stevenson's patent invalid: (1) the foreign corporations in that action "failed to present evidence that the invention was within the ordinary skills of an average skateboarder; and (2) the kicktail skateboard was commercially successful." Id. at 23, 211 USPQ at 1022. The Ninth Circuit, however, found that, unlike the foreign defendants in the ITC suit, Grentec, Inc., had presented sufficient evidence before the district court that "the kicktail skateboard was within the ingenuity of the average skateboarder." Id. Because of this fact, the court did not consider the commercial success of the invention to be dispositive; therefore, it held Stevenson's patent invalid as the invention would have been obvious. Id. The Supreme Court denied certiorari, 456 U.S. 943, 102 S.Ct. 2008, 72 L.Ed.2d 465 (1982).

Although the Ninth Circuit had affirmed the district court's determination of invalidity and the Supreme Court had denied certiorari, Stevenson continued to prosecute his patent infringement suit against Sears ("Suit III"). In this, the present action, which was also brought in the central district of California, Stevenson advanced two reasons why he should not be collaterally estopped from asserting the validity of his patent. First, Stevenson argued that collateral estoppel was inappropriate here because his patent had previously been held "valid" ¹ by the CCPA. Second, he alleged that the affidavits relied upon by the district court in granting Grentec's motion for summary judgment in Suit I (invalidating the patent) were tainted by the "special relationship" between the affiants and Grentec, Inc.

The district court rejected these contentions. It noted that the Ninth Circuit had considered the effect of the CCPA's decision before affirming the district court's finding of invalidity; and that Stevenson had an opportunity to attack the allegedly tainted affidavits in Suit I, but did not do so. Consequently, the district court held that Stevenson had a full and fair opportunity to litigate the validity of his patent in Suit I, and was therefore collaterally estopped from asserting the validity of his patent in Suit III. Furthermore, the court held that Sears was entitled to attorney fees in the amount of $5,000, because Stevenson had continued to prosecute the validity of his patent after the prior judgment of invalidity had become final. See 35 U.S.C. § 285 (1976) ("The court in exceptional cases may award reasonable attorney fees to the prevailing party.").

Stevenson timely appealed from the January 14, 1983 judgment of the district court, entered January 26, 1983. In the past, Stevenson's appeal would have been to the Ninth Circuit; but, effective October 1, 1982, Congress granted exclusive jurisdiction over patent appeals to this court. Federal Courts Improvement Act of 1982, Pub.L. No. 97-164, §§ 125(b), 127(a), 96 Stat. 25, 36-38 (to be codified at 28 U.S.C. §§ 1292(c)(2), 1295(a)(1), 1295(a)(4)(C)). Stevenson now contends that the prior decision of the CCPA in Stevenson v. International Trade Commission, 612 F.2d 546, 67 CCPA 109, 204 USPQ 276, is binding on this court, ² and that therefore we should collaterally estop Sears from asserting the invalidity of Stevenson's patent. Stevenson also contends that he should not be collaterally estopped because he did not have a full and fair opportunity to litigate the validity of his patent in Suit I, as the court's decision in that case was (1) based on tainted affidavits, and (2) based on a motion for summary judgment and not on a full-fledged trial. Finally, Stevenson argues that an award of attorney fees to Sears is not justified in this case.

II. Discussion.

A. Blonder-Tongue: Collateral Estoppel and the Appropriate Inquiry.

As noted by the district court, the appropriate legal test for determining whether a plaintiff-patentee should be collaterally estopped from asserting his alleged patent right is set forth in Blonder-Tongue, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788. There the Supreme Court held that a prior determination of patent invalidity may be asserted as a defense to a subsequent attempt to enforce the patent, and that this defense must be accepted by a court unless the patentee demonstrates that he was denied a full and fair opportunity to litigate the validity of his patent in the prior unsuccessful action. The Court recognized that "[d]etermining whether a patentee has had a full and fair chance to litigate ... in an earlier case is of necessity not a simple matter." Id. at 333, 91 S.Ct. at 1445. The Court, however, listed some factors to be considered: (1) whether the...