IP Law Daily, PATENT—Fed. Cir.: Second infringement case against steel manufacturer not precluded by collateral estoppel, (Nov 15, 2018)

By David Yucht, J.D.

The U.S. Court of Appeals for the Federal Circuit has determined that collateral estoppel did not preclude a patent infringement suit brought by steel manufacturer ArcelorMittal Atlantique et Lorraine against its competitor, AK Steel Corp., because evidence showed material differences between the accused product in this action and the product in an earlier litigation. Consequently, the appellate court overturned the judgment of the district court entering summary judgment of non-infringement. The opinion originally was filed under seal on November 5 and has been unsealed in full (ArcelorMittal Atlantique et Lorraine v. AK Steel Corp., November 14, 2018, Reyna, J.).

Hot stamped steel. ArcelorMittal possesses a patent which relates to boron steel sheets with an aluminum-based coating that, when hot-stamped, become highly mechanically resistant. Mechanical resistance, or ultimate tensile strength (UTS), is measured in megapascals (MPa). Hot-stamping is a thermal treatment process where steel blanks are rapidly heated, inserted into a stamping machine that contains special dies, stamped into a certain shape, and then rapidly cooled. The hot-stamping process gives the steel significantly higher UTS than its pre-stamped state and is highly desired by automobile manufacturers. One claim of this patent indicated that steel treated in this manner had very high mechanical resistance in excess of 1,500 MPa, and the aluminum coating provided a high resistance to corrosion of the steel sheet.

Prior suit. ArcelorMittal sued AK Steel for infringement of its patent. The primary issue in this matter was whether steel sheets produced by AK Steel met the "a mechanical resistance of 1,500 MPa or greater" limitation of ArcelorMittal’s patent after thermal treatment. Evidence showed that AK Steel’s production at that time was experimental and the sheets were being stamped by a single non-commercial "prototype shop." The evidence also indicated that AK Steel’s product had a UTS that did not exceed 1,500 MPa. There was also evidence that Ford Motor Company had placed an order for this steel, but that it was never supplied. This action resulted in a jury verdict of non-infringement.

Present suit. ArcelorMittal argued that new evidence, obtained after the earlier verdict, established that AK Steel’s ULTRALUME products were materially different from its older products because the ULTRALUME sheets were hot-stamped to achieve a UTS exceeding 1,500 MPa and that AK Steel was supplying the market with these sheets. After limited discovery concluded, AK Steel moved for summary judgment based on collateral estoppel arguing that there was no evidence that its pre-stamped steel sheets or its conduct had changed since the prior case was filed. The district court granted AK Steel’s motion for summary judgment of non-infringement. The district court found that the product was the same and could not—prior to hot stamping—be infringing as the steel sheets had a tensile strength of about 600 MPa. According to the district court, AK Steel’s shipping the steel sheets to a separate hot stamper was of no consequence in the context of an infringement claim.

Collateral estoppel. The circuit court reversed the decision of the district court. It noted that the question on appeal was whether changes, if any, in the accused products were "material" for the purpose of collateral estoppel application. The circuit court concluded that the evidence in this case supported that the products were not materially the same and therefore collateral estoppel did not apply. Collateral estoppel applies when the issue sought to be barred was part of a previous matter that was actually litigated, resulted in a final and valid judgment, and the determination of the subject issue was essential to the prior judgment. In an infringement matter, if accused devices in a second suit are essentially the same, then the patentee is precluded from pursuing his or her claims a second time. In the former case against AK Steel, there was no evidence that the its products met the "in excess of 1,500 MPa" UTS limitation or that any of its products were commercially stamped and supplied to an auto manufacturer at all. Now, there was evidence showing that AK Steel was a supplier of such products to at least one major auto manufacturer. The appellate court found that it was significant that an auto manufacturer’s test data showed that AK Steel’s products were thermally treated to achieve a UTS in excess of 1,500 MPa. The evidence in this case indicated that the production process was no longer "rudimentary," that commercial stampers were utilized, and that the stamped steel was being commercialized. This evidence represented a material difference in the accused products that did not exist previously.

The Federal Circuit also determined that the district court erred in finding that AK Steel’s shipping the steel sheets to a separate hot stamper was of no consequence in the context of an infringement claim. A court must look to an inventor’s definition of his or her product and cannot ignore that definition simply because several entities may be involved in the production process. If the hot-stampers in this case produce steel sheets with a UTS exceeding 1,500 MPa after thermal treatment, they might directly be infringing the patent. Therefore, the district court erred in dismissing ArcelorMittal’s potential indirect infringement claims due to a lack of direct infringement

This case is No. 2017-1637.

Attorneys: Constantine L. Trela, Jr. (Sidley Austin LLP) and Hugh Abrams (Shook Hardy & Bacon, LLP) for ArcelorMittal Atlantique et Lorraine and ArcelorMittal. Christopher Neil Sipes (Covington & Burling LLP) for AK Steel Corp.

Companies: ArcelorMittal Atlantique et Lorraine; ArcelorMittal; AK Steel Corp.

Cases: Patent FedCirNews