IP Law Daily, PATENT—Fed. Cir.: Summary affirmance of construction, noninfringement findings had collateral estoppel effect, (Apr 17, 2017)

By Thomas Long, J.D.

Building materials supplier IntegraSpec was collaterally estopped from pursuing claims that competitors Airlite Plastics Co. and Formtech, LLC (collectively, "Airlite") infringed a patent related to insulating concrete forms, the U.S. Court of Appeals for the Federal Circuit has held. The claims were precluded by the Federal Circuit’s summary decision in a prior action, in which IntregaSpec asserted claims from the same patent against different defendants. In that decision, the Federal Circuit affirmed, without written opinion, a district court decision that the accused products were noninfringing. The infringement claims in the current case were the same as the infringement claims asserted in the prior case and involved accused products with the same design as those in the prior litigation (Phil-Insul Corp. v. Airlite Plastics Co., April 17, 2017, O’Malley, K.).

Patent-in-suit; prior litigation. The patent-in-suit—U.S. Patent No. 5,428,933 ("the ’933 patent")—related to insulating concrete forms (ICFs) used in the construction of buildings. IntegraSpec owned the ’933 patent by assignment. The ICFs described in the ’933 patent were expanded polystyrene foam blocks used as molds to cast concrete walls. In February 2011, IntegraSpec filed suit in a Nebraska federal district court against multiple competitors, including Nudura Corp. and Reward Wall Systems, Inc., for infringing the ’933 patent (the "Reward Wall" case). After claim construction, the defendants in the Reward Wall separately moved for summary judgment of noninfringement. The district court granted both motions, finding that the accused products did not infringe the asserted patent claims, either literally or under the doctrine of equivalents. IntegraSpec appealed, challenging only the district court’s construction of two claim terms. The Federal Circuit summarily affirmed the district court’s judgment pursuant to Federal Circuit Rule 36.

Current lawsuit. IntegraSpec filed suit against Airlite in May 2012, while the Reward Wall litigation was pending. IntegraSpec accused two separate lines of Airlite products of infringing two claims of the ’933 patent: the Fox Block ICFs and the Fox Block 1440 ICFs. It was undisputed that, like the Nudura ICFs found to be noninfringing in Reward Wall, the Fox Block ICFs had only one row of alternating projections and recesses on the top and bottom edges of each sidewall. In addition, IntegraSpec did not dispute that—like the Reward Wall iForm ICFs found noninfringing in Reward Wall—the Fox Blocks 1440 ICFs included projections that did not have the same measurable length, breadth, area, and volume, and that the differences were greater than 10 percent. Airlite moved for summary judgment of noninfringement on collateral estoppel grounds. The district court granted Airlite’s motion, and IntegraSpec appealed.

Collateral estoppel. The district court found that each of the collateral estoppel criteria were satisfied for the claim construction and noninfringement issues presented in this case. With respect to claim construction, the district court found that: (1) IntegraSpec was a party in Reward Wall; (2) the claim terms "adjacent" and "substantially the same dimension" were at issue in the prior case; (3) construction of those terms was "actually litigated" in Reward Wall; (4) the claim constructions became final when the Federal Circuit affirmed them on appeal; and (5) the claim constructions were essential to the noninfringement judgments in Reward Wall.

With respect to noninfringement, the district court determined that the infringement issues IntegraSpec litigated in Reward Wall were "substantively the same" as those presented in the current case. In addition, the district court found that Airlite’s accused products did not infringe the ’933 patent "for the same reasons stated in connection with the accused Nudura ICFs and Reward Wall [iForm] ICFs in Reward Wall." The district court noted that the accused Airlite products had the same design as the products found not to infringe in Reward Wall.

On appeal, IntegraSpec argued that two of the collateral estoppel requirements were at issue: (1) whether there was a valid and final judgment and (2) whether the determination in the prior action was "essential" to the prior judgment. IntegraSpec contended that the district court erred when it gave collateral estoppel effect to a Rule 36 judgment and when it failed to conduct claim construction regarding a patent claim not asserted in the earlier lawsuit (Claim 2).

Rule 36. The Federal Circuit disagreed with the contention that a Rule 36 judgment could not serve as the basis for collateral estoppel. Appeals with judgments entered under Rule 36 receive the full consideration of the court, and a Rule 36 summary affirmance constituted a valid and final judgment. The Federal Circuit had expressly recognized that a Rule 36 disposition could support claim preclusion, issue preclusion, judicial estoppel, and law of the case defenses. The Supreme Court had explained that a summary affirmance had binding precedential effect, although it extended no further than the precise issues decided in the case.

In this case, the appellate court said, it was clear that in issuing the Rule 36 decision in Reward Wall, the court had actually and necessarily adopted the district court’s claim constructions when it affirmed the district court’s judgments. In the Reward Wall appeal, IntegraSpec raised only issues of claim construction regarding the limitations "adjacent" and "substantially the same dimension." The claim construction of the former limitation supported the district court’s noninfringement judgment regarding the Nudura ICFs, and construction of the latter limitation supported the noninfringement judgment regarding the Reward Wall ICFs. Neither construction on appeal could have independently supported both noninfringement judgments; therefore, the Rule 36 affirmance necessarily meant that the Federal Circuit found no error in either of the district court’s constructions. In the Reward Wall appeal, IntegraSpec did not challenge any other findings that the district court had made regarding its noninfringement judgments, thereby waiving any objections to them. In the current case, IntegraSpec conceded that Airlite’s ICFs were substantially the same as those at issue in Reward Wall. Accordingly, the noninfringement determinations in Reward Wall precluded the infringement lawsuit against Airlite, the Federal Circuit concluded.

Construction of Claim 2. IntegraSpec argued that Claim 2 must be construed in this case because it was not at issue in Reward Wall. According to IntegraSpec, the district court in Reward Wall only construed Claims 1 and 19, and its construction of the term "adjacent" in Claim 1 created an irreconcilable conflict with Claim 2. Airlite argued—and the Federal Circuit agreed—that IntegraSpec had asserted the infringement of Claim 2—not Claim 1—against the Nudura ICFs in Reward Wall, and that the disputed claim terms in both lawsuits were the same. The Federal Circuit noted that, in Reward Wall, the parties selected the claims and claim terms to be construed, so IntegraSpec’s contention that the district court had overlooked certain terms was without merit. Moreover, the patent claims at issue in the current case contained the same "adjacent" and "dimension" limitations that were construed in Reward Wall. The Federal Circuit declined IntegraSpec’s request to reconstrue the terms now.

The case is No. 2016-1982.

Attorneys: Paul Adams (The Adams Law Firm) for Phil-Insul Corp., d/b/a IntegraSpec, LLC. Louis DiSanto (Banner & Witcoff, Ltd.) for Airlite Plastics Co. and Formtech, LLC.

Companies: Phil-Insul Corp., d/b/a IntegraSpec, LLC; Airlite Plastics Co.; Formtech, LLC

Cases: Patent FedCirNews