Opinion · Court of Appeals for the Federal Circuit
Vardon Golf Company, Inc. v. Karsten Manufacturing Corporation, Defendants-Cross
294 F.3d 1330
- Type
- Opinion
- Court
- Court of Appeals for the Federal Circuit
- Jurisdiction
- Federal
- Date
- 2002-06-21
- Topic
- general
How later courts describe this case
- holding that § 1109(b)’s “party in interest” definition applies in Chapter 7 bankruptcy proceedings
- basing collateral es-toppel necessarily on a decision that is “immune ... to reversal or amendment”
- applying an “immune ... to reversal or amendment” standard for collateral estoppel to attach
- a “partial summary judgment was not an appealable final judgment” when it was not certified as “final under Rule 54(b)”
Citator
UpLaw has not yet analyzed Vardon Golf Company, Inc. v. Karsten Manufacturing Corporation, Defendants-Cross. The absence of a flag is not a finding that it is good law.
- Cited by
- 20 opinions
VARDON GOLF CO. v. KARSTEN MANUFACTURING,294 F.3d 1330(Fed. Cir. 2002)
VARDON GOLF COMPANY, INC., Plaintiff-Appellant, v. KARSTEN MANUFACTURING
CORPORATION, Defendants-Cross Appellant.
Nos. 01-1557, 01-1651.
United States Court of Appeals, Federal Circuit.
June 21, 2002.
Lawrence G. Kurland, Bryan Cave LLP, of New York, NY, argued for defendant-cross appellant. With him on the brief were Thomas C. Walsh, David A. Roodman, Roxana Wizorek, and K. Lee Marshall, of Bryan Cave LLP, of St. Louis, MO; and Troy B. Froderman, Bryan Cave LLP, of Phoenix, AZ.
Before NEWMAN, DYK, and PROST, Circuit Judges.
BACKGROUND
Vardon and Karsten manufacture golf clubs.Vardon Iat 1. In 1999, Vardon brought suit against Karsten alleging that Karsten's TiSI woods infringed claims 12 and 15 of Vardon's '941 patent and that Karsten's ISI iron-type clubs infringed several claims of Vardon's U.S. Patent No. 5,401,021 ("the '021 patent").Id.at 1. Claims 12 and 15 of the '941 patent both contain the limitation "substantially uniform thickness."Id.at 15-16. On September 7, 2000, the district court construed this limitation and held that as a matter of law, Karsten's clubs did not infringe claims 12 and 15 either literally or under the doctrine of equivalents.Id.at 17-19. The court consequently granted summary judgment in Karsten's favor on the '941 patent.Id.It denied, however, Karsten's motion for summary judgment on certain of the '021 claims.Id.Thus,Vardon Iis still before the court awaiting trial on the '021 patent. That case is not before us on appeal.
Prior to bringing suit against Karsten, Vardon had filed a reissue application for the '941 patent. While that application was pending, but before the court's decision inVardon I,Vardon filed a motion to substitute the reissue patent for the '941 patent in the ongoing litigation. The court denied the motion. Two months after the court granted partial summary judgment in Karsten's favor, the '950 reissue patent issued. In order to obtain the reissue, Vardon surrendered the parent patent, thereby mootingVardon I'ssummary judgment on the '941 claims and extinguishing Vardon's right to appeal the court's claim construction and finding of noninfringement regarding that patent. Vardon subsequently filed a second action against Karsten on November 15, 2000.Vardon IIat 2. LikeVardon I, VardonIIwas brought in the Northern District of Illinois, although the two suits were heard by different district judges.
InVardon II,Vardon alleged that Karsten infringed claim 22 of the '950 reissue patent.Id.Unlike claims 12 and 15 of the '941 patent, claim 22 of the '950 reissue did not contain the "substantially uniform thickness" limitation that the court had previously construed inVardon I. Id.After Karsten answered, however, Vardon sought to amend its complaint to include allegations that Karsten's product infringed claims 12 through 21 of the '950 patent, all of which contain the "substantially uniform thickness" limitation.Id.at 2-3. Karsten challenged this motion, arguing that Vardon was collaterally estopped from raising claims that included a limitation that Karsten's clubs had already been found not to possess.Id.at 3.
The court agreed with Karsten and denied Vardon's motion.Id.at 5. The court held that Vardon had failed to take advantage of available means of preserving its right to appeal in connection with theVardon Ilitigation, and that Vardon was therefore estopped from rearguing theVardon Iissues.Id.When Vardon later informed the court that the Patent and Trademark Office ("PTO") had made a mistake printing claim 22 and that, like claims 12 through 21, it too should have contained the "substantially uniform thickness" language, the court dismissed Vardon's entire complaint on the basis of collateral estoppel.Id.at 1. The court denied Karsten's motion for sanctions, however, concluding that Karsten had failed to introduce sufficient evidence to support a finding of bad faith litigation on Vardon's part.Vardon II Sanctionsat 5.
Vardon subsequently filed another motion with theVardon Icourt to substitute the '950 patent into its grant of partial summary judgment. This motion was denied. Vardon appealed theVardon IIdecisionPage 1333to this court, and we have jurisdiction pursuant to 35 U.S.C. § 1295(a)(1).
DISCUSSION
"Because the application of collateral estoppel is not a matter within the exclusive jurisdiction of this court, this court applies the law of the circuit in which the district court sits."Bayer AG. v. Biovail Corp.,279 F.3d 1340,1345, 61 USPQ2d 1675, 1679 (Fed. Cir. 2002) (citingPharmacia Upjohn Co. v.Mylan Pharms., Inc.,170 F.3d 1373,1381n. 4, 50 USPQ2d 1033, 1040 n. 4 (Fed. Cir. 1999)). Under Seventh Circuit law, collateral estoppel, or issue preclusion, prevents a party from litigating an issue if: (1) the issue sought to be precluded is the same as that involved in an earlier action; (2) the issue was actually litigated; (3) determination of the issue was essential to a final judgment; and (4) the party against whom estoppel is invoked was represented in the prior action.See Adair v.Sherman,230 F.3d 890, 893 (7th Cir. 2000);Chicago TruckDrivers, Helpers Warehouse Union (Indep.) Pension Fund v.Century Motor Freight, Inc.,125 F.3d 526,530(7th Cir. 1997);Havoco of Am., Ltd. v. Freeman, Atkins Coleman, Ltd.,58 F.3d 303,307(7th Cir. 1995).
A.
On appeal, Vardon argues that theVardon IIcourt erred when it accordedVardon Ipreclusive effect because that decision was neither final nor appealable. According to Vardon, a nonfinal, unappealable judgment does not become preclusive simply because a party theoretically could have preserved its right to appeal by pursuing certain procedural avenues. In response, Karsten concedes thatVardon I'sgrant of partial summary judgment was not sufficiently final to be appealed. It argues, however, that the decision should be accorded preclusive effect because Vardon voluntarily relinquished its right to appeal. In short, Karsten asserts that because Vardon did not take procedural steps to preserve its appeal fromVardon I'spartial summary judgment, that judgment now precludes Vardon from litigating the matter anew. In making this argument, Karsten relies heavily on the Seventh Circuit's statement inWilliams v.Commissioner of Internal Revenue,1 F.3d 502,504(7th Cir. 1993) that application of collateral estoppel "might be extended to certain cases of summary judgment and even of partial summary judgment."1
We agree with Vardon thatVardon I'sgrant of partial summary judgment was not final for purposes of collateral estoppel and that theVardon IIcourt therefore erred when it accorded the decision preclusive effect. InMiller Brewing Co. v. Jos.Schlitz Brewing Co.,605 F.2d 990(7th Cir. 1979), the Seventh Circuit set forth the requirements for finality under the doctrine of collateral estoppel. The court held that in order "[t]o be `final' for purposes of collateral estoppel the decision need only be immune, as a practical matter, to reversal or amendment."Id.at 996. According to the court, the possibility of appeal contributes directly to this determination of finality, which "turns upon such factors as the nature of the decision (i.e., that it was not avowedly tentative), the adequacy of the hearing,and the opportunity for review."Id.(emphasis added) (citingLummus Co. v. Commonwealth Oil Refining Co.,297 F.2d 80,Page 133489 (2d Cir. 1961)). In so holding, the Seventh Circuit explicitly adopted the approach followed by the Restatement (Second) of Judgments, § 41 reporter's note comment g (Tent. Draft No. 1, 1973), now § 13 reporter's note comment g (1982), which states that the fact "that the decision was subject to appeal or was in fact reviewed on appeal [is a] facto[r] supporting the conclusion that the decision is final for the purpose of preclusion."Id.See also United States v. Sherman,912 F.2d 907,909-10(7th Cir. 1990);Gilldorn Sav. Ass'n v. Commerce Sav. Ass'n,804 F.2d 390,393(7th Cir. 1986);accord Interconnect PlanningCorp. v. Feil,774 F.2d 1132,1135, 227 USPQ 543, 545 (Fed. Cir. 1985) ("Sufficient firmness, according to the Restatement, requires that the party against whom the estoppel is asserted have had the right, even if not exercised, to challenge on appeal the correctness of the earlier decision.").
In the instant case,Vardon I'sgrant of summary judgment clearly was not "immune . . . to reversal or amendment." Neither party moved to certify the court's interlocutory decision as final under Rule 54(b), and consequently that decision was "subject to revision at any time before the entry of judgment adjudicating all the claims," namely resolution of the remaining '021 patent allegations. Fed.R.Civ.Pro.54(b). Moreover, Vardon never had the opportunity to appealVardon I'sconstruction of the "substantially uniform thickness" limitation or its finding that Karsten's product did not contain this element of the '941 patent either literally or under the doctrine of equivalents. Indeed, Karsten concedes thatVardon I'spartial summary judgment was not an appealable final judgment under28 U.S.C. § 1291, and it is undisputed that this decision was rendered moot, and therefore unappealable, when Vardon surrendered the '941 patent. Under these circumstances,VardonIcannot be said to be "final" for collateral estoppel purposes as that term is defined either by the Seventh Circuit or the Restatement.
Karsten urges this court to find otherwise, however, on the ground that Vardon could theoretically have preserved its right to appeal by availing itself of certain procedural means. According to Karsten,Vardon Ishould be deemed final and therefore preclusive because Vardon could have avoided mooting the court's grant of partial summary judgment by: (1) moving theVardon Icourt to certify its decision for interlocutory appeal under Rule 54(b), (2) substituting the '950 reissue patent for the '941 patent at an appropriate time, or (3) suspending its reissuance proceedings before the PTO. This argument is without merit. As a preliminary matter, it is not at all certain that theVardon Icourt would have granted a Rule 54(b) certification motion. Nor is it clear that the court would have allowed Vardon to substitute the '950 reissue patent into the litigation, particularly in light of its denial of Vardon's motions to substitute. The existence of such speculative methods of preserving the right to appeal does not render a nonfinal judgment preclusive for the purposes of collateral estoppel.Accord Interconnect Planning Corp.,774 F.2d at 1136, 227 USPQ at 545 (Fed. Cir. 1985) (the possibility of interlocutory appeal does not render a decision final under the doctrine of collateral estoppel because "[t]he law of collateral estoppel is not intended to penalize a party for declining to try to take a piecemeal appeal.").
Finally, we find Karsten's reliance onWilliamsunconvincing. Although theWilliamscourt observed that "a judgment final in the trial court may have collateral estoppel effect even though the loser has not exhausted his appellate remedies," and noted that "it has been suggested that this rule might be extended to certain cases ofPage 1335summary judgment and even of partial summary judgment," the court held that the appellant's collateral estoppel argument was "frivolous."1 F.3d at 504. As such, its statements about the possible scope of collateral estoppel are dicta. At oral argument, Karsten's counsel could not definitively direct the court to any case that has given collateral estoppel effect to a nonfinal judgment. We decline to do so today.
B.
Vardon also argues thatVardon I'sconstruction of the claim limitation "substantially uniform thickness" is patently incorrect and urges this court to construe the termde novo.Karsten responds thatVardon Iis not before this court and that reconstruing the limitation would therefore be improper. We agree with Karsten. As this court stated inPharmacia,170 F.3d at 1380, 50 USPQ2d at 1039, "our role is limited to reviewing the district court's application of collateral estoppel, not the correctness of the [underlying decision]." It isVardon IIthat is on appeal to this court, notVardon I,and we therefore do not address theVardon Icourt's claim construction.
Finally, on cross-appeal Karsten argues that theVardon IIcourt abused its discretion when it declined to sanction Vardon for bad faith litigation. Karsten sought such sanctions in the form of attorneys fees under Federal Rule of Civil Procedure54(d)(2)(e), and the court refused to grant them on the ground that the record did not support a finding of bad faith.VardonII Sanctionsat 5. Because it was neither unreasonable nor clearly erroneous for the district court to deny Karsten's motion for sanctions, Karsten's argument lacks merit.See Abrutyn v.Giovanniello,15 F.3d 1048,1050-51, 29 USPQ2d 1615, 1617 (Fed. Cir. 1994) (holding that an abuse of discretion occurs if the decision is clearly unreasonable or is based on erroneous conclusions of law). We therefore affirm.
CONCLUSION
TheVardon IIcourt erred when it concluded thatVardon I'sgrant of partial summary judgment was final for the purposes of collateral estoppel and accorded that interlocutory decision preclusive effect. This court, therefore, reversesVardon II'sdismissal of Vardon's complaint and its motion to amend and remands for further proceedings consistent with this Opinion. We decline to reach the claim construction issue and affirm theVardon IIcourt's dismissal of Karsten's motion for sanctions.
COSTS
Each party shall bear its own costs.AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED.
Although we apply regional circuit law to purely procedural issues, we apply Federal Circuit law to non-patent issues where "the disposition of nonpatent-law issues is affected by the special circumstances of the patent law setting in which those issues arise."Midwest Indus., Inc. v. Karavan Trailers, Inc.,175 F.3d 1356,1360, 50 USPQ2d 1672, 1675 (Fed. Cir. 1999) (en banc). Such a relationship has been found to exist in a number of areas. For example on personal jurisdiction questions, we have applied our own law,see Hildebrand v. Steck Mfg. Co.,279 F.3d 1351,1354, 61 USPQ2d 1696, 1698 (Fed. Cir. 2002). We do so in order to "promot[e] uniformity in the field of patent law. . . ."Midwest Indus.,175 F.3d at 1360, 50 USPQ2d at 1676. Although the recent decision of the Supreme Court inHolmes Group, Inc.v. Vornado Air Circulation Systems, Inc.,___ U.S. ___,122 S.Ct. 1889,153 L.Ed.2d 13(2002) may make that uniformity more elusive, it is still important.
Res judicata and collateral estoppel questions are affected by and closely related to patent law questions. Moreover, they may be outcome determinative. In this particular case, it is unlikely that there is a variation in the collateral estoppel rules in the various regional circuits. But it is not difficult to imagine other cases in which different res judicata and collateral estoppel rules would be applied depending on the regional circuit forum, and that the existence of these different rules could affect forum selection. Patent litigants often have a wide choice of fora. There is simply no reason why an earlier patent judgment should have one consequence in the Third Circuit and another in the Seventh Circuit, for example. Such an approach encourages the very forum shopping that our regional circuit law approach was designed to prevent.See Midwest Indus.,175 F.3d at 1359, 50 USPQ2d at 1675.
I would apply uniform Federal Circuit law to determine the effect of previous patent litigation.
- Karsten also argues that the issue of finality is not properly before the court because Vardon failed to raise it in its opening brief. This statement is not accurate. In its brief, Vardon asserts thatVardon Ilacks preclusive effect because it is not final, and Karsten's argument is consequently without merit. ↩
- Footnote 4 of the decision inPharmacia Upjohn Co. v.Mylan Pharmaceuticals, Inc.,170 F.3d 1373, 50 USPQ2d 1033 (Fed. Cir. 1999), on whichBayerrelied, suggested that we should apply regional circuit law on some collateral estoppel issues and not on others.See id.at 1381 n. 4 ("Application ofBlonder-Tongue [Laboratories, Inc. v. University of IllinoisFoundation,402 U.S. 313,91 S.Ct. 1434,28 L.Ed.2d 788(1971)], being an issue of patent law, is a matter within our exclusive jurisdiction and is hence subject to this court's law. However, because the application of general collateral estoppel principles, such as finality of judgment, is not a matter within the exclusive jurisdiction of this court, we must apply the law of the circuit in which the district court here sits. . . ."). ↩