Northern District Of Illinois Uses Collateral Estoppel To Find Patents Invalid Based On PTAB’s Unpatentability Rulings On Similar Patents
On October 8, 2020, Judge Andrea R. Wood of the United States District Court for the Northern District of Illinois denied plaintiff Think Product, Inc.’s motion to reconsider a finding of patent invalidity. Think Products, Inc. v. Acco Brands Corp. and Acco Brands, USA LLC, No. 18-cv-07506 (N.D. Ill. Oct. 8, 2020). The Court had previously granted defendants Acco Brands Corporation’s and Acco Brands, USA LLC’s motion for summary judgment invalidating two patents based on collateral estoppel arising from rulings by the Patent Trial and Appeal Board (“PTAB”) invalidating for obviousness two similar patents.
Plaintiff filed the present suit alleging that defendants infringed U.S. Patent Nos. 9,562,375 (“the ’375 patent”) and 10,125,523 (“the ’523 patent”), which disclose products designed to lock laptops, tablets, and other electronic devices to stationary objects. Defendants moved for summary judgment to invalidate the patents, arguing that plaintiff was collaterally estopped from bringing the present suit because the PTAB had previously invalidated for obviousness two similar patents owned by plaintiff (“the PTAB patents”). The Court granted defendants’ motion to dismiss and found the ’375 and ’523 patents to be invalid. Plaintiffs filed the present motion for reconsideration in response.
The Court initially granted defendants’ motion for summary judgment after considering the Seventh Circuit’s four-factor test for collateral estoppel:
collateral estoppel applies when (1) the issue being litigated is the same as that involved in the prior action; (2) the issue was actually litigated in that action; (3) the determination of that issue was essential to the prior judgment; and (4) the party against whom collateral estoppel is invoked had a full and fair opportunity to litigate the issue in the earlier action.
Plaintiff’s first argument in support of its motion for reconsideration related to the first prong of the collateral estoppel test, as plaintiff argued that the present litigation raised a new issue not considered by the PTAB. The PTAB patents contained language relating to a “captive security rod,” whereas the ’375 and ’523 patents refer to a “locking member.” The PTAB ruled that “captive security rod” referred to a “rod-shaped portion of a locking assembly, wherein the rod-shaped portion is anchored to a portable electronic device,” and specifically rejected plaintiff’s proposed definition of “a rod or spike that is inserted and locked into the hole of a locking mechanism.” According to plaintiff, the PTAB patents, which accordingly did not claim language related to “locking,” did not present the same issue as the ’375 and ’523 patents, which have locking members.
The Court rejected plaintiff’s argument. First, the Court noted that the argument did not “offer any new law or evidence that would render reconsideration appropriate.” The Court ruled that regardless, plaintiff’s argument was not persuasive as there is no real difference between the “anchoring end” of the PTAB patents and the “locking member” of the ’375 and ’523 patents. Further, the Court noted that the PTAB found obvious the idea of using a lock to secure an electronic device to a stationary object, which is also central to the ’375 and ’523 patents.
Next, related to the third prong of the collateral estoppel test, plaintiff argued that the Court wrongly applied Federal Circuit law in determining that the PTAB’s obviousness finding was essential to its invalidity ruling. The PTAB provided alternative grounds (in addition to obviousness) for invalidity. Plaintiff argued that under Seventh Circuit precedent, which plaintiff claimed should be applied, a ruling made on multiple, independent grounds does not have a preclusive effect.
The Court first noted that Federal Circuit precedent should apply to any aspects that may have unique application to patent cases; otherwise, regional circuit law should apply. The Court ruled that even if plaintiff’s argument—that Seventh Circuit law should apply—were followed, the PTAB’s finding of obviousness would be essential. The Court ruled that plaintiff misread Seventh Circuit precedent, and that the law properly dictates that prior rulings on merits can be deemed essential for preclusion purposes even where alternative and independent grounds are provided. Accordingly, plaintiff had not met the exacting “manifest error” standard (which is characterized by the “wholesale disregard, misapplication, or failure to recognize controlling precedent”) necessary for the court to grant a motion to reconsider an interlocutory order under Fed. R. Civ. P. 54(b).
Accordingly, the Court denied plaintiff’s motion for reconsideration.