Home » Patent Law Updates » New Judicial Opinions » Current Summary
Patent Law Summary
Federal Circuit Reverses District Court’s Ruling in Acumed v. Stryker, Remands Case
Acumed, LLC v, Stryker Corp., et al.
No. 2007-1115, Court of Appeals for the Federal Circuit, 05/13/2008
Companies Mentioned: Acumed, LLC, Howmedica Osteonics Corp., Stryker Corp., Stryker Orthopaedics, Stryker Sales Corp.
Holding
In this appeal, the Federal Circuit reversed a district court’s judgment dismissing a patent infringement claim relating to a nail product used in treating bone fractures. The district court had earlier issued a judgment of infringement and willfulness against defendant Stryker’s product, a judgment that was later affirmed by the Federal Circuit. Subsequently, plaintiff-patentee Acumed filed a second action based on a longer version of Stryker’s original product. The district court dismissed the subsequent suit on the ground that it was barred by claim preclusion. On appeal however, the Federal Circuit found that Stryker admitted that its previous and present devices were not “essentially the same.” Claim preclusion could not apply in this case, unless the accused device in the action before the court is "essentially the same" as the accused device in a prior action. In so stating, the Federal Circuit concluded that claim preclusion does not bar a claim merely because it could have been raised in a prior action between the parties that was resolved by a final judgment on the merits.
Detailed Summary
Plaintiff-appellant Accumed, LLC (“Acumed”) was a holder of a patent relating to nail products used in treating bone fractures (“’444 patent”). It filed this appeal after the U.S. District Court for the District of Oregon dismissed its action for patent infringement against defendant-appellee Stryker Corporation, Stryker Sales Corporation, Stryker Orthopaedics, and Howmedica Osteonics Corporation (“Stryker”) on the ground that its complaint was barred by claim preclusion. In particular, the district court held that Acumed’s instant claim was precluded by a prior infringement suit between the parties. The district court had already resolved on the merits this previous suit that was entitled Acumed LLC v. Stryker Corp., No. 04-CV-513 (D. Or., April 21 2, 2006) (“Acumed I”).
The accused product at issue in Acumed I was Stryker’s T2 Proximal Humeral Nail (“T2 PHN”). During discovery in Acumed I, Acumed learned that Stryker had developed a longer version of the T2 PHN named the “T2 Long.” Acumed also obtained manufacturing drawings, development documents, and other information about the T2 Long. However, Stryker was not marketing the T2 Long in the United States during discovery. Presumably for this reason, Acumed did not amend its Acumed I complaint to add an infringement claim that would include the T2 Long product.
After inspecting a sample of the T2 Long, Acumed argued before the district court that it was “substantially similar” to the T2 PHN and that the T2 Long might also infringe its ‘444 patent. The district court offered to allow Acumed to add a claim of infringement based on the T2 Long but warned that adding the T2 claim would causing a delay in the trial for up to one delay. Seeking to avoid delay, Acumed decided to defer its action against the T2 Long. The trial ended with a jury verdict that the T2 PHN infringed Acumed’s patent and that such infringement was willful. The Federal Circuit affirmed this judgment of infringement and willfulness in Acumed LLC v. Stryker Corp., 483 F.3d 800 (Fed. Cir. 2007).
Subsequently, Acumed filed its complaint in the case presently on appeal, Acumed LLC v. Stryker Corp., No. 06-CV-642, 2006 WL 3253115 (D. Or. Nov. 6, 2006) (“Acumed II”), asserting that Stryker’s T2 Long nail infringed its ’444 patent. The district court dismissed Acumed’s action under Federal Rule of Civil Procedure 12(b)(6) on the ground that Acumed’s T2 Long infringement claim was precluded by the judgment of infringement with respect to the T2 PHN in Acumed I. Hence, Acumed filed this appeal.
Given that Acumed I and Acumed II involved similar parties and patent, was the instant patent infringement claim against a different accused product precluded by prior judgment issued in the earlier case of Acumed I? This was the issue up for resolution by the Federal Circuit in this appeal.
In applying the doctrine of claim preclusion, the Federal Circuit court applied the principle laid down under the Restatement (Second) of Judgments. Foster v. Hallco Mfg. Co., Inc., 947 F.2d 469, 478 (Fed. Cir. 1991)(“Foster”), 947 F.2d at 477 n.7, 478-79. Under the Restatement approach to claim preclusion, a claim is defined by the transactional facts from which it arises. Id. As explained in the Restatement: “(1) When a valid and final judgment rendered in an action extinguishes the plaintiff’s claim pursuant to the rules of merger or bar . . ., the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. (2) What factual grouping constitutes a “transaction”, and what groupings constitute a “series”, are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.”
In Foster, the Federal Circuit held that one of the essential transactional facts giving rise to a patent infringement claim is “the structure of the device or devices in issue.” 947 F.2d at 479. In so holding, the Foster court relied on Young Engineers, Inc. v. United States International Trade Commission, 721 F.2d 1305, 1316 (Fed. Cir. 1983). It follows from Young Engineers that claim preclusion does not apply unless the accused device in the action before the court is “essentially the same” as the accused device in a prior action between the parties that was resolved by a judgment on the merits. Foster, 947 F.2d at 479-80. Accused devices are “essentially the same” where the differences between them are merely “colorable” or “unrelated to the limitations in the claim of the patent.” See id. at 480.
In this case, the district court attempted to distinguish Foster on its facts. Acumed II, 2006 WL 3253115 at at *10-12. The district court explained that the accused device in Foster could not have been included in the prior action because the accused device did not exist at the time of the prior action. Id. at *11-12. Further, the district court observed that the accused device in this case, the T2 Long nail, could have been litigated with the T2 PHN nail in Acumed I because Acumed knew that the T2 Long was being sold in the United States when Acumed I was litigated. Id. On this basis, the district court held that the essentially-the-same test of Foster does not apply to this case. Id. After distinguishing Foster, the district court considered general principles of claim preclusion under Ninth Circuit law and concluded that Acumed’s infringement claim was barred by Acumed I. Id. at *13-18.
The Federal Circuit however disagreed with the findings of the district court. Citing Hells Canyon Pres. Council v. U.S. Forest Serv., 403 F.3d 683, 686 n.2 (9th Cir. 2005), the Federal Circuit held that claim preclusion does not bar a claim merely because it could have been raised in a prior action between the parties that was resolved by a final judgment on the merits. The Federal Circuit found nothing in Forest “that suggests that the essentially-the-same test does not apply where a claim could have been litigated in a prior action.”
Crucial to the resolution of this appeal was Stryker’s admission in its brief that the accused device in the present action (i.e., the T2 Long) was “not essentially the same as the accused device in Acumed I (i.e., the T2 PHN). In particular, Stryker conceded that the T2 Long and the T2 PHN have differences that are related to the limitations of the ’444 patent.” Stryker likewise conceded that the T2 Long and the T2 PHN were not “essentially the same” under the Foster test for claim preclusion.
Hence, the Federal Circuit reversed and remanded the case for further proceedings on the basis of the following conclusion: “Because Stryker has conceded that the T2 Long and the T2 PHN accused devices are not “essentially the same” under Foster, it has failed to meet its burden to show that the infringement claim in Acumed I is the same as the infringement claim in the present action. Accordingly, Stryker has failed to show that Acumed I bars the present action under the doctrine of claim preclusion.
View a PDF of the judicial opinion.Patent Law Commentary
Read the related Patent Law commentary: Acumed II Addresses the Issue of Claim Preclusion and When a Patent Claim Could Have Been, by John R. Carr, Esq.
Service
Link to this article · 
Send via E-mail · 
Printable Version (opens in new window)
