United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION, ORDER, AND
PAYNE UNITED STATES MAGISTRATE JUDGE.
filed this lawsuit on February 4, 2014, accusing the
defendants of infringing claims 1, 3, and 4 of U.S. Patent
No. 5, 563, 883. This lawsuit and several others filed by
C-Cation prompted defendants and other entities to petition
the Patent Trial and Appeal Board (PTAB) for inter partes
review (IPR) of the '883 patent. The PTAB has since found
claims 1, 3, and 4 of the '883 patent to be unpatentable,
and the Federal Circuit has affirmed the PTAB's decision.
See C-Cation Techs., LLC v. Arris Grp., Inc., 695 F.
App'x 574 (Fed. Cir. 2017). With C-Cation's appeal
now terminated, and the Federal Circuit's mandate issued,
the Director of the Patent Office must cancel the
unpatentable claims. See 35 U.S.C. § 318(b).
But the Director has not yet done so. Nevertheless, given the
state of the parallel proceedings, the defendants filed a
motion to lift the stay, which was entered to permit the PTAB
to review the asserted claims. The defendants have also filed
a motion to dismiss the lawsuit on the basis of collateral
estoppel. For the following reasons, the stay is lifted, and
the Court recommends that the action be dismissed with
asserted claims of the '883 patent have not yet been
cancelled by the Patent Office, although a cancellation
certificate is due. See § 318(b). The claims
have, however, been found unpatentable by the PTAB, and this
decision has been affirmed by the Federal Circuit, which
denied C-Cation's motion to stay issuance of the mandate
pending disposition of C-Cation's cert petition. The
mandate issued on September 18, 2017.
defendants argue only for collateral estoppel and have chosen
not to argue that because cancellation of the asserted claims
is due, C-Cation effectively has no legal right to assert.
See Fresenius, 721 F.3d at 1346. The collateral
estoppel argument appears to be based on two different
theories, neither of which is questioned by C-Cation. The
first theory is that the PTAB's decision finding the
asserted claims unpatentable constitutes a final judgment,
which gives rise to collateral estoppel in this case.
See Dkt. No. 173 at 7 n.6 (citing B&B
Hardware, 135 S.Ct. at 1301-05). The second theory is
that the Federal Circuit's judgment affirming the
PTAB's decision is itself a final judgment that gives
rise to collateral estoppel. See Id. at 7 (citing
U.S. Ethernet Innovations, LLC v. Texas Instruments
Inc., 645 Fed. App'x 1026, 1029-30 (Fed. Cir. 2016).
collateral estoppel to apply, the first tribunal must have
decided the same issue being litigated in the second
proceeding, and other elements must also be met. B &
B Hardware, 135 S.Ct. at 1303 (citing Restatement
(Second) of Judgments § 27, p. 250 (1980)). Neither the
issue nor the applicable standard needs to be identical,
however. See Id. at 1306-07. “[M]inor
variations in the application of what is in essence the same
legal standard do not defeat preclusion.” Id.
at 1307 (quoting Smith v. Bayer Corp., 564 U.S. 299,
respect to defendants' first theory-that collateral
estoppel is triggered by the PTAB's finding of
unpatentability-the unstated assumption is that the PTAB and
this Court are confronted with the same issue, i.e., patent
validity. Unlike the PTAB, however, a district court does not
give claims their broadest reasonable interpretation, and
also unlike the PTAB, this Court does not apply the
preponderance of the evidence standard to determine whether a
patent claim is invalid, but rather applies the clear and
convincing evidence standard. Cuozzo Speed Techs., LLC v.
Lee, 136 S.Ct. 2131, 2142-44 (2016). For defendants'
first collateral estoppel theory to succeed on the merits, it
must be true that these differences are nothing more than
“minor variations in the application of what is in
essence the same legal standard.” See B&B
Hardware 135 S.Ct. at 1307 (citation omitted). Such a
conclusion is justified when compared to the
differences-found to be “minor” by the Supreme
Court in B&B Hardware-between the likelihood of
confusion standards applied by the Trademark Board and
district courts. See id.
second theory-that the Federal Circuit's judgment
affirming the PTAB's finding gives rise to collateral
estoppel-rests on a similar unstated assumption. Namely, that
the issue decided at the Federal Circuit is the same as the
issue to be decided here, i.e., patent validity. The Federal
Circuit was of course only deciding whether substantial
evidence supports the PTAB's finding of unpatentability.
See CRFD Research, Inc. v. Matal, No. 2016-2198,
2017 WL 6002755, at *4 (Fed. Cir. Dec. 5, 2017). This
difference must therefore be only a “minor
variation” in the application of the legal standard to
the validity question. See B&B Hardware, 135
S.Ct. at 1307. Such a conclusion is also not unreasonable.
of the merits of defendants' arguments, C-Cation does not
dispute whether collateral estoppel is triggered by either
the PTAB's decision or the Federal Circuit's
decision. Nor does C-Cation test defendants' unstated
assumptions regarding the “same” issue element of
collateral estoppel, or any other element of collateral
estoppel. See Dkt. Nos. 178 and 179. Defendants'
arguments regarding collateral estoppel have been effectively
conceded, and are therefore accepted by the Court.
than test defendants' collateral estoppel arguments,
C-Cation opposes lifting the stay (and opposes dismissal) for
two reasons. The first is that the motion to dismiss should
be denied as moot because the case is stayed.
See Dkt. No. 178 at 2. That argument ignores the
point of lifting the stay-to dismiss the case. The second
argument is that the case should remain stayed until the
Supreme Court decides whether to grant C-Cation's
petition for certiorari. The cert petition filed by C-Cation
does not challenge the determination that the claims of the
‘883 patent are unpatentable. Rather it asserts, for
the first time, the issues that will soon be decided by the
Supreme Court in Oil States Energy Services, LLC v.
Greene's Energy Group, LLC, 639 Fed.Appx. 639 (Fed.
Cir. 2016), cert. granted in part, 137 S.Ct. 2239
(2017), namely whether IPR proceedings violate the right to a
courts have rejected C-Cation's argument. See, e.g.,
Leak Surveys, Inc. v. Flir Sys., Inc., No.
3:13-cv-02897-M, 2017 WL 5569196, at *2 (N.D. Tex. Nov. 13,
2017). More important, as Judge Bryson explained in
DietGoal, when a case has been pending for as long
as this one, “[t]here is an interest in bringing
litigation to a close when the law permits that
result.” DietGoal, 70 F.Supp.3d at 816.
these reasons, defendants' motion to lift the stay, Dkt.
No. 172, is granted, and it is ordered that the stay in this
case is lifted. It is further recommended that
defendants' motion to dismiss, Dkt. No. 173, be granted.
C-Cation's complaint should be dismissed with prejudice.