Message: Kollmorgen factor - Another very strong case law to oppose Collateral estoppel
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This is one of the strongest case law that a lot of cases in this regard they refer to this one.
Again all depends on mind of judge Sabraw and his ruling . JMHO
A Different Approach — Kollmorgen
In a case involving a very similar fact pattern to TM Patents, the Western District of Virginia disagreed with TM Patents and held that a prior claim construction ruling after a lengthy Markman hearing should not be afforded preclusive effect, where the parties had settled the prior action before trial.17 In the prior action, Kollmorgen asserted two patents against Allen-Bradley. The claims were construed in a Markman hearing, a claim construction order issued, and the case settled prior to trial. Later, Kollmorgen asserted the same patents against Yaskawa, which contended that issue preclusion should apply to the previous constructions. The Kollmorgen Court held that a consensual settlement was not a final judgment, and therefore issue preclusion did not apply (i.e., the fourth preclusion factor was not met), and noted that "[a]lthough Markman did empower the judge, rather than the jury, to construe the patent scope and claim at issue, it did not single-handedly redefine ‘finality' for collateral estoppel purposes."18
Also, Kollmorgen's inability to have the prior constructions reviewed was "fatal" to the attempt to accord it preclusive effect.19 The Kollmorgen Court reasoned that as Markman's holding was directed to providing the public with consistent claim constructions, and since Kollmorgen had no opportunity to have the prior constructions reviewed (and that approximately 40% of constructions are changed/overturned by the Federal Circuit), Markman therefore did not stand for the blanketed adoption of constructions without the Federal Circuit's rigorous review.20 It was also noted that applying issue preclusion to an unappealable order would have a "chilling effect" on settlements, as a party should have an opportunity to appeal a potentially preclusive order. Otherwise, this would discourage settlements and increase appeals.21 Further analyzing the "finality" factor, the Kollmorgen Court held that the lack of any realistic opportunity for Federal Circuit review greatly outweighed the adequacy of the hearing prong and the nature of the Markman order, and therefore the prior constructions were not essential to a final judgment since the prior court never reached the question of validity/infringement.22 Like the Kollmorgen court, many other courts, after wading through the four-part test, have also found that issue preclusion did not apply to prior claim constructions.23
The Federal Circuit (sort of) Steps Into the Ring
In RF Delaware, Inc. v. Pacific Keystone Tech., the issue before the Federal Circuit was whether a later district court was bound by claims constructions in rulings on partial summary judgment from a first action (with no Markman hearing), where the first action ended in settlement prior to trial.24 The Federal Circuit first noted that issue preclusion is a procedural issue that is governed by regional circuit law and thus applied Eleventh Circuit law. The Federal Circuit held that issue preclusion did not apply because no judgment, much less a final judgment, was ever entered in the first action (i.e., the standard for finality was not met). In reaching this conclusion, the Federal Circuit noted that the criteria for determining whether a previous decision is final or firm includes whether the parties were "fully heard," and that there was no evidence that an evidentiary hearing (i.e., Markman hearing) was held to construe the claims of either patent before partial summary judgment orders were issued.25 Indeed, the first court did not even entertain oral argument on claims of one of the patents at issue. Thus, it was "questionable whether the parties were ‘fully heard' before the [first] court reached its decisions on claim constructions."26 However, the Federal Circuit did note that a decision can have preclusive effect even if there is no "final judgment," thereby leaving the door open for a future Federal Circuit ruling similar to that of TM Patents (i.e., a Markman order after a sufficient hearing and opportunity to be heard may have subsequent preclusive effect, even if the parties settle prior to trial).27 In short, the RF Delaware ruling focused heavily on whether the parties were "fully heard." Accordingly, the preclusive effect of prior constructions most likely will depend at least in part on the nature and extent of the hearing. However, even if the parties were fully heard, the lack of Federal Circuit review of constructions where parties settle prior to trial may outweigh the adequacy of the hearing prong when determining preclusion. This issue remains unanswered by the Federal Circuit, and notably, the RF Delaware Court did not cite to the TM Patents/Kollmorgen split.
The Future
The Federal Circuit has had the opportunity to weigh in on the issue of whether Markman orders are sufficiently final for issue preclusion to apply. In Shire LLC v. Sandoz, Inc.,28 the issue before the Federal Circuit was whether, in a later case, issue preclusion applies to a previous Markman order, where the patentee settled the prior case after the Markman hearing/order. In other words, the issue was whether a patentee who settles an earlier case after a Markman ruling is precluded from relitigating claim construction issues determined in a prior case. However, the parties in Shire settled late in 2009, thereby leaving this issue unanswered by the Federal Circuit. For now, the TM Patents/Kollmorgen district court split remains, with the Federal Circuit's RF Delaware decision narrowly providing some insight on whether or when Markman orders are sufficiently final for issue preclusion to apply. However, since the Federal Circuit currently applies regional circuit law to the procedural aspects of issue preclusion, the question of whether or when Markman orders are sufficiently final for issue preclusion to apply most likely will continue to be decided on a case-by-case basis.
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