Applied Materials, Inc. v. Demaray LLC

Background

Demaray previously sued Samsung in the Western District of Texas, alleging that Samsung’s use of Applied’s Cirrus and Avenir reactive magnetron sputtering chambers infringed U.S. Patent Nos. 7,544,276 and 7,381,657. A jury found that the accused chambers did not infringe either patent, literally or under the doctrine of equivalents.

Applied later brought this Northern District of California action seeking a declaration that its reactors did not infringe the same patents. Demaray asserted infringement counterclaims against Applied, while excluding certain claims involving reactors sold or provided to Samsung.

Applied moved for summary judgment based on claim preclusion and issue preclusion. Claim preclusion bars a later case involving the same claim after a final merits judgment, when the parties are identical or legally connected and the claims are the same. Issue preclusion bars relitigation of an issue of fact or law that was actually litigated and necessary to an earlier judgment. Demaray cross-moved for summary judgment that preclusion did not apply.

Claim Preclusion

The court held that Applied had not shown that it was in privity with Samsung. Although Applied had an indemnification agreement with Samsung and argued that its products were the focus of the Texas trial, the court found those facts insufficient.

The indemnification agreement did not establish privity by itself because Demaray’s counterclaims in this case sought relief based on Applied’s own actions, not on Applied’s actions as Samsung’s indemnitor. The court also found that Applied’s status as the supplier of the accused products did not establish the necessary legal connection between Applied and Samsung. Because privity was absent, the court did not decide whether the two cases involved the same claim or cause of action. Claim preclusion therefore did not bar Demaray’s claims in this case.

Issue Preclusion

The court treated the relevant issue as whether the Cirrus and Avenir chambers infringed the asserted patents. It found that the chambers in the two cases were, at a minimum, essentially the same, and that differences in the constructions of the terms “narrow band-rejection filter” and “pulsed DC power supply” did not prevent preclusion for claims based on direct infringement under 35 U.S.C. § 271(a).

The court distinguished between Section 271(a), which covers direct infringement, and Section 271(f), which covers certain indirect infringement involving supplying components for combination outside the United States. Because those provisions have different requirements and involve materially different evidence and transactional facts, the court held that the Section 271(a) and Section 271(f) issues were not identical for the Cirrus chambers, for which only Section 271(f) was undisputedly at issue in the Texas action. Issue preclusion therefore did not bar Demaray’s Cirrus-related claims.

For the Avenir chambers for which Section 271(a) was at issue in the Texas action, the court found the issues identical. It also concluded that the Texas jury necessarily based its non-infringement verdict on both the Section 271(a) and Section 271(f) theories for Avenir chambers subject to both theories. Issue preclusion therefore barred Demaray’s claims against those Avenir chambers.

Disposition

The court found that Applied did not prove claim preclusion because Applied was not in privity with Samsung. It found that issue preclusion applied only to Demaray’s claims against those Avenir chambers for which Demaray had raised a Section 271(a) infringement theory in the Texas action. Otherwise, Applied did not meet its burden to establish issue preclusion.

The court granted in part and denied in part Applied’s motion for summary judgment and granted in part and denied in part Demaray’s motion for summary judgment.