Cisco Systems, Inc. v. Capella Photonics, Inc.

Background

Cisco sued Capella, and Capella filed patent-infringement counterclaims. The dispute concerns patents covering optical communication technology, including optical add-drop multiplexers. The motion addressed only whether Capella could seek damages for alleged infringement occurring before the relevant patents were reissued.

In an earlier related proceeding, Capella accused Cisco of infringing Patent Nos. RE42,368 and RE42,678. During that proceeding, the Patent Trial and Appeal Board invalidated specified claims of both patents as obvious over prior art, and the Federal Circuit affirmed those cancellations. Capella later pursued reissue proceedings, resulting in Patent Nos. RE47,905 and RE47,906, both issued on March 17, 2020.

Capella’s counterclaim alleged infringement dating back at least to 2014. Under 35 U.S.C. § 252, damages for conduct before reissue are available only when the original and reissued claims are “substantially identical.” Capella alleged that one or more claims of each reissued patent was substantially identical to one or more claims of the corresponding original patent. Cisco argued that the reissue claims were narrower because they required “fiber collimator” ports rather than merely “ports.”

Legal standard

The court applied the standard for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). Such judgment is proper when the pleadings show that no material factual issue remains and the moving party is entitled to judgment as a matter of law. For purposes of the motion, the court generally accepts the nonmoving party’s allegations as true and treats denied allegations by the moving party as false, subject to properly considered documents and judicially noticeable matters.

Court’s analysis

The court accepted Capella’s position for purposes of the motion—that the relevant reissue claims were substantially identical to the original claims—without deciding whether that condition was actually satisfied. The court then considered whether claims substantially identical to claims previously invalidated by the Patent Trial and Appeal Board would also be invalid.

The court applied issue preclusion, also called collateral estoppel, which prevents a party from relitigating an issue actually decided in earlier litigation between the same parties. Under Ninth Circuit law, the party invoking issue preclusion must show that the issue is identical, was actually litigated, and was a critical and necessary part of the earlier judgment.

The court held that the differences between the Patent Trial and Appeal Board’s standards and those used in district court did not prevent issue preclusion. The Federal Circuit’s decisions indicated that an affirmed Patent Trial and Appeal Board invalidity determination can have preclusive effect in district court despite differences in claim-construction standards and burdens of proof. The court also concluded that the scope of the original claims had been litigated, that Capella had a full and fair opportunity to address the issue before the Board and on appeal, and that claim scope was necessary to the earlier invalidity decisions.

The court reasoned that if the reissue claims were substantially identical to the original claims, issue preclusion would make the reissue claims invalid. If the reissue claims were narrower, § 252 would prevent Capella from recovering damages for the period before reissue. Thus, under either scenario, Capella could not seek pre-issue damages.

Disposition

The court granted Cisco’s motion for judgment on the pleadings. The order states that Capella may not seek pre-issue damages in this case and that the order disposes of Docket No. 35.