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

Background

Cisco sued Capella seeking a declaration that Cisco’s products did not infringe Capella’s reissued patents. Capella counterclaimed for patent infringement, including alleged infringement dating back to at least 2014. The Patent Trial and Appeal Board had previously cancelled claims in Capella’s original patents as obvious over prior art, and the Federal Circuit affirmed those cancellations. Capella later obtained reissued patents.

On August 21, 2020, the court granted Cisco’s motion for judgment on the pleadings. The court concluded that Capella could not recover damages for infringement occurring before the reissue of the relevant patents because the Patent Trial and Appeal Board’s invalidation of claims in the original patents applied to substantially identical claims in the reissued patents.

Motion to Certify an Immediate Appeal

Capella asked the court to certify that earlier order for an interlocutory appeal under 28 U.S.C. § 1292(b). An interlocutory appeal is an appeal taken before the case is fully concluded. To obtain certification, Capella had to show that the order involved a controlling legal question, that there was substantial disagreement about the question, and that an immediate appeal could materially advance the end of the litigation.

Capella raised two proposed questions. First, it challenged the court’s conclusion that an affirmed Patent Trial and Appeal Board decision cancelling claims in inter partes review—a procedure for challenging patent validity—had a preclusive effect in later district-court litigation. Second, it challenged the conclusion that claims in the reissued patents that were substantially identical to the cancelled claims were also invalid for purposes of Capella’s requested pre-issuance damages.

Court’s Analysis

The court held that Capella had not shown a substantial ground for disagreement on either question. As to the first question, the court relied on Federal Circuit decisions stating that an affirmed invalidity finding by either a district court or the Patent Trial and Appeal Board has a collateral-estoppel effect in pending or related actions. Collateral estoppel, also called issue preclusion, prevents a party from relitigating an issue that was already finally decided. The court rejected Capella’s argument that the different evidentiary standards used by the Patent Trial and Appeal Board and district courts prevented that preclusive effect.

As to the second question, the court acknowledged that the Federal Circuit had not directly addressed the precise issue of substantially identical claims in this setting. But it relied on Federal Circuit authority holding that issue preclusion is not limited to claims that are word-for-word identical when the issues of validity are the same. The court also noted that Capella had conceded, for purposes of Cisco’s earlier motion, that the claims in the reissued patents were substantially identical to the claims in the original patents. The court concluded that this concession and the cited precedent supported its earlier ruling.

The court distinguished an authority cited by Capella because that case involved an amended claim before the Patent Trial and Appeal Board issued its final written decision. Here, the Board had issued final decisions cancelling the original claims, and those decisions had been affirmed on appeal. The court concluded that Capella had not identified authority supporting a different result.

Disposition

The court denied Capella’s motion to certify the earlier order for interlocutory appeal under 28 U.S.C. § 1292(b). The order states that it disposed of Docket No. 53.