Thursday, May 30, 2019

CAFC discusses issue preclusion in Papst

From within Papst:

The Supreme Court in B & B Hardware noted as a general matter that the Restatement standards allow for some
exceptions to issue preclusion even when the above-quoted
conditions are met. 135 S. Ct. at 1303, 1309−10. The Court
specifically recognized that “[i]ssue preclusion may be inapt if ‘the amount in controversy in the first action [was] so
small in relation to the amount in controversy in the second
that preclusion would be plainly unfair.” Id. at 1309 (quoting Restatement (Second) of Judgments § 28, cmt. j). The
Court added: “After all, ‘[f]ew . . . litigants would spend
$50,000 to defend a $5,000 claim.” Id. (quoting Wright &
Miller § 4423, at 612); see Kroeger v. U.S. Postal Service,
865 F.2d 235, 239−40 (Fed. Cir. 1988); Marciel v. Comm’r,
489 F.3d 1018, 1023 (9th Cir. 2007); United States v. Berman, 884 F.2d 916, 922 (6th Cir. 1989); Ferrell v. Pierce,
785 F.2d 1372, 1385 (7th Cir. 1986).


Papst has not asserted inadequate representation or an impaired opportunity to litigate in the IPRs involving the ’144 patent and the ’746
patent. See Soverain Software LLC v. Victoria’s Secret Direct Brand Mgt., LLC, 778 F.3d 1311, 1315−16 (Fed. Cir.
2015) (discussing such grounds for denying preclusive effect). Nor has Papst presented, let alone supported, any
allegation of a legally significant disparity in incentives between the present IPR and the two other Aytac-based IPRs
at issue. Papst is in no position now to say that the litigation costs in those other two IPRs were not worth incurring.
After all, Papst litigated all the way through to final written decisions—rather than, for example, disclaim the challenged patent claims in the ’144 patent and the ’746 patent
IPRs before the Board reached final written decisions.
Papst then litigated all the way up to the eve of oral argument in this court. Such pursuit through nearly all of the
available process undermines any assertion of relevantly
low incentives in the IPRs involving Aytac and the ’144 patent and ’746 patent.
More generally, given the heavy burdens that Papst
placed on its adversaries, the Board, and this court by waiting so long to abandon defense of the ’144 patent and ’746
patent claims, Papst’s course of action leaves it without a
meaningful basis to argue for systemic efficiencies as a possible reason for an exception to issue preclusion. Papst also
has no basis to argue that it tried unsuccessfully to secure
an agreement, from Samsung or other petitioners (in this
IPR or others),

Of substantial evidence:

We also confirm that Papst’s challenges fail
on the merits, even apart from issue preclusion.
We review the Board’s factual findings in an inter
partes review for substantial evidence and its legal conclusions de novo. See Arendi S.A.R.L. v. Apple, Inc., 832 F.3d
1355, 1360 (Fed. Cir. 2016). Substantial evidence means
“such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.” In re Mouttet, 686
F.3d 1322, 1331 (Fed. Cir. 2012). As to claim construction,
the Board saw no difference relevant to the issues here between identifying the best construction and identifying the
broadest reasonable construction, and the parties have
identified no difference either. See 37 C.F.R. § 42.100(b).


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