Rule 36 Judgment May Support Finding of Collateral Estoppel

By Marc Blackman – 

The Federal Circuit recently affirmed final written decisions in two inter partes reviews by holding that the patent owner was collaterally estopped from relitigating the threshold issue of whether a prior art reference was a printed publication. VirnetX Inc. v. Apple, Inc., 2017-2490, 2017-2494 (Fed. Cir. Dec. 10, 2018). In doing so, the CAFC confirmed that a Rule 36 summary affirmance may serve as a basis for collateral estoppel.

The PTAB had found various claims of U.S. Patent No. 8,504,696 unpatentable as obvious over a combination of references. Each combination included RFC 2401, a Request for Comments dated November 1998 discussing a standardized security protocol for the Internet. During the IPR proceedings, patent owner VirnetX argued that RFC 2401 was not a printed publication under Section 102(b) because Apple had not presented sufficient evidence that the document was publicly accessible as of November 1998. Based on Apple’s evidence, however, the PTAB found, by a preponderance of the evidence, that RFC 2401 was publicly accessible by November 1998.

VirnetX previously had appealed seven final written decisions finding that RFC 2401, in combination with other references, rendered obvious a number of patents related to the ‘696 patent. VirnetX also argued in that appeal that RFC 2401 was not a printed publication. Nevertheless, the CAFC entered a Rule 36 judgment summarily affirming all seven decisions.
In the present appeal, Apple contended that VirnetX was collaterally estopped from arguing whether RFC 2401 was a printed publication in view of the prior Rule 36 judgment. Collateral estoppel precludes a party from relitigating an issue if (1) a prior action presents an identical issue; (2) the prior action actually litigated and adjudged that issue; (3) the judgment in that prior action necessarily required determination of the identical issue; and (4) the prior action featured full representation of the estopped party. In contesting collateral estoppel, VirnetX only disputed whether the printed publication issue was necessary to the earlier judgment. But in VirnetX’s appeal of three of the seven earlier final written decisions, VirnetX only argued that RFC 2401 was not a printed publication. Consequently, the CAFC necessarily found that RFC 2401 was a printed publication in affirming all seven decisions. The CAFC reiterated that collateral estoppel applied even though its prior judgment was a Rule 36 affirmance. As long as all of the elements for collateral estoppel are “carefully observed,” the CAFC stated that a Rule 36 judgment may serve as a basis for collateral estoppel.

Takeaway: Litigants should pay particular attention to the potential use of Rule 36 judgments to support a collateral estoppel argument. Due to the growing number of appeals, particularly from the PTAB, that involve the same or related patents, there are ample opportunities for issues to be relitigated — and collaterally estopped.