Stop What You Are Doing: Collateral Estoppel At The PTAB

By: Rich Graham and Matt Johnson

On March 13, 2018, in Nestlé USA, Inc. v. Steuben Foods, Inc., 2017-1193 (Fed. Cir. Mar. 13, 2018), the Federal Circuit confirmed that collateral estoppel may preclude the need to revisit an issue that had already been resolved against a party in post grant proceedings.  The court considered whether the PTAB may construe a claim term in a way that differs from a previous Federal Circuit construction of the same term in a different proceeding.

At the Federal Circuit, Nestlé appealed from a final written decision in favor of Steuben Foods finding a claim not obvious.  Nestlé argued that the Board’s decision relied on an erroneous construction of the claim “aseptic.”

Nestlé had previously appealed the Board’s construction of the term “aseptic” in a separate IPR involving different claims of a different patent owned by Steuben Foods.  See Nestlé USA, Inc. v. Steuben Foods, Inc., 2016-1750 (Fed. Cir. May 9, 2017).  There, the Federal Circuit construed “aseptic” to mean “FDA level of aseptic” based on binding lexicography in the specification and vacated the Board’s broader construction .

In the March 2018 decision, the Federal Circuit found that it was undisputed that the claims at issue in each appeal used the term “aseptic” in a similar fashion.  More importantly, however, the two patents’ specifications contained identical lexicography for the term “aseptic.”  And Steuben Foods stood as the patent owner in each case.  Thus, the court determined that Steuben Foods had a “full and fair opportunity to litigate the issue of claim construction during the prior appeal.”  The court explained that:

“Collateral estoppel protects a party from having to litigate issues that have been fully and fairly tried in a previous action and adversely resolved against a party opponent.” Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1342 (Fed. Cir. 2013). We apply our precedent on collateral estoppel when claim construction is involved. Id. “It is well established that collateral estoppel, also known as issue preclusion, applies in the administrative context.” Maxlinear, Inc. v. CF CRESPE LLC, 880 F.3d 1373, 1376 (Fed. Cir. 2018).

Thus, it “follows, that collateral estoppel protects Nestlé and obviates the need to revisit an issue that was already resolved against Steuben Foods.”  The court made a point to clarify that collateral estoppel is not limited “to patent claims that are identical.”  Rather, “it is the identity of the issues that were litigated that determines whether collateral estoppel should apply.”

In previous articles we have discussed whether the PTAB may reach different conclusions than the courts.  See Is The PTAB Bound By A Previous Federal Circuit Claim Construction?; Fed Circ Affirms Conflicting Invalidity Determinations from District Court and PTAB; Can PTAB and Courts Reach Different Decisions? Definitely So.  As these articles explain, cases have shown that when different legal standards form the basis of a court’s decision—including decisions of the Federal Circuit—the PTAB may come to a different conclusion when applying the standards that govern PTAB trials.  But, Nestlé confirms that when identical issues arises from a post-grant proceeding, under the same standards, the PTAB may be bound by the earlier determination.