Appeal from the United States District Court for the District of Delaware in No. 1:11-cv-00339-LPS, Chief Judge Leonard P. Stark.
ANTHONY MATTHEW GARZA, Charhon Callahan Robson & Garza, PLLC, Dallas, TX, argued for plaintiff-appellant. Also represented by STEVEN CHASE CALLAHAN, BRETT CHARHON.
MATTHEW CHRISTOPHER GAUDET, Duane Morris LLP, Atlanta, GA, argued for defendants-appellees. Also represented by L. NORWOOD JAMESON; KRISTINA CAGGIANO KELLY, Washington, DC.
Before NEWMAN, BRYSON, and O'MALLEY, Circuit Judges.
Bryson, Circuit Judge.
This appeal by a patent owner requires us to address the collateral estoppel effects of a general jury verdict in a prior action involving the same patents. The district court held that the jury's verdict against the patentee in the prior action was entitled to collateral estoppel effect in this proceeding. We reverse.
Plaintiff-appellant United Access Technologies, LLC (" United" ), is the owner of U.S. Patent Nos. 5,844,596; 6,243,446; and 6,542,585. The asserted claims of the three patents recite systems for using a landline telephone connection for both voice communication and data transmission. The inventions are directed to the use of exchanges that combine the voice and data components of the signal for transmission over the telephone line, and filters that separate those components so that they can be received as separate voice and data signals by a user.
In 2002, United's predecessor in interest, Inline Connection Corporation, brought suit against EarthLink, Inc., charging EarthLink with direct infringement of various claims of the three patents. Inline's theory of the case was that EarthLink offered its customers an Internet connection service based on a broadband digital communications technology known as Asymmetrical Digital Subscriber Line (" ADSL" ), and that Earthlink's ADSL service infringed the asserted patents. EarthLink's defense was that it did not infringe, for two reasons: first, the ADSL technology did not infringe the patents; and second, Earthlink's accused ADSL system did not include a " telephone device" as required by all asserted claims.
The jury in the EarthLink case returned a general verdict of non-infringement with respect to all of the asserted claims. Nothing in the verdict form or the other aspects of the record indicated what ground for decision the jury had adopted in reaching its verdict.
Inline moved for judgment as a matter of law (" JMOL" ). The trial court denied the motion, holding that the jury's verdict of non-infringement was supported by the evidence. In particular, the court ruled that the jury's verdict could be upheld on either of two theories: (1) the jury could have concluded that Inline failed to carry its burden to show that the ADSL technology infringed the asserted claims, or (2) the jury could have found that EarthLink did not infringe because none of its systems included a telephone, which was a required element of each of the asserted claims.
In its response to Inline's JMOL motion, EarthLink argued that the testimony of Inline's expert, including his conclusion that standard ADSL services infringe the claims of the patents in suit, was heavily impeached during cross-examination. The trial court agreed with EarthLink that a reasonable jury " could have determined that [the expert] was impeached during his testimony and, therefore, lacked credibility," and that, " [b]ased on such determination, the jury could reasonably have returned its non-infringement verdict." In its second argument in response to Inline's JMOL motion, EarthLink contended that the evidence showed that telephones and telephone service were separate from the Internet access service offered by EarthLink, and that EarthLink's accused service had no connection to the telephone service at all. Again, the trial court agreed with EarthLink and ruled that " since at least one 'telephone device' is an element of each of the asserted claims, the absence of evidence that EarthLink's system includes that element is substantial evidence upon which the jury could have returned its non-infringement verdict."
On appeal from the trial court's judgment in the EarthLink case, this court affirmed without opinion. United Access Techs., LLC v. EarthLink, Inc., 432 F.App'x 976 (Fed. Cir. 2011).
In 2011, United, as Inline's successor, filed this action against defendants-appellees CenturyTel Broadband Services LLC, and Qwest Corporation. United charged the defendants with infringing the same claims of the three patents that had been asserted against EarthLink. CenturyTel and Qwest sought dismissal of United's claims based on collateral estoppel. Their theory was that the jury's verdict in the EarthLink case established as a matter of law that the industry standard ADSL technology did not infringe United's patents. Because United failed to show that the ADSL services sold by CenturyTel and Qwest differed in any material respect from the ADSL services that had been sold by EarthLink, they contended that the prior proceedings collaterally estopped United from proving infringement in the present action.
The district court agreed with the defendants and dismissed the action on collateral estoppel grounds. The court began its analysis by noting that United had not been able to articulate how the defendants' systems were different from the systems that were the subjects of the trial in the EarthLink case. The court explained that United had identified only a single potential distinguishing factor between EarthLink's services and those offered by the defendants in this case: that EarthLink's services did not include telephone devices, but provided an access service that was distinct from any service involving the use of a telephone, while the defendants' services included telephone devices.
The district court rejected that proposed distinction, stating that it " does nothing to account for the fact that the issue whether industry standard ADSL infringes the ...