Chief Judge Saris of the District of Massachusetts has granted-in-part a product manufacturer’s motion seeking summary judgment of claim preclusion based on patentee’s prior assertion of the same patent against a component supplier. The court explained that none of the patent claims could be asserted against products that used components supplied by a third party that had previously faced allegations of infringing the same patent but had successfully invalidated the only patent claim that had been asserted. The court also ruled, however, that the patentee could assert the remaining claims against products that used components made by other suppliers.
The case began in September 2013 when the Trustees of Boston University (BU) asserted U.S. Patent No. 5,686,738 against Kingbright Electric Co., Ltd. and Kingbright Corp. (collectively, “Kingbright”), manufacturers of LED package products that use LED chips. The 738 patent covers a process used in creating semiconductors for LED lights. Kingbright uses LED chips from three different suppliers—Epistar, Cree and Tekcore.
The court stayed the case in November 2014, pending the resolution of an earlier-filed case in which BU had asserted claim 19 of the 738 patent against Epistar. That case concluded when the Federal Circuit ruled that claim 19 was invalid for lack of enablement. The district court then lifted the stay, at which point Kingbright moved for judgment on the pleadings or partial summary judgment, arguing that the case against it was barred following the Federal Circuit’s decision.
The district court’s analysis began with a discussion of the Kessler doctrine, a doctrine from a 1907 Supreme Court decision holding that customers could not be sued when their seller had previously been accused of infringement but prevailed on a noninfringement defense. BU argued that Kessler did not apply when a seller had prevailed only on invalidity, but the district court disagreed citing two Federal Circuit opinions in support.
The court then turned to BU’s second argument—namely, that Kessler only prevented suits against post-judgment conduct. The district court found that this was a closer question because statements in Federal Circuit opinions, including as recently as 2015 and 2018, pointed in different directions. Although the district court stated that the 2015 decision—holding that pre and post-judgment activity was covered—was more consistent with Kessler’s purpose, the court found that even if Kessler did not apply, the matter could be resolved by applying traditional claim preclusion principles.
Under claim preclusion, the court explained, BU could not sue a privy of Epistar by asserting the same patent against the same product. BU challenged whether Kingbright was a privy, but the court explained that under First Circuit law, Kingbright had sufficiently shown it was a privy because it was a customer and indemnitee of Epistar. Accordingly, BU was precluded from asserting any claims of the 738 patent against the Kingstar products that used Epistar chips. However, the court found that neither the Kessler doctrine nor claim preclusion prevented BU from asserting the existing claims of the 738 patent against Kingstar products using Cree and Tekcore chips.
Practice Tip: Claim preclusion may protect customers of a previously successful seller from patent infringement claims. Thus, a patentee considering holding some patent claims in reserve if a suit against a seller fails should carefully consider whether a customer of that seller may be able to assert claim preclusion as a defense.
Trs. of Boston Univ. v. Kingbright Elec. Co., 13-cv-12335, slip op. (D. Mass. Dec. 17, 2019) (Saris, C.J.)
