Indirectly Related Patents Get Same Claim Construction Through Collateral Estoppel

The Federal Circuit recently held in Nestlé II[i] that it, and by implication the PTAB, should not relitigate claim construction even for indirectly related patents having different specifications.

On March 13, 2018, the Federal Circuit issued a precedential decision in Nestlé II applying collateral estoppel (issue preclusion) to a claim construction issue arising in the context of inter partes review proceedings. Specifically, the Federal Circuit held that collateral estoppel attached to the construction of “aseptic” (and its variants, e.g., “aseptically disinfecting”) in U.S. Patent No. 6,481,468 (“the ’468 patent”) based on the Federal Circuit’s prior non-precedential decision Nestlé I[ii], which addressed the construction of “aseptic” in U.S. Patent No. 6,945,013 (“the ’013 patent”).

Steuben Foods owns the ’013 and ’468 patents, which claim priority to the same provisional patent application, but are not directly related (e.g., as continuation, continuation-in-part, or divisional). The patents have some common disclosure, including 16 common figures. The ’468 patent, however, includes significant additional disclosure, including 19 figures that are not in the ’013 patent. Nevertheless, both patents define “aseptic,” stating that “‘aseptic’ will refer to the FDA level of aseptic.”

Nestle filed petitions for inter partes review of the ’013 and ’468 patents in August 2014 and November 2014, respectively. The Board instituted two separate proceedings to review the patents. The construction of “aseptic” was at issue in both proceedings. The ’013 patent proceeding advanced to final written decision first, with the Board issuing its decision in December 2015. In the ’013 patent decision, the Board construed “aseptic” to mean “aseptic to any applicable United States FDA standard, and in the absence of any such standard, aseptic assumes its ordinary meaning of free or freed from pathogenic microorganisms,” and found that Nestle had failed to prove that the challenged claims (18-20) were unpatentable.

The Board issued the ’468 patent final written decision in June 2016. In this decision, the Board accorded “aseptic” the same construction as it did in the proceeding involving the ’013 patent. It held that Nestle had shown that three of the four challenged claims were unpatentable, but failed to prove that the other challenged claim was unpatentable.

Nestle appealed both Board decisions, advancing similar arguments in both appeals that the Board’s construction of “aseptic” was incorrect. The Federal Circuit decided the ’013 patent appeal first. In Nestlé I, the Federal Circuit vacated the Board’s construction of “aseptic,” finding that binding lexicography in the ’013 patent’s specification controlled the construction of this term, and thus remanded to the Board for further proceedings.[iii]

In Nestlé II, the Federal Circuit again vacated the Board’s construction of “aseptic” and remanded to the Board for further proceedings.[iv] But instead of repeating the Nestlé I analysis, the Court relied on collateral estoppel, ruling that Steuben Foods “had a full and fair opportunity to litigate the issue” (i.e., construction of “aseptic”) in Nestlé I, and thus collateral estoppel attached to protect Nestle and obviate the need to revisit the issue.[v]

Critically, despite the fact that the patents are only loosely related, the Federal Circuit in Nestlé II ruled that neither party “pointed to any material difference between the two patents or their prosecution histories that would give rise to claim construction issues in this appeal different from those raised in the prior appeal.”[vi] And it emphasized that Federal Circuit “precedent makes clear 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.”[vii] So because the ’468 patent provided the same definition of “aseptic” as the ’013 patent, the Federal Circuit in Nestlé II could have simply applied the same rationale as Nestlé I and held that binding lexicography controls the construction of “aseptic” in the ’468 patent. It did not, instead applying collateral estoppel to resolve the issue.

Both Patent Owner and Petitioner need to heed the Court’s warning regarding indirectly related patents for three reasons. First, it serves as a reminder that collateral estoppel applies in administrative proceedings, such as inter partes reviews. Second, it sends a message to practitioners that the Federal Circuit is unwilling to revisit an issue that was, in a prior appeal, fully and fairly litigated by the party raising the issue, even when addressing indirectly related patents. Finally, this case reinforces that the same or similar terms in indirectly related patents (e.g., not related as continuation, continuation-in-part, or divisional) may still carry the same meaning. But the Court also provided guidance to rebut collateral estoppel in these situations: identify material differences between the patents or their prosecution histories that would warrant different constructions.

[i] Nestlé USA, Inc. v. Steuben Foods, Inc., No. 2017-1193 (Fed. Cir. Mar. 13, 2018).
[ii] Nestlé USA, Inc. v. Steuben Foods, Inc, 686 F. App’x 917 (Fed. Cir. 2017).
[iii] Nestlé I, slip op. at.
[iv] Nestlé II, slip op. at 4.
[v] Id., at 3-4.
[vi] Id., at 3.
[vii] Id., at 4 (internal citations omitted).

This article appeared in the April 2018 issue of PTAB Strategies and Insights. To view our past issues, as well as other firm newsletters, please click here.