E.digital Corporation v. Futurewei Technologies, Inc. ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
E.DIGITAL CORPORATION,
Plaintiff-Appellant,
v.
FUTUREWEI TECHNOLOGIES, INC.,
doing business as Huawei Technologies (USA), AND
HUAWEI DEVICE USA, INC.,
Defendants-Appellees.
______________________
2014-1019
______________________
Appeal from the United States District Court for the
Southern District of California in No. 3:13-cv-00783-DMS-
WVG, Judge Dana M. Sabraw.
-----------------------
E.DIGITAL CORPORATION,
Plaintiff-Appellant,
v.
PANTECH WIRELESS, INC.,
also known as Pantech North America,
PANTECH CO. LTD. AND GOPRO, INC.,
Defendants-Appellees.
______________________
2014-1242, -1243
2 E.DIGITAL CORPORATION v. FUTUREWEI TECHNOLOGIES, INC.
______________________
Appeals from the United States District Court for the
Southern District of California in Nos. 3:12-cv-02899-
DMS-WVG and 3:13-cv-00023-DMS-WVG, Judge Dana M.
Sabraw.
______________________
Decided: November 19, 2014
______________________
ANTON N. HANDAL, Handal & Associates, of San Die-
go, California, argued for plaintiff-appellant. With him on
the brief was PAMELA C. CHALK.
JOSE L. PATIÑO, Foley & Lardner LLP, of San Diego,
California, argued for all defendants-appellees. With him
on the brief for defendants-appellees Futurewei Technolo-
gies, Inc., et al., were NICOLA A. PISANO and CHRISTOPHER
C. BOLTEN.
KEVIN M. O’BRIEN, Baker & McKenzie LLP, of Wash-
ington, DC, for defendant-appellees Pantech Wireless,
Inc., et al. With him on the brief were D. JAMES PAK,
MATT DUSHEK and YI FANG.
HECTOR J. RIBERA, Fenwick & West LLP, of Mountain
View, California, for defendant-appellee GoPro, Inc. With
him on the brief were MICHAEL J. SACKSTEDER, CAROLYN
CHANG and BRYAN A. KOHM.
______________________
Before MOORE, O’MALLEY, and REYNA, Circuit Judges.
MOORE, Circuit Judge.
e.Digital Corporation appeals from a U.S. District
Court for the Southern District of California judgment of
non-infringement based on a determination that e.Digital
E.DIGITAL CORPORATION v. FUTUREWEI TECHNOLOGIES, INC. 3
was collaterally estopped from seeking a construction of a
claim limitation in e.Digital’s U.S. Patent Nos. 5,491,774
and 5,839,108 different from another court’s previous
construction of the same limitation in the ’774 patent. We
hold that the district court correctly applied collateral
estoppel to the ’774 patent, but improperly applied the
doctrine to the unrelated ’108 patent. We also hold that
the court did not abuse its discretion when it converted a
stipulated partial judgment into a final judgment pursu-
ant to Fed. R. Civ. P. 54(b). We affirm-in-part, reverse-in-
part, and remand for further proceedings consistent with
this opinion.
BACKGROUND
Prior to the cases at issue in this appeal, e.Digital as-
serted claims 1 and 19 of the ’774 patent in the U.S.
District Court for the District of Colorado (Colorado
Court). The ’774 patent discloses a device with a micro-
phone and a removable, interchangeable flash memory
recording medium that allows for audio recording and
playback. ’774 patent col. 3 ll. 50–64. Asserted claims 1
and 19 recited “a flash memory module which operates as
sole memory of the received processed sound electrical
signals” (sole memory limitation). Id. col. 9 ll. 9–11, col.
12 ll. 54–55. The court construed the sole memory limita-
tion to require “that the device use only flash memory, not
RAM or any other memory system” to store the “received
processed sound electrical signals.” e.Digital Corp. v.
Pentax of Am., Inc., No. 09-cv-02578, 2011 WL 2560069,
at *8 (D. Colo. June 28, 2011). The court based its con-
struction on the written description of the ’774 patent and
its determination that the use of RAM had been dis-
claimed during prosecution. Id. at *5–6. e.Digital argued
that, because a microprocessor requires RAM to operate,
and the claimed device performed tasks that involved a
microprocessor, the device must use RAM. The Colorado
Court held, however, that the existence of a microproces-
sor did not require the use of RAM because certain types
4 E.DIGITAL CORPORATION v. FUTUREWEI TECHNOLOGIES, INC.
of flash memory “could be directly addressed by the
microprocessor in the same way that RAM could, such
that one could replace that RAM with the appropriate
flash memory.” No. 2014-1019 J.A. 152. Based on the
claim construction, the parties to the Colorado litigation
stipulated to dismiss the case with prejudice, which the
Colorado Court granted.
After the Colorado case, the United States Patent and
Trademark Office cancelled claims 1 and 19 of the ’774
patent in an ex parte reexamination. ’774 patent col. 2 l.
58–col. 4 l. 38 (ex parte reexamination certificate). It
issued reexamined claim 33, which recites the limitations
of cancelled claims 1 and 19, including the identical sole
memory limitation, and added additional limitations like
a microprocessor. Id.e.Digital brought suit against Woodman Labs, Inc.
d/b/a GoPro (GoPro), Pantech Wireless, Inc. and Pantech
Co. Ltd. (together, Pantech), Futurewei Technologies, Inc.
and Huawei Device USA (together, Huawei), and Apple
Inc. in the Southern District of California, asserting
reexamined claim 33 and claims 2 and 5 of the ’108 pa-
tent. The court consolidated GoPro and Pantech’s cases
for discovery and claim construction purposes only. Based
on the Colorado Court’s previous construction, the de-
fendants moved to apply collateral estoppel to the con-
struction of the sole memory limitation in the ’774 and
’108 patents.
The district court granted the motions and adopted
the Colorado Court’s construction. The court reasoned
that the ’774 patent reexamination never addressed the
sole memory limitation, and further held that the ’108
and ’774 patents are “closely related.” No. 2014-1019 J.A.
9–10. e.Digital and Huawei stipulated to final judgment
of non-infringement so e.Digital could appeal the Huawei
decision. e.Digital stipulated to non-final partial judg-
ment of non-infringement with Pantech, GoPro, and
E.DIGITAL CORPORATION v. FUTUREWEI TECHNOLOGIES, INC. 5
Apple, who moved to stay their respective cases pending
the Huawei appeal. Apple then moved to convert its
judgment to a final judgment, and GoPro, but not Pan-
tech, joined the motion. The court converted all of the
partial judgments to final judgments under Fed. R. Civ. P.
54(b). e.Digital appealed these judgments. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
I. Collateral Estoppel
We review a district court’s application of collat-
eral estoppel de novo, applying the law of the regional
circuit. Aspex Eyewear, Inc. v. Zenni Optical LLC, 713
F.3d 1377, 1380 (Fed. Cir. 2013). Collateral estoppel
applies if: (1) the issue necessarily decided in the previous
proceeding is identical to the one which is sought to be
relitigated; (2) the first proceeding ended with a final
judgment on the merits; and (3) the party against which
collateral estoppel is asserted was a party or in privity
with a party at the first proceeding. Hydranautics v.
FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000). On
appeal, the parties only dispute whether construction of
the sole memory limitation presents an identical issue.
We hold that the district court correctly applied
collateral estoppel to the ’774 patent because reexamined
claim 33 recites the sole memory limitation identical to
claims 1 and 19, and because the ’774 patent reexamina-
tion never addressed that limitation or the presence of
RAM. The reexamination instead focused exclusively on a
limitation in claim 33 that is completely unrelated to the
sole memory limitation. Though we do not hold that
reexamination history cannot ever create a new issue that
would preclude the application of collateral estoppel, such
a scenario does not exist here because the reexamination
history in no way modifies, clarifies, or even informs the
construction of the sole memory limitation. Furthermore,
though claim 33 adds a microprocessor not recited in
6 E.DIGITAL CORPORATION v. FUTUREWEI TECHNOLOGIES, INC.
claims 1 and 19, the Colorado Court already considered,
at length, whether existence of a microprocessor required
the presence of RAM, and decided that it did not. Thus,
despite e.Digital’s arguments to the contrary, the addition
of a microprocessor was expressly considered by the
Colorado Court. Because reexamined claim 33 presents
the identical claim construction inquiry as decided in the
Colorado action, the district court properly applied collat-
eral estoppel to the ’774 patent.
The ’108 patent, on the other hand, presents a sepa-
rate claim construction issue. The ’108 patent is not
related to the ’774 patent, but does disclose a purported
improvement to the ’774 patent. ’108 patent col. 1 ll. 21–
31, col. 7 ll. 1–9. While the ’108 patent may incorporate
by reference the ’774 patent as prior art, it does not
change the fact that the patents are not related. The ’108
patent discloses a separate invention, includes a distinct
prosecution history, and is supported by a different writ-
ten description—including Figures 3 and 4 which clearly
depict RAM. These distinctions reinforce the well-
understood notion that claims of unrelated patents must
be construed separately. Texas Digital Sys., Inc. v. Tele-
genix, Inc., 308 F.3d 1193, 1211 (Fed. Cir. 2002) (citing
Abbott Labs. v. Dey, L.P., 287 F.3d 1097, 1104 (Fed. Cir.
2002)) (explaining that a claim of an unrelated patent
“sheds no light on” the claims of the patent in suit).
Because the asserted patents are not related, the ’108
patent requires a new claim construction inquiry and the
court therefore erred in applying collateral estoppel to the
’108 patent.
To be clear, our decision that collateral estoppel
cannot apply to the construction of a claim in one patent
based on a previous claim construction of an unrelated
patent is not an invitation to assume the opposite is
always justified. That is, a court cannot impose collateral
estoppel to bar a claim construction dispute solely because
the patents are related. Each case requires a determina-
E.DIGITAL CORPORATION v. FUTUREWEI TECHNOLOGIES, INC. 7
tion that each of the requirements for collateral estoppel
are met, including that the issue previously decided is
identical to the one sought to be litigated. A continuation-
in-part, for instance, may disclose new matter that could
materially impact the interpretation of a claim, and
therefore require a new claim construction inquiry.
II. Conversion of Partial Judgment to Final Judgment
Under Fed. R. Civ. P. 54(b)
Finally, the district court did not abuse its discretion
in converting Pantech’s partial judgment of non-
infringement to a final judgment under Fed. R. Civ. P.
54(b). Sheehan v. Atlanta Int’l Ins. Co., 812 F.2d 465, 468
(9th Cir. 1987) (reviewing for abuse of discretion a deter-
mination under Rule 54(b) that there was no just reason
for delay in entering final judgment on fewer than all
claims in the case). Rule 54(b) provides that a district
court “may direct entry of a final judgment as to one or
more, but fewer than all, claims . . . only if the court
expressly determines that there is no just reason for
delay.” We see no error in the district court’s determina-
tion that there was no just reason for delay because “[a]s
the Huawei case [was] already on appeal, certifying the
balance of cases ensure[d] that the collateral estoppel
order [would] be appealed only once.” Nos. 2014-1242,
2014-1243 J.A. 16. The court therefore did not abuse its
discretion when it converted Pantech’s judgment to a final
one for purposes of appeal.
CONCLUSION
The district court correctly applied collateral estoppel
to the ’774 patent, but erred in imposing the doctrine as to
the unrelated ’108 patent, which requires an independent
claim construction. The court did not abuse its discretion
when it certified Pantech’s case for appeal pursuant to
Rule 54(b).
8 E.DIGITAL CORPORATION v. FUTUREWEI TECHNOLOGIES, INC.
AFFIRMED-IN-PART, REVERSED-IN-PART,
REMANDED
COSTS
No costs.