Cummins, Inc. v. Tas Distributing Co., Inc.
700 F.3d 1329
Fed. Cir.2012Background
- Cummins and TAS have litigated three actions since 2003 over TAS idle-control technologies and the Master License Agreement governing their use and royalties.
- Cummins sought declaratory judgments in 2009 that TAS’s ’703 and ’469 patents are invalid and unenforceable; TAS sought to enforce royalties and contract rights.
- TAS I (2003) resolved contract claims, with Cummins paying ongoing royalties and TAS obtaining some relief; Cummins did not raise patent defenses then.
- TAS II (2007) alleged Cummins owed royalties on Retrofit units and that TAS technology was substituted, leading to discovery including inventor deposition.
- In TAS III (2009), Cummins sought to invalidate the TAS patents and rescind the Master License Agreement; the district court granted summary judgment for TAS on res judicata grounds.
- The district court concluded Cummins could have asserted the patent-based defenses in TAS I and that those defenses are barred by res judicata under Illinois law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction basis of TAS I against patent defenses | Cummins argues TAS I lacked jurisdiction to hear patent defenses. | TAS argues the patent defenses were not barred and could have been raised. | No jurisdictional bar; patent defenses could have been raised in TAS I. |
| Transactional test—are TAS I and TAS III the same action | Cummins contends different factual bases mean separate claims. | TAS argues same group of operative facts; res judicata applies. | They are the same action under the transactional test; res judicata applies. |
| Preclusion of patent-based defenses (invalidity/unenforceability) under res judicata | Cummins contends adjustments could be made without nullifying TAS I. | TAS maintains the defenses were available and would impair TAS I’s judgment. | Patents invalidity/unenforceability defenses are barred by res judicata. |
| Patent misuse and res judicata | Cummins argues Mercoid carve-out allows patent misuse to be raised later. | Res judicata bars these misuse claims as they relate to the same contract and relief. | Patent misuse claims are also barred by res judicata. |
| Nullification risk and res judicata | Cummins claims no nullification risk because it did not prevail in TAS I. | Nullification risk would impair TAS I’s judgment and supports preclusion. | Nullification concerns support applying res judicata; Cummins cannot undermine TAS I. |
Key Cases Cited
- River Park, Inc. v. City of Highland Park, 703 N.E.2d 883 (Ill. 1998) (transactional test for res judicata; extends to all related operative facts)
- MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (S. Ct. 2007) (licensee royalty payments do not render patent disputes nonjusticiable)
- Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661 (S. Ct. 1944) (limits to res judicata exception for patent misuse relief scenarios)
- Nasalok Coating Corp. v. Nylok Corp., 522 F.3d 1320 (Fed. Cir. 2008) (preclusion when later suit would nullify initial judgment or rights)
- Henry v. Farmer City State Bank, 808 F.2d 1228 (7th Cir. 1986) (compulsory counterclaims and preclusion under Illinois law)