Soverain Software LLC v. Victoria's Secret Direct Brand Management, LLC
778 F.3d 1311
| Fed. Cir. | 2015Background
- Soverain owned U.S. Patents ’314 and ’492 and sued Victoria’s Secret and Avon in the E.D. Tex.; a jury found infringement and no invalidity for asserted claims, and the district court entered judgment for Soverain.
- Defendants appealed; while this appeal was pending, this Court decided Soverain v. Newegg and Newegg II, holding various claims of the same patents obvious and therefore invalid (including shopping-cart and hypertext-statement claims).
- The panel considered whether the Newegg invalidity rulings collaterally estop Soverain from relitigating invalidity against these unrelated defendants.
- Soverain conceded issue-preclusion normally applies but argued it lacked a “full and fair opportunity” to litigate obviousness in Newegg (because Newegg had sought a new trial on appeal rather than direct JMOL reversal and Soverain would have argued differently on appeal).
- The Court analyzed (1) identity of issues between claims invalidated in Newegg and claims asserted here, (2) whether Soverain actually litigated obviousness in Newegg, (3) whether the Newegg judgment was necessary to that decision, and (4) whether special circumstances (full-and-fair-opportunity) defeat preclusion.
- The Court concluded Soverain had a full and fair opportunity in Newegg, the issues are identical or materially the same (including dependent claims and an Internet-limitation variant), and therefore issue preclusion invalidates the asserted claims here; the infringement judgment was reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Newegg’s invalidity rulings collaterally estop relitigation of claims 34 & 51 (’314) and claim 17 (’492) | Soverain: preclusion normally applies but here it lacked a full and fair opportunity on appeal, so estoppel should not bind it | Defs: Newegg decision is a final invalidity judgment that binds subsequent litigants under Blonder‑Tongue | Held: Preclusion applies — Newegg explicitly held those claims obvious and Soverain had full and fair opportunity to litigate. |
| Whether claim 15 (’492) is precluded where Newegg invalidated a dependent claim (claim 41) | Soverain: claim 15 was not expressly invalidated in Newegg | Defs: A broader independent claim cannot survive where a dependent claim is invalid for obviousness | Held: Preclusion applies — invalidity of dependent claim extends to independent claim (Callaway principle). |
| Whether Soverain lacked a full and fair opportunity to litigate obviousness in Newegg because of appellate postures/strategies | Soverain: it would have made different or additional arguments on appeal had it expected the court to decide invalidity rather than order a new trial | Defs: Soverain had adequate incentive and did present the same substantive arguments at district court and on appeal; failing to press additional arguments does not show lack of full and fair opportunity | Held: Soverain had a full and fair opportunity; strategic differences on appeal do not defeat issue preclusion. |
| Whether claim 39 (’492) — adding “Internet” limitation — escapes preclusion | Soverain: claim 39 was not adjudicated and the Internet limitation differentiates it | Defs: The Internet limitation is a routine incorporation of known technology and does not materially change invalidity analysis | Held: Preclusion applies — the Internet limitation does not materially alter the invalidity question; claim 39 is invalid. |
Key Cases Cited
- Soverain Software LLC v. Newegg Inc., 705 F.3d 1333 (Fed. Cir.) (court held specific ’314 and ’492 claims obvious)
- Soverain Software LLC v. Newegg Inc., 728 F.3d 1332 (Fed. Cir.) (panel rehearing clarifying representative claim coverage)
- Blonder‑Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (U.S. 1971) (a prior invalidity judgment can estop relitigation by others; patentee must show lack of full and fair opportunity)
- Callaway Golf Co. v. Acushnet Co., 576 F.3d 1331 (Fed. Cir.) (a broader independent claim cannot be nonobvious where a dependent claim is invalid for obviousness)
- Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333 (Fed. Cir.) (issue preclusion between different claims permitted where differences do not materially alter invalidity analysis)
- Mendenhall v. Barber‑Greene Co., 26 F.3d 1573 (Fed. Cir.) (once claims are held invalid against one accused infringer, unrelated defendants may invoke collateral estoppel)