Lead Opinion
Appellants, Astee Industries, Inc., and its subsidiary Barber-Greene Company, invoke principles of collateral estoppel as enunciated in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation,
I.
BACKGROUND
The ’904 and ’905 patents in suit have been extensively litigated.
1. Astec’s motion to modify the injunction in this cause is DENIED. [Doc. 356]
2. Astec’s motion for entry of an order vacating the judgment of October 31, 1988 which was affirmed by the Federal Circuit is DENIED. [Doc. 366] This court finds that if the Iowa jury verdict is inconsistent with the judgment affirmed by the Federal Circuit in this cause, that conflict should be*1577 resolved by the Federal Circuit when the Iowa verdict goes up on appeal.
Astee filed an interlocutory appeal (No. 91-1317) under 28 U.S.C. § 1291(c)(1), which was stayed on Mendenhall’s motion. After consideration of post-trial motions and entry of a final judgment by the Astee trial court on all claims and counterclaims, Astee again appealed, asserting error in the district court’s ruling on the collateral estoppel issue as well as on various damages issues (No. 92-1244). These two appeals were consolidated. Mendenhall filed no appeal of the adverse judgment on Astec’s counterclaims. The judgment was stayed pending appeal.
Meanwhile, Mendenhall appealed the final judgment in favor of the defendant in the Cedarapids case to this court, asserting a right to a new trial because the Cedarapids trial court allegedly erred in excluding the opinion of the Astee judge as probative evidence in the Cedarapids ease and in improperly instructing the jury. Mendenhall did not appeal the trial court’s denial of its JNOV (now JMOL) motion on any issues. On September 13, 1993, this court rendered its decision affirming the Cedarapids judgment holding invalid claims 1-12 of ’904 and all claims of ’905 for obviousness and public use. In addition, this court ruled on Cedara-pids cross-appeal that claim 13 of the ’904 patent was also invalid.
The Barber-Greene trial had been stayed pending the interlocutory appeal of validity issues in Astee. Upon affirmance in that appeal, the Barber-Greene case proceeded to trial on the issues of infringement, Barber-Greene was held hable and damages and an injunction were awarded. It was not until the Barber-Greene case was on appeal that the Cedarapids district court entered a final judgment holding ah of the claims which Mendenhall had asserted against Barber-Greene invalid.
The Barber-Greene, Astec, and Cedarapids appeals were heard on the same day but were not consolidated for disposition. As indicated, the Supreme Court denied review of the Cedarapids judgment holding the ’904 and ’905 claims invalid and the mandate in that case has issued. The Astee and Barber-Greene appeals are now consolidated for disposition.
II.
A. Blonder-Tongue and Its Progeny
In Blonder-Tongue, supra, the Supreme Court ruled that once the claims of a patent are held invalid in a suit involving one alleged infringer, an unrelated party who is sued for infringement of those claims may reap the benefit of the invalidity decision under principles of collateral estoppel. Mutuality of estoppel is no longer required. Thus, the benefits of collateral estoppel (now generally termed issue preclusion) arising from a final judgment of patent invalidity were extended to an alleged infringer other than the defendant who earlier successfully litigated the matter and those in privity therewith.
The final judgment in the Cedarapids case held that all claims of Mendenhall’s ’904 and ’905 patents are invalid. Astee and Barber-Greene assert that the Cedarapids judgment should be given collateral estoppel effect in the infringement suits brought by Mendenhall against each of them. The defense of collateral estoppel clearly would have been available to these defendants had their eases been stayed until the Cedarapids case proceeded to its ultimate judgment holding the ’904 and ’905 patents wholly invalid. Instead, the Cedarapids case was stayed while the others proceeded. Thus, the invalidity judgment in Cedarapids was entered
Because its patents are invalid and were determined to be invalid after full and fair litigation,
B. Timeliness
Appellants’ position is that under the precedent of this court, the defense of collateral estoppel based on a patent invalidity judgment in another case may be raised at any time during the pendency of proceedings, even for the first time on appeal, citing Dana Corp. v. NOK, Inc.,
In the earlier of the cited authority, collateral estoppel was raised by the alleged in-fringer, Thompson-Hayward, based on a holding by this court in a suit against Dawson Chemical Company that Rohm and Haas’s patent was unenforceable. Rohm & Haas Co. v. Crystal Chem. Co.,
In Lear, Inc. v. Adkins,395 U.S. 653 [89 S.Ct. 1902 ,23 L.Ed.2d 610 ]162 USPQ 1 (1969) the Supreme Court overturned the doctrine of licensee estoppel. The Court noted “the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain” [citation omitted]. In Lear, the public’s interest in allowing challenges to invalid patents was determined to prevail over the principles of contract law.... [W]e deem this public interest [in candor during patent prosecution] to be paramount over the proprieties of pleading practice.
NOK raised the collateral estoppel issue in its appeal, arguing that this court’s determination of invalidity of the patent in the IPC case required reversal of the judgment in its case as well. This court summarized the opposing position as follows:
Dana argues that the application of Blonder-Tongue should be limited to situations in which invalidity is decided in another case and that determination occurs before the trial court’s decision in the case in which collateral estoppel is raised.
NOK
[W]e see no reason why estoppel cannot be raised during the pendency of an appeal. ...
Nothing in Blonder-Tongue indicates that timing of the decision giving rise to estoppel is critical or that the plea of that defense cannot thereafter be timely made at any stage of the affected proceedings. Thus, we see no reason for declining to permit estoppel to be raised in this case.
Id. (emphasis added).
Mendenhall argues that the controlling authority applicable here should be the earlier case of Jamesbury v. United States, 217 Ct. Cl. 658,
We disagree that Jamesbury states such a rule of law or that the Thompson-Hayward and NOK decisions conflict with Jamesbury. The explication of the Court of Claims for rejecting the collateral estoppel defense in Jamesbury is very brief. The court did state, inter alia, that the district court decision holding the patent invalid was wrong (
In any event, contrary to Mendenhall’s argument, Jamesbury lays down no ride which makes the collateral estoppel defenses in these cases too late as a matter of law.
We conclude that appellants’ defense of collateral estoppel is not untimely. Each appellant raised the issue during pending litigation at virtually the earliest possible date.
C. Effect of Interlocutory Astee Liability Judgment
Mendenhall presents a variation of its argument that proceedings here are too far advanced for redetermination of liability by attempting to invoke a novel kind of res judicata within a case. Mendenhall argues that collateral estoppel should not apply here because this Court would have to overturn its own prior decision affirming the validity of the ’904 and ’905 patents in Astee. It distinguishes the Thompson-Hayward and NOK decisions on the ground that collateral estop-pel was invoked before a liability finding against the defendant had been upheld on appeal and urges our prior Astee judgment respecting liability was final and precludes relitigation of that issue as a matter of law.
First, the issue on appeal technically is not whether this court’s prior holding respecting validity in Astee should be overturned. The issue in Astec’s appeal (which also controls in Barber-Greene) is the viability of a collateral estoppel defense which arose subsequently.
Secondly, the judgment of this court on liability in Astee resulted in a remand for further proceedings. It was not the final judgment in the case. To rise to that level, the litigation must be entirely concluded so that Mendenhall’s cause of action against Astee was merged into a final judgment. Restatement (Second) of Judgments § 13 (1982). A final judgment is one that “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States,
Although the interlocutory decision of the Court of Claims on the question of validity and infringement was appealable, United States v. Esnault-Pelterie,299 U.S. 201 ,303 U.S. 26 [57 S.Ct. 159 ,58 S.Ct. 412 ,81 L.Ed. 123 ,82 L.Ed. 625 ]; 28 U.S.C. § 288(b), as are interlocutory orders of district courts in suits to enjoin infringement, 28 U.S.C. § 227(a); Simmons Co. v. Grier Bros. Co.,258 U.S. 82 , 89 [42 S.Ct. 196 , 198-99,66 L.Ed. 475 (1922) ], the decision was not final until the conclusion of the accounting. Barnard v. Gibson,7 How. 649 [12 L.Ed. 857 (1849)]; Humiston v. Stainthorp,2 Wall. 106 [17 L.Ed. 905 (1864) ]; Simmons Co. v. Grier Bros. Co., supra, [258 U.S. at] 89 [42 S.Ct. at 198-99 ]. Hence the court did not lack power at any time prior to entry of its final judgment at the close of the accounting to reconsider any portion of its decision and reopen any part of the ease.
Marconi Wireless Co. v. United States,
It follows that a decision by an appellate court on an interlocutory appeal is no more final than the appealed decision itself. In the Simmons case, cited and relied upon by the Marconi court, the Supreme Court unequivocally rejected that view:
The decree of July 24, 1914, although following a “final hearing”, was not a final decree. It granted to plaintiffs a permanent injunction upon both grounds, but an accounting was necessary to bring the suit to a conclusion upon the merits. An appeal taken to the Circuit Court of Appeals, whose jurisdiction, under § 129 Judicial Code, extended to the revision of interlocutory decrees granting injunctions, followed by the decision of that court reversing in part and affirming in part, did not result in a decree more final than the one reviewed.
Similarly, in a ease involving an interlocutory judgment of liability that had been appealed and affirmed under the predecessor to § 1292(c)(2), the Supreme Court, citing Marconi, suggested that the proceedings could be reopened by the district court despite that judgment to consider allegations of misuse raised after appeal. McCullough v. Kammerer Co.,
Every case of which we are aware that has considered the “finality” of a district court liability judgment appealable under § 1292(e)(2) and its predecessors has characterized such judgments as “interlocutory” in the context of the entire case.
The federal courts of appeals have recognized a variety of “special circumstances” under which they would reconsider their previously-determined law of the case. Intervening changes in applicable authority have been cited as a basis for reconsideration. Dean v. Trans World Airlines, Inc.,
In Central Soya, Inc. v. George A. Hormel & Co.,
as a matter of sound judicial practice, under which a court generally adheres to a decision in a prior appeal in the case unless one of three “exceptional circumstances” exists: the evidence on a subsequent trial was substantially different, controlling authority has since made a contrary decision of the law applicable to such issues, or the decision was clearly erroneous and would work a manifest injustice.
As indicated, in considering the new collateral estoppel defense, contrary to Mendenhall’s argument, we are not in these appeals “revisiting” the merits of our decision respecting the issue of validity of the patents as presented in Astee. The issue of validity had to be and was “revisited” in Cedarapids. Thus, the policy behind law of the case that a court will not usually “revisit” a decided issue is not present here. But even if we consider appellants’ liability as the law of the case, the question presented is whether the invalidity judgment in Cedarapids, as affirmed by this court, presents an “exceptional circumstance” warranting departure from the prior rulings that these defendants are liable to Mendenhall. In our view, clearly it is. The Cedarapids invalidity judgment, being intervening controlling authority on the relevant issue of law, would qualify as an exceptional circumstance under any articulated test. Further, when the rest of the industry is not impeded by the patents, it seems - manifestly unjust to rely merely on “judicial economy” as justification for holding appellants liable and impairing their ability to compete. Just as in Lear v. Adkins, the public policy of full and free competition was deemed paramount over contract principles,
In sum, under any of Mendenhall’s theories, the interlocutory judgment of this court and the proceedings in Astee do not preclude or provide policy reasons for denying collateral estoppel to the Cedarapids judgment in these appeals.
D. Scope of Estoppel and Need for Remand
Mendenhall argues that even if the Astee judgment does not bar appellants as a matter of law from raising the defense of collateral estoppel, collateral estoppel may not be invoked respecting the ’904 patent because the invalidity ruling on ’904 was unnecessary to the Iowa judgment. Mendenhall notes that the Iowa defendant was found not to infringe the ’904 patent and cites our precedent at the time holding that upon finding no infringement the validity issue was moot, e.g., Morton International, Inc. v. Cardinal Chemical Co.,
The plaintiffs alternatively argued that if collateral estoppel may be raised as a defense at this stage in the proceedings, then we must remand to the trial court for a
Respecting Barber-Greene, Mendenhall argues that it would be unjust and inequitable to permit that defendant to dishonor its commitment to be bound by the validity outcome in the Astee case. We, of course, agree, but the commitment (if one was made beyond the legal consequence of its relationship to Astee) was to tie its fate to that of its parent. Barber-Greene is not bound by the Astee interlocutory judgment to a greater extent than Astee itself.
Barber-Greene’s situation is at least as favorable for estoppel as that of the appellant in Thompson-Hayward v. Rohm & Haas, supra, who agreed to be bound by the final judgment in a parallel proceeding in which the patent was ultimately held invalid. Our holding that the Cedampids invalidity judgment overrides the interlocutory judgment in Astee on principles of collateral estoppel also frees Barber-Greene of liability under the terms of its agreement.
III.
CONCLUSION
Having considered all arguments of Men-denhall, we conclude these appeals must be sustained. Because the Mendenhall patents are invalid, the plaintiffs cannot now enjoin or recover damages from these defendants. The liability judgments together with the awards of damages and the permanent injunctions awarded as relief for their infringement of the ’904 and ’905 patents are reversed.
IV.
COSTS
Each party will bear its own costs.
REVERSED.
Notes
. Other pending suits include Mendenhall and CMI Corp. v. Standard Havens, Inc., No. 86-710-CIV-W-6 (W.D.Mo. filed June 4, 1986), and Mendenhall and CMI Corp. v. Bituma Constr. Equip. Co., No. C-86-1029 (N.D.Iowa filed June 6, 1986). The subject matter of the patents concerns hot asphalt mixing equipment.
. The nonprecedential opinion in Mendenhall v. Astec Indus., Inc., appears at
. See Cardinal Chem. Co. v. Morton International, Inc., - U.S. -,
. Mendenhall did not assert, inter alia, claim 13 against Barber-Greene.
. The collateral estoppel arose upon the district court’s judgment of invalidity of the '904 and '905 claims in the Cedarapids case. That judgment having been affirmed by this court and review having been denied by the Supreme Court, we no longer have the situation of applying collateral estoppel based on a judgment that might be reversed. See Hart Steel Co. v. Railroad Supply Co.,
. This court has adopted decisions of the United States Court of Claims as precedents. South Corp. v. United States,
. See note 5, supra.
.This conclusion is also supported by precedent from our sister circuits. See Aetna Casualty & Surety Co. v. General Dynamics Corp.,
. Indeed, claim 13 was invalidated only after the hearings in these appeals.
. As indicated, Barber-Greene agreed it was bound by the ultimate validily decision against its parent in Astee.
.28 U.S.C. § 1292(c)(2) provides that this court shall have exclusive jurisdiction
of an appeal from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and is final except for an accounting.
Contrary to Mendenhall's arguments, the Astee appeal on December 16, 1988, was taken as of right under the above statute. The subsequent order of the district court entered January 26,
.We note that an interlocutory appeal from a permanent injunction, to the extent that it considers questions of validity and infringement (as in Simmons), is identical in substance to an appeal brought under § 1292(c)(2).
. See Johns-Manville, supra; W.L. Gore & Assocs., Inc. v. Carlisle Corp.,
. The rule against disturbing a final judgment is not an absolute bar in any event. However,
. Supra, note 3.
Dissenting Opinion
dissenting.
Because I believe the facts in these cases weigh heavily against the application of collateral estoppel, I dissent. Put simply, in Nos. 91-1317 and 92-1244, Astee has had every opportunity to challenge the validity of the patents asserted against it in this litigation. It had a full and fair trial, and validity was further explored in detail on an interlocutory appeal to this court. Mendenhall v. Astec Indus., Inc.,
As a “matter of sound judicial practice” a court will adhere to its prior decision and generally refuse to reopen what has been decided unless there are “exceptional circumstances” that compel a departure from this “law of the ease.” Central Soya Co. v. George A Hormel & Co.,
The only “exceptional circumstance” relied upon by Astee is that it should be entitled to assert collateral estoppel against Mendenhall because of the result of Mendenhall v. Cedarapids, Inc.,
As explained by the Supreme Court, the primary reasons for the application of estop-pel in patent cases are economic. The “question is whether it is any longer tenable to afford a litigant more than one full and fair opportunity for judicial resolution of the same issue.” Id. at 328,
None of these reasons supporting collateral estoppel are present here, and its use serves no legitimate purpose. This is not a ease where a party is defending in a subsequent infringement litigation after a holding of invalidity. Astee itself has already had a full and fair opportunity for resolution of the validity issue. The ruling of invalidity in Cedarapids came after the final judgment on the merits of this case. Applying estoppel here would not save anything in the way of judicial resources. Of course, if Mendenhall attempted to bring a future suit, collateral estoppel would be entirely appropriate, but not here. The cows have left the barn, slamming the door now serves no purpose. The invocation of collateral estoppel in favor of Astee is not a “just and equitable” result.
In the Barber-Greene litigation, Nos. 91-1109 and 91-1131, the above considerations counsel against the application of estoppel against Mendenhall as well. Even more importantly, Barber-Greene waived any right it may have had to challenge validity, by collateral estoppel or otherwise, when it agreed to be bound by the result of the validity phase of the Astee litigation. Not only did Barber-Greene tell the district court, in seeking a stay of its ease, that it would be bound by the ruling on validity in Astee, but it also filed a stipulation that the validity and enforceability of Mendenhall’s patents were not at issue in their case and this stipulation was incorporated into the district court’s final order and judgment.
The agreement to be bound is clear and enforceable and precludes Barber-Greene from challenging the validity of the patents in this appeal. See Foster v. Hallco Manufacturing Co.,
Rehearing
ORDER ON PETITION FOR REHEARING
Sept. 14, 1994
The petition for rehearing is granted by the panel members in the majority but only for the purpose of making the following addition to note 11, p. 1580 of its opinion following the text of 28 U.S.C. 1292(c)(2):