United States District Court, D. Delaware
C. Haney and John C. Phillips, Jr., PHILLIPS GOLDMAN
McLAUGHLIN & HALL, P.A., Wilmington, DE; William W.
Flachsbart (argued), Jonathan Hill, and Robert P. Greenspoon,
FLACHSBART & GREENSPOON, LLC, Chicago, IL. Attorneys for
Hoeschen, John W. Shaw, and David M. Fry, SHAW KELLER LLP,
Wilmington, DE; Kevin P. Martin (argued) and Srikanth K.
Reddy, GOODWIN PROCTER LLP, Boston, MA; Monte M. F. Cooper,
GOODWIN PROCTER LLP, Redwood City, CA. Attorneys for
ANDREWS, U.S DISTRICT JUDGE.
before me is Defendants' Motion to Dismiss Complaint on
the Basis of Claim Preclusion and Issue Preclusion. (D.I. 9).
The Parties have fully briefed the issues. (D.I. 10, 18, 19,
23). I heard oral argument on May 14, 2019. (D.I. 26
("Tr.")). For the reasons discussed more fully
below, I will grant Defendants' motion as to willful
infringement and deny their motion as to the rest.
filed this suit on September 17, 2018. (D.I. 1). It alleges
that Defendants infringe the claims of five related patents:
U.S. Patent Nos. 6, 459, 213 ('"213 Patent");
6, 172, 464 ("'464 Patent"); 5, 757, 140
('"140 Patent"); 5, 510, 681 ('"681
Patent"); and 5, 510, 680 ("'680 Patent").
(Id.). All five patents are expired. (D.I. 10 at 3).
The Accused Products are Defendants' compact fluorescent
lightbulbs ("CFLs"). (D.I. 1 at ¶¶ 26-30).
predecessor in interest and the named inventor on all of the
patents-in-suit, Mr. Ole K. Nilssen,  sued Defendants in this
District on August 1, 2000. (D.I. 1 at ¶ 42). He alleged
that Defendants' CFLs infringed 26 patents, including the
'680 and '681 Patents. (D.I. 10 at 4). The case was
transferred to the Northern District of Dlinois. In February
2006, that court held a bench trial to decide whether certain
patents, including the '680 and '681 Patents, were
unenforceable due to inequitable conduct. On July 6, 2006,
the court concluded that they were. Nilssen v. Osram
Sylvania, Inc., 440 F.Supp.2d 884, 911 (N.D. Ill. 2006)
("OSRAMF), aff'd, 504 F.3d 1223 (Fed. Cir.
2007). The court's unenforceability finding as to the
'680 and '681 patent was based on Mr. Nilssen: (1)
failing to pay large entity maintenance fees; (2) improperly
including a March 20, 1978 patent in the ancestry of the
asserted patents; (3) failing to disclose ongoing litigation
with Motorola; and (4) as to the '681 Patent, failing to
disclose known prior. art that he had disclosed in other
pending applications. Id. at 902-11. The court found
that Mr. Nilssen's excuses for the conduct were not
credible and found that Mr. Nilssen intended to deceive the
Patent Office. Id. The court, however, declined to
apply the doctrine of unclean hands to extend its findings of
unenforceability to all of the related patents-in-suit.
Id. at 911.
Nilssen filed a second lawsuit ("OSRAM IF)
against Defendants on May 2, 2003. (D.I. 16, Exh. 7). There,
he alleged that Defendants' CFLs infringed 15 additional
patents, including the '464 and' 140 Patents.
(Id. at ¶¶ 14, 25). After receiving
Defendants' invalidity contentions, Mr. Nilssen dropped
his claims that Defendants infringed the '464 and'
140 Patents from the suit. (D.I. 16, Exh. 8 at 7). At a
status conference on April 15, 2004, Mr. Nilssen voluntarily
moved to dismiss the remaining claims with leave to reinstate
the case by June 25, 2004. Minute Order, Nilssen v. Osram
Sylvania Inc., No. 03-2962 (N.D. Ill. April 15, 2004),
D.I. 28. The court granted his motion. Id. Over the
next year, the court repeatedly extended the deadline for Mr.
Nilssen to reinstate the case, with the last recorded
deadline arriving on July 22, 2005. See Nilssen v. Osram
Sylvania Inc., No. 03-2962, D.I. 30-42 (minute entries
extending deadline). On September 27, 2005, the court again
entered a minute entry dismissing the case. Id. at
D.I. 49. The court later characterized the dismissal as
"with prejudice." (D.I. 16 at Exh.9).
August 13, 2004, during the pendency of OSRAM I and
OSRAM II, Mr. Nilssen filed an additional lawsuit
against Wal-Mart. See Nilssen v. Wal-Mart Stores, Inc.
("Wal-Marf), 2008 WL 11350028 (N.D. Ill. Mar. 17,
2008). In that lawsuit, he initially asserted, among others,
the '680, '681, and '464 Patents. Id. at
*1. On summary judgment, Mr. Nilssen acknowledged the
unenforceability ruling in OSRAM I and only pursued
his claim of infringement of the '464 Patent.
Id. As in OSRAM I, the Wal-Mart
court found the '464 Patent unenforceable due to Mr.
Nilssen's improper payment of small entity fees and his
failure to disclose litigation with Motorola. Id. at
Foundation, Ltd., Mr. Nilssen's co-plaintiff in
Wal-Mart, filed an appeal of the district
court's denial of its motion to vacate the
Wal-Mart unenforceability determination as it
applied to Geo. Notice of Appeal, Nilssen v. Wal-Mart
Stores, Inc., No. 04-5363 (N.D. Ill. Nov. 19, 2009),
D.I. 307; see Motion by Plaintiff GEO Foundation Ltd
to Vacate Judgment Pursuant to Fed.R.Civ.P. 60(b)(4),
Nilssen v. Wal-Mart Stores, Inc., No. 04-5363 (N.D.
Ill. Nov. 19, 2009), D.I. 303. During the pendency of that
appeal, the law of inequitable conduct changed dramatically
when the Federal Circuit issued its en banc decision
in Therasense, Inc. v. Becton, Dickinson & Co.,
649 F.3d 1276 (Fed. Cir. 2011). The Federal Circuit ordered
the parties to submit supplemental briefing on the impact of
the Therasense decision. Nilssen v. Wal-Mart
Stores, Inc., 394 Fed.Appx. 709 (Fed. Cir. 2010). The
court issued a Rule 36 affirmance once that briefing was
complete. Nilssen v. Wal-Mart Stores, Inc., 438
Fed.Appx. 898 (Fed. Cir. 2011).
Mr. Nilssen's death, his patents were assigned to his
widow, who assigned the rights to Beacon Point Capital, LLC,
who, in turn, assigned the rights to Plaintiff. (D.I. 10 at
reviewing a motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), the Court must accept the
complaint's factual allegations as true. See BellAtl.
Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). Rule 8(a)
requires "a short and plain statement of the claim
showing that the pleader is entitled to relief."
Id. at 555. The factual allegations do not have to
be detailed, but they must provide more than labels,
conclusions, or a "formulaic recitation" of the
claim elements. Id. ("Factual allegations must
be enough to raise a right to relief above the speculative
level... on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).").
Moreover, there must be sufficient factual matter to state a
facially plausible claim to relief. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). The facial plausibility
standard is satisfied when the complaint's factual
content "allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id. ("Where a complaint pleads
facts that are merely consistent with a defendant's
liability, it stops short of the line between possibility and
plausibility of entitlement to relief." (internal
quotation marks omitted)). A court may decide a Rule 12(b)(6)
motion to dismiss based on preclusion grounds so long as the
affirmative defense of preclusion is apparent on the face of
the complaint. See Brody v. Hankin, 145 Fed.Appx.
768, 771-72 (3d Cir. 2005).
argue for dismissal of Plaintiff s complaint on three
grounds: claim preclusion as to claims stemming from the
'464, '140, '681 and '680 Patents, issue
preclusion as to the enforceability of all patents-in-suit,
and failure to state a willfulness claim. I will address each
of their arguments in turn.
is not claim precluded from litigating Defendants'
alleged infringement of the '464, '140, '681, and
'680 Patents. The Federal Circuit applies the law of the
regional circuit when deciding whether claim preclusion
applies. Mentor Graphics Corp. v. EVE-USA, Inc., 851
F.3d 1275, 1298 (Fed. Cir. 2017), cert, dismissed,
139 S.Ct. 44 (2018). In the Third Circuit, a claim is
precluded if "there has been (1) a final judgment on the
merits in a prior suit involving (2) the same parties or
their privies and (3) [the current] suit [is] based on the
same cause of action." Lubrizol Corp. v. Exxon
Corp., 929 F.2d 960, 963 (3d Cir. 1991). The Federal
Circuit applies its own law to determine "[w]hether two
infringement allegations constitute the same ... cause of
action." Mentor Graphics Corp., 851 F.3d at
1298. Under Federal Circuit precedent, an infringement action
is not the same cause of action as a previous action if the
accused products did not exist at the time of the previous
suit. Aspex Eyewear, Inc. v. Marchon Eyewear, Inc.,
672 F.3d 1335, 1342 (Fed. Cir. 2012). This is the result of
the common law principle that "a party who sues a
tortfeasor is ordinarily not barred by a prior judgment from
seeking relief for discrete tortious action by the same
tortfeasor that occurs subsequent to the original
action." Id. In Aspex, the Federal
Circuit explained that, as each act of patent irifringement
is a discrete tort, claim preclusion does not attach to later
acts of infringement. Id. at 1343. This remains true
even if the products are "essentially the same" or,
in fact, the same. Mentor Graphics Corp., 851 F.3d
at 1299; Brain Life, LLC v. Elekta Inc., 746 F.3d
1045, 1056 (Fed. Cir. 2014).
Parties do not dispute that the first two factors of the
claim preclusion test are met in this case.. (See
D.I. 10 at 9-11; D.I. 18 at 5-6). They do, however, disagree
as to whether these are the same causes of action as in the
earlier suits. (See D.I. 10 at 11-12; D.I. 18 at
5-6). It is not clear from the record how similar the accused
CFLs in this case are to those previously accused.
(See D.I. 1 at ¶ 29; see also Tr. at
25:16-26:3). What is clear, however, is that Plaintiff seeks
damages only for alleged tortious conduct that occurred after
the termination of the earlier OSRAM lawsuits. Thus,
under Aspex and Mentor Graphics, Plaintiffs
cause of action is not the same cause of action as was
separately argue that the Kessler doctrine, a
supplement to claim preclusion, should apply in this case.
Kessler v. Eldred, 206 U.S. 285 (1907). The
Kessler doctrine is a sparsely used tool that
"allow[s] an adjudged non-infringer to avoid
repeated harassment for continuing its business as usual
post-final judgment in a patent action where circumstances
justify that result." Brain Life, 746 F.3d at
1056 (emphasis in original). It gives an accused infringer
"rights with respect to specific products that had been
held to be noninfringing, even when the specific
acts of infringement would not be barred by claim
preclusion because they occurred postfinal judgment."
Id. at 1057 (emphasis in original). The Federal
Circuit has expressed reservations about the Kessler
doctrine and has expanded its reach only in limited
circumstances. See SimpleAir, Inc. v. Google LLC,
884 F.3d 1160, 1170 (Fed. Cir. 2018) (characterizing
Kessler as a claim preclusion gap-filler for
postfinal judgment actions of adjudged noninfringers);
Brain Life, 746 F.3d at 1058 (noting that the
continued existence of the Kessler doctrine is
"questionable" in light of modern claim and issue
Defendants are not adjudged noninfringers, the
Kessler doctrine does not apply. Defendants admit
that the OSRAM I was resolved by a finding of
inequitable conduct and that OSRAMII was resolved by
Plaintiff voluntarily moving to dismiss the case. (D.I. 19 at
4). Neither case was resolved by a finding of
noninfringement. (Id.). They argue, however, that
the Kessler doctrine should extend to dismissals
with prejudice as a general matter. (See id.). They
cite Brain Life as support for this proposition.
(Id.). In Brain Life, the defendant was
found not to infringe two patents during a first lawsuit.
Brain Life, 746 F.3d at 1058. Prior to that final
decision, the plaintiff had'dismissed with prejudice its
claims related to a third patent. Id. The Federal
Circuit held that the defendant was an adjudged noninfringer
and that the Kessler doctrine precluded the
plaintiff from again accusing the products of infringement.
Id. at 1058-59. It noted, "[plaintiff] could
have continued to assert [the dropped] claims."
Id. at 1058. Those circumstances are distinguishable
from this case. In Brain Life, the Federal Circuit
held that, because the plaintiff chose to drop one of its
patents, it had to live with the consequences of that
decision. That is, the defendant's status as an adjudged
noninfringer could not be defeated by the plaintiffs own
choice not to pursue certain claims. Here, no court has
determined that Defendants do not infringe Plaintiffs
patents. Thus, Defendants are not adjudged noninfringers,
regardless of the fact that Plaintiffs cases were dismissed
with prejudice. The Kessler doctrine does not
is not claim precluded or barred by the Kessler
doctrine from pursuing infringement claims against
Defendants. Thus, I will not dismiss Plaintiff's
complaint as to the '464, '140, ...