United States District Court, D. Delaware
REPORT AND RECOMMENDATION
CHRISTOPHER J. BURKE UNITED STATES MAGISTRATE JUDGE.
before the Court in these patent infringement cases are
Defendants Walmart Inc., Vudu, Inc. (collectively, the
"Walmart Defendants"), Cigna Corp. and Cigna Health
and Life Insurance Company's (collectively, the
"Cigna Defendants" and together with the Walmart
Defendants, "Defendants") motions to dismiss for
failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6) (the "Motions"). (Civil Action
No. 19-660-CFC-CJB (the "Walmart Action"), D.I. 10;
Civil Action No. 19-964-CFC-CJB (the "Cigna
Action"), D.I. 12) In their Motions, Defendants argue
for dismissal on the grounds that: (1) certain patents
asserted by Plaintiff Sound View Innovations, LLC
("Sound View" or "Plaintiff) are directed to
patent-ineligible subject matter pursuant to 35 U.S.C. §
101 ("Section 101"); and that (2) Sound View is
collaterally estopped from asserting certain other patents in
these litigations. This Report and Recommendation will
address the Motions as they relate to the issue of collateral
estoppel only. For the reasons that follow, the Court
recommends that, as to that issue, the Motions be DENIED.
Walmart Action, Sound View asserts five patents against the
Walmart Defendants, including United States Patent No. 5,
806, 062 (the "'062 patent"). (Civil Action No.
19-660-CFC-CJB, D.I. 1 at ¶ 3) In the Cigna Action,
Sound View asserts five patents against the Cigna Defendants,
including the '062 patent and United States Patent No. 6,
125, 371 (the '"371 patent"). (Civil Action No.
19-964-CFC-CJB, D.I. 1 at ¶ 3)
claims from the '062 and '371 patents that Sound View
specifically asserted in its complaints in these actions have
previously been found invalid in other proceedings.
Specifically, Sound View asserts claim 14 of the '062
patent against both sets of Defendants. (Civil Action No.
19-660-CFC-CJB, D.I. 1 at¶85; Civil Action No.
19-964-CFC-CJB, D.I. 1 at ¶ 125) On April 30, 2019, the
Honorable John A. Kronstadt of the United States District
Court for the Central District of California issued an order
in Sound View Innovations, LLC v. Hulu, LLC, Civil
Action No. 17-4146 JAK (PLAx) granting Hulu, LLC's
"Motion for Partial Summary Judgment of Invalidity and
Noninfringement of the '062 patent, in which the
Hulu Court held that claim 14 of the '062 patent
is patent-ineligible under Section 101 (the
"Hulu Order"). (Civil Action No.
19-660-CFC-CJB, D.I. 11, ex. A at 4-12) Sound View also
asserts claim 8 of the '371 patent against the Cigna
Defendants. (Civil Action No. 19-964-CFC-CJB, D.I. 1 at
¶ 142) In a trio of decisions issued on April 9, 2019,
the United States Patent and Trademark Office's Patent
Trial and Appeal Board ("PTAB") found by a
preponderance of the evidence that claims 1-3 and 8-10 of the
'371 patent are unpatentable under 35 U.S.C. § 103
in connection with inter partes review proceedings
(the "PTAB Decisions"). (Civil Action No.
19-964-CFC-CJB, D.I. 13, exs. B-D)
their Motions, Defendants argue that, in light of the
Hulu Order and the PTAB Decisions, Sound View is
collaterally estopped from asserting these invalidated claims
against them in these actions. (Civil Action No.
19-660-CFC-CJB, D.I. 11 at 3-5; D.I. 20 at 1-3; Civil Action
No. 19-964-CFC-CJB, D.I. 13 at 3-6; D.I. 18 at 1-3) Because
collateral estoppel applies, Defendants assert that dismissal
of the claims as to these patents is warranted, as Sound View
fails to '"state a claim to relief that is plausible
on its face'" with respect to these claims.
(See Civil Action No. 19-964-CFC-CJB, D.I. 13 at 6)
Sound View, for its part, argues that collateral estoppel
does not bar Sound View's claims of infringement with
respect to the '062 and '371 patents, and that the
cases as to these patents should instead be stayed pending
appeals of the Hulu Order and PTAB Decisions. (Civil
Action No. 19-660-CFC-CJB, D.I. 18 at 2-5; Civil Action No.
19-964-CFC-CJB, D.I. 17 at 1-4)
STANDARD OF REVIEW
Motion to Dismiss Under Rule 12(b)(6)
standard of review here is the familiar two-part analysis
applicable to motions made pursuant to Rule 12(b)(6). First,
the court separates the factual and legal elements of a
claim, accepting "all of the complaint's
well-pleaded facts as true, but [disregarding] any legal
conclusions." Fowler v. UPMC Shadyside, 578
F.3d 203, 210-11 (3d Cir. 2009). Second, the court determines
"whether the facts alleged in the complaint are
sufficient to show that the plaintiff has a 'plausible
claim for relief" Id. at 211 (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). In
assessing the plausibility of a claim, the court must
'"construe the complaint in the light most favorable
to the plaintiff, and determine whether, under any reasonable
reading of the complaint, the plaintiff may be entitled to
relief" Id. at 210 (quoting Phillips v.
Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).
doctrine of collateral estoppel (also known as issue
preclusion) precludes a party from relitigating an issue that
has previously been decided in another judicial proceeding.
Anderson v. Gen. Motors LLC, Civ. No. 18-621-LPS,
2019 WL 4393177, at *4 (D. Del. Sept. 13, 2019). Under the
law of the United States Court of Appeals for the Third
Circuit, collateral estoppel applies if: (1) the identical
issue was previously adjudicated; (2) the issue was actually
litigated; (3) the previous determination of the issue was
necessary to the decision; and (4) the party being precluded
from relitigating the issue was fully represented in the
prior action. Stone v. Johnson, 608 Fed.Appx. 126,
127 (3d Cir. 2015); Jean Alexander Cosmetics, Inc. v.
L'Oreal USA, Inc., 458 F.3d 244, 249 (3d
Cir. 2006). The Third Circuit also considers whether
the party being precluded had a full and fair opportunity to
litigate the issue in question in the prior action, and
whether the issue was determined by a final and valid
judgment. Free Speech Coal, Inc. v. Attorney Gen. of
U.S., 677 F.3d 519, 541 (3d Cir. 2012); Jean
Alexander, 458 F.3d at 249.
parties' briefing, the only element of collateral
estoppel in dispute here is whether the Hulu Order
and PTAB Decisions constitute final judgments. Therefore, the
Court's analysis focuses on this issue.
is no bright-line rule regarding what constitutes a
"final judgment" for issue preclusion purposes.
Free Speech Coal, 677 F.3d at 541. However, "a
prior adjudication of an issue in another action must be
sufficiently firm to be accorded conclusive effect."
Id. (internal quotation marks and citation omitted).
"[F]inality for purposes of issue preclusion is a more
pliant concept than it would be in other contexts, and [it]
may mean little more than that the litigation of a particular
issue has reached such a stage that a court sees no really
good reason for permitting it to be litigated again."
Id. (internal quotation marks and citation omitted).
To determine whether a prior ruling was "sufficiently
firm" for preclusion purposes, courts should consider
factors including, but not limited to, the following: (1)
whether the ...