1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION 10 11 APPLIED MATERIALS, INC., Case No. 20-cv-09341-EJD
12 Plaintiff, ORDER ON MOTIONS FOR SUMMARY JUDGMENT 13 v.
14 DEMARAY LLC, Re: ECF Nos. 431, 452 Defendant. 15
16 17 Plaintiff and Counterclaim Defendant Applied Materials, Inc. (“Applied”) has moved for 18 summary judgment that Applied’s Cirrus and Avenir Chambers (the “Accused Chambers”) do not 19 infringe U.S. Patent Nos. 7,544,276 (“’276 Patent”) and 7,381,657 (“’657 Patent”) (together, the 20 “Asserted Patents”) based on claim and issue preclusion. Applied’s Motion for Summary 21 Judgment (“Applied MSJ”), ECF No. 431. Defendant and Counterclaim Plaintiff Demaray LLC 22 (“Demaray”) opposes the motion and has moved for summary judgment that preclusion does not 23 apply. Demaray’s Opposition to Applied’s Motion for Summary Judgment and Cross-Motion for 24 Summary Judgment (“Demaray MSJ”), ECF No. 452.1 Both motions are fully briefed. Applied’s 25
26 1 The Court reminds the parties to review and adhere to this Court’s Standing Order for Civil Cases. Both parties’ briefs violate this Court’s instruction regarding footnotes. Any non- 27 compliant footnotes in future filings may be stricken. See Standing Order for Civil Cases, Section IV(A)(4). 1 Reply in Support of Motion for Summary Judgment (“Applied Reply”), ECF No. 461; Demaray’s 2 Reply in Support of Motion for Summary Judgment (“Demaray Reply”), ECF No. 467. 3 Having carefully reviewed the relevant documents, the Court finds this matter suitable for 4 decision without oral argument pursuant to Civil Local Rule 7-1(b). For the reasons stated below, 5 the Court GRANTS IN PART Applied’s Motion and GRANTS IN PART Demaray’s Motion. 6 I. BACKGROUND 7 The facts of this case have been set forth in prior Orders and in the parties’ briefs. Only 8 those facts and issues necessary to resolve the pending motions are discussed below. Additional 9 facts are identified in Section III. 10 A. The Texas Action 11 On July 14, 2020, Demaray sued Samsung Electronics Co., Ltd. (“Samsung”) in the 12 Western District of Texas for its allegedly infringing use of Samsung’s reactive magnetron 13 sputtering (“RMS”) reactors. See Demaray LLC v. Samsung Elec. Co., Ltd., No. 6:20-cv-00636 14 (W.D. Tex.), ECF No. 1 (the “Texas action”). In that suit, Demaray alleged that the RMS reactors 15 Samsung received from Applied infringed the same patents asserted in the present case––the ’276 16 Patent and the ’657 Patent. Id. ¶ 28. Demaray accused two families of chambers: Cirrus and 17 Avenir. Demaray brought claims under 35 U.S.C. §§ 271(a), (f). For Cirrus chambers, only 18 § 271(f) was at issue. For Avenir, § 271(a) was at issue for a subset of chambers. Although it is 19 not clear based on the parties’ arguments and the record, it appears that § 271(a) was also at issue 20 for the remaining accused Avenir chambers. Applied was not a party to the Texas action. 21 In February 2024, the Texas action proceeded to a five-day jury trial. The jury returned a 22 verdict for Samsung, finding that the accused Cirrus and Avenir chambers do not infringe the 23 Asserted Patents either literally or under the doctrine of equivalents (“DOE”). Jury Verdict Form, 24 ECF No. 526. The verdict form had four infringement sub-questions. The first asked: “For the 25 Cirrus chambers, has Demaray proven by a preponderance of the evidence that Samsung literally 26 infringed the following patent claims? Check ‘Yes’ (for Demaray) or ‘No’ (for Samsung).” Id. at 27 2. The second was the same but specified under the doctrine of equivalents. The third and fourth 1 were in the same form, but “For the Avenir chambers.” Id. at 4. The form also had validity and 2 damages questions. The jury checked “No” for infringement of each claim and did not mark any 3 other questions. Id. at 2–4. 4 B. The Present Action 5 On December 24, 2020, Applied filed a lawsuit in this district seeking a declaratory 6 judgment that Applied’s reactors “do not directly or indirectly infringe any claim” of the Asserted 7 Patents. Complaint, ECF No. 1 ¶¶ 95, 100. Demaray responded by asserting counterclaims 8 against Applied for infringement of the Asserted Patents. Demaray’s Amended Answer and 9 Counterclaims (“Demaray’s Answer and Counterclaims”), ECF No. 174. Demaray’s 10 counterclaims carved out any reactors Applied sold to Samsung. See id. ¶¶ 49, 78 (“for the 11 avoidance of doubt, [Demaray] does not seek to recover, in this litigation, either (a) damages to 12 compensate Demaray for Intel’s and Samsung’s use of the Applied reactors, which damages are at 13 issue in the Texas litigations, or (b) damages to compensate Demaray for Applied’s infringing 14 activities with respect to reactors sold or provided to Intel and Samsung, as Demaray has elected 15 to seek damages instead against Intel and Samsung in the Texas litigations”). 16 II. LEGAL STANDARD 17 Summary judgment on a claim or defense is appropriate “if the movant shows that there is 18 no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of 19 law.” Fed. R. Civ. P. 56(a). To prevail, a party moving for summary judgment must show the 20 absence of a genuine issue of material fact with respect to an essential element of the non-moving 21 party’s claim, or to a defense on which the non-moving party will bear the burden of persuasion at 22 trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this 23 showing, the burden then shifts to the party opposing summary judgment to identify “specific facts 24 showing there is a genuine issue for trial.” Id. The party opposing summary judgment must then 25 present affirmative evidence from which a jury could return a verdict in that party’s favor. 26 Anderson v. Liberty Lobby, 477 U.S. 242, 257 (1986). 27 On summary judgment, the court draws all reasonable factual inferences in favor of the 1 non-movant. Id. at 255. In deciding a motion for summary judgment, “[c]redibility 2 determinations, the weighing of the evidence, and the drawing of legitimate inferences from the 3 facts are jury functions, not those of a judge.” Id. However, conclusory and speculative testimony 4 does not raise genuine issues of fact and is insufficient to defeat summary judgment. See 5 Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). 6 Whether claim or issue preclusion applies is a mixed question of law and fact. Springs v. 7 First National Bank of Cut Bank, 835 F.2d 1293, 1295 (9th Cir. 1988). The Federal Circuit 8 applies “the law of the regional circuit to the general procedural question of whether issue 9 preclusion applies.” Soverain Software LLC v. Victoria’s Secret Direct Brand Mgmt., LLC, 778 10 F.3d 1311, 1314 (Fed. Cir. 2015). “However, for any aspects that may have special or unique 11 application to patent cases, Federal Circuit precedent is applicable.” Aspex Eyewear, Inc. v. Zenni 12 Optical Inc., 713 F.3d 1377, 1380 (Fed. Cir. 2013). That includes “issues of issue preclusion that 13 implicate substantive patent law issues, or issues of issue preclusion that implicate the scope of 14 [the Federal Circuit’s] own previous decisions.” Soverain Software, 778 F.3d at 1314. 15 III. DISCUSSION 16 Applied contends that Demaray is precluded under both claim and issue preclusion from 17 relitigating whether the Accused Chambers infringe the Asserted Patents. Demaray responds that 18 neither form of preclusion applies. The Court addresses both below. 19 A. Claim Preclusion 20 Applied argues claim preclusion applies because Demaray already sued Samsung on 21 “identical claims” in Texas and lost. Applied MSJ 8. In the Ninth Circuit, claim preclusion 22 applies where the prior suit: (1) reached a final judgment on the merits; (2) involved identical 23 parties or privies; and (3) involved the same claim or cause of action. Mpoyo v. Litton Electro- 24 Optical Sys., 430 F.3d 985, 987 (9th Cir. 2005) (quotations omitted). “Whether two claims of 25 infringement constitute the same claim or cause of action is an issue particular to patent law” to 26 which Federal Circuit law applies. Brain Life, LLC v. Elekta Inc., 746 F.3d 1045, 1052 (Fed. Cir. 27 2014). 1 The parties do not dispute that the jury in the Texas action reached a final judgment on the 2 merits. Because the Court finds that privity does not exist, it declines to evaluate whether the 3 Texas action involved the same claim or cause of action for purposes of claim preclusion. 4 See F.T.C. v. Garvey, 383 F.3d 891, 897 (9th Cir. 2004) (“Because we find that privity does not 5 exist, we decline to discuss identity of claims”). 6 In the Ninth Circuit, “privity may exist . . . when there is sufficient commonality of 7 interest” between the parties. Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Plan. Agency, 322 8 F.3d 1064, 1081 (9th Cir. 2003) (internal quotation and citation omitted). That is, privity exists 9 when the interests of the party in the subsequent action were shared with and adequately 10 represented by the party in the former action. See Shaw v. Hahn, 56 F.3d 1128, 1131–32 (9th Cir. 11 1995). 12 Although it was not a party to the Texas action, Applied argues it was in privity with 13 Samsung for claim preclusion purposes based on two grounds: (1) Applied owes indemnity to 14 Samsung pursuant to an indemnification agreement between the parties, and (2) the “whole trial” 15 in the Texas action revolved around Applied’s products. Applied MSJ 11 (citing 16 Samsung/Applied Materials General Terms and Conditions (the “Indemnification Agreement”)). 17 Demaray responds that Applied has not established privity because (1) Applied refused 18 discovery into any indemnification relationship, (2) Applied consistently made arguments that 19 undermine its current position, and (3) the sole supporting document Applied relies on––the 20 Indemnification Agreement––shows only a partial obligation to indemnify limited to claims 21 related to the “Equipment” Samsung purchased from Applied. Demaray MSJ 17–21. 22 For the reasons stated below, Applied has not shown that it is in privity with Samsung such 23 that claim preclusion will apply. 24 1. Indemnification Agreement 25 Applied first argues that the indemnitor-indemnitee relationship is sufficient to find privity 26 between Applied and Samsung. The Indemnification Agreement provides that Applied “agrees to 27 defend, indemnify, and hold [Samsung] harmless against any claims that the Equipments or any 1 products [Samsung] manufactures by using such Equipments infringe upon or violate any patent.” 2 Indemnification Agreement § 15. In addition to the requirement that Applied pay if Samsung lost 3 the Texas action, the Indemnification Agreement also gave Applied “the right to make the defense 4 and settlement of any [] claim.” Id. Indeed, Applied insists it exercised that control in the Texas 5 action because “Samsung deferred to Applied” “regarding litigation strategy.” Applied MSJ 11. 6 The Ninth Circuit in Garvey considered an indemnitor-indemnitee relationship when 7 analyzing privity for preclusion purposes. Garvey involved claims by the FTC for the marketing 8 of a weight loss system sold by Enforma. Id. at 895. Enforma hired Modern Media, a subsidiary 9 of Modern Interactive, to prepare infomercials for the weight loss system, and it hired Steven 10 Patrick Garvey to star in the infomercials. The FTC initially brought claims against Enforma and 11 two of the company’s executives for deceptive acts and misleading advertising in violation of 12 Sections 5(a) and 12 of the Federal Trade Commission Act (“FTCA”), 15 U.S.C. §§ 45(a), 52. 13 The district court entered a stipulated settlement binding Enforma and the company’s CEO, which 14 prohibited certain conduct and required payment to the FTC. Id. at 856. Soon after, the FTC filed 15 a separate complaint against Mr. Garvey, Modern Interactive, and the media company’s 16 executives (together, with Modern Interactive, “the Modern Interactive defendants”) for violating 17 the same sections of the FTCA. The district court granted summary judgment in favor of the 18 Modern Interactive defendants, finding that the prior settlement barred the present claims by res 19 judicata, also known as claim preclusion. 20 On appeal, the Ninth Circuit reversed the res judicata finding because the parties to the first 21 action “were not sufficiently connected” to the parties in the second action “to justify barring the 22 FTC’s claims.” Id. at 898. The Ninth Circuit found there was “no indication that the defendants 23 in the [first] action were acting on behalf of” the defendants in the second action. Id. Relevant to 24 the present case, the Ninth Circuit acknowledged the “complicating factual issue” that the prior 25 defendant, Enforma, had agreed to indemnify the later defendants. The Court noted that “[r]es 26 judicata may bar a claim brought against an indemnitee where the same claim has already been 27 pursued against the indemnitor.” Id. But Garvey explained that the preclusive effect of an 1 indemnitor-indemnitee relationship “only makes sense when the indemnitor is, in the first action, 2 acting in its capacity as indemnitor.” Id. (emphasis in original). Although Enforma was 3 “technically an indemnitor,” there was “no indication that [Enforma] was acting in this role in the 4 first lawsuit.” Id. Rather, Enforma “was being pursued directly for its own actions.” Id. The 5 Ninth Circuit thus concluded that the indemnification agreement did not establish privity for res 6 judicata purposes. It held that “[i]f the indemnitor is sued for its own actions and is not sued as an 7 indemnitor for the acts of another, the rationale favoring preclusion no longer holds.” Id. 8 The present procedural posture is slightly different. Here, the indemnitor (Applied) seeks 9 to invoke claim preclusion based on a ruling in favor of its indemnitee (Samsung). In Garvey, the 10 reverse was true: the indemnitee sought to invoke claim preclusion based on an agreement binding 11 the indemnitor. Despite that difference, the general principle stated in Garvey applies here––the 12 rationale favoring preclusion no longer holds when the indemnitor is sued for its “own actions” 13 and is not sued as an indemnitor for the acts of another. Put another way, an indemnification 14 agreement does not establish privity for preclusion purposes absent facts demonstrating that the 15 indemnitor is acting in its capacity as indemnitor. Id.; see also Josephs ex rel. Est. of Leibrock- 16 Josephs v. Gallatin Cnty., 385 F. App’x 671, 673 (9th Cir. 2010) (“while an indemnitor- 17 indemnitee relationship can provide privity, it only does so when the indemnitor is sued as the 18 indemnitor of the indemnitee in the prior litigation, and not for his own actions”). 19 Thus, Samsung and Applied’s indemnitee-indemnitor relationship would only establish 20 privity and have a preclusive effect if Applied, as indemnitor, was sued in the present case in its 21 capacity as indemnitor to Samsung. The relationship would not establish privity and have no 22 preclusive effect if Applied was sued directly for “its own actions.” To show that Applied was 23 acting in its role as an indemnitor in the Texas action, Applied points to trial testimony confirming 24 that “Applied is actually [partially] indemnifying Samsung,” which means that Applied “is 25 actually paying, or at least partially, for Samsung’s liability” in the Texas action. See Demaray 26 LLC v. Samsung Elec. Co., Ltd., No. 6:20-cv-00636 (W.D. Tex.), Trial Transcript (“Trial Tr.”) at 27 741:22–742:4; see also id. at 743:12–15 (“Q: And you would agree that if Applied has to pay if 1 Samsung loses, then Applied by definition has a stake in this matter, right? A. Yes”). The cited 2 trial testimony simply underscores the undisputed fact that Applied was indemnifying Samsung in 3 the Texas action. It does not inform whether Applied is acting in its capacity as indemnitor of 4 Samsung in the present case. 5 Following Garvey, the Court declines to find that the Indemnification Agreement alone 6 establishes privity between Samsung and Applied for claim preclusion purposes.2 Demaray 7 brought counterclaims against Applied in this case for Applied’s own actions––not for Applied’s 8 actions as an indemnitor for the acts of Samsung. Nor is there any evidence that Applied is acting 9 in this case in its capacity as indemnitor to Samsung. To be sure, under Garvey, Demaray would 10 be precluded from suing based on Applied’s conduct within the scope of the Indemnification 11 Agreement. But Demaray’s counterclaims explicitly carve out any damages to compensate 12 Demaray for (1) Samsung’s use of the Applied reactors, and (2) Applied’s infringing activities 13 with respect to reactors sold or provided to Samsung. Demaray’s Answer and Counterclaims 14 ¶¶ 49, 78. As pled, Demaray’s counterclaims seek relief based on Applied’s own actions, not 15 Applied’s actions as indemnitor. 16 Moreover, Samsung was represented in the Texas action by the same counsel who 17 currently represents Applied. Thus, there is evidence that Samsung knew Demaray was pursuing 18 Applied during the pendency of the Texas action. This supports the conclusion that Samsung was 19 not acting on behalf of Applied (or vice versa) because both parties understood Applied was 20 involved in a separate case pending in the Northern District of California. See Garvey, 383 F.3d at 21 898 (conclusion that first defendant not acting on behalf of second defendant in first lawsuit 22 supported where first defendant “knew that the FTC was pursuing and intended to continue 23 pursuing other defendants”). Given the overlapping counsel and Applied’s prior statements 24
25 2 Applied argues that this case is more akin to SpeedTrack, Inc. v. Off. Depot, Inc., 2014 WL 1813292 (N.D. Cal. May 6, 2014), aff’d, 791 F.3d 1317 (Fed. Cir. 2015). Applied Reply 9. The 26 Court does not find SpeedTrack persuasive because, although post-dating Garvey, it evaluated the indemnitor-indemnitee relationship under Minnesota authority. Id. (“Neither party has presented 27 Ninth Circuit authority on the issue of whether an indemnification agreement is sufficient to meet the ‘privity’ requirement, but defendants do cite one out-of-district case with similar facts.”). 1 emphasizing differences between this case and the Texas action, “applying res judicata here would 2 likely reward gamesmanship by [Applied].” Id. at 900. 3 2. Applied’s Products in the Texas action 4 Separate from the Indemnification Agreement, Applied also argues privity between it and 5 Samsung exists because only Applied’s Cirrus and Avenir chambers were accused of 6 infringement. Applied MSJ 11–12. But Applied’s status as a supplier of the accused products 7 does not establish privity between it and Samsung––the purchaser and user of the accused 8 products. See Transclean Corp. v. Jiffy Lube Int’l, Inc., 474 F.3d 1298, 1306 (Fed. Cir. 2007) (“a 9 manufacturer or seller of a product who is sued for patent infringement typically is not in privity 10 with a party, otherwise unrelated, who does no more than purchase and use the product”). Nor has 11 Applied shown that complete overlap in accused products is sufficient to establish privity. 12 * * * 13 In sum, the Indemnification Agreement does not establish the necessary privity between 14 Samsung and Applied for claim preclusion to apply. Nor has Applied shown that there is 15 otherwise sufficient commonality of interest between it and Samsung. Thus, claim preclusion 16 does not bar Demaray’s claims in this case. 17 B. Issue Preclusion 18 Applied next argues that the issue of whether the Applied Cirrus and Avenir chambers 19 infringe the ’276 and ’657 Patents has already been decided in the Texas action, and Demaray 20 should be precluded from relitigating that “issue” against Applied. 21 Issue preclusion, also known as collateral estoppel, “is designed to bar[] successive 22 litigation of an issue of fact or law actually litigated and resolved in a valid court determination.” 23 Paulo v. Holder, 669 F.3d 911, 918 (9th Cir. 2011) (alteration in original; internal quotation marks 24 omitted). “The party asserting issue preclusion must demonstrate: (1) the issue at stake was 25 identical in both proceedings; (2) the issue was actually litigated and decided in the prior 26 proceedings; (3) there was a full and fair opportunity to litigate the issue; and (4) the issue was 27 necessary to decide the merits.” See Howard v. City of Coos Bay, 871 F.3d 1032, 1041 (9th Cir. 1 2017) (internal quotation marks omitted). 2 The parties do not dispute that Demaray had a full and fair opportunity to litigate the issue. 3 The Court turns to the remaining elements below. 4 1. Whether the Issues in Both Actions Are Identical 5 As stated above, Applied frames the relevant “issue” as follows: whether Applied’s Cirrus 6 and Avenir chambers infringe the Asserted Patents. Applied MSJ 12. In opposing Applied’s 7 request for issue preclusion, Demaray relies heavily on its discussion in the context of claim 8 preclusion. See Demaray MSJ 22; Demaray Reply 13 (“The reasons Demaray explained as to why 9 the claims are not the same between the two cases … therefore show the issues, too, are not the 10 same”). Demaray argues that, although the cases share the same Asserted Patents, the issues are 11 nevertheless not the same in the context of preclusion because of different accused activity, 12 different transactional facts, and different claim constructions. 13 The Federal Circuit applies its own “precedent to questions involving substantive issues of 14 patent law, issues of issue preclusion that implicate substantive patent law issues, or issues of issue 15 preclusion that implicate the scope of [the Federal Circuit’s] own previous decisions.” Wis. 16 Alumni Rsch. Found. v. Apple Inc., 112 F.4th 1364, 1378 (Fed. Cir. 2024) (“WARF”) (quoting 17 Soverain Software, 778 F.3d at 1314). Issue preclusion may apply and bar a second litigation, 18 even where the products are different from the first litigation, under “limited circumstances where 19 it is shown that a close identity exists between the relevant features of the accused device and the 20 device previously determined to be non-infringing such that they are essentially the same.” Id. 21 (quoting ArcelorMittal Atlantique et Lorraine v. AK Steel Corp., 908 F.3d 1267, 1274 (Fed. Cir. 22 2018)). Accused devices are essentially the same where the differences between them are “merely 23 colorable or unrelated to the limitations in the claim of the patent.” Id. (citation omitted). 24 Accused devices. First, Demaray argues that there is “no overlap” in the accused chambers 25 in this case with those in the Texas action because it explicitly carved out in this case all products 26 Applied has sold to Samsung. Demaray MSJ 11. This argument is unpersuasive because Applied 27 has shown that the two sets of chambers are, at a minimum, “essentially the same.” See WARF, 1 112 F.4th at 1379. Demaray does not dispute the two “families” of chambers in both cases were 2 the same, and the fact that there were fewer chambers within the same family at issue does not 3 defeat preclusion. 4 Theories of infringement. Demaray next contends that the issues are not identical to any 5 issues actually litigated because the theories of infringement in both cases are different. 6 According to Demaray, the Texas action focused on whether Samsung’s actions infringed 7 Demaray’s patents under 35 U.S.C. § 271(f), and the current action is focused on whether 8 Applied’s activities infringe the same patents primarily under 35 U.S.C. § 271(a). Demaray 9 argues that it does not need to prove any elements of § 271(f) to prevail in its claims against 10 Applied under § 271(a). Demaray MSJ 12. As in WARF, Demaray’s argument reveals a 11 difference between Demaray’s and Applied’s articulation of “the issue”––namely, “whether the 12 issue is infringement or the separate theories of infringement.” WARF, 112 F.4th at 1381. 13 In WARF, the party opposing issue preclusion argued that literal infringement (the issue in 14 the first lawsuit) and the doctrine of equivalents (the issue in the later lawsuit) were different 15 issues for preclusion purposes because they “have different tests.” Id. at 1381. The Federal 16 Circuit rejected that approach, finding that “different tests” did not necessarily amount to 17 “different issues.” Instead, in resolving the question of whether the issues were the same, WARF 18 followed the Supreme Court’s approach in B&B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 19 138 (2015). Id. at 1381–82 (explaining that B&B Hardware “looked to the statutes, the history, 20 and the Restatement (Second) of Judgments” to determine whether the issues were the same). 21 First, regarding the relevant statutes, the court explained that there is only one statute3 governing 22 patent infringement, 35 U.S.C. § 271, and section 271(a) “covers both literal infringement and the 23 doctrine of equivalents.” Id. (“we are not dealing with two statutes, just one describing liability 24 for all direct infringement”). 25
26 3 The court did observe that “[o]ther sections of § 271 provide the basis for other types of 27 infringement not at issue here, such as induced and contributory infringement.” WARF, 112 F.4th at 1382, n.11 (citing 35 U.S.C. § 271(b)–(c)). 1 Next, turning to the relevant historical context, WARF explained that the Supreme Court 2 has consistently treated infringement, either literal or doctrine of equivalents, as a single issue. Id. 3 (citing Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 608 (1950) and Winans v. 4 Denmead, 56 U.S. 330, 344 (1853)). Finally, the Federal Circuit referred to the Restatement’s 5 guidance in defining the “issue” for purposes of issue preclusion. Id. at 1383. The treatise offers 6 several factors to consider, including whether there is substantial overlap between the evidence or 7 argument, whether the new evidence or argument involves application of the same rule of law, and 8 whether pretrial preparation and discovery relating to the matter presented in the first action 9 reasonably could be expected to have embraced the matter in the second. Evaluating these factors, 10 the court explained that the evidence would be substantially the same between literal infringement 11 and the doctrine of equivalents because “it will always boil down to the patent claim, the accused 12 product (or method), and a comparison of the two.” Id. In sum, the Federal Circuit held that that 13 “literal infringement and the doctrine of equivalents are the same issue for issue-preclusion 14 purposes.” Id. at 1384. 15 The Federal Circuit also considered preclusion in the context of claims under different 16 sections of the patent statute in Inguran, LLC v. ABS Glob., Inc., 72 F.4th 1272 (Fed. Cir. 2023). 17 Inguran held that an inducement infringement claim brought in a later suit was not precluded by a 18 direct infringement claim brought in an earlier suit “because the claims [were] not based on the 19 same transactional facts.” Id. at 1279. In so holding, the court explained that the accused activity 20 and transactional facts differed, including because the evidence needed “to support a claim for 21 direct infringement [] is different from the evidence required to sustain a claim of induced 22 infringement by third parties.” Id. (noting that patentee “would need additional facts to plausibly 23 allege an induced infringement claim”). 24 Here, the relevant two theories of infringement are §§ 271(a) and 271(f).4 Section 271(a) 25 provides that “whoever without authority makes, uses, offers to sell, or sells any patented 26
27 4 The Court addresses Demaray’s claim under § 271(a) as to the subset of Avenir chambers in the Texas action later in this section. 1 invention, within the United States or imports into the United States any patented invention during 2 the term of the patent therefor, infringes the patent.” This is the statutory basis for direct 3 infringement, which covers both literal infringement and the doctrine of equivalents. Section 4 271(f), by contrast, imposes indirect infringement liability for exporting domestically supplied 5 components of a patented invention under certain circumstances. It does not depend on a separate 6 act of direct infringement. See Waymark Corp. v. Porta Sys. Corp., 245 F.3d 1364, 1368 (Fed. 7 Cir. 2001) (“Admittedly, infringement without a completed infringing embodiment is not the norm 8 in patent law, but it is reasonable in the context of 271(f)(2)”). Like WARF, we are dealing with 9 one statute––§ 271. Unlike WARF, we are dealing with two separate sections of the same statute; 10 one that describes liability for direct infringement, and one that describes liability for indirect 11 infringement. See Zoltek Corp. v. United States, 672 F.3d 1309, 1327 (Fed. Cir. 2012) (observing 12 in dicta that §§ 271(b), (c), and (f) involve indirect infringement). 13 The Court is not convinced that, at least under the facts of this case, direct infringement 14 under § 271(a) and indirect infringement under § 271(f) should be treated as the same issue for 15 issue-preclusion purposes under WARF’s three-step framework. First, as noted above, the sections 16 are separate and cover different types of infringement. While “minor variations in the application 17 of what is in essence the same legal standard do not defeat preclusion,” the two sections here do 18 not involve “the same legal standard.” WARF, 112 F.4th at 1381 (quoting B&B Hardware, 575 19 U.S. at 154). Section 271(f) has unique requirements not present in section 271(a), including that 20 the accused infringer “supplies or causes to be supplied” components in a manner “to actively 21 induce the combination” of the components outside the United States (§ 271(f)(1)), or that the 22 accused infringer had knowledge that the component is so made and had intent that the component 23 would be combined outside the United States (§ 271(f)(1)). 24 Second, the Court is unaware of any historical treatment of infringement under §§ 271(a) 25 and 271(f) as a “single issue.” C.f. WARF, 112 F.4th at 1382 (citing precedent treating DOE and 26 literal infringement as a “single issue”). 27 Third, although there is certainly some overlap between the evidence and argument in both 1 cases, the Court finds the overlap is not substantial enough such that the issues should be treated 2 as the same. Unlike literal infringement and DOE infringement theories, where the evidence 3 “must necessarily be substantially the same because the [DOE] is intended to cover unimportant 4 and insubstantial changes and substitutions in the patent which, though adding nothing, would be 5 enough to take the copied matter outside the claim” (WARF, 112 F.4th at 1383 (emphasis in 6 original)), evidence and argument pertaining to §§ 271(a) and 271(f) would differ in meaningful 7 respects. For example, evidence and argument relating to extraterritoriality and exportation, and 8 the extent to which Samsung knew of and controlled these activities were central to finding 9 liability under § 271(f) in the Texas action. No such evidence or argument would be required in 10 the present action pertaining to § 271(a) liability against Applied. 11 Similarly, the transactional facts in the Texas action in large part revolved around 12 Samsung’s activities. There, the issues related to whether Samsung “supplie[d] or cause[d] to be 13 supplied in or from the United States” at least a substantial portion of the components of a 14 patented invention “in such a manner as to actively induce the combination of such components 15 outside of the United States” (§ 271(f)(1)) and whether Samsung had “know[ledge] that such 16 component is so made or adapted and inten[t] that such component will be combined outside of 17 the United States” (§ 271 (f)(2)). Indeed, although Applied now argues that the extent of 18 Demaray’s theories under § 271(f) were cabined to “a couple lines of testimony during a five-day 19 trial” (see Applied Reply 7), Samsung’s counsel argued at trial that “Demaray’s sole infringement 20 theory” was under § 271(f), which related to “Samsung’s entirely foreign use of these chambers.” 21 Trial Tr. at 675:21–676:8. Demaray could not have brought claims against Samsung’s activities in 22 Korea under § 271(a). 23 Although neither case considered preclusion in the specific context of claims under 24 §§ 271(a) and 271(f), the Court’s conclusion is consistent with preclusion principles stated WARF 25 and Inguran.5 Applied argues that Inguran’s preclusion holding should not apply here because the 26
27 5 Applied cites what it argues is “binding case law” which “confirms that the legal theory a plaintiff brings is irrelevant for claim preclusion purposes––as long as their claims arise from the 1 Federal Circuit relied on the fact that the patentee in that case only later learned about the third 2 parties in the second suit. Applied Reply 7. The Court does not read Inguran’s holding so 3 narrowly. While the Federal Circuit did note that the patentee “could not have asserted an 4 inducement claim” during the first lawsuit, the court still concluded that the transactional facts 5 between the two suits differed because the two theories on infringement involved different 6 evidence. Inguran, 72 F.4th at 1279 (“the evidence that [patentee] needs to support a claim for 7 direct infringement by ABS is different from the evidence required to sustain a claim of induced 8 infringement by third parties”); see also Gammino v. Am. Tel. & Tel. Co., No. CV 12-666-LPS, 9 2013 WL 6154569, at *2 (D. Del. Nov. 22, 2013) (finding without explanation that direct 10 infringement claim not barred by claim preclusion where “Plaintiff’s dismissed indirect 11 infringement cause of action arises under 35 U.S.C. § 271(b), while Plaintiff’s remaining direct 12 infringement cause of action arises under a different statute, namely 35 U.S.C. § 271(a)”). 13 Inguran’s holding thus remains persuasive. 14 In sum, the Court concludes that the issue actually litigated in the Texas action was not 15 “identical” to the issue in the present action because of the different subsections of § 271 Demaray 16 relies on in each case. However, this conclusion applies only for the Cirrus chambers, for which it 17 is undisputed that only § 271(f) was at issue in the Texas action.6 Applied argues that Demaray 18 “very clearly went after Samsung’s use of the Avenir chambers in the United States, which 19 necessarily means it made § 271(a) arguments at trial.” Applied Reply 6 (citing trial transcript). 20 For those Avenir chambers where § 271(a) was at issue, Demaray argues that issue preclusion still 21
22 same set of facts in both suits.” Applied Reply 6. The Court does not find the cited cases binding on these facts because all predate WARF and otherwise do not analyze preclusion under the 23 circumstances here. For example, In re PersonalWeb Technologies involved different infringement theories and arguments under 271(a)––it did not consider different infringement 24 theories based on separate sections of the patent statute. In re PersonalWeb Techs. LLC, 961 F.3d 1365, 1376 (Fed. Cir. 2020). 25 6 Demaray points out that Samsung’s infringement for making products using a patented process outside the United States and importing those products under 35 U.S.C. § 271(g) was also at issue 26 in the Texas action. See Demaray MSJ 11, n. 4. Applied does not address this issue. The Court finds that Applied has not established preclusion applies with respect to claims brought under 27 § 271(g) because there are no claims against Applied for making products using a patented process under that section. 1 does not apply to Avenir “because the issues were not the same between the cases,” including 2 “due to the different claim constructions.” Demaray Reply 14, n. 3. Because the Court’s 3 conclusion above as to whether the issues are identical relies on Demaray’s assertion of two 4 separate subsections of the patent statute, the result would not apply to the extent Demaray 5 brought claims against Samsung in the Texas action under § 271(a). Thus, while the Court’s issue 6 preclusion analysis ends here with respect to Demaray’s claims against Samsung based on 7 § 271(f), it does not resolve preclusion with respect to Demaray’s claims against Samsung based 8 on § 271(a). The Court will therefore proceed to evaluate remaining arguments regarding whether 9 Demaray’s infringement claims against Samsung based on § 271(a) in the Texas action are the 10 same as the infringement issues against Applied here. 11 Claim constructions. Demaray argues that issue preclusion does not apply because the 12 issues are not identical for the additional reason that the claim constructions in both cases are 13 different, and Applied now seeks to reverse course and ignore differences in the constructions it 14 intentionally sought. See Demaray MSJ 13–17. Demaray focuses on two terms at issue in both 15 cases: “narrow band-rejection filter” (or “NBRF”) and “pulsed DC power.” Demaray contends 16 that the issue of whether the Accused Chambers here satisfy this Court’s constructions was neither 17 identical nor necessarily resolved by the jury in the Texas action because Samsung argued either a 18 narrowed construction (as to “NBRF”) or an inconsistent construction (as to “pulsed DC power”) 19 with this Court’s constructions. Id. at 14–15. Demaray also emphasizes Applied’s prior 20 statements arguing for different claim constructions in this case. Id. at 16. In response, Applied 21 argues that the claim construction differences are irrelevant because the cases share Asserted 22 Patents, and regardless, the constructions are either identical or at least “essentially” the same for 23 preclusion purposes. Applied Reply 4. 24 In SimpleAir, the Federal Circuit held that “where different patents are asserted in a first 25 and second suit, a judgment in the first suit will trigger claim preclusion only if the scope of the 26 asserted patent claims in the two suits is essentially the same.” SimpleAir, Inc. v. Google LLC, 27 884 F.3d 1160, 1167 (Fed. Cir. 2018). Although the Federal Circuit in SimpleAir evaluated claim 1 preclusion between cases with different patents, this Court sees no reason (and Demaray does not 2 meaningfully argue) why the holding would not apply equally to issue preclusion in a case where 3 the same patents are asserted in both suits––as in this case. Thus, adopting that standard here, the 4 Court finds that the scope of the two terms as construed in both this case and in the Texas action 5 are, at least, “essentially the same.” The “pulsed DC power supply” term was construed in both 6 actions as “supply for providing pulsed power.”7 Claim Construction Order 3, Demaray LLC v. 7 Samsung Electronics Co., Ltd., No. 6:20-cv-636, ECF No. 121 (construing “pulsed DC power 8 supply” as “supply for providing pulsed DC power”); Claim Construction Order, ECF No. 268 at 9 7 (same). And while the “NBRF” term was construed to have its plain and ordinary meaning in 10 the Texas action, Applied has shown that the term’s construction in this case (a “filter that rejects a 11 narrow band of frequencies, including the RF bias power frequency, and passes all other 12 frequencies”) was essentially the same. Demaray argues that the construction of the “NBRF” term 13 in this action “focuses on which frequencies are passed and which are rejected.” Demaray MSJ 14 14. But expert testimony at trial reflects that the focus for that term was essentially the same. See 15 Trial Tr. at 300:23–301:4 (“Q: The narrow band filter is meant to filter out a narrow band of 16 frequencies and then largely pass whatever’s outside of that, right? A: That’s reasonable”); 309:3– 17 9 (when asked whether the NBRF “has to reject a narrow band of frequencies” and “largely pass 18 everything else,” expert replies “I think that’s fair”). The Court does not find persuasive 19 Demaray’s cited district court cases or remaining arguments to the contrary.8 Demaray Reply 6–8; 20 see Arlington Indus., Inc. v. Bridgeport Fittings, Inc., No. 3:01-cv-485, 2009 WL 2973469 (M.D. 21 Pa. Sept. 10, 2009); see also KlausTech LLC v. Google LLC, No. 4:20-cv-4459, 2021 WL 22
23 7 Acknowledging that the constructions for the “pulsed DC power” term are identical, Demaray 24 nevertheless contends that the construction Samsung argued at trial was materially different. Demaray Reply 8. But the relevant inquiry is whether the scope of the claims in the two suits is 25 essentially the same. Here, the courts’ constructions define the scope of the term; not the parties’ arguments at trial. 26 8 Demaray also suggests that the Court should not “reward Applied for Samsung’s violation of black-letter law.” Demaray MSJ 15, n. 5 (referring to Samsung’s “serious and prejudicial error” in 27 arguing claim construction to the jury). Whether Samsung committed error during trial in the Texas action is not before this Court. 1 5414328, at *2 n.4 (N.D. Cal. Mar. 9, 2021). 2 In sum, the Court declines to find that differences in the construction or the parties’ 3 arguments regarding the scope of “narrow band-rejection filter” and “pulsed DC power supply” of 4 the same Asserted Patents require a finding of different issues for issue preclusion as to § 271(a) 5 claims. 6 * * * 7 To recap, on the question of whether the “issue” actually litigated in the Texas action is 8 identical to the “issue” in the present action, the Court finds that Applied has not met its burden to 9 show the issues were identical as to the Cirrus chambers, for which it is undisputed that only 10 § 271(f) was at issue in the Texas action. However, Applied has met its burden to show the issues 11 were identical as to any accused Avenir chambers for which § 271(a) was at issue in the Texas 12 action. For those Avenir chambers subject to § 271(a) in the Texas action, the Court proceeds to 13 assess whether the remaining requirements are met to establish issue preclusion. 14 2. Whether the Issue Was Necessary to Decide the Merits in the Texas Action 15 For issue preclusion to apply, the issue must have been necessary to decide the merits. 16 Howard, 871 F.3d at 1041. Applied argues that “[t]he record is clear that the jury rested its verdict 17 on a finding that Applied’s chambers do not practice Demaray’s patents.” Applied MSJ 16. It 18 argues that a “realistic and rational reading” of the record demonstrates that the jury could have 19 only resolved the Samsung case on the grounds of non-infringement because (1) both sides’ 20 opening and closing statements referred to the dispute over “whether Applied’s Cirrus and Avenir 21 chambers infringe the patents;” (2) the trial featured evidence of Samsung’s use of the Avenir 22 chambers domestically, and so the jury had to rest its verdict on the ground that the Avenir 23 chambers did not practice Demaray’s patents; and (3) the jury notes suggest that the jury 24 necessarily rested its verdict on a finding of non-infringement. See Applied Reply 12–15. 25 Demaray responds that issue preclusion does not apply because the Samsung verdict and 26 resulting judgment may have been based on a finding that Samsung’s acts do not meet the 27 1 requirements of § 271(f), including the “supplies or causes to be supplied” and intent requirements 2 of that subsection. Demaray MSJ 22–23. This argument is now irrelevant because the Court has 3 already found that issue preclusion does not apply to claims brought against the Cirrus chambers 4 under § 271(f) in the Texas action. For the remaining Avenir chambers, logic dictates that the 5 Texas action verdict and resulting judgment as to the Avenir chambers that were subject to both 6 §§ 271(a) and 271(f) claims must have been based on both claims. Specifically, to find that there 7 was no liability, the jury needed to find that there was no liability under § 271(a) and also no 8 liability under § 271(f). If the jury found liability under one section but not the other, the jury 9 needed to check “Yes” for whether Demaray proved infringement. Thus, the record––and 10 common sense––supports finding that the jury in the Texas action necessarily rested its verdict as 11 to the Avenir chambers on a finding of non-infringement under both §§ 271(a) and 271(f). 12 * * * 13 To conclude with issue preclusion, when the jury entered a verdict of noninfringement in 14 the Texas action as to the accused Cirrus chambers, issue preclusion did not bar claims against 15 those chambers in this action because only § 271(f) was at issue for the Cirrus chambers. But 16 when the jury entered a verdict of noninfringement in the Texas action as to the accused Avenir 17 chambers, issue preclusion did bar claims against those chambers in this action because § 271(a) 18 was at issue for the Avenir chambers, and the jury necessarily rested its verdict as to those 19 chambers on a finding of non-infringement under both §§ 271(a) and 271(f). 20 IV. CONCLUSION 21 After a close review of the arguments, the case law, and the record in this case, the Court 22 finds that Applied has not met its burden to prove that claim preclusion bars Demaray’s claims in 23 this case because Applied was not in privity with Samsung. As for issue preclusion, the only 24 claims that are precluded in this case are Demaray’s claims against those Avenir chambers for 25 which Demaray raised a § 271(a) theory of infringement in the Texas action. Otherwise, Applied 26 has not met its burden to show issue preclusion. 27 For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART 1 Applied’s motion and Demaray’s motion as indicated above. 2 3 IT IS SO ORDERED. 4 Dated: December 19, 2024 5 6 EDWARD J. DAVILA 7 United States District Judge 8 9 10 11 a 12
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