e.Digital Corporation v. Futurewei Technologies, Inc., dba Huawei Technologies (USA),
and Pantech Wireless, Inc. ,
Fed. Cir. Case Nos. 2014-2019, 1242, and 1243 (November 19, 2014)

Before the cases at issue in this appeal, e.Digital asserted claims 1 and 19 of the '774 patent in a prior action in Colorado. The '774 patent discloses a device with a microphone and a ‎removable, interchangeable flash memory recording medium that allows for audio recording and ‎playback. Asserted claims 1 and 19 recited "a flash memory module which operates as sole memory of ‎the received processed sound electrical signals" (sole memory limitation). The court construed the ‎sole memory limitation to require "that the device use only flash memory, not RAM or any other ‎memory system" to store the "received processed sound electrical signals." Based on the claim ‎construction, the parties to the prior action stipulated to dismiss the case with prejudice.‎

After dismissal of the Colorado case the PTO cancelled claims 1 and 19 in an ex parte ‎reexamination. It issued reexamined claim 33, which recites the limitations of cancelled claims 1 and ‎‎19, including the identical sole memory limitation, and added additional limitations, such as a ‎microprocessor. ‎

e.Digital then filed the present action in the Southern District of California, asserting ‎reexamined claim 33 and claims 2 and 5 of a '108 patent. Based on the Colorado court's ‎construction, the defendants moved to apply collateral estoppel to the construction of the sole ‎memory limitation in the '774 and '108 patents.‎

The court granted the motions and adopted the Colorado court's construction, reasoning that the '774 patent reexamination never addressed the sole memory limitation, and that the '108 and '774 patents are "closely related." e.Digital and Huawei stipulated to final ‎judgment of non-infringement so e.Digital could appeal the Huawei decision. Apple then moved to ‎convert its judgment to a final judgment, and GoPro, but not Pantech, joined the motion. The court ‎converted all of the partial judgments to final judgments under Fed. R. Civ. P. 54(b). e.Digital appealed ‎these judgments. ‎

Collateral Estoppel

The district court's application of collateral estoppel is reviewed de novo, applying the law of the regional ‎circuit. Collateral estoppel applies if: (1) the issue necessarily decided in the previous proceeding is ‎identical to the one which is sought to be relitigated; (2) the first proceeding ended with a final ‎judgment on the merits; and (3) the party against which collateral estoppel is asserted was a party or in ‎privity with a party at the first proceeding. On appeal, the parties only dispute whether construction of ‎the sole memory limitation presents an identical issue.‎

The panel holds that the district court correctly applied collateral estoppel to the '774 patent because ‎reexamined claim 33 recites the sole memory limitation identical to claims 1 and 19, and because the ‎‎'774 patent reexamination never addressed that limitation or the presence of RAM. The panel noted that it was not saying that reexamination history cannot ever create a new issue that would preclude collateral estoppel, such a scenario does not exist here because the reexamination history in no way ‎modifies, clarifies, or even informs the construction of the sole memory limitation. Because ‎reexamined claim 33 presents the identical claim construction inquiry as decided in the Colorado ‎action, the district court properly applied collateral estoppel to the '774 patent.‎

The '108 patent, on the other hand, presents a separate claim construction issue. The '108 patent is not ‎related to the '774 patent, but does disclose a purported improvement to the '774 patent. While the ‎‎'108 patent may incorporate by reference the '774 patent as prior art, it does not change the fact that ‎the patents are not related. The '108 patent discloses a separate invention, includes a distinct ‎prosecution history, and is supported by a different written description—including Figures 3 and 4,‎ which clearly depict RAM. These distinctions reinforce the well understood notion that claims of ‎unrelated patents must be construed separately so the panel holds that the district court erred in applying ‎collateral estoppel to the '108 patent.‎

The panel notes that its decision that collateral estoppel cannot apply to the construction of a claim in one ‎patent based on a previous claim construction of an unrelated patent is not an invitation to assume the ‎opposite is always justified. That is, a court cannot impose collateral estoppel to bar a claim ‎construction dispute solely because the patents are related. Each case requires a determination that ‎each of the requirements for collateral estoppel are met, including that the issue previously decided is ‎identical to the one sought to be litigated. A continuation-in-part, for instance, may disclose new ‎matter that could materially impact the interpretation of a claim, and therefore require a new claim ‎construction inquiry.‎

Conversion of Partial Judgment to Final Judgment Under Fed. R. Civ. P. 54(b)‎

Finally, the panel holds that the district court did not abuse its discretion in converting Pantech's partial judgment of ‎noninfringement to a final judgment under Fed. R. Civ. P. 54(b). Rule 54(b) provides that a district court ‎‎"may direct entry of a final judgment as to one or more, but fewer than all, claims . . . only if the court ‎expressly determines that there is no just reason for delay." The panel sees no error in the district court's ‎determination that there was no just reason for delay because as the Huawei case was already on ‎appeal, certifying the balance of cases ensured that the collateral estoppel order would be ‎appealed only once. The court therefore did not abuse its discretion when it converted Pantech's ‎judgment to a final one for purposes of appeal.‎

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