Preclusive Effect of Unselected Patent Claims Not Resolved in Katz Decision

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The U.S. Court of Appeals for the Federal Circuit has affirmed a district court’s decision requiring a patentee to limit the number of patent claims that could be addressed in litigation. The Federal Circuit also affirmed the district court’s refusal to sever and stay the case as to the unselected claims, rejecting the patentee’s argument that entering final judgment on the unselected claims violated due process. In re Katz Interactive Call Processing Patent Litig., Nos. 2009-1450, -1451, -1452, -1468, -1469, 2010-1017, Slip Op. at 10-15 (Fed. Cir. Feb. 18, 2011).

In the wake of ever-increasing numbers of patent claims,1 this decision clarifies and supports a district court’s inherent authority to ensure efficient adjudication of large numbers of patent claims. But in so doing, the Federal Circuit left unresolved the far more uncertain question: What is the preclusive effect of the final judgment on the unadjudicated claims in later actions? This question remains an open issue when a court orders a party to limit claims as opposed to cases where the parties reach an agreement deciding the fate of the unasserted claims.

The underlying litigation in this appeal consolidated 25 separate actions, in which the plaintiff, Ronald A. Katz Technology Licensing LP (Katz), asserted 1,975 claims from 31 patents against various defendant groups. Id. at 6. On appeal, Katz asserted 14 of those patents. Id. at 4.

Several defendants asked the district court to limit the number of asserted claims, with one group proposing that Katz initially select 40 claims per action, narrowing the number to 20 per action after discovery. Id. at 7. Although “Katz did not question the need to limit the number of claims in order to make the case manageable,” Katz counter-proposed that it initially select 50 claims for each defendant group, narrowing the number to 20 claims for each defendant group after discovery. Id. The district court reached a compromise, ordering Katz to select no more than 40 claims for each defendant group for discovery, narrowing the number to 16 claims for each defendant group after discovery, provided that the total number of claims to be asserted against all defendants did not exceed 64 claims. Id.

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