Patent Watch: Superior Indus., LLC v. Thor Global Enters. Ltd.

by BakerHostetler

[C]laim preclusion does not arise merely because the plaintiff was aware of independent facts that gave rise to a separate cause of action against the defendant at the time it brought suit. [A prior trademark infringement claim may not bar a] patent infringement claim because the two claims arise from clearly separate transactions. [T]hese separate cases under separate laws do not constitute the same cause of action.

On November 27, 2012, in Superior Indus., LLC v. Thor Global Enters. Ltd., the U.S. Court of Appeals for the Federal Circuit (Rader,* Mayer, Schall) affirmed-in-part, reversed-in-part and remanded the district court's dismissal of Superior's complaint alleging, inter alia, that Thor indirectly infringed U.S. Patents No. 7,284,947, No. 7,470,101, and No. 7,618,231, which related to a portable conveyor assembly. The Federal Circuit stated:

The doctrine of res judicata, more specifically referred to as claim preclusion, bars a party from bringing "repetitive suits involving the same cause of action." Under Eighth Circuit law, claim preclusion "bars relitigation of a claim if: (1) the prior judgment was rendered by a court of competent jurisdiction; (2) the prior judgment was a final judgment on the merits; and (3) the same cause of action and the same parties or their privies were involved in both cases." Superior and Thor do not dispute that the 2009 Trademark Action involved the same parties and resulted in a final judgment on the merits entered by a court of competent jurisdiction. Superior's claim for patent infringement is thus barred by claim preclusion if the 2009 Trademark Action constitutes the "same cause of action."

Two cases involve the same cause of action when they arise from the same "nucleus of operative facts" -- i.e., when the same "transaction or series of transactions" forms the basis for the two suits. The Eighth Circuit determines whether two claims arise from the same set of transactional facts by asking whether the facts "are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage." A claim in a second action may still be precluded even if it involves proof of some facts that were not operative for the prior action. Significant differences in the necessary proof, however, may indicate that the two claims simply are not based on the same nucleus of operative fact. The Eighth Circuit has adopted the approach of the Restatement (Second) of Judgments, which is: to see [the] claim in factual terms and to make it coterminous with the transaction regardless of the number of substantive theories, or variant forms of relief flowing from those theories, that may be available to the plaintiff; regardless of the number of primary rights that may have been invaded; and regardless of the variations in the evidence needed to support the theories or rights. The transaction is the basis of the litigative unit or entity which may not be split. Thus, claim preclusion prevents a plaintiff from suing a second time on a new legal theory based on the same underlying conduct.

Thor and the district court emphasize that Superior "could have brought" its claim for infringement of the '101 Patent at the time it filed the 2009 Trademark Action because the patent had issued by that time. Although cases frequently state that claim preclusion prevents parties "from relitigating issues that were or could have been raised" in a prior action, such statements require some additional context. Claim preclusion only applies to repetitious suits involving the same cause of action. Thus, in discussions of claim preclusion, "the phrase 'claims that were raised or could have been raised,' refers to legal theories arising out of the same transactional nucleus of facts." Thus, claim preclusion does not arise merely because the plaintiff was aware of independent facts that gave rise to a separate cause of action against the defendant at the time it brought suit. . . . Thor has not cited any Eighth Circuit cases that suggest claim preclusion ever applies to bar litigation of a claim that arises from a different transaction or series of transactions than was at issue in a prior litigation between the same parties.

In this case, the 2009 Trademark Action does not preclude Superior's patent infringement claim because the two claims arise from clearly separate transactions. In other words, these separate cases under separate laws do not constitute the same cause of action. The district court erred in finding that "both lawsuits arise from the same nucleus of operative facts-Thor's offering for sale its FB undercarriage technology in the United States." Superior's trademark claims arose from Thor's use of the FB mark in advertising -- not from actual sales or offers for sale of the Thor Undercarriage Technology in the United States. Stated in other terms, Superior's patent infringement claim arises from sales, offers to sell, or importation of goods that allegedly infringe the '101 Patent -- not from the advertising or use of the FB mark at issue in the 2009 Trademark Action.

The district court dismissed Superior's claim for infringement of the '231 Patent under Rule 12(b)(6), finding Superior failed to plead sufficient factual matter to state a claim for relief that is plausible on its face. In a complaint for patent infringement under § 271(a), Form 18 of the Federal Rules of Civil Procedure provides the pleading standard. Form 18 requires "(1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the patent; (3) a statement that defendant has been infringing the patent 'by making, selling, and using [the device] embodying the patent'; (4) a statement that the plaintiff has given the defendant notice of its infringement; and (5) a demand for an injunction and damages." [The complaint] adequately pleads direct infringement of the '101 and '231 Patents. This allegation contains each element of a claim for direct patent infringement. The complaint also alleges induced and contributory infringement of the '101 and '231 Patents. Form 18 does not determine the sufficiency of pleading for claims of indirect infringement. Rather, the pleading requirements set forth in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009) apply to such claims. This court finds Superior's complaint falls far short of pleading facts necessary to state a plausible claim for either induced or contributory infringement. Superior does not allege that the accused products are "especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use" as required by 35 U.S.C. § 271(c). Similarly, Superior does not allege any facts to support a reasonable inference that Thor specifically intended to induce infringement of the '231 Patent or that it knew it had induced acts that constitute infringement. This court therefore affirms the dismissal of Superior's claims of indirect infringement under 35 U.S.C. §§ 271(b) and (c).

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung ( or 202.861.1537) or any member of our Intellectual Property Team.

See information regarding BakerHostetler's Patent Litigation and IP Prosecution and Portfolio Management practices.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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