The opinion of the court was delivered by: SHADUR
Like the mythical Hydra, Dometic Corporation ("Dometic") seeks to grow two figurative heads in place of each one of its heads of legal argument that gets lopped off from time to time in the course of this lawsuit.
It is time to cauterize, and thus to kill permanently, Dometic's most recent attempted renewal--its currently tendered "Renewed Motion To Narrow the Issues Pursuant to Fed.R.Civ.P. 16 Based on Patent Invalidity."
This Court's April 17, 1995 memorandum opinion and order (the "April Opinion") denied without prejudice Dometic's then-pending motion to narrow the issues by rejecting on grounds of invalidity the patent infringement claim brought against Dometic by Zip Dee, Inc. ("Zip Dee")--a proposed narrowing based on Zip Dee's asserted failure to have complied with the on-sale and public-use provisions of the patent statute. Now Dometic wants to renew that motion, seeking to take heart from this Court's holding in its May 19, 1995 memorandum opinion and order (the "May Opinion," 886 F. Supp. 1427).
In the May Opinion this Court dealt with the effect, in terms of claim-preclusion and issue-preclusion considerations, of the prior litigation between Zip Dee and Dometic's predecessor A&E Systems, Inc. ("A&E") (see May Opinion at 1430) on Zip Dee's trademark claims in the current litigation. For the reasons stated there (May Opinion at 1432-35), this Court determined in part that Dometic's post-judgment sales of allegedly infringing products gave rise to a new trademark infringement claim for claim-preclusion purposes.
If that is so, now says Dometic, then the doctrine of claim preclusion also cannot apply to foreclose its ability to advance any defenses that its predecessor did not assert in that same prior litigation between Zip Dee and A&E. And because the proposed on-sale and public-use defenses to Zip Dee's patent infringement claims were not litigated in that earlier lawsuit, Dometic concludes that it is free to press those defenses now.
That line of "analysis" is strongly counterintuitive, so much so that it would seem potentially persuasive only to an audience whose thought processes had been paralyzed from overexposure to the sometimes illogical nature of legal reasoning.
And in this instance well-established legal doctrine squarely supports the intuitive rejection of Dometic's position.
What Dometic does not recognize is that any arguments as to the applicability or effects of claim preclusion vel non are irrelevant, for Dometic's present effort to advance the two defenses in question is barred by issue preclusion. This Court recognizes that May Opinion at 1435 accepted arguendo the litigants' narrow reading of the "issues" concept in the context of the argument that the parties were then addressing,
but Dometic's current effort has caused this Court to examine that issue independently--and to Dometic's total detriment.
Here is the familiar exposition of the issue-preclusion doctrine as expressed in Restatement (Second) of Judgments ("Restatement") § 27 (a section on which, somewhat surprisingly, Dometic attempts to rely in its current motion):
When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.
Where Dometic runs afoul of both law and logic is in its failure to recognize the distinction between an issue, in the sense employed by the Restatement and by preclusion doctrine generally, and the arguments that a party may advance in its effort to prevail on such an issue. In this instance A&E (and hence, in legal contemplation, its successor Dometic) vigorously litigated, and it lost, the issue of the validity or invalidity of Zip Dee's patent--an issue of law within the express scope of Restatement § 27. It is quite true that the arguments that A&E then brought to bear on that issue were (1) the patent claims' asserted lack of novelty and (2) the patent claims' asserted obviousness in view of the prior art,
and that A&E did not then assert (though of course it could have) the on-sale and public-use arguments that Dometic now wants to trot out. But with Dometic's predecessor having once fought and lost the battle on the issue of the validity of Zip Dee's patent, Dometic is now barred by issue preclusion from waging that battle again with fresh troops.
What has just been said is fundamental to the law of judgments. Dometic's attempted invocation of Restatement § 27 did not read far enough into that section, for the illustrations to which it points are quite beside the mark--instead cmt. c to that section provides far more relevant teaching.
The objective of the doctrine of issue preclusion (also known as collateral estoppel) is judicial finality; it fulfills "the purpose for which civil courts have been established, the conclusive resolution of disputes within their jurisdictions." Kremer v. Chemical Constr. Corp., 456 U.S. 461, 467 n. 6, 102 S. Ct. 1883, 1890 n. 6, 72 L. Ed. 2d 262 (1982). The Supreme Court had defined issue preclusion to mean that "once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case." Allen v. McCurry 449 U.S. 90, 94, 101 S. Ct. 411, 414, 66 L. Ed. 2d 308 (1980).
The standards for establishing the preclusive effect of a prior holding are: First, the same issue now being raised must have been contested by the parties and submitted for judicial determination in the prior case. Second, the issue must have been actually and necessarily determined by a court of competent jurisdiction in that prior case. See McLaughlin v. Bradlee, 256 U.S. App. D.C. 119, 803 F.2d 1197, 1201 (D.C.Cir. 1986); RESTATEMENT (SECOND) OF JUDGMENTS § 27 (1982) ("when an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties"). Third, preclusion in the second case must not work a basic unfairness to the party bound by the first determination. An example of such unfairness would be when the losing party clearly lacked an incentive to litigate the point in the first trial, but the stakes of the second trial are of a vastly greater magnitude. See Otherson v. Department of Justice, 228 U.S. App. D.C. 481, 711 F.2d 267, 273 (D.C.Cir. 1983); see also Parklane Hosiery Co. v. Shore, 439 U.S. 322, 330, 99 S. Ct. 645, 651, 58 L. Ed. 2d 552 (1979) (unfairness concern is heightened when plaintiff seeks ...