Rule 36, Collateral Estoppel and Unequal Treatment at the Federal Circuit

Clearly, the Federal Circuit does not provide the same level of consideration to Rule 36 decisions that they do with respect to cases where full opinions are issued. The fact that they say otherwise does not make it true.

On Monday, April 17, 2017, the United States Court of Appeals for the Federal Circuit took another step down the very slippery Rule 36 path. A Rule 36 summary affirmance is one where the Federal Circuit, without a formal opinion, simply affirms the lower tribunal (whether district court of Patent Office) with a one-word sentence: “Affirmed.” In Phil-Insul Corp. v. Airlite Plastics Co., the Federal Circuit ruled that these one-word decisions carry collateral estoppel effect. In other words, if you lose your patent claims in a district court or PTAB proceeding, and the Federal Circuit affirms with a Rule 36 decision, those claims are gone forever. See also CAFC says Rule 36 has Preclusive Effect.

Phil-Insul Corp. dba IntegraSpec is the assignee of record of U.S. Patent No. 5,428,933, which originally issued on July 4, 1995. In February 2011, IntegraSpec filed suit against multiple defendants—including Reward Wall Systems, Inc. (“Reward Wall”) and Nudura Corporation (“Nudura”)— alleging infringement of the ’933 Patent. Ultimately, IntegraSpec would lose at the district court.

IntegraSpec appealed the district court’s final judgment to the Federal Circuit, challenging only the court’s construction of the terms “adjacent” and “dimension.” Interesting, although not particularly relevant, IntegraSpec did not challenge any of the issues surrounding the district court’s noninfringement decisions. The Federal Circuit heard oral arguments on October 7, 2014, and summarily affirmed the district court’s judgment pursuant to Federal Circuit Rule 36. Phil-Insul Corp. v. Reward Wall Sys., Inc., 580 F. App’x 907 (Fed. Cir. 2014).

In the case decided last week, IntegraSpec filed its complaint against Airlite in May 2012, while the Reward Wall action was pending. In this case IntegraSpec accused two separate lines of Airlite products of infringement. After the Federal Circuit issued its decision in Reward Wall, IntegraSpec moved for claim construction. IntegraSpec asked the district court to construe the terms “adjacent” and “substantially the same dimension.” Airlite opposed that motion on collateral estoppel grounds.


Airlite subsequently moved for summary judgment of noninfringement based on collateral estoppel. Airlite argued that IntegraSpec’s infringement claims are the same as the infringement claims it asserted and lost in Reward Wall and that Airlite’s accused products have the same design as the products found noninfringing in that prior litigation. According to Airlite, because the Federal Circuit previously affirmed the claim construction of the “adjacent” and “dimension” limitations, those constructions are binding on IntegraSpec for collateral estoppel purposes.

Not surprisingly, IntegraSpec disagreed. IntegraSpec argued that: (1) it did not have a full and fair opportunity to litigate the issues in Reward Wall because it now alleges infringement of Claim 2, rather than Claim 1; (2) the district court’s claim construction in Reward Wall was incorrect; and (3) “the defense of collateral estoppel is not available in this case because the claim construction was not essential to the court’s noninfringement rulings.”

The district court found that all of the elements for collateral estoppel were satisfied for both the claim construction and noninfringement issues presented. Specifically, the court found that IntegraSpec had a “full and fair opportunity to litigate” the claim constructions in Reward Wall and that the court’s construction of those terms resulted in a finding of noninfringement. The district court further found that: (1) the infringement issues in this case are “essentially indistinguishable” from those in Reward Wall; and (2) the accused Airlite products have the same design as the products found noninfringing in Reward Wall.

IntegraSpec’s primary argument on appeal was that a Rule 36 judgment can never serve as a basis for collateral estoppel. That seems to be a perfectly correct and reasonably position to take, but the Federal Circuit disagreed.

Despite the obvious error of the statement, the Federal Circuit again ruled, as they have explained on previous occasions, “judgments entered under Rule 36 review the full consider of the court, and are no less carefully decided than the case in which we issue full opinions.”

IntegraSpec was denied the opportunity to make its case here because of collateral estoppel based on the reasoning that they already had a full and fair opportunity to litigate the dispute. What exactly does “full and fair” mean? Figuring out what the means in the context of Rule 36 disposals is complicated. We do know, however, what “full and fair” cannot mean. The term “full and fair” cannot mean “equal.” While the Federal Circuit continues to want to say that cases decided using the Rule 36 summary mechanism are “no less carefully decided,” the fact is that litigants in Rule 36 cases receive less consideration by the Court; this truth is factually indisputable. It takes a certain amount of time to decide the answers to the questions presented, but it also takes a certain amount of time to explain those answers in a written decision. To think the act of writing the decision is purely ministerial and makes no difference strikes me as pure nonsense.

When you don’t have to show your work how can you or anyone else really be sure that the decision is fair, done after a full consideration of the issues presented and arguments made, and without making a mistake? Let’s face it, judges and their clerks are human too, and mistakes happen. How many unidentifiable mistakes happen in these Rule 36 summary disposals? If you go by the Federal Circuit batting average at the Supreme Court the percentage of reversible errors that cannot be detected within the pool of Rule 36 disposals would be astonishingly high.

Clearly, the Federal Circuit does not provide the same level of consideration to Rule 36 decisions that they do with respect to cases where full opinions are issued. The fact that they say otherwise does not make it true. Indeed, it would be utterly shocking if the Federal Circuit, or anyone for that matter, could give the same, thorough consideration to a determination where there is no effort to justify or explain the decision in writing. Indeed, everyone who has ever written anything of any consequence has to universally know that the act of writing an analysis makes the analysis better, tighter and more complete. Furthermore, it is certainly not out of the ordinary for the act of writing an analysis that will be memorialized for all time to lead to greater insight, and perhaps even a change in opinion. In fact, we know that judges can and do change their minds (and their votes) when confronted with thoughtful written analysis.

It is simply nonsensical for the Federal Circuit to say that cases dismissed with a Rule 36 flick are receiving the same level of careful consideration, let alone what would amount to full and fair consideration under the notions of substantial fair play and justice that are supposed to be the norms of the American justice system. Frankly, the Federal Circuit is only fooling itself if they believe this drivel. It is disingenuous to say that litigants receive the same thoughtful consideration by the Federal Circuit when there is no opinion as litigants do when there is a written opinion.

Still, even if you are inclined to believe what the Federal Circuit wrote, the reasoning of the Court in this opinion is wanting in terms of rigor and consistency. The Federal Circuit explains that the Supreme Court has acknowledged that Rule 36 decisions are valid and final judgments, but then they go on to explain that a Rule 36 decision does not endorse or reject any specific part of the lower tribunals reasoning. Instead, in the words of the Federal Circuit, “a Rule 36 judgment simply confirms that the trial court entered the correct judgment.” But by the express terms of Rule 36 it can only be used when “an opinion would have no precedential value.” Still, the Federal Circuit concludes that Rule 36 decisions support “claim preclusion, issue preclusion, judicial estoppel, law of the case and the like.” Talk about trying to have it both ways!

What goes unanswered, however, is how a non-precedential decision that does not endorse any specific part of the prior ruling can support any kind of preclusion or estoppel. That question goes unanswered, no doubt, because there is no logically – or legally – acceptable answer.

The Federal Circuit is creating a bizarre jurisprudential scheme whereby patent owners who lose patent claims might actually be better off not appealing to the Federal Circuit. It is well-established law that a decision from a federal district court in the First Circuit would not have any binding effect on a federal district court from the Ninth Circuit, for example. But if you go up to the Federal Circuit and the Federal Circuit decides to simply pull out the Rule 36 rubber stamp, which they do in over 50% of all cases, then suddenly that district court ruling from the First Circuit would have binding effect on all federal district courts all over the country. Worse, neither the litigants or the public gain the benefit of knowing what, if anything, the Federal Circuit specifically agreed with since we know that a Rule 36 judgment does not endorse any specific aspect of the prior ruling.

To call this situation bizarre doesn’t begin to scratch the surface. It is idiotic really, that patent owners who lose in one federal district court would be better off not appealing to the Federal Circuit. By not appealing to the Federal Circuit the patent owner effectively gets another bite at the apple in another district court without any preclusive effect whatsoever. I suppose that is good for the Federal Circuit’s docket, and perhaps the message they are trying to send – STOP appealing!


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Join the Discussion

7 comments so far.

  • [Avatar for Night Writer]
    Night Writer
    April 27, 2017 01:41 pm

    @6 Paul Adams: thanks for sharing this.

  • [Avatar for Paul Adams]
    Paul Adams
    April 26, 2017 11:57 pm

    I am Paul Adams, counsel for Integraspec. Regarding the comment by Judge O’Malley that a R36 gets the same consideration as in a full opinion case, in the earlier Reward appeal after Judges Taranto and Dyk trashed the arguments of opposing counsel (listen to the hearing), the next morning they issued the Rule 36 affirmance. I suppose they stayed up all night giving the case the “full consideration”.
    After practicing for 51 years, starting in the Ninth Circuit that never saw a valid patent, elated when they formed the Federal Circuit, and then finding that after some initial fine judges (and there still are some) the political appointments such as the Chief Judge is perfectly ridiculous.

    This was as meritorious an invention as I have seen in a long time and I have apologized to my client for the loss.

    Time to retire.

  • [Avatar for BP1]
    April 26, 2017 02:55 am

    Thanks Gene, The litigator Adams has decades of experience and also lost under the Kessler Doctrine in Brain Life, LLC v. Elekta Inc. (2014). District Court judges beat up patentees to streamline cases, limiting them to as few patents and as few claims as possible. The Fed Cir streamlines via Rule 36 decisions, which now support “claim preclusion, issue preclusion, judicial estoppel, law of the case and the like.” How can that be correct? Good luck petitioning for cert on a Rule 36 decision. The Kessler Doctrine protects defendants that win on appeal and Rule 36 screws patentees that lose at the District Court.

  • [Avatar for Night Writer]
    Night Writer
    April 25, 2017 08:09 pm

    @1 I think eliminate the CAFC too. I think the reason is, though, that if the other circuits decide the patent cases, Google cannot select all the judges. There is too much going on and too many other interests involved. At the CAFC, Google can buy the court (and has.) I definitely agree that the CAFC should be dissolved. The judges could be put to better use, e.g., manual labor.

  • [Avatar for Night Writer]
    Night Writer
    April 25, 2017 08:05 pm

    A lot of the CAFC judges treat patent claims like a nuisance. Not surprising given that Google selected most of them.

  • [Avatar for Anon]
    April 25, 2017 02:39 pm

    Whenever I think of the current practices of the Court of Appeals Federal Circuit, I am reminded of the psychological thought experiment of simians in a cage.

    Place a group of simians in a cage.
    The cage has a stepladder in the middle of the cage, directly under a hanging bunch of bananas.

    Whenever the simians (following their natural desires) attempt to climb up the ladder to retrieve the bananas, a firehose is unleashed on ALL of the simians in the cage.

    They quickly learn that they don’t want any of their group climbing that ladder.

    Exchange a new simian into the group, removing one of the former group.

    Invariably, the new simian, lacking the firehose experience, attempts to use the step ladder to climb to the bananas.

    The firehose is once again used on the entire group of simians, and (understandably the new simian learns quickly – helped along with a pounding from his fellow simians.

    Replace another simian with a new simian, removing one older simian.

    Now, the simians do not even wait for the firehose to pounce on the new simian approaching the stepladder, but pounce on him quickly.

    Replace yet simian.

    Same result, sans firehose.

    Keep on replacing simians.

    There will come a time when ALL the simians in the cage have never directly felt the effects of a firehose, and yet, they will invariably pounce on any (new) simian coming into the cage and stepping up on the stepladder.

    With that in mind, take a look at the CAFC, and the repeated firehosing of the Supreme Court blasting anything that appears to be patent friendly.

    We need not only a new and ‘untrained’ bunch of simians, but we also need to permanently remove the firehose.

  • [Avatar for CW5]
    April 25, 2017 12:44 pm

    The Federal Circuit has strayed far from its originally intended purpose. Today, many of the judges do not have any particular expertise in patent law.

    Perhaps the great experiment with the Federal Circuit has failed, and we should go back to having the regional circuits decide patent appeals. At least under that system we would avoid the cloistered “group think” we seem to be getting from the Federal Circuit.