Federal Circuit Vacates District Court Invalidity Judgment Based on Judicial Estoppel

“The Federal Circuit said that, ‘even though judicial estoppel can occur in an administrative tribunal,’ a § 256 petition, without more, does not count as a ‘persuasion’ of a ‘court’ for judicial-estoppel purposes.”

Federal CircuitOn August 28, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed the U.S. District Court for the District of Massachusetts’ claim construction in Egenera, Inc. v. Cisco Systems, Inc., but vacated the court’s invalidity judgment based on judicial estoppel and remanded for further proceedings.

Egenera, Inc. (Egenera) owned U.S. Patent No. 7,231,430 (the ’430 patent), which was based on a provisional patent application filed in 2001 and was directed to a platform for automatically deploying a scalable and reconfigurable virtual network. In 2016, Egenera filed suit against Cisco in the district court for infringement of the ’430 patent. Cisco then filed an inter partes review (IPR) Petition with the United States Patent and Trademark Office’s (USPTO) Patent Trial and Appeal Board (PTAB) challenging the validity of the asserted claims.

Egenera petitioned the USPTO to remove an inventor, Peter Schulter, from the ’430 patent after reviewing Cisco’s IPR petition, asserting that “it realized that all claim limitations had been conceived before … Schulter… started working there.” The USPTO granted the petition and removed Schulter’s name.

The construction of “logic to modify” was at issue in the claim context of “at least one control node including logic to modify received messages to transmit said modified messages to the external communication network.” Although Cisco did not argue that “logic” should be interpreted as means-plus-function in the IPR or its invalidity contentions, it asserted a means-plus-function construction before the district court. The district court construed the patent’s “logic” terms as means-plus-function elements, concluding that “the structure in the specification corresponding to the claimed function of the ‘logic to modify’ was the so-called tripartite structure—the combination of a virtual LAN proxy, a physical LAN driver, and a virtual LAN server.”

Cisco filed an amended answer in the district court asserting invalidity based on pre–America Invents Act (AIA) Section 102(f). In particular, Cisco argued that Schulter invented the tripartite structure and should have been listed as an inventor. The district court denied a motion by Cisco for summary judgment based on invalidity due to improper inventorship. The district court also rejected Egenera’s argument inventorship could be corrected under 35 U.S.C. § 256(b) and reasoned that judicial estoppel precluded Egenera from “resurrecting” Schulter’s inventorship.

Following a three-day bench trial on inventorship, the district court found that Schulter was an inventor and “then reiterated that Egenera was judicially estopped from invoking Section 256 to restore Mr. Schulter’s name, thereby holding the ’430 patent invalid.”  Egenera appealed to the CAFC.

Claim Construction

Initially, the CAFC considered the “logic to modify” limitation at issue, which the district court construed as a means-plus-function element. The CAFC noted that there is a rebuttable presumption against means-plus-function claim interpretation. Quoting Watts v. XL Sys., Inc., the CAFC explained that a party challenging a means-plus-function interpretation must demonstrate that a claim term either failed to “recite sufficiently definite structure” or recited “function without reciting sufficient structure for performing that function.” Citing Williamson v. Citrix Online, LLC, the CAFC further explained that if “the presumption against means-plus-function interpretation is overcome, [the court] must ‘identify the claimed function’ and then ‘determine what structure, if any, disclosed in the specification corresponds to the claimed function.’”

Although Egenera argued that the district court erred in construing “logic to modify” as a means-plus-function limitation, the CAFC agreed with Cisco that “logic”, as used in the claims, means only a “general category of whatever may perform” the function. Citing Williamson, the CAFC explained that the “question is not whether a claim term recites any structure but whether it recites sufficient structure—a claim term is subject to Section 112(f) if it recites ‘function without reciting sufficient structure for performing that function.’” The CAFC further explained that the mere “inclusion of a limitation within a structure does not automatically render the limitation itself sufficiently structural” and the claims and specification of the ‘430 patent do not provide any structural limitation to the “inputs, outputs, connections, and operation” of the claimed “logic to modify.” Thus, the CAFC concluded that Cisco overcame the presumption against applying Section 112(f). The CAFC also rejected Egenera’s attempt to seek a much narrower construction on appeal and affirmed the district court’s claim construction order.

Judicial Estoppel

The CAFC next considered Egenera’s argument that the district court erred in applying judicial estoppel, which resulted in Egenera’s inability to correct inventorship and led to the invalidation of the ‘430 patent. Rejecting Cisco’s argument, the CAFC stated “[w]e hold that the AIA did not narrow the meaning of “error” and “§ 256 does not exclude ‘considered acts,’ or even ‘deceptive intention,’ from the meaning of ‘error’, but rather “error” is simply an incorrect listing of inventors.

Applying First Circuit precedent, the CAFC considered the New Hampshire factors for judicial estoppel, namely:

(1) whether a party’s earlier and later positions are “clearly inconsistent”—that is, “mutually exclusive”; (2) whether the party “succeeded in persuading   a   court   to   accept”  the  earlier  position; and (3) whether the party would “derive an unfair advantage or impose an unfair detriment” on the other side if not estopped.

With respect to the first consideration, the CAFC noted that Egenera did not advance any “clearly inconsistent” positions that were “mutually exclusive” and “directly inconsistent.” Second, the CAFC noted that Egenera did not succeed in persuading a court or court-like tribunal to accept its first position. The CAFC said that, “even though judicial estoppel can occur in an administrative tribunal,” a § 256 petition, without more, does not count as a “persuasion” of a “court” for judicial-estoppel purposes. With respect to the third consideration, the CAFC explained that “Egenera would gain no unfair advantage, and Cisco would suffer no unfair prejudice, if judicial estoppel were not applied.”  The CAFC concluded that the “district court legally erred as to each New Hampshire factor [and] the district court abused its discretion by applying judicial estoppel.”  Thus, the CAFC affirmed the district court’s claim construction but vacated the district court’s invalidity judgment and remanded for further proceedings.


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