United Access Technologies LLC v. CenturyTel Broadband Services LLC et al
MEMORANDUM OPINION re 115 motion for judgment on the pleadings. Signed by Judge Leonard P. Stark on 9/30/16. (ntl)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
UNITED ACCESS TECHNOLOGIES, LLC,
C.A. No. 11-339-LPS
CENTURYTEL BROADBAND SERVICES,
LLC and QWEST CORPORATION,
Stamatios Stamoulis and Richard C. Weinblatt, STAMOULIS & WEINBLATT LLC,
Steven Callahan, Martin Robson, Anthony M. Garza, and C. Luke Nelson, CHARRON
CALLAHAN ROBSON & GARZA, PLLC, Dallas, TX.
Attorneys for Plaintiff.
Richard L. Renck, DUANE MORRIS LLP, Wilmington, DE.
L. Norwood Jameson, Matthew C. Gaudet, Alison H. Hutton, and David C. Dotson, DUANE
MORRIS LLP, Atlanta, GA.
Attorneys for Defendants.
September 30, 2016
On April 15 , 2011, Plaintiff United Access Technologies, LLC ("Plaintiff') filed this
lawsuit against Defendants CenturyTel Broadband Services, LLC and Qwest Corporation
(collectively, "Defendants"), alleging infringement of U.S. Patent Nos. 5,884,596 ("the '596
patent"), 6,234,446 ("the '446 patent"), and 6,542,585 ("the '585 patent"). (D .11) The patentsin-suit relate to industry-standard ADSL. (D.I. 80 at 3-8) Industry-standard ADSL involves
communications between two modems: a modem at a customer's home and a modem belonging
to the telephone company. The modem at the telephone company (called a "DSLAM") can be
located in either a central office (CO-ADSL) or a remote terminal (RT-ADSL).
At the time this litigation was filed, United Access's predecessors-in-interest ("Inline")
had already asserted the '596, '446, and '585 patents in another litigation, Jnline Connection
Corporation v. EarthLink, C.A. No . 1:02-cv-00272-MPT (D. Del) (the "EarthLink case"). In the
EarthLink case, the defendants argued that, based on the Court' s construction of the claim term
"signal interface," CO-ADSL could not infringe the asserted patent. The Court granted summary
judgment with respect to the accused CO-ADSL systems, and the case proceeded only with
respect to EarthLink' s RT-ADSL accused products. Ultimately, a jury found in favor of
Defendants. The Federal Circuit later summarily affirmed this ruling. See United Access Techs. ,
LLC v. EarthLink, Inc. , 432 F. App'x 976, 977 (Fed. Cir. 2011).
Following the jury trial in the EarthLink case, Defendants moved for Judgment on the
Pleadings in this case. Defendants argued that the Summary Judgment ruling in EarthLink
established that Defendants' CO-ADSL products did not infringe Plaintiffs patents, while the
jury verdict established that Defendants ' RT-ADSL products did not infringe. (D.I. 42 at 4-8)
Based on these rulings, Defendants argued, the doctrine of collateral estoppel barred Plaintiffs'
claims. This Court agreed and granted Defendants' Motion for Judgment on the Pleadings. (D.I.
80 ("Collateral Estoppel Order")) The Court then dismissed the case.
Plaintiffs appealed, and the Federal Circuit overturned the Collateral Estoppel Order. The
Federal Circuit explained that collateral estoppel did not apply to the jury verdict, because the
EarthLink jury could have based its finding of non-infringement on either of two alternative
grounds: either a broad finding that RT-ADSL does not infringe the asserted patents in general or
a narrow finding related to the specific products at issue in that case. See United Access Techs.,
LLC v. Centurytel Broadband Servs. LLC, 778 F.3d 1327, 1335 (Fed. Cir. 2015). Because either
ground could have been the basis for the jury's decision, it was impossible to determine whether
the infringement issue presented in this case was "actually decided" in the EarthLink case. Id. at
Now, on remand, Defendants have moved for Judgment on the Pleadings once more.
(D.I. 115) They argue that, based on the summary judgment ruling in the EarthLink case,
collateral estoppel bars Plaintiffs claims that CO-ADSL products infringe the asserted patents.
LEGAL STAND ARDS
A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure
12(c), alleging a failure to state a claim upon which relief can be granted, is analyzed under the
same standard as a Rule 12(b)(6) motion to dismiss. See Turbe v. Gov 't of Virgin Islands, 938
F.2d 427, 428 (3d Cir. 1991). Federal Rule of Civil Procedure 12(b)(6) permits a court to
dismiss all or part of an action for "failure to state a claim upon which relief can be granted." A
motion to dismiss requires a court to accept as true all material allegations of the complaint. See
Spruill v. Gillis, 372 F.3d 218, 223 (3d Cir. 2004). "The issue is not whether a plaintiff will
ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Jn
re Burlington Coat Factory Sec. Litig. , 114 F.3d 1410, 1420 (3d Cir. 1997). Thus, a court may
grant a motion to dismiss only if, after "accepting all well-pleaded allegations in the complaint as
true, and viewing them in the light most favorable to plaintiff, plaintiff is not entitled to relief."
Maio v. Aetna, Inc. , 221 F.3d 472, 482 (3d Cir. 2000).
The Court may consider matters of public record, and authentic documents upon which
the complaint is based if attached to the complaint or as an exhibit to the motion. See Oshiver v.
Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994). The Court may also
take judicial notice of the factual record of a prior proceeding. See Oneida Motor Freight, Inc. v.
United Jersey Bank, 848 F.2d 414, 416 n.3 (3d Cir. 1988). Ultimately, a motion for judgment on
the pleadings can be granted "only if no relief could be afforded under any set of facts that could
be proved." Turbe, 938 F.2d at 428.
Regional law determines the applicability of collateral estoppel in a patent case. See
e.Digital Corp. v. Futurewei Technologies, Inc. , 772 F.3d 723, 726 (Fed. Cir. 2014). In the Third
Circuit, collateral estoppel applies where: "( 1) the previous determination was necessary to the
decision; (2) the identical issue was previously litigated; (3) the issue was actually decided in a
decision that was final, valid, and on the merits ; and (4) the party being precluded from
relitigating the issue was adequately represented in the previous action." Hawksbill Sea Turtle v.
Fed. Emergency Mgmt. Agency, 126 F.3d 461 , 475 (3d Cir. 1997). The parties do not dispute
that United Access was fully represented in the EarthLink case and in the EarthLink appeal.
Although Plaintiff disagrees with Defendants about whether the issue decided in the EarthLink
summary judgment opinion - whether industry-standard CO-AD SL infringes the patents in suit is identical to the issue presented in the pending motion in this case, Plaintiff does not dispute
that the EarthLink parties actually litigated the issue of whether industry-standard CO-AD SL
infringes. Thus, the parties' disputes are whether the ADSL issue in this case is identical to the
ADSL issue in the EarthLink case and, if so, whether this issue was determined by a valid and
final judgment in Earth/ink.
Identical Issue, Actually Litigated
Plaintiff argues that Defendants have not satisfied the identical issue prong of the
collateral estoppel test because "[n]on-infringement is a two-step inquiry [requiring] the Court
[to] (i) construe the claims and (ii) compare the accused products to the claims, properly
construed." (D.I. 120 at 12) Although Plaintiff concedes that there are no material differences
between the patent claims at issue in the two cases, Plaintiff argues that Defendants cannot
establish collateral estoppel applies because Defendants have not shown that their accused
products are identical to those at issue in EarthLink. (Id. at 16)
The Court settled this issue in its previous Collateral Estoppel Order, finding that the two
sets of products are identical, and noting that Plaintiff had waived its opportunity "to identify
meaningful differences between their accused products and those at issue inEarthLink." (D.I. 80
at 5, 9) This conclusion was not reversed or even affected by the Federal Circuit's decision or
mandate. Thus, Defendants have demonstrated that their products are identical to those at issue
Necessary to the Final Judgment
Plaintiff next argues that the partial summary judgment ruling in EarthLink was not
necessary to the Federal Circuit's summary affirmance in that case. This Court' s ruling in the
EarthLink summary judgment proceeding was based on this Court' s construction of the claim
term "signal interface." 1 Based on that claim construction, this Court found that CO-ADSL
could not infringe the asserted claims.
On appeal, the EarthLink defendants argued that the Federal Circuit could affirm this
Court' s judgment of non-infringement for CO-ADSL either based on this Court' s construction of
"signal interface," or for the independent reason that the jury verdict of non-infringement for
RT-ADSL compelled a finding of non-infringement for CO-ADSL. (D.I. 120 at 14) Because the
Federal Circuit summarily affirmed this Court, the panel did not state which of these reasons
served as the basis for its decision. Plaintiff argues, consequently, that Defendants cannot show
that the claim construction rationale articulated by this Court was necessary to the Federal
Circuit' s affirmance. (Id.)
In TecSec, Inc. v. Int'! Bus. Ma chines Corp., 713 F.3d 1336, 1343 (Fed. Cir. 2013), the
Federal Circuit addressed a similar scenario. There, a district court had construed claim terms
and granted summary judgment of non-infringement based on these constructions. Although the
district court described its claim constructions as "strictly necessary" to its decision, the Federal
For simplicity, the Court describes the decisions of Chief Magistrate Judge Mary Pat
Thynge in the EarthLink case as decisions of "the Court" or "this Court."
Circuit found that its judgment was "independently predicated on alternative grounds:" a failure
of proof as to the defendants' intent and the defendants ' customers' acts, as well as a failure to
show that the defendants' software met certain claim limitations, as construed. Id. at 1343-44.
The Federal Circuit found that collateral estoppel could not apply where the lower court had
"determined two issues, either of which could independently support the result," because neither
was "necessary" to the final judgment. Id.
In EarthLink, this Court articulated only one rationale for its finding that CO-ADSL did
not infringe the asserted patents. But on appeal, the EarthLink defendants expressly advocated a
second, independent basis for affirming a finding of non-infringement: that the jury's rationale
for a finding of non-infringement ofRT-ADSL would apply equally to CO-ADSL. (D.I. 121-2 at
Under the circumstances, there is ambiguity as to the basis on which the Federal Circuit
affirmed this Court's judgment, leaving an ambiguity as to whether the basis on which this Court
granted judgment to the EarthLink defendants was "necessary" to that judgment. Since the
Federal Circuit's summary affirmance neither "endorse[d] [n]or reject[ed] . . . the district court' s
specific holdings" regarding claim construction, and because the claim constructions at issue here
are not necessary to one of the rationales for affirmance that the EarthLink defendants introduced
on appeal, it is simply not possible to say that this Court's claim constructions were necessary to
the Federal Circuit' s decision. See TecSec, 731 F.3d at 1344. As a result, collateral estoppel
does not apply to this Court's decision in EarthLink.
Defendants concede that the EarthLink defendants did make this second, independent
argument for affirmance in the EarthLink appeal.
The Court' s conclusion is supported by the Third Circuit's decision in Leyse v. Bank of
Am., Nat. Ass 'n, 538 F. App'x 156, 159 (3d Cir. 2013) ("Leyse If'), in which that Court declined
to apply collateral estoppel where there was "at least some ambiguity" as to which of multiple
alternatives formed basis of appellate court's summary affirmance. 3 In Leyse II, the Third Circuit
considered the estoppel effect of the Second Circuit's earlier summary affirmance of a decision
from the Southern District of New York in Leyse I. See Leyse v. Bank ofAm., Nat. Ass 'n, No. 09
CIV. 7654 (JGK), 2010 WL 2382400 (S.D.N.Y. June 14, 2010) ("Leyse I").
At the district court level, the defendant in Leyse I argued that dismissal of the case was
appropriate for two independent reasons: that the plaintiff lacked standing to sue under the
federal statute at issue in the case and that state law prohibited the plaintiff from bringing a class
action lawsuit under that statute. See Leyse, 2010 WL 2382400, at *2. The district court
dismissed the case solely for lack of standing, declining to decide whether state law also provided
an independent and sufficient ground for dismissing the case. See id. at *6. The plaintiff
appealed the district court's dismissal. The Second Circuit summarily affirmed the district
court's decision to dismiss the case without explicitly stating the reasons for its affirmance. Id. at
In evaluating the estoppel effect of Leyse I, the Third Circuit found in Leyse 11 that
collateral estoppel was "not applicable" because there was "at least some ambiguity as to" which
of the two alternative grounds for dismissal was the basis of the Second Circuit's affirmance of
the district court decision in Leyse I. Id. at 158-60. As such, the Third Circuit found that
At the hearing on this motion, the parties disagreed about the relevance of the Third
Circuit' s non-precedential decision in Leyse, and submitted follow-up letter briefs addressing its
pertinence to the present case. (D .I. 13 3, 134)
collateral estoppel did not bar plaintiff from bringing a new district court case "alleging the same
claims, and based on the same set of facts , as the two prior actions." Id.
The Third Circuit's decision in Leyse II was predicated on a finding that there was "at
least some ambiguity" as to the basis of the Second Circuit' s decision to dismiss the plaintiff's
earlier claims. The same is true here. In this case, as in Leyse II, Defendants allege that the
appellate court's summary affirrnance bars Plaintiff's claims. In this case, as in Leyse II, the
summarily-affirmed district court decision addressed the merits of only one possible ground for
its decision, despite the fact that the record (in Leyse the district court record; in EarthLink the
appellate record, based on the defendants' arguments) discussed alternative grounds. Finally, the
result in this case, as in Leyse II, is that there is "some ambiguity" about which ground for
dismissal was the basis of the appellate court's decision to summarily affirm the district court' s
Admittedly, the precise source of the ambiguity here differs from the source of ambiguity
in Leyse II. And the Court has concerns that Plaintiffs ' view, if pressed too far, would eliminate
Defendants argue that this case is distinct from Leyse II because the record in Leyse II
strongly suggested that one of the two grounds had been the basis of the Second Circuit's
decision. (See D.I. 134 at 2) The Third Circuit noted this evidence, going so far as to say that
the Second Circuit in Leyse I "appears to have relied upon" one ground rather than the other.
Leyse II, 538 Fed. App ' x at 159-60. This information was relevant because, in the Third Circuit,
summary affirrnance based on "independently sufficient alternative" grounds is a basis for
collateral estoppel as to both grounds . See id. at 160. Thus, had the record indicated that both
grounds provided a sufficient basis for dismissal, the summary affirmance would have had issue
preclusive effect in Leyse II. While in this case there is no similar evidence suggesting that the
appellate court based its decision on one argument rather than the other, there is also no evidence
that the Federal Circuit considered both of the presented arguments to be "independently
sufficient alternative grounds" for a finding of non-infringement, each of which would estop
Plaintiff from asserting infringement now. Thus, Defendants ' distinction between the facts of
this case and the facts of Leyse II does not undermine the Court's conclusion that collateral
estoppel does not apply.
all possibility of collateral estoppel effect from cases that terminate with a Rule 36 affirmance an outcome that cannot be correct. See, e.g. , Ho Keung Tse v. Apple Inc. , 635 F. App'x 864, 865
(Fed. Cir. 2015) (giving collateral estoppel effect to district court decision that was summarily
affirmed under Rule 36); Brain Life LLC v. Elecktra Inc., 746 F.3d 1045, 1050 (Fed. Cir. 2014)
(same). However, under the specific circumstances here - where there is "some ambiguity" as to
whether an issue was "necessarily decided" in a prior case, and that ambiguity arises from a
party's express appellate argument for affirmance on alternative, independent grounds that are
supported by the record in the district court case - the Court feels compelled to conclude that
Defendant has failed to show that collateral estoppel applies. See also Leyse II, 538 F. App 'x at
160 (stating that summary affirmance does not have preclusive effect unless basis for affirmance
is clear) (citing Jean Alexander Cosmetics, Inc. v. L 'Oreal USA, Inc., 458 F.3d 244, 255 (3d. Cir.
2006)); De Sollar v. Hanscome, 158 U.S. 216, 221 (1895) ("[I]t is of the essence of estoppel by
judgment that it is certain that the precise fact was determined by the former judgment.").
The Court will deny Defendants ' motion. An appropriate Order follows.
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