SURFCAST INC v. MICROSOFT CORPORATION
ORDER DISMISSING CASE By JUDGE JON D. LEVY. (akr)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
ORDER DISMISSING CASE
This patent infringement case was originally filed in October 2012 by SurfCast,
Inc., which alleged that Microsoft Corporation had infringed its patent: United States
Patent No. 6,724,403.
ECF No. 1.
Microsoft counterclaimed against SurfCast,
asserting that the patent was invalid and unenforceable under the doctrines of
inequitable conduct and unclean hands. ECF No. 126. The case was stayed by order
of this court on November 14, 2014 after the United States Patent and Trademark
Office (“PTO”)—as part of its inter partes review process—found that the patent was
unpatentable. See ECF No. 300. SurfCast appealed the PTO decision to the Federal
Circuit Court of Appeals, which affirmed the PTO’s decision and denied SurfCast’s
petition for rehearing en banc.
The parties agree that this case should be dismissed because SurfCast’s patent
has been cancelled. They differ, however, on whether the dismissal should be with or
without prejudice. SurfCast argues that the dismissal should be without prejudice
because the U.S. Supreme Court granted certiorari in June 2017 in a case challenging
the constitutionality of the PTO’s inter partes review process. See Oil States Energy
Services, LLC v. Greene’s Energy Group, LLC, No. 16-712 (cert. granted June 12,
2017). SurfCast suggests that the Supreme Court may find the inter partes review
process unconstitutional and apply its decision retroactively, thereby extinguishing
the PTO’s decision cancelling SurfCast’s patent. SurfCast argues that this case
should be dismissed without prejudice so that it may reassert its infringement claims
if the patent is revived, without having to resort to seeking relief under Federal Rule
of Civil Procedure 60(b). Microsoft argues that the case should be dismissed with
prejudice because the orders of the Federal Circuit and the PTO are final and
SurfCast’s claims in this proceeding are now moot.
SurfCast’s argument rests on the premise that its patent—and, by extension,
its infringement claim—will be revived in the event the Supreme Court holds that
the PTO’s inter partes review process is unconstitutional, and also explicitly holds
that its decision will apply retroactively. I do not, however, have the benefit of
briefing, a complete record, or even a live controversy to aid in my assessment of this
hypothetical scenario. I therefore decline to decide the question of what effect, if any,
the Supreme Court’s decision in Oil States might have as to the enforceability of the
patent at issue here. Because the Federal Circuit issued a final judgment settling
the precise issue at issue in this case between these same parties, I will accord the
judgment preclusive effect and dismiss SurfCast’s claims with prejudice. See AVX
Corp. v. Cabot Corp., 424 F.3d 28, 30 (1st Cir. 2005) (noting that res judicata applies
given final judgment on the merits on sufficiently related claim between the parties).
In addition, Microsoft asserted counterclaims in its answer to the Complaint,
seeking a declaratory judgment that SurfCast’s patent was unenforceable and
invalid, and had not been infringed by Microsoft. The PTO’s decision, which was
affirmed by the Federal Circuit, ruled that SurfCast’s patent was unenforceable and
invalid. Microsoft does not point to any reason for it to continue to pursue its
counterclaims at this juncture. The dismissal with prejudice will therefore apply to
both SurfCast’s claims and Microsoft’s counterclaims.
Accordingly, SurfCast, Inc.’s Amended Complaint (ECF No. 19) and Microsoft
Corporations Counterclaims (ECF No. 126) are DISMISSED, with prejudice.
Dated this 21st day of August 2017
/s/ JON D. LEVY
U.S. DISTRICT JUDGE
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