Quest Integrity USA, LLC v. A.Hak Industrial Services US, LLC

Filing 230

(VACATED per #246 Order) ORDER denying as moot A.Hak's #215 Motion to Compel; granting A.Hak's #226 Motion for Summary Judgment; parties to submit JSR within 7 days signed by Judge Richard A Jones.(RS) Modified docket text on 5/10/2019 (SWT).

HONORABLE RICHARD A. JONES

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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QUEST INTEGRITY USA, LLC,

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Plaintiff,
Case No. C14-1971-RAJ
v.
ORDER
A.HAK INDUSTRIAL SERVICES US,
LLC,
Defendant.

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I.

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This matter comes before the Court on Defendant A.Hak Industrial Services US,
LLC’s (“A.Hak”) Motion for Summary Judgment Based on Collateral Estoppel (Dkt. #
226) and Motion to Compel (Dkt. # 215). Having considered the submissions of the
parties, the relevant portions of the record, and the applicable law, the Court finds that
oral argument is unnecessary. For the reasons that follow, the Court GRANTS A.Hak’s
Motion for Summary Judgment (Dkt. # 226) and DENIES as moot A.Hak’s Motion to
Compel (Dkt. # 215).
II. BACKGROUND

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INTRODUCTION

Quest owns U.S. Pat. No. 7,542,874 (the “‘874 Patent”), entitled “2D and 3D
Display System and Method for Furnace tube Inspection.” Dkt. # 227-1 at 2-23 (Phillips
Decl. Ex. A). As noted in the Court’s previous order, Dkt. # 81, Quest provides
inspection services for oil refinery “furnace tubes,” which are serpentine tubes that wrap

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around a refinery furnace. Furnace tubes contain petroleum products heated to high
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ORDER – 1

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temperatures during the refining process. Refineries must periodically clean furnace
tubes, and inspect them after cleaning. Quest (like others in the industry) uses “pigs,”
which are devices that travel along the inside of furnace tubes, to inspect the tubes. The
‘874 Patent covers methods of displaying the data compiled from furnace pigs in a way
that allows technicians to identify the location of defects or other problems in the furnace
tubes.
On December 15, 2014, Quest filed a lawsuit in the U.S. District Court for the
District of Delaware against A.Hak and two other entities, Clean Harbors Industrial
Services, Inc. (“Clean Harbors”) and Cokebusters USA, Inc. (“Cokebusters”)
(collectively, the “Delaware Defendants”). Quest Integrity USA, LLC v. A.Hak Industrial
Services US, LLC, et al., Nos. C14-1481-SLR, C14-1482-SLR, C14-1483-SLR, Dkt. # 1
(D. Del. Dec. 15, 2014). Quest alleged that these entities had infringed the ‘874 Patent.
Shortly thereafter, Quest voluntarily dismissed its lawsuit against A.Hak. Id., No. C141481-SLR, Dkt. # 24. According to Quest, it withdrew the action after learning that
A.Hak planned to contest jurisdiction. Dkt. # 228 at 3. On December 29, 2014, Quest
refiled its action against A.Hak in this Court. Dkt. # 1. In response to Quest’s claim of
patent infringement, A.Hak and the Delaware Defendants asserted that the ‘874 Patent is
invalid.
On June 28, 2016, the Honorable Sue L. Robinson of the United States District
Court for the District of Delaware issued an order setting forth the court’s findings on
claim construction. See Quest Integrity USA, LLC v. Clean Harbors Indus. Servs., Inc.,
No. 14-1482-SLR, 2016 WL 3548145, at *1 (D. Del. June 28, 2016).
The following year, Judge Robinson issued two decisions, which together
invalidated claims 1, 11-13, 24-25, 27-28, 30, 33, 37, and 40 of the ‘874 Patent and
granted summary judgment in the Delaware Defendants’ favor. See Quest Integrity USA,
LLC v. Clean Harbors Indus. Servs., Inc., --- F. Supp. 3d ---, No. C14-1482-SLR, C141483-SLR, 2017 WL 1155381 (D. Del. Mar. 28, 2017); Quest Integrity USA, LLC v.
ORDER – 2

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Clean Harbors Indus. Servs., Inc., No. C14-1482-SLR, C14-1483-SLR, 2017 WL
1365227, at *1 (D. Del. Apr. 7, 2017). Judge Robinson invalidated the claims under the
doctrine of anticipation. 1 As set forth in her March 28 order, Judge Robinson found that
Quest had engaged in two commercial transactions with Orion Norco Refining (“Norco”)
that anticipated the patent claims such that the invention asserted by Quest is not novel.
Quest Integrity USA, LLC, 2017 WL 1155381 at *7-9.
Now, A.Hak moves for summary judgment on the grounds that Quest’s action in
this Court is collaterally estopped by Judge Robinson’s findings of invalidity. Dkt. #
226. Quest opposes the motion. Dkt. # 228.
III. LEGAL STANDARD

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Summary judgment is appropriate if there is no genuine dispute as to any material
fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a). The moving party bears the initial burden of demonstrating the absence of a
genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). On
an issue where the nonmoving party will bear the burden of proof at trial, the moving
party can prevail by pointing out to the district court that there is an absence of evidence
to support the non-moving party’s case. Id. at 325. If the moving party meets the initial
burden, the opposing party must set forth specific facts showing that there is a genuine
issue of fact for trial in order to defeat the motion. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 250 (1986). The court must view the evidence in the light most favorable to
the nonmoving party and draw all reasonable inferences in that party’s favor. Reeves v.
Sanderson Plumbing Prods., 530 U.S. 133, 150-51 (2000).

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Anticipation is a tenet of patent law whereby a claimed invention may be declared
invalid under 35 U.S.C. § 102 because “the same invention, including each element and
limitation of the claims, was known or used by others before it was invented by the patentee.”
Hoover Grp., Inc. v. Custom Metalcraft, Inc., 66 F.3d 299, 302 (Fed. Cir. 1995).

ORDER – 3

IV. DISCUSSION

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A.

Judicial Notice

As an initial matter, the Court takes judicial notice of the decisions issued by
Judge Robinson in the District of Delaware. Under Federal Rule of Evidence 201, the
Court make take judicial notice of any fact “not subject to reasonable dispute because it
. . . can be accurately and readily determined from sources whose accuracy cannot
reasonably be questioned.” Fed. R. Evid. 201(b)(2). Courts “may take notice of

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proceedings in other courts, both within and without the federal judicial system, if those
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proceedings have a direct relation to matters at issue.” Bias v. Moynihan, 508 F.3d 1212,
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1215 (9th Cir. 2007) (quoting Bennett v. Medtronic, Inc., 285 F.3d 801, 803 n. 2 (9th Cir.
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2002)). The proceedings in Judge Robinson’s court have a direct relation to those at hand
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and the authenticity of her decisions cannot reasonably be questioned.
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B.
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Collateral Estoppel

In this action, Quest asserts thirty claims of the ‘874 Patent against A.Hak: claims
1-7, 10-15, 19-20, 23-29, 32-37, 39, 40. Dkt. # 150 at 1. A.Hak contends that Quest is
collaterally estopped from asserting each of these claims, and thus, that the Court should
grant summary judgment in its favor.
The law of the Federal Circuit governs substantive issues of patent law, whereas
the law of the regional circuit governs nonpatent issues. In re Cambridge Biotech Corp.,
186 F.3d 1356, 1368 (Fed. Cir. 1999). General principles of collateral estoppel are not
unique to patent law. Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170 F.3d 1373,
1381 n.4 (Fed. Cir. 1999). The Court thus looks to the Ninth Circuit for those principles.
The Ninth Circuit has held that collateral estoppel “prevents a party from
relitigating an issue decided in a previous action if four requirements are met: ‘(1) there
was a full and fair opportunity to litigate the issue in the previous action; (2) the issue
was actually litigated in that action; (3) the issue was lost as a result of a final judgment
in that action; and (4) the person against whom collateral estoppel is asserted in the
present action was a party or in privity with a party in the previous action.’” Kendall v.
ORDER – 4

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Visa U.S.A., Inc., 518 F.3d 1042, 1050 (9th Cir. 2008) (quoting In re Palmer, 207 F.3d
566, 568 (9th Cir. 2000)). The party seeking to establish collateral estoppel has the
burden to prove that these four elements have been met. Id.
On the narrower question of whether collateral estoppel forecloses a plaintiff from
asserting alleged patent rights, the Supreme Court has held that a ruling of patent
invalidity in one action may require a finding of invalidity in a subsequent action. See
Blonder-Tongue Labs., Inc. v. Univ. of Illinois Found., 402 U.S. 313, 333-34, 349-50
(1971). In Blonder-Tongue, “the Supreme Court held that a prior determination of patent
invalidity may be asserted as a defense to a subsequent attempt to enforce the patent, and
that this defense must be accepted by a court unless the patentee demonstrates that he was
denied a full and fair opportunity to litigate the validity of his patent in the prior
unsuccessful action.” Stevenson v. Sears, Roebuck & Co., 713 F.2d 705, 709 (Fed. Cir.
1983) (citing Blonder-Tongue, 402 U.S. at 333). In applying this analysis, district courts
may not question “whether the prior finding of invalidity was correct.” Id.
Unlike general principles of collateral estoppel, a court’s application of BlonderTongue is an issue of patent law governed by Federal Circuit precedent. Pharmacia &
Upjohn Co., 170 F.3d at 1381 n.4; see also Ohio Willow Wood Co. v. Alps S., LLC, No.
2:05-CV-1039, 2012 WL 4322541, at *6 (S.D. Ohio Sept. 20, 2012) (“Although the law
of the regional circuit applies to general principles of collateral estoppel, the application
of Blonder-Tongue is a matter of patent law, and, therefore the law of the Federal Circuit
is binding in this area.”); CollegeNET, Inc. v. ApplyYourself, Inc., No. CV-02-1359-HU,
2008 WL 4793683, at *3 (D. Or. Oct. 28, 2008) (“While general principles of collateral
estoppel are governed by the law of the regional circuit in patent cases, the more exacting
issue of the effect of a prior determination of invalidity on current patent claims is one of
patent law.”).
i.

Judge Robinson expressly invalidated eleven of the claims that Quest asserts

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Claims 1, 11-13, 24, 25, 27, 28, 33, 37, and 40

ORDER – 5

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against A.Hak in this action: claims 1, 11-13, 24, 25, 27, 28, 33, 37, and 40. A.Hak
contends that Judge Robinson’s express invalidation of these claims entitles it to
summary judgment. The Court agrees.
Quest does not dispute that it had a full and fair opportunity to litigate the validity
of these claims in the Delaware action, that the issues underpinning these claims were
actually litigated, that Quest lost on these issues due to a final judgment, 2 or that it was a
party to the Delaware action. A.Hak has thus shown that applying collateral estoppel to
these claims would be consistent with the general principles of collateral estoppel set
forth by the Ninth Circuit. See Kendall, 518 F.3d at 1050.
The same holds true with respect to the standard set forth by the Supreme Court in
Blonder-Tongue. As noted, that standard provides that a determination of patent
invalidity estops a patentee from asserting invalidated patent claims in a subsequent
action unless the patentee can show that it did not have a full and fair opportunity to
litigate in the prior action. Blonder-Tongue, 402 U.S. at 333-34, 349-50. Quest has not
sought to show that it lacked a full and fair opportunity to litigate the Delaware action.
Instead, Quest opposes A.Hak’s motion on the basis that it involves an
impermissible use of offensive collateral estoppel. The Supreme Court has held that “in
cases where a plaintiff could easily have joined in the earlier action or where, either for
the reasons discussed above or for other reasons, the application of offensive estoppel
would be unfair to a defendant, a trial judge should not allow the use of offensive
collateral estoppel.” Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979). In
Quest’s view, A.Hak is the plaintiff with respect to its claims of invalidity, and thus, may
not rely on collateral estoppel because it could have joined in the Delaware action, yet
decided not to.

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See Quest Integrity USA, LLC v. Clean Harbors Indus. Servs., Inc., No. C14-1482-SLR,
Dkt. # 249 (D. Del. Mar. 28, 2017) (entering judgment against Clean Harbors); Quest Integrity
USA, LLC v. Cokebusters USA, Inc., C14-1483-SLR, Dkt. # 376 (D. Del. Jul. 12, 2017) (entering
judgment against Cokebusters).

ORDER – 6

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The Court disagrees that A.Hak’s motion implicates the rule in Parklane. While
A.Hak indeed bears the burden of proof to establish its defense of patent invalidity, it
does not, in a preclusive sense, qualify as the plaintiff for purposes of determining
whether collateral estoppel applies under these circumstances. One of the primary effects
of Blonder-Tongue was to overrule existing precedent that prevented a defendant from
asserting collateral estoppel based on a prior finding of invalidity in an action to which it
was not a party. See Blonder-Tongue, 402 U.S. at 350. In other words, that decision
encouraged, rather than discouraged, an assertion of estoppel by a defendant charged with
patent infringement, even if that defendant was not involved in the action invalidating the
patent. See id. Indeed, Blonder-Tongue is analogous to the dispute at hand:
contemporaneous actions by the same plaintiff against different defendants where one
action resulted in a finding of invalidity, which the Supreme Court then permitted the
defendant in the other action to assert as a defense. Id. at 314-17.
Quest also contends that collateral estoppel should not apply because A.Hak has
stipulated to definitions of certain claim terms that are different than the constructions
applied by Judge Robinson. That, however, is an issue of claim construction that does
not alter the preclusive effect of Judge Robinson’s express findings that specific patent
claims at issue in this action are invalid. The Court finds that collateral estoppel applies
as to claims 1, 11-13, 24, 25, 27, 28, 33, 37, and 40, and GRANTS summary judgment
accordingly, as there is no genuine dispute of material fact concerning the invalidity of
those claims.
ii.

Judge Robinson did not expressly invalidate the remaining nineteen claims that
Quest asserts against A.Hak, namely claims 2-7, 10, 14-15, 19-20, 23, 26, 29, 32, 34-36,
and 39. A.Hak contends that Judge Robinson’s decision as to the other eleven claims
collaterally estops Quest from asserting the nineteen remaining claims because the
differences between these claims and the invalidated claims are immaterial. Again, the

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Claims 2-7, 10, 14-15, 19-20, 23, 26, 29, 32, 34-36, and 39

ORDER – 7

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Court agrees.
Whether, for purposes of collateral estoppel, a particular claim in a patent case is
the “same” as a claim in a separate case is an issue of patent law. Aspex Eyewear, Inc. v.
Marchon Eyewear, Inc., 672 F.3d 1335, 1341 n.1 (Fed. Cir. 2012). Federal Circuit
“precedent does not limit collateral estoppel to patent claims that are identical. Rather, it
is the identity of the issues that were litigated that determines whether collateral estoppel
should apply.” Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1342 (Fed. Cir.
2013) (emphasis in original). “If the differences between the unadjudicated patent claims
and adjudicated patent claims do not materially alter the question of invalidity, collateral
estoppel applies.” Id.
As mentioned, Judge Robinson basis for invalidating claims 1, 11-13, 24-25, 2728, 30, 33, 37, and 40 was that they were anticipated by a commercial transaction
between Quest and Norco. 3 Quest Integrity USA, LLC, 2017 WL 1155381 at *32-43
(claims 1, 11-13, 24-25, 27-28, 30, 33, and 37); Quest Integrity USA, LLC v. Clean
Harbors Indus. Servs., Inc., 2017 WL 1365227, at *1-5 (claim 40). Briefly, Quest sold
furnace tube inspection services to Norco in 2003 that disclosed the invention set forth in
the claims later asserted by Quest against the Delaware Defendants. Those claims
consisted of three types: machine claims, process claims, and article of manufacture
claims. 4 In reaching her conclusion that the Norco transaction anticipated the asserted
claims, Judge Robinson found beyond any genuine dispute of material fact that the
transaction implicated each type of patent claim at issue. Quest Integrity USA, LLC,

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3

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Prior to reaching her decision, Judge Robinson ordered Quest to limit the number of
claims against the Delaware Defendants to three independent and two dependent claims,
meaning that Quest was limited to five claims per defendant. Quest Integrity USA, LLC, 2017
WL 1155381 at *1 n.1. Were it not for this limitation, Quest would have asserted more than five
claims, such as it has in this action. Quest Integrity USA, LLC v. Clean Harbors Indus. Servs.,
Inc., No. C14-1482-SLR, Dkt. # 205, at *1 n.1 (D. Del. Jan. 6, 2017).
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These are among the four types of things that may be patented, the fourth being a
composition of matter. 35 U.S.C. § 101.

ORDER – 8

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2017 WL 1155381 at *24-27.
In contending that Judge Robinson’s decisions collaterally estop the remaining
claims asserted by Quest in this action, A.Hak emphasizes that the remaining claims—as
well as the ‘874 Patent as a whole—comprise the same three types implicated in the
Norco transaction. A.Hak also includes a chart demonstrating why there are no material
differences between each of the remaining claims and the invalidated claims. Dkt. # 2271 at 96-109 (Ex. E). Quest contends that the Court cannot rely on this chart because it
was not prepared by an expert and, in any event, the chart fails to show that the remaining
claims are invalid.
Quest’s contention that the Court cannot rely on A.Hak’s claim comparison chart
is unconvincing. Courts routinely analyze the similarities and differences between claims
when deciding whether collateral estoppel should apply. Ohio Willow Wood Co., 735
F.3d at 1342. The Court finds A.Hak’s chart to be helpful in performing this analysis and
considers it accordingly. 5
Having reviewed A.Hak’s claim comparison chart, the Court finds that A.Hak has
carried its initial burden to demonstrate that the invalidated claims and the remaining
claims are substantially similar beyond any genuine dispute of material fact. See Celotex,
477 U.S. at 323. For example, while claim 2 of the ‘874 Patent was not asserted in the
Delaware action, it is precluded by Judge Robinson’s invalidation of claim 12. Claim 2
reads, “The system of claim 1, wherein said display is comprised of a two-dimensional or
three-dimensional representation of one or more said tube segments of said furnace.”
Dkt. # 227-1 at 21 (Ex. A, ‘874 Patent at 16:45-47). Claim 12 reads, “The computerized
method of claim 11, wherein said display is comprised of a two-dimensional or threedimensional representation of one or more of said stacked tube segments of said furnace.”
Id. at 22 (Ex. A, ‘874 Patent at 17:36-39). Judge Robinson construed the claim term,
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A.Hak’s chart is not an end run around the page limitation for summary judgment
motions. LCR 7(e)(3). Together, A.Hak’s chart and motion total twenty-four pages. Dkt. # 226
(Mot. for Summary Judgment); Dkt. # 227-1 at 96-109 (Ex. E).

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“wherein said display is comprised of a two-dimensional or three-dimensional
representation of one or more of said stacked tube segments of said furnace,” to mean
“inspection data from one or more of the stacked tube segments is displayed in two or
three dimensions.” Quest Integrity USA, LLC, 2017 WL 1155381 at *17. Thus, the
Norco transaction anticipated claim 12 because a report generated as part of that
transaction included a two-dimensional display of inspection data from twenty-three
furnace tube segments. Id. Given this analysis, the Court discerns no material difference
between claims 2 and 12, and Quest points to none. The same is true for the remainder of
A.Hak’s claims analysis.
Indeed, Quest does little to substantively oppose A.Hak’s motion as to the
unadjudicated patent claims. Beyond arguing that the Court cannot rely on the claim
comparison chart, Quest devotes a mere paragraph to support its contention that the
remaining claims are materially different from the invalidated claims. First, Quest
contends that A.Hak admits that Judge Robinson did not address claim limitations in
certain claims. But this ignores the basic principle that unadjudicated claims can be
rendered invalid by adjudicated claims if they are substantially identical. Second, Quest
disputes A.Hak’s contention that claim 3 is precluded by claim 13. According to Quest,
claim 3 is not precluded by claim 13 because “Claim 3 specifically requires a computer
programmed [sic] to perform functions and Claim 13 only requires that the functions be
performed on a computer.” Dkt. # 228 at 9. But Quest does not explain why this is a
material difference and the Court does not see it as such. Third, Quest takes issue with
A.Hak’s emphasis on Judge Robinson’s finding that each of the three types of patent
claims at issue was implicated in the Norco transaction. Although Quest is correct that
this finding does not alone entitle A.Hak to summary judgment, A.Hak’s argument is not
so simple—as set forth in its claim construction chart, A.Hak has performed a detailed
analysis of why the invalidated claims preclude the remaining claims.
If a moving party carries its initial burden to show that unadjudicated patent
ORDER – 10

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claims are substantially identical to invalidated claims and the nonmoving party responds
with conclusory assertions to the contrary, the nonmoving party has not carried its burden
to oppose summary judgment. Ohio Willow Wood Co., 735 F.3d at 1343 (affirming
district court’s application of collateral estoppel where plaintiff opposed summary
judgment by identifying differences in claim scope without explaining why those
differences were material). That is the case in this instance. Accordingly, the Court finds
that Quest is collaterally estopped from asserting claims 2-7, 10, 14-15, 19-20, 23, 26, 29,
32, 34-36, and 39 of the ‘874 Patent and GRANTS A.Hak’s motion for summary
judgment as it applies to these claims.
C.

Motion to Compel

On February 10, 2017, A.Hak filed a motion to compel deposition testimony from
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one of Quest’s claim construction witnesses. Dkt. # 215. Issues of claim construction
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have long since been rendered moot by the decisions of Judge Robinson, by the Court’s
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ruling on May 3, 2017 (Dkt. # 225), and by the Court’s instant ruling. Accordingly, the
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Court DENIES as moot A.Hak’s motion to compel. Dkt. # 215.
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V. CONCLUSION
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For the reasons stated above, the Court GRANTS A.Hak’s Motion for Summary
Judgment Based on Collateral Estoppel (Dkt. # 226) and DENIES as moot A.Hak’s
Motion to Compel (Dkt. # 215). In the status report that A.Hak filed on April 25, 2017,
A.Hak represented that it is willing to stipulate to a stay of its counterclaims pending an
opportunity for Quest to appeal the instant ruling. Dkt. # 224 at 7. Within seven (7) days
from the date of this Order, the parties shall submit a joint status report concerning
whether the parties have agreed to a stay of A.Hak’s counterclaims and whether Quest’s
pending motion to dismiss will be withdrawn in accordance with that stay.
DATED this 31st day of July, 2017.

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ORDER – 11

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The Honorable Richard A. Jones
United States District Judge

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ORDER – 12