Claim Preclusion Does Not Apply to Ineligible Subject Matter: VideoShare, LLC v. Google LLC (W.D. Tx.)

The sins of the parent patent will not be visited on the child patent, at least in the Western District of Texas. An earlier determination of ineligible subject matter does not trigger claim preclusion against an infringement suit asserting a patent issued from a continuation application from the earlier patent. VideoShare, LLC v. Google LLC, Civ. No. 6-19-CV-00663-ADA (W.D. Tx. May 4, 2020).

Because this case involves claim preclusion (or res judicata, if you like Latin), the conflict necessarily started in an earlier case. Back in 2013, VideoShare sued Google in the District of Delaware for infringing U.S. Patent No. 8,464,302, “Method and System for Sharing Video with Advertisements over a Network.” The accused product was YouTube. The court invalidated the ’302 patent as ineligible subject matter under § 101, and the Federal Circuit confirmed the result.

The current case features the same parties and the same accused product, with the case now relocated to the Waco, Texas. VideoShare accused Google—specifically YouTube—of infringing U.S. Patent No. 10,362,341. The ’341 patent is a continuation of the ’302 patent from the Delaware case. During prosecution of the ’341 patent, VideoShare had to use a terminal disclaimer to overcome a double-patenting rejection over the ’302 patent.

Google moved to dismiss the case under the doctrine of claim preclusion. In essence, claim preclusion means that a party cannot bring a cause of action that is too similar to an earlier cause of action that has already been resolved. The elements of claim preclusion are (1) identical parties (or current parties in privity with earlier parties), (2) proper jurisdiction in the earlier case, (3) a final judgment on the merits, and (4) the same cause of action. Whether a case involves the same cause of action depends on whether the later cause of action forms “all or any part of the transaction, or series of connected transactions, out of which the [earlier] action arose.” The disagreement centers on the last element.

The Federal Circuit has found that the transactional test is satisfied if the scopes of the earlier-asserted patent claims and later-asserted patent claims are essentially the same. SimpleAir v. Google (Fed. Cir. 2018). But Judge Albright here finds SimpleAir inapposite. SimpleAir and related caselaw typically involve an earlier determination of infringement or of invalidity over prior art, either of which necessitate determining the scope of the earlier-asserted patent claims. By contrast, invalidity for ineligible subject matter does not require determining claim scope, so the scope of the later-asserted patent claims cannot be compared to the (undetermined) scope of the earlier-asserted patent claims.

Even if the court did proceed to follow the rule in SimpleAir, there is no good way of comparing the scopes of the earlier- and later-asserted patent claims. Google contended that (1) the terminal disclaimer constituted an admission that the claim scope was essentially the same and (2) the continuation application must have had narrower claims than its parent patent. The court disagrees that terminal disclaimers are admissions of anything, rather than just a procedural mechanism to speed along prosecution. What’s more, prosecution and litigation operate under different standards for claim interpretation—broadest reasonable interpretation versus the Phillips standard—so even if a terminal disclaimer served as a statement about claim scope during prosecution, that statement doesn’t necessarily carry over to a case in court. In response to Google’s second contention, the court notes that a continuation can include broader or narrower claims. Thus, the court finds that claim preclusion does not apply to this case.

But the court goes further than just that outcome. “The Court concludes that the doctrine of claim preclusion cannot be readily applied to analyzing patent eligibility” or to either step of the Alice test. “[B]ecause one element of claim preclusion is whether or not the two patents have the same scope, if the scope of the first patent was not determined when evaluating its patent eligibility, then it is axiomatic that claim preclusion based on patent ineligibility cannot apply to the second patent.” For both Alice steps, differences in claim language, unconstrued terms in the later-asserted patent, and changes in the type of claim (apparatus, method, etc.) can change the outcome.

Lessons for Practice

The first takeaway is that getting rid of one patent as ineligible does not affect other patents in the same family. Each patent in a family will be considered individually.

Second, when dragged as a defendant to the Western District of Texas, be prepared for a slog. This case means that claim preclusion based on ineligible subject matter won’t be addressed until the litigation is at approximately the summary judgment stage, after fact discovery and claim construction. This case comes on the tail of Slyce Acquisition v. Syte-Visual Conception (previously covered on this blog). In Slyce—also decided by Judge Albright—the court opined that deciding ineligibility before claim construction should be “rare.” The sum effect is that resolving a patent case before summary judgment will likewise be “rare.”