Court: District Court, E.D. Pennsylvania; July 12, 2018; Federal District Court
Defendants The ScottCare Corporation and Ambucor Health Solutions, Inc. filed a motion seeking judgment on the pleadings or, alternatively, summary judgment regarding Plaintiffs' claims related to U.S. Patent Nos. 7,212,850 and 7,907,996, arguing that the claims are patent-ineligible under 35 U.S.C. § 101. The court granted Defendants' motion, citing collateral estoppel from a prior ruling in *CardioNet, LLC v. InfoBionic, Inc.*, which determined that specific claims from both patents were directed to the abstract idea of correlating data sets, akin to a medical professional comparing assessments. The court noted that the claims did not present an inventive concept sufficient for patent eligibility. The court also found that these claims were representative of all claims in the patents after considering additional briefing. Furthermore, a stipulation between the parties, approved by the court, restricted ScottCare from asserting the invalidity of certain claims from the patents in question, except for claims 31 and 32 of the '850 Patent.
Under Federal Rule of Civil Procedure 12(c), a motion for judgment on the pleadings can be filed after the pleadings are closed, provided it does not delay the trial. Courts in this Circuit evaluate such motions using the same standard as Rule 12(b)(6) motions to dismiss for failure to state a claim, with the key distinction being that motions on the pleadings consider the complaint, the answer, and any attached documents. To survive a motion to dismiss, the complaint must present sufficient factual matter that, when accepted as true, shows a plausible claim for relief. A plausible claim allows for a reasonable inference of the defendant's liability based on the allegations.
In the discussion, defendants assert that the InfoBionic, Inc. ruling should be given issue preclusive effect as a final judgment, while plaintiffs argue it is an interlocutory ruling and not appealable, thus lacking preclusive effect. The Court determines that plaintiffs are collaterally estopped from claiming infringement of the '850 Patent and '996 Patent due to a prior ruling in the District of Massachusetts declaring these claims patent ineligible. The doctrine of collateral estoppel prevents re-litigation of issues previously decided, as upheld in Blonder-Tongue Labs. v. University of Illinois Found. The Supreme Court's ruling allows an unrelated defendant in a subsequent infringement action to invoke collateral estoppel based on a judgment of invalidity.
To invoke collateral estoppel, a defendant must show: (1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the earlier determination was necessary for the decision; and (4) the party being precluded was fully represented in the prior action. The Third Circuit also considers if the prior determination was made through a final and valid judgment. The only contested element by plaintiffs is whether the InfoBionic, Inc. decision qualifies as a final judgment, which is the focus of the Court's discussion.
The Massachusetts District Court's ruling on the patent-ineligibility of the '850 and '996 Patents is deemed a final judgment for purposes of collateral estoppel, as the parties were fully heard, and the court provided well-reasoned opinions. The decision is not immediately appealable, yet the plaintiffs had a full opportunity to litigate. There is no strict definition of "final judgment" for issue preclusion; rather, it requires that the ruling be sufficiently firm to warrant conclusive effect. Courts assess three factors: full participation by the parties, the issuance of a reasoned opinion, and the appealability of the decision, with none being individually decisive.
The plaintiffs were adequately represented and presented their arguments before the Massachusetts District Court, which issued two comprehensive opinions detailing the patent-ineligibility based on the Alice framework. The court determined that claims 31 and 12 serve as representative claims for the respective patents, as all claims are substantially similar and tied to the same abstract ideas. Although the plaintiffs contend the previous rulings were erroneous, this court cannot reassess the correctness of the prior invalidity finding when considering collateral estoppel. The examination is limited to ensuring that the prior decision was not based on a fundamental misunderstanding of the law. While the Massachusetts District Court's decisions are not yet appealable, this does not negate their finality for collateral estoppel purposes.
Defendants have met the finality requirement for issue preclusion, as the Massachusetts District Court's judgment on the patentability of the '850 and '996 Patents is deemed a final judgment. This conclusion is supported by the interests of judicial economy and comity, as an independent review would not serve these interests given the prior court's thorough evaluation of the claims. The Court confirms that all elements of issue preclusion are satisfied: the issues in both litigations are identical, they were actually litigated, the prior determination was essential to the judgment, and the Plaintiffs were adequately represented in the earlier case. The Massachusetts District Court determined claims 12 and 31 of the patents were patent-ineligible under 35 U.S.C. § 101, which was necessary for its decision.
Plaintiffs' argument regarding a stipulation preventing Defendants from challenging the patentability of the asserted claims is dismissed; the Court asserts that it is not bound by this stipulation because patent eligibility is a legal question. As such, if a claim does not meet the § 101 standard, it must be rejected regardless of other patentability criteria. Ultimately, since Plaintiffs had a full and fair opportunity to present their claims previously, the Court grants Defendants' motion.
