Patent Eligibility and Collateral Estoppel

I previously wrote about a Middle District of Florida Court invalidating one FairWarning IP's patents at the pleading stage.  There, the Court determined the asserted patent (U.S. Patent 8,578,500) was invalid because it was directed only an abstract idea.  FairWarning has appealed that decision.

FairWarning had also sued Cynergistek for alleged infringement of the '500 Patent.  That case was reassigned to Judge Merryday (who decided the case above) as it shared common issues.  Cynergistek also moved for judgment on the pleadings based on the alleged invalidity of the '500 Patent, but also argued that FairWarning was now collaterally estopped from asserting the '500 Patent because of Judge Merryday's prior finding.

The Court explained the standard:

Blonder–Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971), holds that, if a previous action invalidated a patent after the patent-holder had a full and fair opportunity to litigate, collateral estoppel prevents the patent-holder from enforcing the patent against an unrelated party in another action.

FairWarning argued that it lacked a full and fair opportunity to present its case in the prior decision because that decision "was one of those relatively rare instances where the courts wholly failed to grasp the technical subject matter and issues in suit."  The Court was not persuaded:

A review of Iatric System confirms (1) that FairWarning responded (without requesting a hearing) to Iatric Systems's motion to dismiss, which challenged the '500 patent's validity, and (2) that the order dismissing the action both considered and rejected FairWarning's arguments.

The Court then avoided the collateral estoppel question and ruled on the merits:

Regardless of collateral estoppel, for the same reasons explained in Iatric Systems, FairWarning fails to state a claim for infringement of the ‘500 patent, which is “directed to” nothing more than a patent-ineligible abstract idea. FairWarning asserts neither a fact nor an argument that warrants a different conclusion in this action.

The Court then dismissed as moot defendant's counterclaims seeking declarations of invalidity and non-infringement.

Motion for judgment on the pleadings, granted in part.

FairWarning IP, LLC v. Cynergistek, Inc., Case No. 8:15-CV-100 (M.D. Fla. Sept. 14, 2015) (J. Merryday)