In a decision seeking to clarify the focus of the “material differences” test for claim preclusion, the Federal Circuit upheld a lower court finding that the patentee was barred from bringing a second lawsuit against the accused infringer where an infringement claim, premised on the doctrine of equivalents, was deemed waived in the first proceeding.

In Nystrom, the patent at issue is directed to an outdoor wood flooring board having a convex upper surface to enhance water shed while also having a concave lower surface to facilitate board stacking. The patentee, Ron Nystrom, first asserted his patent against Trex in 2001.

Nystrom alleged that woodcomposite decking boards manufactured by Trex, which were constructed of fifty-sixty percent wood material with recycled plastic comprising the remainder of the decking board, infringed his patent.

After the district court construed certain terms of the claims unfavorably towards Nystrom in the first lawsuit, he conceded that infringement could not be proven and appealed the claim construction ruling to the Federal Circuit. On appeal, the district court’s constructions were largely affirmed. That decision, Nystrom v. Trex Co., 424 F.3d 1136 (Fed. Cir. 2005) (“Nystrom I”), was notable in part because the Federal Circuit, in one of the earliest post- Phillips rulings on claim construction, limited the claim term “board” to cover only boards made of “wood from a log” which was unusually narrow.

The Federal Circuit reached this conclusion based on statements in the specification and prosecution history, even though the statements were not found to constitute a disclaimer of claim scope or the patentee acting as a lexicographer to provide a specific definition of “board.” After the Federal Circuit remanded the case to the district court, Nystrom attempted to pursue an infringement claim based on the doctrine of equivalents. The doctrine of equivalents provides that claims that are not literally infringed “may nonetheless be found to infringe if there is ‘equivalence’ between the elements of the accused product or process and the claimed elements of the patented invention.” Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17, 21 (1997). This doctrine allows the patent claims to cover “insubstantial alterations that were not captured in drafting the original patent claim but which could be created through trivial changes.” Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 733 (2002).

The district court rejected Nystrom’s attempt to pursue an infringement theory premised on the doctrine of equivalents on the basis of Nystrom’s previous stipulation to non-infringement, which Nystrom made without reference to the doctrine of equivalents. This decision of the district court was also appealed to the Federal Circuit, which agreed that Nystrom had waived his infringement claim under the doctrine of equivalents against Trex.

Seemingly undeterred, Nystrom filed a second lawsuit against Trex just days after the Federal Circuit ruling, which also added distributors of the decking boards manufactured by Trex. In this second action, Nystrom alleged that Trex’s “secondgeneration” boards infringed solely on the basis of the doctrine of equivalents and that these boards could not have been named in the first suit because they were not marketed until after the filing of the first lawsuit. Trex promptly moved for summary judgment seeking to bar Nystrom from relitigating infringement on the grounds of res judicata, contending the second generation boards were essentially the same as the boards that were the subject of the first lawsuit.

The doctrine of res judicata, otherwise referred to as “claim preclusion,” precludes the relitigation of a claim, or cause of action, or any possible defense to the cause of action that has been terminated by a final court judgment. Foster v. Hallco Mfg. Co., 947 F.2d 469, 476 (Fed. Cir. 1991). In the appeal of the second lawsuit to the Federal Circuit (“Nystrom II”), the Court noted that an accused infringer seeking to rely on claim preclusion in a patent infringement action must show that the accused product or process in the second suit is “essentially the same” as the accused product or process in the first suit. Further, mere “colorable changes” in an infringing device or changes unrelated to the limitations in the claim would not present a new cause of action.

In seeking to rely on claim preclusion to bar Nystrom’s latest attack, Trex did not dispute that there were material differences between the second generation boards and the first generation boards at issue in Trex I. However, Trex argued that the only limitations that led to the judgment of non-infringement in the first suit (the “board” limitation mentioned previously and the term “manufactured to have”) were identical in both products to support the res judicata bar.

Thus, the Federal Circuit viewed Nystrom II as presenting a “new angle” on claim preclusion: whether the accused infringer may assert claim preclusion (i.e., res judicata) where the sole claim limitations at issue in the first suit remain unchanged in the second suit. The Federal Circuit emphasized that the focus for claim preclusion is on the “material differences” between the two accused devices, but found that prior precedent had not directly addressed whether the focus of the “material differences” test is on the claim limitations at issue in each particular case.

Beginning its analysis, the Court noted that for Nystrom to prevail in his infringement claim, he would have to prove infringement of each claim limitation. The bases of noninfringement in the first suit were the two constructions of “board” and “manufactured to have.” Thus, if the accused device in Nystrom II was unchanged as to these limitations, then Nystrom would effectively be seeking to re-litigate a prior ruling that these elements were not present.

As the court noted, this would be the exact situation that res judicata seeks to prevent.

Nystrom, however, disputed that the boards were not insubstantially different with respect to the “board” and “manufactured to have” limitations.

Nystrom pointed to the addition of a wood grain in the new Trex board and a change in color. The Federal Circuit held that changes were insufficient to give rise to the required “material differences” because the wood grain and color was only added to give the Trex board a more wood-like feel, look, and shade, which are “colorable changes” and do not address the process used to make the board. Thus, as Nystrom had waived his infringement claim against Trex under the doctrine of equivalents in the first lawsuit, he was precluded from relitigating his claim in Nystrom II for products that were not substantially different as to the claim limitations forming the basis of the noninfringement decision in Nystrom I.

Judge Rader, who authored the Court’s opinion, also wrote separately to discuss his “additional views” on the doctrine of equivalents and the related doctrine of claim vitiation. Claim vitiation acts as a restraint on the doctrine of equivalents and provides that the doctrine of equivalents cannot apply when its application would effectively read a limitation out of the claim. Judge Rader argues that, in application, claim vitiation is effectively subsumed within the doctrine of equivalents analysis itself. However, current precedent mandates that the decision makers for these doctrines are different: the determination of equivalency is a question of fact resolved by juries, while claim vitiation is a question of law decided by judges. As Judge Rader points out, this presents a conflict in that, although the tests are the same, the testers are different. Thus, differing outcomes could be reached in application of the same rules. Judge Rader concludes his views by questioning who should properly decide issues of equivalency and vitiation: judge, jury, or both? Whether there will be any resolution to this conflict will be left for future cases to decide.