District Court Erred By Applying Collateral Estoppel To A General Jury Verdict That Could Have Rested On Multiple Grounds

In United Access Technologies, LLC v. CenturyTel Broadband Services LLC, No. 14-1347 (Fed. Cir. Feb. 12, 2015), the Federal Circuit reversed the district court's dismissal of the action on collateral estoppel grounds based on a prior action involving the same patents where a general jury verdict found against the patentee.

United Access Technologies, LLC ("United") owns U.S. Patent Nos. 5,844,596; 6,243,446; and 6,542,585 (collectively "the United Patents"). The asserted claims of the United Patents recite systems for using a landline telephone connection for both voice communication and data transmission. In 2002, Inline Connection Corporation ("Inline"), United's predecessor in interest, brought suit against EarthLink, Inc. ("EarthLink"), charging EarthLink with direct infringement of the United Patents by offering its customers an Internet connection service based on a broadband digital communications technology known as Asymmetrical Digital Subscriber Line ("ADSL"). EarthLink asserted that ADSL technology did not infringe the United Patents, and even if it did, EarthLink's accused ADSL system did not include a "telephone device" as required by the claims.

The jury in the EarthLink case returned a general verdict of noninfringement with respect to all of the asserted claims. Nothing in the verdict form or the record indicated the jury's grounds it had adopted in reaching its verdict. Inline moved for JMOL and the trial court denied the motion. The district court found that the jury's verdict could be upheld on either of the following two theories: (i) Inline failed to meet its burden to establish that ADSL technology infringed the asserted claims of the United Patents, or (ii) EarthLink did not infringe because none of its systems included a telephone, a required element of the asserted claims. The Federal Circuit affirmed the district court's decision.

In 2011, United, as Inline's successor, filed this action against CenturyTel Broadband Services LLC and Qwest Corporation (collectively "Appellees"), charging infringement of the same claims asserted in the EarthLink case. Appellees sought dismissal of the claims based on collateral estoppel. United argued that this case should be distinguished from the EarthLink case because EarthLink provided services distinct from any services involving the use of a telephone, while Appellees' service included telephone services. The district court rejected United's argument, stating that the proposed...