What is “Materially Identical?”
The doctrine of issue preclusion can prevent an issue previously litigated at the PTAB from being re-litigated in a later proceeding, such as in the district court. In order for issue preclusion to apply, a “materially identical” issue must have been “actually litigated and determined by a valid and final judgment,” where the determination was “essential to the judgment.” See Papst Licensing GMBH & Co. KG v. Samsung Elecs. Am., Inc., 924 F.3d 1243, 1252 (Fed. Cir. 2019). Thus, once appeals have been exhausted, the determinations in a FWD from the PTAB may have preclusive effect in future actions, even on related patents so long as they raise “materially identical” issues.
Which begs the question: What is the scope of materially identical?
In Papst, the PTAB issued FWDs finding unpatentable three related patents. Initially, Patentee appealed all three decisions but then voluntarily dismissed two of the appeals shortly before oral arguments. The Federal Circuit found that Patentee was precluded from challenging claim construction issues in the remaining appeal that were materially identical to the issues decided in the dismissed appeals, as those decisions were now final.
But not all issues are so straightforward, and equitable exceptions that may prevent the application of issue preclusion, as illustrated in the Federal Circuit’s recent decision in Oren Techs., LLC v. Proppant Express Investments LLC, No. 2019-1778 (Fed. Cir. July 23, 2021). (here)
In Oren, Patentee appealed the PTAB’s FWD finding all challenged claims unpatentable in a first of two patents. While the appeal was pending, the PTAB issued a rehearing decision in the second, related patent, which raised similar issues, finding all but one of the challenged claims unpatentable. Meanwhile, in a related district court action between the parties, the district court issued a claim construction opinion which resulted in the parties stipulating to non-infringement of both patents. Following the non-infringement stipulation, neither party appealed the rehearing decision of the second patent.
At first glance, these facts appear to be very similar to those in Papst, where the decision not to appeal a FWD in a related patent resulted in issue preclusion for the remaining appeal. However, Oren argued, and the Federal Circuit agreed, that it lacked incentive to litigate the reconsideration decision, which is an equitable exception to issue preclusion. First, one claim survived in the patent at issue in the reconsideration decision, which still provided some protection from that patent. Second, the non-infringement stipulation meant that Oren could not obtain an injunction or damages from that patent from the defendant in any event.
Thus, “principles of fairness” may prevent the application of issue preclusion where there is “considerably greater incentive to continue litigating an issue in a second case than  in a first case.”