Resorbing Patent Law's Kessler Cat into the General Law of Preclusion

Abstract

The Supreme Court has repeatedly warned lower courts against the creation and expansion of patent specific rules of procedure where the general law would suffice. The recently revived and expanded Kessler doctrine is one such patent-specific rule, and we argue its time has come for resorption into the general law of preclusion that has since expanded to encompass the doctrine.

This article begins with a historic case analysis of the Supreme Court’s 1907 decision in Kessler v. Eldred. In a prior lawsuit, Kessler had successfully defended his electric-cigar-lighters against patent infringement charges by his competitor Eldred. That case ended with a judgment of no-infringement. Eldred then turned-around and began suing Kessler’s customers for selling the same product that had already been adjudged not-infringing. The Supreme Court held that the prior judgment provided Kessler with the right to sell his cigar-lighters without threat of suit to his customers and that right was enforceable in equity by Kessler against Eldred for wrongful interference. Kessler was decided prior to the 1930s merger of law and equity, liberal pleading rules, and Declaratory Judgment Act, all of which changed the landscape of res judicata, and long before non-mutual issue preclusion came into favor. That said, we argue that Kessler looks like an easy case of defensive issue preclusion.

We then focus on the post-Blonder-Tongue revival of the Kessler doctrine by the Federal Circuit and criticize the Federal Circuit for treating Kessler as a separate and distinct, patent-specific doctrine. We argue that the Federal Circuit’s decisions during the 2014-2021 period expanded the doctrine beyond its original holding to encompass situations well outside of the scope of issue and claim preclusion. These expansions that we label “Kessler Cat” take Kessler beyond the limits set by the Supreme Court in 1907, but without any reckoning with the resulting due process or patent exceptionalism concerns. The situation begs the question: why are the traditional rules of issue and claim preclusion sufficient for all other areas of law, except for patents? So far, the courts have not addressed these questions. Rather, the Federal Circuit has repeatedly expressed reticence in applying Kessler, even while expanding the doctrine.

We see two primary paths for the Court to take action. The narrow path is to reject the Federal Circuit’s Kessler Cat and revert back to the Court’s original 1907 doctrine which, at the time was seen simply as “application of the well-established doctrine of res judicata that a judgment estops the defeated party from denying, in any suit between the parties or their privies, any fact established by the judgment.” That narrow approach would be parallel to the Court’s action in Minerva Surgical, where it maintained the doctrine of assignor estoppel while substantially limiting the Federal Circuit’s expansion of the doctrine. A broader alternative path would be to reject the Kessler doctrine whole cloth to the extent that it exists outside the bounds of trans-substantive “traditional claim- or issue-preclusion principles” and as obviated by the adoption of non-mutual issue preclusion. This broader path is in line with the Supreme Court’s recent decision in Lucky Brand Dungarees rejecting “defense preclusion” as a separate form of res judicata. In either case, we see no need for the court to repudiate its original decision in Kessler, but only to recognize that the doctrine, as originally understood, fits within the traditional guideposts of res judicata.

The article includes a novel game theory analysis of the rules of preclusion.

Keywords: patent, res judicata, claim preclusion, issue preclusion, trans-substantive, civil procedure, declaratory judgment