How many different times can you sue your competitor for violating intellectual property rights involving the same product?

At least twice, according to the Court of Appeals for the Federal Circuit (CAFC) in Superior Industries, LLC v. Thor Global Enterprises, Ltd. Specifically, the CAFC held that claim preclusion (res judicata) did not bar a party from suing a competitor for patent infringement based on information learned during its previous suit for trademark infringement over the same product. See Nov. 27, 2012 Opinion.

Claim preclusion prevents a party from filing repeated suits based on the same cause of action. Suits involve the same cause of action when they arise from the same nucleus of operative fact. The policy behind claim preclusion is to prevent multiple suits based on the same underlying conduct.

Claim preclusion generally applies to issues which were or could have been raised in a prior suit. The operative facts which are involved in a claim for patent infringement are considered to be an issue of substantive patent law resolved by CAFC precedent.

Superior Industries Files Suit Twice Over Same Product with Different Claims

Superior Industries, LLC owns patented technology for a portable conveyor that transports and stockpiles rock, sand, grain and other aggregate material. Superior coined the term “fully braced” for its conveyor undercarriage and registered the trademark “FB” for the conveyors.

Superior sued Thor Global Enterprises, Ltd. for trademark infringement after Thor issued a press release for its new “FB (Fully Braced) Undercarriage technology” for its portable conveyors. See Aug. 4, 2009 Complaint, Oct. 1, 2007 Press Release. The parties settled eight months later with a consent judgment prohibiting Thor from using the FB mark. See Apr. 7, 2010 Consent Judgment.

A few months after the consent judgment, Superior sued Thor again over the same conveyor systems, this time for patent infringement based on sales offerings by Thor discovered through the trademark suit. See June 21, 2010 Complaint.

The district court dismissed the patent suit on claim preclusion grounds because Superior simply chose not to assert the patent claims in the prior trademark suit. The district court emphasized that claim preclusion is intended to prevent re-litigation of issues which were or could have been raised in the prior action. See July 22, 2011 Opinion.

Federal Circuit Reverses Patent Suit

The CAFC reversed primarily because the two suits involved separate cases under separate laws. Specifically, Superior based its trademark suit on Thor’s use of the mark FB in advertising, not on actual sales or offers for sale for the conveyor. In contrast, Superior based its patent suit on sales, offers to sell, or importation of the infringing conveyors. See Nov. 27, 2012 Opinion.

Sources: Superior Industries, LLC v. Thor Global Enterprises, Ltd., Case No. 2011-1549, In the United States Court of Appeals for the Federal Circuit; Superior Industries, LLC v. Thor Global Enterprises, Ltd., Case No. 0:10-cv-02524 (D. Minn.); Superior Industries, LLC v. Thor Global Enterprises, Ltd., Case No. 0:09-cv-02035 (D. Minn.)

This article was prepared by Charles B. Walker, Jr. (cwalker@fulbright.com and 713 651 5203) and Charles Ashley Callahan (acallahan@fulbright.com and 512 536 5218) of Fulbright’s Intellectual Property and Technology Practice.