Carbon credit trading patent infringement case dismissed, again. SOWINSKI v. CARB

Carbon credit trading patent infringement case dismissed, again. SOWINSKI v. CARB

A patent is a set of exclusive rights granted the the inventor of a new invention. To be granted a patent in the United States an inventor must file a patent application with the United State Patent and Trademark Office. The USPTO will assign an examining attorney to review the patent application and confirm that the invention meets the requirements for the patent to be granted.  If the examining attorney determine that the patent application complies with all the statutory requirements of United States Patent Law, the inventor will be granted a patent on the invention claimed in the patent application.

A patent grants its owner the exclusive right to make, use, sell and import an invention in the United States.  If someone other than the patent owner attempts to exercise one of these exclusive rights, without authorization, that can be considered patent infringement.  If a patent owner feels that their patent is being infringed on, the patent owner can file a lawsuit in United States Federal Court.

Patent law does not exist in a vacuum, when a plaintiff files a suit for patent infringement there are several other relevant legal principles.  One of those relevant legal principles is the concept of res judicata.    Res judicata is the principle that a matter may not, generally, be litigated again once it has been judged on the merits.  Claim preclusion and issue preclusion are concepts within res judicata.  Claim preclusion is the principle once a cause of action has been litigated, it may not be litigated again.  Issue preclusion is the principle that once an issue of fact has been determined in a proceeding between two parties, the parties may not litigate that issue again even in a proceeding on a different cause of action.

So when the final decision of a district court is appealed to a higher court, the higher court typically does not question the facts on which the district court based that decision.

RICHARD SOWINSKI, v. CALIFORNIA AIR RESOURCES BOARD, 2019-1558 (C.A.F.C. 2020) is a case where res judicata barred a patent owner from suing a defendant for patent infringement.

This case focues on United States Patent No. 6,601,033 (the ’033 patent), entitled “Pollution Credit Method Using Electronic Networks,” which describes and claims an electronic method and apparatus for validating and trading consumer pollution control tax credits.

Defendants in this case operate California’s Cap-and-Trade Program auctions which allow participants to trade allowances and credits for greenhouse gas emissions.  The purpose of the program is to reduce pollution.

Plaintiff filed suit for patent infringement in 2015.  Defendants filed a motion to dismiss and Plaintiff failed to respond within the time set by local court rules.  The original suit was dismissed.  Plaintiff then filed an almost identical lawsuit in 2018 which was dismissed on the grounds of res judicata.  Plaintiff then appealed to the Court of Appeals for the Federal Circuit.

Plaintiff presented two main arguments on appeal (1) that the second lawsuit was for infringing activity that occurred after the original suit was dismissed and (2) that the merits of patent infringement were not adjudicated in the first lawsuit, because the dismissal was based on the technicality of a local deadline. Plaintiff stated that the imposition of res judicata on this basis is “manifestly unjust” because there was no trial on the question of infringement, and that if an infringement suit is now barred his patent is essentially invalidated because the CARB Cap-and-Trade Program is the only known infringing activity.

The Federal Circuit agreed with the District Court and affirmed the dismissal.   The Federal Circuit noted that he Federal Rule of Civil Procedure, and case precedent, consider a dismissal for failure to prosecute an adjudication on the merits for purposes of preclusion.  With respect to the date of the infringing conduct, the Federal Circuit found that different conduct and different alleged violations may not trigger preclusion, in this case Plaintiff’s second lawsuit did not allege any differences.  A claim based on new and different facts is not precluded, whereas a claim based on the same facts is precluded.

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