UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

Rudolph Technologies, Inc.,

a Delaware corporation,

Case No. 15-cv-1246 (WMW/BRT)

Plaintiff,

ORDER GRANTING IN PART AND

v. DENYING IN PART PLAINTIFF’S MOTION FOR PARTIAL SUMMARY

Camtek Ltd.,

a foreign corporation, JUDGMENT

Defendant.

This matter is before the Court on Plaintiff Rudolph Technologies, Inc.’s

(“Rudolph”) motion for partial summary judgment. (Dkt. 151.) Rudolph contends that

Defendant Camtek Ltd.’s (“Camtek”) invalidity arguments and claim construction

arguments in this case are foreclosed by issue preclusion in light of prior litigation

between the same parties. For the reasons addressed below, the Court grants in part and

denies in part the motion.

BACKGROUND

I. Prior Litigation

August Technology Corp. (“August Technology”) developed the inventions

described in United States Patent No. 6,826,298 (“the ’6,298 Patent”). August Tech.

Corp. v. Camtek, Ltd., No. 05-cv-1396, Dkt. 268 at 2. Rudolph subsequently purchased

August Technology, and Rudolph and August Technology became co-owners of the

’6,298 Patent. Id. Rudolph makes and sells automated visual inspection systems for the

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microelectronics industry, including systems for secondary inspection of semiconductor

wafers. Id. Camtek and Rudolph are direct competitors in the secondary wafer

inspection market. Id. On July 14, 2005, August Technology commenced a patent-

infringement action against Camtek in this district, alleging that Camtek’s Falcon wafer

inspection product infringed certain claims, including claims 1 and 3, of the ’6,298 Patent

(“Falcon Litigation”). Id., Dkt. 1.

At the claim-construction stage of the Falcon Litigation, the parties identified

eleven disputed terms in the asserted patent claims, and the district court resolved those

disputes in a written order (“Falcon Claim Construction Order”). Id., Dkt. 268 at 5. The

Falcon Litigation proceeded to a jury trial in February 2009. The jury returned a special

verdict, finding among other things, that Camtek’s Falcon product literally infringed

claims 1 and 3 of the ’6,298 Patent and that Camtek failed to prove that the ’6,298 Patent

is invalid. Id., Dkt. 466. The district court denied Camtek’s post-trial motions for

judgment as a matter of law as to both infringement and invalidity. Id., Dkt. 644.

Camtek appealed.

The Federal Circuit affirmed in part, vacated in part, and remanded the Falcon

Litigation for further proceedings. August Tech. Corp. v. Camtek, Ltd., 655 F.3d 1278

(Fed. Cir. 2011). Specifically, as relevant here, the Federal Circuit (1) modified the

district court’s construction of the claim term “wafer” and remanded for a limited trial on

infringement with respect to a claim element of the ’6,298 Patent affected by the

modified claim construction, and (2) concluded that substantial evidence supported the

jury verdict regarding the validity of the ’6,298 Patent. Id. at 1286-87.

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On March 31, 2014, the district court granted Rudolph’s motion for summary

judgment of infringement on the limited issue remanded by the Federal Circuit.

Following additional motion practice and the entry of judgment by the district court,

Camtek appealed and the Federal Circuit affirmed without a written opinion. Rudolph

Techs., Inc. v. Camtek, Ltd., 632 F. App’x 620 (Fed. Cir. 2016).

II. Current Litigation

On March 12, 2015, Rudolph commenced this patent-infringement action against

Camtek, alleging that Camtek’s Eagle product infringes the same claims of the ’6,298

Patent that Rudolph had asserted against Camtek in the Falcon Litigation. In its Answer,

Camtek advanced a number of defenses including, as relevant here, that “[e]ach claim of

the ’6,298 patent is invalid for failing to meet one or more of the requirements or

conditions for patentability under Title 35 of the United States Code, including without

limitation, §§ 101, 102, 103, and/or 112.”

On November 18, 2015, Rudolph sought the Court’s leave to file an early motion

for partial summary judgment regarding invalidity, asserting that Camtek is precluded

from relitigating the alleged invalidity of the ’6,298 Patent because Camtek previously

litigated that issue and lost in the Falcon Litigation. On December 7, 2015, the Court

denied Rudolph’s request for leave without prejudice and directed the parties not to file

another such request until after the parties have filed their joint status report on claim

construction.

On January 11, 2016, the parties filed their joint status report on claim

construction. (Dkt. 142.) The joint status report included a claim chart listing each

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disputed claim term in the ’6,298 Patent. Camtek indicated that it intends to seek the

Court’s construction of seven claim terms. In contrast, Rudolph asserted that no claim

construction is necessary because issue preclusion applies to each of the disputed claim

terms and, therefore, the district court’s construction of those terms in the Falcon

Litigation is controlling in this case. On March 10, 2016, the Court granted Rudolph’s

request for leave to file the present motion for partial summary judgment regarding the

application of issue preclusion to both patent invalidity and claim construction.

ANALYSIS

I. Legal Standards

Summary judgment is proper when there are no genuine issues of material fact and

the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). When

considering a motion for summary judgment, the district court views the facts in the light

most favorable to the nonmoving party. Shelter Ins. Cos. v. Hildreth, 255 F.3d 921, 924

(8th Cir. 2001). Summary judgment is properly granted only when no reasonable jury

could return a verdict for the nonmoving party. Id. The moving party bears the burden to

produce sufficient evidence to establish that “there are no genuine issues of material fact

and that the movant is entitled to judgment as a matter of law.” Id.

Issues unique to patent cases are governed by Federal Circuit precedent. Aspex

Eyewear, Inc. v. Zenni Optical Inc., 713 F.3d 1377, 1380 (Fed. Cir. 2013). However,

with respect to procedural issues that are not unique to the Federal Circuit’s exclusive

jurisdiction over patent matters, such as issue preclusion, the law of the regional circuit

applies. Dana v. E.S. Originals, Inc., 342 F.3d 1320, 1323 (Fed. Cir. 2003). Issue

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preclusion bars a party from relitigating an issue that was actually adjudicated in previous

litigation between the same parties. Sandy Lake Band of Mississippi Chippewa v. United

States, 714 F.3d 1098, 1102 (8th Cir. 2013). “A party is precluded from litigating such a

matter in a subsequent case, whether or not the issue arises on the same or a different

claim.” Id. (citation omitted) (internal quotation marks omitted). In the Eighth Circuit,

issue preclusion has five elements:

(1) the party sought to be precluded in the second suit must have been a

party, or in privity with a party, to the original lawsuit; (2) the issue sought

to be precluded must be the same as the issue involved in the prior action;

(3) the issue sought to be precluded must have been actually litigated in the

prior action; (4) the issue sought to be precluded must have been

determined by a valid and final judgment; and (5) the determination in the

prior action must have been essential to the prior judgment.

Id. at 1102-03 (citing Robinette v. Jones, 476 F.3d 585, 589 (8th Cir. 2007)).

II. Issue Preclusion as to Patent Invalidity

The parties first dispute whether Camtek’s invalidity arguments in this case are

foreclosed by issue preclusion. It is undisputed that the parties in this case are the same

as in the Falcon Litigation, that the alleged invalidity of the ’6,298 Patent was actually

litigated in the Falcon Litigation on certain grounds, that the Falcon Litigation resulted in

a valid and final judgment with respect to invalidity on those grounds, and that the

invalidity determination in the Falcon Litigation was essential to that judgment.

The parties’ present dispute, therefore, is limited to defining the scope of the

“issue” on which litigation is foreclosed by the prior judgment in the Falcon Litigation.

This dispute implicates the second element of the Eighth Circuit’s issue preclusion test—

namely, whether the invalidity issue in this case is “the same as” the invalidity issue that

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was actually litigated and determined in the Falcon Litigation. Rudolph argues that all of

Camtek’s invalidity defenses are foreclosed, regardless of whether Camtek advanced the

particular theory or evidence of invalidity in the Falcon Litigation, because “invalidity” is

a single issue. Rudolph contends that the concepts of “arguments” and “issues” should

not be conflated. In contrast, Camtek asserts that only the specific grounds for invalidity

that Camtek advanced in the Falcon Litigation are precluded here, and that it should be

free to advance alternative grounds for invalidity in this case.1 Therefore, the Court must

determine, for the purpose of issue preclusion, whether the scope of the “issue” of patent

invalidity (1) embraces all grounds for invalidity as a single issue or (2) is limited to the

grounds for invalidity Camtek advanced in the Falcon Litigation.

A. The Scope of the Issue Subject to Preclusion

The parties have not identified, and the Court is unaware of, any precedent in this

circuit or the Federal Circuit directly addressing whether patent invalidity is a single issue

for the purpose of issue preclusion. See Evonik Degussa GmbH v. Materia Inc., 53 F.

Supp. 3d 778, 793 (D. Del. 2014) (observing that “the Federal Circuit has yet to rule

conclusively on this matter”). Therefore, the Court begins by examining the principles

underlying issue-preclusion doctrine.

1 In the Falcon Litigation, Camtek challenged and litigated the validity of the ’6,298

Patent on the following grounds: on-sale bar, pursuant to 35 U.S.C. § 102; obviousness,

pursuant to 35 U.S.C. § 103; and indefiniteness, pursuant to 35 U.S.C. § 112. August

Tech., No. 05-cv-1396, Dkt. 294, 466. In this case, Camtek challenges the validity of the

’6,298 Patent on the following grounds: anticipation, pursuant to 35 U.S.C. § 102;

obviousness, pursuant to 35 U.S.C. § 103; and lack of adequate written description, lack

of enablement and indefiniteness, pursuant to 35 U.S.C. § 112.

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Issue preclusion serves “the dual purpose of protecting litigants from the burden of

relitigating an identical issue with the same party or [that party’s] privy and of promoting

judicial economy by preventing needless litigation.” Parklane Hosiery Co., Inc. v. Shore,

439 U.S. 322, 326 (1979). The doctrine is rooted in concerns for judicial economy.

Simmons v. O’Brien, 77 F.3d 1093, 1095 (8th Cir. 1996). Central to the fair

administration of issue-preclusion doctrine “is the notion that a party will be bound only

if it had ‘an adequate opportunity or incentive to obtain a full and fair adjudication in the

first proceeding.’ ” Id. (quoting Restatement (Second) of Judgments § 28 cmt. j).

Outside of the patent context, the Eighth Circuit has recognized the “significant

line of cases suggesting that litigation of an issue necessarily encompasses all arguments

and evidence that could be presented to resolve the issue, and that the mere discovery of

new evidence does not create a new issue.” Liberty Mut. Ins. Co. v. FAG Bearings Corp.,

335 F.3d 752, 762-63 (8th Cir. 2003) (collecting cases). “ ‘[O]nce an issue is raised and

determined, it is the entire issue that is precluded, not just the particular arguments raised

in support of it in the first case.’ ” Id. at 762 (emphasis and alteration in original)

(quoting Yamaha Corp. of Am. v. United States, 961 F.2d 245, 254 (D.C. Cir. 1992)).

This Court sees no reason why these principles should not apply with equal force in the

context of patent invalidity.

The Restatement (Second) of Judgments (“Restatement”) provides additional

insight into the principles underlying issue preclusion. Both the Eighth Circuit and the

Federal Circuit look to the Restatement for guidance with respect to issue preclusion.

E.g., id.; Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1362 (Fed. Cir. 2000). The

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Restatement acknowledges that one of the most difficult tasks in applying issue

preclusion is the question currently before the Court—namely, how “to delineate the

issue on which litigation is, or is not, foreclosed by the prior judgment,” which “involves

a balancing of important interests: on the one hand, a desire not to deprive a litigant of an

adequate day in court; on the other hand, a desire to prevent repetitious litigation of what

is essentially the same dispute.” Restatement (Second) of Judgments § 27 cmt. c. The

Restatement identifies four factors that courts should consider when determining whether

an issue in a successive proceeding is identical to a previously litigated issue:

[1] Is there a substantial overlap between the evidence or argument to be

advanced in the second proceeding and that advanced in the first? [2] Does

the new evidence or argument involve application of the same rule of law

as that involved in the prior proceeding? [3] Could pretrial preparation and

discovery relating to the matter presented in the first action reasonably be

expected to have embraced the matter sought to be presented in the second?

[4] How closely related are the claims involved in the two proceedings?

Id. The Restatement and the foregoing factors provide an instructive framework for

resolving the present dispute.

With respect to the first Restatement factor, any new theories of invalidity would

require Camtek to present substantially the same evidence and arguments that Camtek

presented in the Falcon Litigation—namely, an analysis of the ’6,298 Patent and a

comparison of prior art to the asserted patent claims from the perspective of a person of

ordinary skill in the art. As to the second Restatement factor, the same rule of law would

apply because all patent invalidity defenses arise from 35 U.S.C. § 282 and must be

proved by clear and convincing evidence to overcome the statutory presumption of patent

validity. See Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 95 (2011). With respect to

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the third Restatement factor, it is reasonable to expect that the several years of discovery

and pretrial preparation in the Falcon Litigation embraced all possible invalidity theories,

whether or not Camtek ultimately advanced every theory in a dispositive motion or at

trial. As such, Camtek had both “an adequate opportunity” and the “incentive to obtain a

full and fair adjudication” of invalidity in the Falcon Litigation. See Simmons, 77 F.3d at

1095. Finally, the claims advanced in the two proceedings are closely related—both

involve the alleged infringement of claims 1 and 3 of the ’6,298 Patent by one of

Camtek’s products and, in turn, the alleged invalidity of the ’6,298 Patent. Thus, all four

Restatement factors weigh in favor of concluding that the scope of the issue that is

subject to issue preclusion encompasses all invalidity theories and arguments that

Camtek advances in this case.

The Restatement also offers the following illustration that is analogous to the

circumstances in this case and lends additional support to the foregoing conclusion:

A brings an action against B to recover for personal injuries in an

automobile accident. A seeks to establish that B was negligent in driving at

an excessive rate of speed. After trial, verdict and judgment are given for B.

In a subsequent action by B against A for injuries in the same accident, A is

precluded from setting up B’s negligence as a defense, whether or not the

alleged negligence is based on an assertion of excessive speed. It is

reasonable to require A to bring forward all evidence in support of the

alleged negligence in the initial proceeding.

Restatement (Second) of Judgments § 27 cmt. c, illus. 4 (emphasis added). This

illustration is consistent with the Eighth Circuit’s analysis in Liberty Mutual, 335 F.3d at

762-63, and indicates that issue preclusion applies even if the underlying theory or

evidence proffered in the second action is different. Indeed, if the “negligence” issue in

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this illustration were replaced with “patent invalidity,” the same principle would warrant

application of issue preclusion to all of Camtek’s grounds for invalidity advanced in this

case.

Moreover, persuasive authority from other federal district courts also weighs in

favor of treating invalidity as a single issue for the purpose of issue preclusion. For

example, in Applied Medical Resources Corp. v. U.S. Surgical Corp. (Applied II), the

United States District Court for the Central District of California rejected the accused

infringer’s argument that only the particular grounds for invalidity advanced in the prior

litigation (Applied I) should be precluded. 352 F. Supp. 2d 1119, 1124-27 (C.D. Cal.

2005). The accused infringer asserted that the prior verdict resolved only four patent

validity issues: anticipation by prior sale, best mode, public use and prior publication. Id.

at 1124. In the subsequent action, the accused infringer advanced different grounds for

invalidity based on prior art that had not been considered in the previous action. Id. at

1124 n.6. The district court concluded that issue preclusion barred the accused infringer

from relitigating not only the grounds for invalidity that it had argued in the first

litigation, but also any new grounds for invalidity raised in the second litigation. Id. at

1126-28. On appeal, the Federal Circuit observed, in dicta, that the “conclusion in

Applied I that the patent is not invalid properly estops [the accused infringer] from

making the same arguments in Applied II. The issue is the same.” Applied Med. Res.

Corp. v. U.S. Surgical Corp., 435 F.3d 1356, 1362 (Fed. Cir. 2006) (emphasis added).

The vast majority of federal district courts that have encountered this question

have reached the same conclusion that the district court reached in Applied II. E.g.,

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Fairchild Semiconductor Corp. v. Power Integrations, Inc., C.A. No. 12-540, 2015 WL

1905871, at *2 (D. Del. Apr. 23, 2015); Evonik, 53 F. Supp. 3d at 792-94; Astrazeneca

UK Ltd. v. Watson Labs., Inc., 905 F. Supp. 2d 596, 602-03 (D. Del. 2012); Roche Palo

Alto LLC v. Apotex, Inc., 526 F. Supp. 2d 985, 994-95 (N.D. Cal. 2007); Meritor

Transmission Corp. v. Eaton Corp., Civil No. 1:04CV178, 2006 WL 3951711, at *4-7

(W.D.N.C. Sept. 26, 2006). Granted, none of these decisions is binding here.

Nonetheless, the Court finds their reasoning compelling, particularly in light of the

Eighth Circuit’s analysis in Liberty Mutual and the Restatement principles outlined

above.

Camtek does not persuasively distinguish the district court’s decision in Applied II

or any of the other decisions that have reached the same conclusion. Camtek asserts that

these decisions “reflect a misunderstanding of patent law” because “a patentee’s rights

under a patent are defined by the claims of the patent.” But this observation has no

material bearing on the Court’s foregoing analysis. The facts remain that the same claims

of the same ’6,298 Patent have been asserted against the same defendant in this case as in

the Falcon Litigation, Camtek had ample opportunity and incentive to receive a full and

fair adjudication of invalidity in the Falcon Litigation, and Camtek took advantage of that

opportunity by actually litigating invalidity in the Falcon Litigation.

Camtek also argues that Applied II and the other similar decisions are based on the

flawed premise that “a district court can hold a patent (claim) to be valid for all eternity.”

But none of these decisions relies on that premise to support its result, nor does this

Court. That Camtek is foreclosed in this case from raising an issue that it previously

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litigated says nothing about the validity of the ’6,298 Patent, nor does it preclude a

different party from challenging the validity of the ’6,298 Patent in another case.

Camtek cites one decision in support of its argument that issue preclusion should

not apply to grounds for invalidity that it did not advance in the Falcon Litigation. See

TASER Int’l, Inc. v. Karbon Arms, LLC, 6 F. Supp. 3d 510 (D. Del. 2013). In TASER, the

United States District Court for the District of Delaware concluded that each theory of

invalidity is a separate issue for the purpose of issue preclusion. Id. at 519. The TASER

court reached its conclusion in one paragraph of minimal analysis that cited only a

secondary source with no binding or persuasive basis for that conclusion. Id. (citing 6

Annotated Patent Digest § 38:46). The TASER decision neither cites nor analyzes the

principles underlying issue-preclusion doctrine, the Restatement, or any of the numerous

federal district court decisions that have reached the opposite conclusion. Accordingly,

this Court is not persuaded by the decision in TASER.

Camtek also argues that policy considerations weigh against treating patent

invalidity as a single issue for the purpose of issue preclusion. As support, Camtek cites

Lear, Inc. v. Adkins, 395 U.S. 653 (1969), in which the Supreme Court of the United

States held that patent licensees are not estopped from challenging the validity of the

licensed patent by virtue of having taken a license. The Supreme Court reasoned that

there are important policies favoring challenges to validity. Lear, 395 U.S. at 663-64.

The Federal Circuit subsequently considered the breadth of the principle described in

Lear, and concluded that “general principles of res judicata apply, despite the policies

favoring challenges to validity expressed in Lear.” Foster v. Hallco Mfg. Co., 947 F.2d

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469, 475 (Fed. Cir. 1991); see also Applied II, 352 F. Supp. 2d at 1126 (rejecting

argument that Lear counsels against treating validity as a single issue for purposes of

issue preclusion, relying on Foster). This Court agrees and concludes that Camtek’s

policy argument is unavailing.

In sum, based on the principles underlying issue-preclusion doctrine, the guidance

provided by the Restatement, and the persuasive reasoning from numerous district courts

that have addressed this question, the Court concludes that patent invalidity is a single

issue for the purpose of issue preclusion. Because the alleged invalidity of the ’6,298

Patent was actually litigated and determined by a valid and final judgment as between

these parties in the Falcon Litigation, and that determination was essential to the prior

judgment, all of the elements of issue preclusion are satisfied. Therefore, Camtek is

precluded from advancing any grounds for invalidity of the ’6,298 Patent in this case.

B. The Change-of-Law Exception

Camtek argues that, even if the elements of issue preclusion are satisfied, issue

preclusion should not foreclose Camtek’s indefiniteness defense because the Supreme

Court’s decision in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), is

an intervening change in the relevant law.

An exception to issue preclusion is triggered when the controlling principles of

law have changed. Ginters v. Frazier, 614 F.3d 822, 826-27 (8th Cir. 2010); see also

Dow Chem. Co. v. Nova Chems. Corp. (Canada), 803 F.3d 620, 628 (Fed. Cir. 2015).

“Therefore, a court is not bound by a previous decision where there is a change in the

controlling precedent.” Dow, 803 F.3d at 628-29. The change-of-law exception applies

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to both law-of-the-case doctrine and issue preclusion. Ginters, 614 F.3d at 826-27;

Baranski v. United States, 515 F.3d 857, 861 (8th Cir. 2008); see also Dow, 803 F.3d at

628-29. Similar to issue preclusion, law-of-the-case doctrine provides that, “when a

court decides upon a rule of law, that decision should continue to govern the same issues

in subsequent stages of the same case.” Maxfield v. Cintas Corp., No. 2, 487 F.3d 1132,

1134-35 (8th Cir. 2007) (internal quotation marks omitted); accord Dow, 803 F.3d at

627.

In Nautilus, the Supreme Court held that the Federal Circuit’s prior standard for

determining whether a patent is invalid as indefinite was contrary to the governing

statute, 35 U.S.C. § 112, and articulated a new standard to take its place. 134 S. Ct. at

2124. Specifically, the Supreme Court rejected the previous “insolubly ambiguous” or

“amenable to construction” standard and instead held that “a patent is invalid for

indefiniteness if its claims, read in light of the specification delineating the patent, and the

prosecution history, fail to inform, with reasonable certainty, those skilled in the art about

the scope of the invention.” Id. The Federal Circuit subsequently recognized that

Nautilus changed the law regarding patent indefiniteness and that a court may reconsider

indefiniteness arguments decided before Nautilus that would otherwise be precluded

under either issue-preclusion doctrine or law-of-the-case doctrine. Dow, 803 F.3d at 628-

29. As it pertains to law-of-the-case doctrine, the change-of-law exception is available

until the proceeding has reached final judgment. Id. at 628.

In the Falcon Litigation, the district court applied the pre-Nautilus indefiniteness

standard when it denied Camtek’s motion for summary judgment as to invalidity in July

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2008. August Tech., No. 05-cv-1396, Dkt. 294. When the Supreme Court decided

Nautilus on June 2, 2014, this case had not commenced and the Falcon Litigation had not

reached final judgment. Therefore, Camtek’s indefiniteness defense was governed by

law-of-the-case doctrine rather than issue preclusion, and the change-of-law exception

was available to Camtek until the Falcon Litigation reached final judgment. See Dow,

803 F.3d at 627-28.

When the Supreme Court decided Nautilus, the district court in the Falcon

Litigation had granted summary judgment to Rudolph on the limited infringement issue

remanded by the Federal Circuit and the parties were in the midst of briefing additional

post-trial issues before the district court. On February 10, 2015, the district court entered

judgment in the Falcon Litigation, which the Federal Circuit affirmed on February 3,

2016. With approximately eight months between the date Nautilus was decided and the

date the district court entered judgment in the Falcon Litigation, and with another year

before the Federal Circuit affirmed the judgment on appeal, Camtek had ample

opportunity and incentive to raise the change-of-law exception in the Falcon Litigation.

It chose not to. Camtek’s indefiniteness defense, therefore, is no different than any other

ground for invalidity of the ’6,298 Patent that was available to Camtek but not asserted in

the Falcon Litigation. Issue preclusion applies.

Camtek emphasizes that in Dow, the Federal Circuit observed that the change-in-

law exception “applies whether the change in law occurs while the case is before the

district court or while the case is on appeal.” Id. at 629. But that observation only

underscores the fact that nothing prevented Camtek from raising the change-of-law

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exception during the Falcon Litigation, regardless of the procedural posture of the case at

that time. Although Camtek asserts that the scope of live issues in the Falcon Litigation

had been narrowed after remand from the Federal Circuit, that does not explain why

Camtek did not attempt to raise the change-of-law exception before the Falcon Litigation

reached a final judgment. When the Supreme Court decided Nautilus, a new invalidity

argument became available to Camtek. And the change-of-law exception would have

permitted Camtek to raise that argument notwithstanding the district court’s prior

summary judgment ruling in the Falcon Litigation. Camtek did not take advantage of

that opportunity. By not raising the issue, Camtek abandoned that argument, just as it

abandoned any other unasserted invalidity defenses.

Accordingly, the change-of-law exception to issue preclusion does not permit

Camtek to relitigate the issue of indefiniteness in this case.

III. Issue Preclusion as to Claim Construction

The parties also dispute whether issue preclusion applies to the construction of

certain claim terms in the ’6,298 Patent. Specifically, the parties disagree about whether

the construction of claim terms in the Falcon Litigation precludes this Court from

construing the seven disputed claim terms in this case.

At the claim-construction stage, a district court’s duty is “to resolve a dispute

about claim scope that has been raised by the parties.” Eon Corp. IP Holdings v. Silver

Spring Networks, 815 F.3d 1314, 1319 (Fed. Cir. 2016). This duty resides with the court

because “ ‘the ultimate question of construction [is] a legal question.’ ” Id. at 1318

(quoting Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 842 (2015)). Claim-

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construction determinations may be subject to issue preclusion; indeed, previously

construed patent claim terms are not available for redetermination in a subsequent action

that presents the identical claim-construction inquiry. e.Digital Corp. v. Futurewei

Techs., Inc., 772 F.3d 723, 726 (Fed. Cir. 2014); see also Del Mar Avionics, Inc. v.

Quinton Instrument Co., 836 F.2d 1320, 1324 (Fed. Cir. 1987).

When engaging in claim construction, the district court must construe the claims

“independent of the accused product, in light of the specification, the prosecution history,

and the prior art.” Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565,

1580 (Fed. Cir. 1991) (internal quotation marks omitted), overruled on other grounds by

Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282 (Fed. Cir. 2009). Although it is appropriate

for a court to consider the accused device when determining which aspects of the patent

claim should be construed, the claim language itself “is construed in the light of the claim

language . . . not in light of the accused device.” Exigent Tech., Inc. v. Atrana Solutions,

Inc., 442 F.3d 1301, 1309 n.10 (Fed. Cir. 2006) (emphasis in original) (citation omitted)

(internal quotation marks omitted). Claim construction merely elaborates the normally

terse claim language “in order to understand and explain, but not to change, the scope of

the claims.” Scripps, 927 F.2d at 1580. Therefore, issue preclusion may apply to claim-

construction determinations even if the accused product in the first case is different than

the accused product in a subsequent case. See, e.g., e.Digital Corp., 772 F.3d at 726;

Pfaff v. Wells Elecs., Inc., 5 F.3d 514, 516-18 (Fed. Cir. 1993).

As addressed above in Part I, the Eighth Circuit has recognized five elements to

issue preclusion. Sandy Lake, 714 F.3d at 1102. It is undisputed that the parties in this

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case are the same as in the Falcon Litigation and that the Falcon Litigation resulted in a

valid and final judgment. In addition, because Camtek was found to infringe the asserted

claims of the ’6,928 Patent in the Falcon Litigation, and infringement of a patent claim

can occur only if each element of the asserted patent claim is present in the accused

product, any determination of claim scope in the Falcon Litigation necessarily was

essential to the prior judgment. Therefore, the Court’s analysis must focus on the

remaining elements of issue preclusion—namely, whether the disputed claim-

construction issues in this case are the same as the claim-construction issues that were

actually litigated and determined in the Falcon Litigation. The Court will address each

disputed claim term in turn.

A. “Wafer”

In the Falcon Litigation, the district court construed the claim term “wafer” in the

Falcon Claim Construction Order. August Tech., No. 05-cv-1396, Dkt. 268. Camtek

challenged that construction on appeal, and the Federal Circuit modified the construction.

Specifically, the Federal Circuit construed the claim term “wafer” as “a thin, discrete

slice of semiconductor material with circuitry thereon that is ready for electrical testing

having one or more dies. A plurality of wafers means more than one physically distinct

wafer.” August Tech., 655 F.3d at 1286. The Federal Circuit also observed that “the

claims neatly accommodate a wafer in any discrete format, such as a whole wafer, a

discrete portion of a wafer (a sawn wafer or a broken wafer), and even a discrete physical

substrate that includes only an individual die.” Id. at 1285. On remand, Camtek

advanced an interpretation of the Federal Circuit’s modified construction that the district

19

court rejected. August Tech., No. 05-cv-1396, Dkt. 964 at 23-26. However, the parties

now agree that the claim term “wafer” has been construed to mean:

A thin, discrete slice of semiconductor material with circuitry thereon that

is ready for electrical testing having one or more dies. A plurality of wafers

means more than one physically distinct wafer. A physically distinct wafer

is a wafer in any discrete format, such as a whole wafer, a discrete portion

of a wafer (a sawn wafer or a broken wafer), and even a discrete physical

substrate that includes only an individual die.

Although the parties agree that this prior construction is binding in this case,

Camtek asserts that the parties disagree about how to interpret this prior construction.

Camtek argues that two elements of issue preclusion—first, that the issue must be the

same, and second, that the issue must have been actually litigated—are not satisfied

because the parties have not had an opportunity to litigate what effect the Federal

Circuit’s construction of “wafer” has on other parts of the ’6,298 Patent. As such,

Camtek proposes “clarifying” the Federal Circuit’s construction of “wafer” by adding the

following:

In the preamble and throughout the claim, the definition of wafer should be

the same and should have the same form. In other words, if a whole wafer

is used to satisfy the wafer element in one portion of the claim, a physically

discrete die cannot be used to satisfy it in another part of the claim,

especially when the subsequent occurrence refers back to the previous

occurrence for antecedent basis.

It is undisputed that this proposed language is not part of the Federal Circuit’s

construction of “wafer.” Nonetheless, Camtek argues that this additional language is

necessary because the term “wafer” appears numerous times in the asserted patent claims,

yet the Federal Circuit’s construction was applied narrowly on remand to just one

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instance in which the term “wafer” appears in the asserted patent claims. Camtek’s

arguments are unpersuasive for at least two reasons.

First, contrary to Camtek’s arguments, the ultimate issue here is the same as the

issue in the Falcon Litigation—the construction of the claim term “wafer.” Camtek

suggests that it is presenting a new issue—not the issue of what “wafer” means, but rather

the issue of whether “wafer” must have a consistent meaning throughout the patent claim.

But that distinction is flawed because Camtek is not simply asking for the meaning of

“wafer” to be applied consistently. If Camtek were seeking consistent application of the

meaning of “wafer,” there would be no need for the proposed “clarifying” language.

Instead, the Court simply could apply the Federal Circuit’s undisputed construction to

each instance in which the word “wafer” appears in the asserted patent claims, which is

what Rudolph has requested.

Camtek’s “clarifying” language modifies the Federal Circuit’s construction of the

term “wafer.” The Federal Circuit’s construction recognized that a “wafer” can take

various forms so long as it is “a thin, discrete slice of semiconductor material with

circuitry thereon that is ready for electrical testing having one or more dies.” August

Tech., 655 F.3d at 1286. Camtek would like this Court to conclude additionally that, if a

wafer takes a certain form in one part of the patent claim, it must maintain that same form

in other parts of the patent claim. But the Federal Circuit’s construction does not impose

that limitation.

Moreover, such a limitation is not required as a matter of law. In Intergraph Corp.

v. Intel Corp., 89 F. App’x 218, 228 (Fed. Cir. 2004), the Federal Circuit recognized that

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a claim construction that defines a term but allows that term to take multiple forms within

the confines of the court’s construction is permissible and “does not run afoul of the

general rule that a claim term should be interpreted consistently throughout a claim.” In

Intergraph, the district court had interpreted the term “instruction” to mean “the smallest

unit of work capable of being processed at any particular stage in the computer.” 89 F.

App’x at 228. The Federal Circuit concluded that the fact that an “instruction” could be

64 bits at one stage of the patented method and 57 bits at a later stage of the patented

method did not make the district court’s construction inconsistent, so long as at all times

the “instruction” was “the smallest unit of work capable of being processed.” Id.

Similarly, in this case, if a “whole wafer” is used in one part of the patent claim, but a

“broken wafer” is used in another part of the patent claim, the definition of “wafer”

remains consistent so long as, in both instances, the wafer is “a thin, discrete slice of

semiconductor material with circuitry thereon that is ready for electrical testing having

one or more dies.” In sum, Camtek does not advance a new issue distinct from the

Federal Circuit’s construction of “wafer,” nor has Camtek identified a legal flaw in that

construction.2 Rather, Camtek seeks an opportunity to litigate an issue that has been

decided: the meaning of “wafer.”3

2 Even if Camtek had identified a legal flaw, a party cannot oppose the application

of issue preclusion by attacking the earlier judgment on the ground that the original

forum committed legal error. In re Scarborough, 171 F.3d 638, 642 (8th Cir. 1999).

3 Camtek cites Yodlee, Inc. v. Plaid Techs., Inc., for the proposition that a district

court may reconstrue claim terms if issues arise that were not presented in the earlier

case. C.A. No. 14-1445, 2016 WL 204372 (D. Del. Jan. 15, 2016). This decision is not

binding on this Court. Moreover, in Yodlee, the district court declined to apply issue

22

Second, Camtek argues that this issue was not actually litigated in the Falcon

Litigation because Camtek did not have a full and fair opportunity to litigate the scope of

the Federal Circuit’s modified construction of “wafer” on remand. It is true that Camtek

did not advance the specific argument in the Falcon Litigation that it now asserts

regarding the scope of “wafer.” But Camtek proposed a definition of “wafer” during

claim construction in the Falcon Litigation, subsequently advanced an alternative

interpretation of the Federal Circuit’s “wafer” construction, and sought additional

construction of other parts of the ’6,298 Patent that contain the term “wafer,” all of which

the district court rejected in the Falcon Litigation. August Tech., No. 05-cv-1396, Dkt.

964 at 24-26. Camtek had the opportunity on remand in the Falcon Litigation to raise

concerns about the Federal Circuit’s construction of “wafer,” and Camtek in fact raised

some of those concerns. Thus, Camtek’s suggestion that it was denied a fair opportunity

to fully litigate the meaning of “wafer” is unpersuasive.

Accordingly, the Court concludes that the construction of the claim term “wafer”

adopted in the Falcon Litigation, as modified by the Federal Circuit and without the

additional language Camtek proposes, is entitled to issue-preclusive effect in this case.

B. “Training”

The parties agree that the construction of the claim term “training” in the Falcon

Litigation should govern in this case because all of the elements of issue preclusion are

preclusion because the claim-construction order in the earlier action was not a final

judgment for the purpose of issue preclusion. Id. at *3. Thus, because the procedural

posture in Yodlee is materially different than the circumstances in this case, Yodlee is

inapposite.

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satisfied. But the parties dispute the exact language of the district court’s construction of

“training” in the Falcon Litigation. The parties agree, and the record reflects, that the

district court in the Falcon Litigation defined the term “training” to mean “examining

wafers to develop a model of a good quality wafer.” August Tech., No. 05-cv-1396, Dkt.

964 at 28-29, Dkt. 463 at 17. But Camtek argues that, in the Falcon Litigation, the

district court observed that “training” occurs in a step separate from “inspection.” Thus,

Camtek proposes adding the phrase “during a step distinct from inspection” to the end of

the undisputed portion of the definition of “training.”

At the claim-construction stage in the Falcon Litigation, the district court adopted

a construction of “training” that included elements from both Rudolph’s and Camtek’s

proposed constructions. In doing so, the court rejected a portion of Rudolph’s proposed

construction that stated “by which to locate defects,” and observed that “Plaintiff[’s]

reliance on the step in which the model is used to inspect die to locate defects is a step

separate from training, and need not be used to define training. Accordingly, the Court

will adopt the following construction: ‘Examining wafers to develop a model of a good

quality wafer.’ ” August Tech., No. 05-cv-1396, Dkt. 268 at 20.

When read in context, it is clear that the district court’s statement preceding its

construction of “training” is not a part of that term’s definition. Notably, the definition of

“training” provided to the jury in the Falcon Litigation did not include any reference to

separate steps. Id., Dkt. 463 at 17. In addition, in its summary judgment order following

remand from the Federal Circuit, the district court distinguished between its construction

of the claim term “training” and the fact that “[i]n arriving at this construction, the Court

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noted that ‘the step in which the model is used to inspect die to locate defects is a step

separate from training.’ ” Id., Dkt. 964 at 28-29 (emphasis added). The district court’s

construction is distinct from its contemporaneous observations. If the court had intended

to include a statement pertaining to separate steps in its definition of “training” it could

have done so. Despite multiple opportunities to do so, it did not. Moreover, if Camtek

believed that the definition of “training” was flawed absent a statement regarding

separate steps, it had a full opportunity to advance that argument in the Falcon Litigation.

Thus, Camtek has not demonstrated that appending language to the undisputed

construction of “training” is warranted here.

Accordingly, the Court concludes that the construction of the claim term

“training” adopted in the Falcon Litigation, without the additional language proposed by

Camtek, is entitled to issue-preclusive effect in this case.4

C. “Inspection”

As with “training,” the parties agree that the construction of the claim term

“inspection” in the Falcon Litigation should govern in this case because all of the

elements of issue preclusion are satisfied. However, the parties dispute the exact

language of the district court’s construction of “inspection” in the Falcon Litigation. The

parties agree, and the record reflects, that the district court in the Falcon Litigation

defined the claim term “inspection” to mean “examining wafers to locate one or more

4 The Court is mindful that, in the parties’ joint claim construction status report,

Rudolph also proposed additional language in the definition of “training” that was not

included in the Falcon Claim Construction Order or the definitions provided to the jury in

the Falcon Litigation. However, Rudolph has abandoned that additional language and

now argues only for the undisputed portion of the definition.

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defects, if any.” August Tech., No. 05-cv-1396, Dkt. 268 at 20-21, Dkt. 463 at 17. But,

similar to its argument regarding “training,” Camtek asserts that the district court in the

Falcon Litigation observed that “inspection” occurs in a step separate from “training.”

Thus, Camtek proposes adding the phrase “during a step distinct from training” to the end

of the undisputed portion of the definition of “inspection.”

For the same reasons described above in Part III.B. with respect to “training,”

Camtek has not demonstrated that appending language to the undisputed construction of

“inspection” is warranted. Accordingly, the Court concludes that the construction of the

claim term “inspection” adopted in the Falcon Litigation, without the additional language

proposed by Camtek, is entitled to issue-preclusive effect in this case.

D. “Model of [a] good quality wafer”

The parties agree that in the Falcon Litigation the district court construed the

phrase “model of [a] good quality wafer” to mean a model “with all of the necessary

characteristics to inspect an unknown quality wafer.” Although this definition did not

appear in the Falcon Claim Construction Order, the district court provided this definition

in its post-trial order denying Camtek’s motion for judgment as a matter of law and

referenced this definition again in its summary judgment order following remand from

the Federal Circuit. See August Tech., No. 05-cv-1396, Dkt. 644 at 8, Dkt. 964 at 32.

In the parties’ joint claim construction status report in this case, Rudolph proposed

additional language—namely, that the “model can be generated with or without human

involvement.” But Rudolph has abandoned that additional language and now appears to

argue only for the undisputed portion of the definition. Camtek, on the other hand,

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continues to advance its proposed additional language—namely, that a “model of [a]

good quality wafer” is “[a]n automated computer-generated model.”

Although the parties did not dispute the phrase “model of [a] good quality wafer”

at the initial claim-construction stage in the Falcon Litigation, the district court construed

this phrase in its post-trial order, and Camtek did not challenge that construction on

appeal. See August Tech., No. 05-cv-1396, Dkt. 644 at 8, Dkt. 964 at 32. Following

remand from the Federal Circuit, Camtek asked the district court to reconstrue this

phrase. But the district court declined, observing that, because Camtek had not

challenged the district court’s prior construction on appeal, the district court’s prior

construction became the law of the case. August Tech., No. 05-cv-1396, Dkt. 964 at 23-

26. Therefore, the record reflects that the construction of the phrase “model of [a] good

quality wafer” was at issue and actually litigated in the Falcon Litigation.

Accordingly, the construction of the phrase “model of [a] good quality wafer”

adopted in the Falcon Litigation, without the additional language proposed by Camtek, is

entitled to issue-preclusive effect in this case.

E. “Freezes”

Camtek argues in its response memorandum that the term “freezes” should be

construed by this Court. But Camtek did not cross-move for any relief, and the term

“freezes” is not raised in Rudolph’s motion for partial summary judgment. Because this

issue is not properly before the Court, the Court declines to address it. See, e.g., Peterson

v. City of Cosmos, Minn., No. Civ.03-6570, 2005 WL 1267620, at *8 (D. Minn. May 27,

27

2005) (declining to consider issue raised by nonmoving party in response to motion for

summary judgment).

F. Remaining Disputed Phrases

The remaining ’6,298 Patent phrases that the parties dispute for the purpose of this

motion are “visual inputting,” “training a model as to parameters of a good wafer via

optical viewing of multiple known good wafers,” and “inspecting unknown quality

wafers using the model.” None of these phrases was disputed at the claim-construction

stage of the Falcon Litigation; therefore, the district court did not define these phrases in

the Falcon Claim Construction Order. See August Tech., No. 05-cv-1396, Dkt. 268.

And, unlike the terms “wafer” and “model of [a] good quality wafer,” neither the Federal

Circuit nor the district court appears to have addressed the construction of these three

phrases at any other point in the Falcon Litigation.

Rudolph argues, however, that the district court in the Falcon Litigation construed

these phrases by giving them their ordinary meaning. When the district court charged the

jury in the Falcon Litigation, after listing out the patent claim terms that the district court

had construed, the court gave the following catch-all instruction to the jury: “You should

give the rest of the words in the claims their ordinary meaning in the context of the patent

specification and prosecution history.” August Tech., No. 05-cv-1396, Dkt. 463 at 17.

Rudolph contends, in essence, that a patent claim term has been construed for the purpose

of issue preclusion when that claim term is given its ordinary meaning. This Court

disagrees for several reasons.

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First, when discussing a district court’s decision to apply the ordinary meaning to

a patent claim term, the Federal Circuit consistently refers to that decision as a “decision

not to construe the terms.” Eon Corp., 815 F.3d at 1318 (emphasis added); accord O2

Micro Int’l Ltd. v. Beyond Innovation Tech. Co., 521 F.3d 1351, 1358-62 (Fed. Cir. 2008)

(recognizing that a “district court is not obligated to construe terms with ordinary

meanings” and concluding that the “district court’s failure to construe” a disputed claim

term was legal error). Indeed, the respective district courts in both Eon and O2 Micro

expressly declined to construe the disputed terms. See Eon, 815 F.3d at 1317 (observing

that the district court concluded that the disputed terms “do not require construction”);

O2 Micro, 521 F.3d at 1357 (observing that the district court concluded that the disputed

term “needs no construction”). Thus, contrary to Rudolph’s argument, a court’s decision

to apply the ordinary meaning of a patent claim term is not the same as construing that

term. It is the opposite of construing the term.

Second, the meanings of the three now-disputed phrases in this case have not

previously been litigated. In Eon and O2 Micro, the parties took opposing positions

regarding the construction of the disputed claim terms, and the respective district courts

considered and rejected proposed constructions. See Eon, 815 F.3d at 1317; O2 Micro,

521 F.3d at 1357. By contrast, the parties in the Falcon Litigation never disputed the

meaning of the three now-disputed phrases, and the district court never specifically

remarked on their meaning. Rather, the district court’s sole, vague reference to the

meaning of these phrases is a catch-all instruction that the jury should apply the ordinary

meaning to any term for which the court had not supplied a definition. The record in the

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Falcon Litigation, including this catch-all jury instruction, belies Rudolph’s contention

that these phrases were construed in the Falcon Litigation.

Third, Rudolph’s position is not logically sound. Indeed, if Rudolph’s position

were taken to its logical conclusion, then any time there are successive lawsuits involving

the same patent claims and the same parties, the construction of any claim term in the

second case would be improper because ordinary meaning would have attached to all

patent terms not expressly defined by the court in the first action. Rudolph proffers no

legal authority to support such a far-reaching rule. Moreover, the result of such a rule

would create the perverse incentive for parties to vigorously contest every patent claim

term in order to avoid unintentionally becoming bound to “ordinary meaning” by default

in a later case, which would, in turn, require courts to construe every term in every

asserted patent claim.

Rudolph argues that, because the disputed claim terms appeared on the special

verdict form, the Falcon Litigation necessarily adjudicated the construction of those

terms. But in the relevant portions of the special verdict form, the jury in the Falcon

Litigation addressed only whether Camtek had infringed the asserted patent claims.

August Tech., No. 05-cv-1396, Dkt. 466 at 1-4. In doing so, the jury did not adopt a

construction of any term or phrase in the ’6,298 Patent. Indeed, claim construction is not

the province of the jury; claim construction is a legal question that is exclusively for the

court to resolve. Eon, 815 F.3d at 1318. And it is undisputed that the construction of the

phrases “visual inputting,” “training a model as to parameters of a good wafer via optical

viewing of multiple known good wafers,” and “inspecting unknown quality wafers using

30

the model” were never submitted to the district court for adjudication in the Falcon

Litigation.

Accordingly, because the construction of the phrases “visual inputting,” “training

a model as to parameters of a good wafer via optical viewing of multiple known good

wafers,” and “inspecting unknown quality wafers using the model” were neither at issue

nor actually litigated in the Falcon Litigation, the Court concludes that the issue

preclusion doctrine does not foreclose the construction of these phrases in this case.

ORDER

Based on the foregoing analysis and all the files, records and proceedings herein,

IT IS HEREBY ORDERED:

1. Rudolph’s motion for partial summary judgment, (Dkt. 151), is

GRANTED with respect to the issue of the invalidity of the ’6,298 Patent and, therefore,

Camtek is precluded from contesting the validity of the ’6,298 Patent in this case.

2. Rudolph’s motion for partial summary judgment, (Dkt. 151), is

GRANTED with respect to the issue of claim construction and, therefore, the

construction adopted in the Falcon Litigation of the following four terms in claims 1 and

3 of the ’6,298 Patent are entitled to preclusive effect in this case as follows:

a. “wafer” means “a thin, discrete slice of semiconductor material with

circuitry thereon that is ready for electrical testing having one or

more dies. A plurality of wafers means more than one physically

distinct wafer. A physically distinct wafer is a wafer in any discrete

format, such as a whole wafer, a discrete portion of a wafer (a sawn

31

wafer or a broken wafer), and even a discrete physical substrate that

includes only an individual die”;

b. “training” means “examining wafers to develop a model of a good

quality wafer”;

c. “inspection” means “examining wafers to locate one or more defects,

if any”; and

d. “model of [a] good quality wafer” means “a model with all of the

necessary characteristics to inspect an unknown quality wafer.”

3. Rudolph’s motion for partial summary judgment, (Dkt. 151), is DENIED

with respect to the issue of claim construction to the extent that it seeks to preclude

construction in this case of the phrases “visual inputting,” “training a model as to

parameters of a good wafer via optical viewing of multiple known good wafers,” and

“inspecting unknown quality wafers using the model” in claims 1 and 3 of the ’6,298

Patent.

Dated: August 8, 2016 s/Wilhelmina M. Wright

Wilhelmina M. Wright

United States District Judge