On appeal, the Federal Circuit stated that a party is collaterally estopped from relitigating an issue if: (1) a prior action presents an identical issue; (2) the prior action actually litigated and adjudged that issue; (3) the judgment in that prior action necessarily required determination of the identical issue; and (4) the prior action featured full representation of the estopped party. According to the court, a Rule 36 judgment may serve as a basis for collateral estoppel if the issue was essential or necessary to the Rule 36 judgment. In affirming the Board's decision here, the court reasoned that the question of whether RFC 2401 was a printed publication was essential to the Rule 36 judgment in VirnetX I since each ground of unpatentability that VirnetX appealed in VirnetX I relied on RFC 2401.
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