Opinion
Civil No. 1:02CV77.
March 24, 2005
MEMORANDUM OF OPINION
THIS MATTER is before the Court on the following matters:
1. Defendants' Proposal for Expeditiously Resolving this Action, filed June 11, 2004;
2. Plaintiff's Motion for Reconsideration and Clarification of April 22, 2004, Memorandum of Opinion regarding Summary Judgment and Request for Oral Argument, filed June 11, 2004;
3. Ramsey Group, Inc.'s (Ramsey) Motion for dismissal without prejudice, certification for appeal and stay pending appeal, filed June 11, 2004;
4. Expo Power Systems, Inc.'s (Expo) Motion for Injunctive Relief against further Infringement, filed June 11, 2004;
5. Joint Statement in Response to Order filed June 10, 2004, filed June 17, 2004; and
6. Ramsey's Motion for Reconsideration and Vacation of Summary Judgment based on Newly Discovered Evidence, Motion for Sanctions and Motion to Dismiss, filed October 22, 2004.
I. PROCEDURAL HISTORY
On March 26, 2002, Ramsey initiated this action seeking declaratory judgments that it has not infringed United States Patent No. 6,308,728 B1 ('728) for a spill containment system and method and that the patent is invalid. The complaint also asserted a claim for unfair trade practices pursuant N.C. Gen. Stat. § 75-1.1. The Defendants in that action were EGS International, Inc., doing business under the name of EnviroGuard (EnviroGuard), Douglas Frazier (Frazier), the inventor of the '728 patent and majority shareholder of EnviroGuard, and Kenneth Cotton (Cotton), the president of EnviroGuard. According to the complaint, "Ramsey Group and Defendants are competitors in the field of designing, manufacturing, and selling products for containing spills of hazardous material from stationary industrial and commercial batteries such as those used on the telecommunications industry." Complaint, filed March 26, 2002, at 3.
On July 26, 2002, the undersigned granted Ramsey's motion for leave to file a supplemental amended complaint which added Expo as a defendant and United States Patent No. 6,395,417 B1 (the '417 patent) to its request for declaratory judgments of non-infringement and invalidity. Memorandum and Order, filed July 26, 2002. Expo counterclaimed for a declaration of infringement and later amended its counterclaim to assert additional claims. Answer and Counterclaim, filed August 9, 2002.
On October 16, 2002, this action was consolidated with Expo Power Systems, Inc. v. Ramsey Group, Inc., Civil Case No. 1:02cv202. Order, filed October 16, 2002. In that action, originally filed in California, Expo sought a declaration that Ramsey has infringed the '417 patent. Memorandum and Order, filed August 27, 2003, at 4.
On August 27, 2003, the undersigned granted the Plaintiff's motion for summary judgment as to Expo's claim of infringement of the '728 patent and dismissed Expo's counterclaim as to that patent. Id., at 15. As a result, the '728 patent is no longer at issue in the action. On September 3, 2003, the undersigned issued a claim construction decision as to the '417 patent. Memorandum of Decision, filed September 3, 2003. On April 22, 2004, the undersigned addressed the parties' cross-motions for summary judgment and made the following rulings:
1. Ramsey's motion for partial summary judgment of non-infringement of the '417 patent was denied as to Claims 1, 5, 6, 9, 12, and 13;
2. Expo's motion for partial summary judgment of infringement of the '417 patent was granted as to Claims 1, 5, and 6;
3. Expo's motion for partial summary judgment of infringement of the '417 patent was denied as to Claim 12;
4. Expo's motion for partial summary judgment of infringement of the '417 patent was denied as to induced and/or contributory infringement as to Claims 12 and 13;
5. Ramsey's motion for partial summary judgment of patent invalidity as to the '417 patent was denied;
6. the Defendants' cross-motion for partial summary judgment of patent validity as to the '417 patent was granted;
7. Ramsey's motion for partial summary judgment of patent unenforceability as to the '417 patent was denied;
8. the Defendants' cross-motion for partial summary judgment of patent enforceability as to the '417 patent was granted;
9. the Defendants' motion for partial summary judgment as to claims of violations of the North Carolina Unfair and Deceptive Trade Practices Act was granted and those claims were dismissed from the case; and
10. the Defendants' motion for partial summary judgment as to their counterclaim for false advertising under the Lanham Act was granted in part and denied in part. The Court found that Expo was entitled to summary judgment as to its claim that a non-existent trademark was used on Ramsey's products. Expo's other claims of false advertising were not appropriate for summary judgment.
In the April 2004 decision, the undersigned asked the parties to advise of their positions concerning what issues and claims remained in the action. The parties responded that they were in agreement that the following issues remain:
1. whether Ramsey infringes Claims 9, 12 and 13 of the '417 patent;
Expo asserted a counterclaim against Ramsey for patent infringement. Amended Answer with Amended Counterclaims, filed March 5, 2003.
2. remedies, including damages, available to Expo for infringement of the '417 patent and whether an injunction should be awarded;
3. a determination as to whether the infringement was willful within the meaning of 35 U.S.C. § 284 for purposes of damages calculations;
4. a determination as to the appropriateness of an award of attorneys' fees and costs pursuant to 35 U.S.C. § 285;
5. whether false advertising was committed by Ramsey;
Expo asserted a counterclaim against Ramsey for false advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a). Amended Answer, supra.
6. remedies available for any such false advertising;
7. whether Expo should prevail on its claim against Ramsey for violations of the North Carolina Unfair and Deceptive Trade Practices Act;
Expo asserted a counterclaim against Ramsey for violations of N.C. Gen. Stat. § 75-16.1. Amended Answer, supra.
8. remedies available for any such violations; and
9. the appropriateness of any injunctive relief.
In addition to these issues, the parties jointly inquired as to the appropriateness of dismissing the claims against Defendant Kenneth Cotton since all claims in which he had been named have been resolved. The Defendants also noted that in the event a trial were necessary, they would consider dismissing certain portions of their claims.
II. THE MOTION TO RECONSIDER THE APRIL 2004 DECISION
After the April 2004 decision was issued, Ramsey moved pursuant to Fed.R.Civ.P. 54(b) for reconsideration due to "a number of factual and legal errors, including misreadings of deposition testimony[.]" Ramsey Group's Motion for Reconsideration and Clarification of April 22, 2004 Memorandum of Opinion regarding Summary Judgment and Request for Oral Argument, filed June 11, 2004, at 1.[A]n order of partial summary judgment is interlocutory in nature. Motions for reconsideration of interlocutory orders are not subject to the strict standards applicable to motions for reconsideration of a final judgment. This is because a district court retains the power to reconsider and modify its interlocutory judgments, including partial summary judgments, at any time prior to final judgment when such is warranted.American Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 514-15 (4th Cir. 2003) (internal citations omitted).
The undersigned will not address every issue raised by Ramsey in the motion because the gist of the arguments is disagreement with the outcome of the decision. For example, Ramsey argues that the Court credited the testimony of the Defendants' expert over that of the Plaintiff's expert. "[T]he Court made the decision to believe Mr. Robbins over Mr. Dick without knowing that Mr. Robbins volunteered to Mr. Egan at a trade show in May 2004 that Mr. Robbins' company (Acran, Inc.) has established an ongoing business relationship with Defendant Expo Power Systems, Inc., the entity that benefits from Mr. Robbins' testimony." Ramsey Group's Memorandum in Support of Motion for Reconsideration and Clarification of April 22, 2004 Memorandum and Opinion regarding Summary Judgment and Request for Oral Argument ["Ramsey Memorandum"], filed June 11, 2004, at 4-5 (emphasis added). The ruling on the parties' motions was rendered in April 2004, thus, the allegedly impeaching conversation had not yet occurred. As a result, this point does not support Ramsey's contention that the undersigned improperly credited one witness over another.
Ramsey also argues that the undersigned improperly rejected an affidavit proferred by its president, John Egan. The Court, however, did not reject that affidavit but instead found that it did not contain evidence sufficient to create a genuine issue of material fact. Nor did the Court make a credibility finding; in fact, the Court merely pointed out that a genuine issue of material fact cannot be created by use of an affidavit which conflicts with prior deposition testimony. At no point did the Court make a credibility finding as to Egan; it merely noted that he could not create an issue of fact in the manner attempted.
Ramsey also argues that the Court improperly relied on an installation manual submitted by Ramsey in support of its motion for summary judgment. "[T]he portion of the instructions that the Court emphasized . . . inadvertently fail to mention the need to unscrew and remove the lag screw that keeps the barrier section bolted to the floor." Ramsey Memorandum, at 10. However, Ramsey submitted the exhibit in support of its motion; it may not now argue that the Court should have divined its incompleteness.
Ramsey next attacks legal conclusions, claiming that the Court improperly applied the wrong standard to its determination that the '417 patent was valid pursuant to 35 U.S.C. § 102. The Court, Ramsey argues, extensively discussed the prior art in order to show that "because the prior art is `nonanalogous art,' . . . the prior art may be discounted or disregarded in the invalidity analysis. However, attacking the prior art references on the basis that they are nonanalogous art is wholly improper in the anticipation context ( i.e., the 35 U.S.C. § 102 context)." Id., at 13 (footnote added).
"Under 35 U.S.C. § 102, a claim is anticipated, and therefore invalid, when a single prior art reference discloses each and every element of the claimed invention." Kemin Foods, L.C. v. Pigmentos Vegetales del Centro A.A. de C.V., 240 F.Supp.2d 963, 969 (S.D. Iowa 2003), rev'd in part on other grounds, 93 Fed. Appx. 225 (Fed. Cir. 2004).
A prior art reference is "analogous if it is from the same field of endeavor as the invention." State Contracting Eng'g, Inc. v. Condotte America, Inc., 346 F.3d 1057, 1069 (Fed. Cir. 2003) (citations omitted). "`[A] reference may be from an entirely different field of endeavor than that of the claimed invention or may be directed to an entirely different problem from the one addressed by the inventor, yet the reference will still anticipate if it explicitly or inherently discloses every limitation recited in the claims.'" Id., at 1068 (quoting In re Schreiber, 128 F.3d 1473, 1478 (Fed. Cir. 1997)).
Ramsey misconstrues the format of the opinion. The Court first discussed the factual aspects to be applied to both legal contentions, invalidity based on anticipation pursuant to § 102 and invalidity based on obviousness pursuant to § 103. The discussion of the prior art includes both references which were outside the field of the '417 patent and references within the field. The Court then discussed the application of the law to the facts. The Court did not "attack the prior art references on the basis that they are nonanalogous art" in the anticipation context. In fact, there was no discussion at all of analogous or nonanalogous art.
Finally, Ramsey asks the Court to "clarify" one aspect of the claim construction in order to assist its attempts to "design around" the '417 patent. The claim construction decision was rendered in September 2003. The Court will not at this date undertake to elucidate that opinion, which it does not consider vague or in need of clarification. See, e.g., Gen-Probe, Inc. v. Vysis, Inc., 359 F.3d 1376, 1380 (Fed. Cir.), cert. denied, 125 S. Ct. 351 (2004); Resonate Inc. v. Alteon Websystems, Inc., 338 F.3d 1360, 1368 (Fed. Cir. 2003).
III. THE MOTIONS TO DISMISS, CERTIFY AND STAY
Ramsey asks the Court to dismiss all remaining claims without prejudice so that an appeal may proceed. Ramsey Group's Motion and Supporting Memorandum for Dismissal without Prejudice of Defendants' Remaining Claims . . ., Certification of the Court's Judgments Regarding Patent Infringement . . ., [and] Entry of Order Staying Remaining Issues Pending Appeal ["Ramsey's Motion and Memorandum"], filed June 11, 2004. Assuming arguendo that the remaining infringement claims live or die with the Court's claim construction and resolution of summary judgment, the damages issues have not yet been adjudicated. It would, therefore, be highly inefficient to proceed toward appeal before the completion of the damages portion of the case.For the same reason, the Court will not certify this case for an interlocutory appeal and stay the remaining issues pending such an appeal. Certification would only further delay the ultimate resolution of the case, a case which has languished for three years under the voluminous filings of the parties. Indeed, but for the filing of these unnecessary motions, this case would have been reached for trial prior to this year.
The Court will also take this opportunity to curtail the specter of additional discovery. In a footnote, Ramsey points out that "[i]f the Court does not certify the patent liability questions as final, appealable issues under Rule 54(b), then the parties may need to conduct additional expert discovery because the parties agreed to postpone expert depositions until this Court decided the parties' summary judgment motions." Id., at 13 n. 4. No additional time will be provided for discovery and the parties are instructed that they may not move for the same.
IV. EXPO'S MOTION FOR INJUNCTIVE RELIEF
Expo seeks an injunction to preclude further infringement of the '417 patent as to those claims for which it received summary judgment. Expo's Motion and Memorandum in Support for Injunctive Relief Against further Infringement of the '417 Patent, filed June 11, 2004. No resolution of the damages issues has occurred.Title 35 U.S.C. § 283 provides that a court having jurisdiction over a patent infringement action " may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." 35 U.S.C. § 283 (emphasis added). The language of the statute makes clear that the issuance of an injunction is discretionary. Odetics, Inc. v. Storage Tech. Corp., 185 F.3d 1259, 1272 (Fed. Cir. 1999) ("[D]istrict courts, as befits a question of equity, enjoy considerable discretion in determining whether the facts of a situation require it to issue an injunction[.]").
Here, although summary judgment has been granted on the issue of infringement as to some of the claims, other claims remain pending. No final judgment has been rendered in this action and no assessment of damages has occurred. The Court does not find that the issuance of a permanent injunction is warranted at this stage. See, e.g., NTP, Inc. v. Research in Motion, Ltd., 392 F.3d 1336 (Fed. Cir. 2004). However, the Court will require Ramsey to post a bond in the amount of $200,000 until the conclusion of the trial herein.
Ramsey argued that because the Defendants never moved for a preliminary injunction, this fact weighed against the entry of a permanent injunction, citing MercExchange, L.L.C. v. eBay, Inc., 275 F.Supp.2d 695 (E.D. Va. 2003). The Federal Circuit reversed that holding on March 16, 2005. MercExchange, L.L.C. v. eBay, Inc., ___ F.3d ___, 2005 WL 605779, *15 (Fed. Cir. 2005).
V. RAMSEY'S MOTION TO VACATE SUMMARY JUDGMENT, TO IMPOSE SANCTIONS AND TO DISMISS
Over two years after filing this action, over one year after the Court rendered a claim construction ruling, and six months after the Court's summary judgment decision, Ramsey for the first time raised the issue of co-inventorship of the '417 patent, claiming that Expo obtained the patent without disclosing to the Patent and Trademark Office (PTO) the existence of Howard Kuster, an alleged co-inventor of the patent. The case before this Court involves (1) whether Ramsey infringed the '417 patent, not who invented the invention; (2) whether the '417 patent was valid; and (3) whether the '417 patent was enforceable. There is no claim in the complaint or subsequent pleadings involving co-inventorship. Nor does Ramsey now seek to inject this issue into the case. Ramsey's sole reason for raising the issue now is in support of its motion to vacate the undersigned's summary judgment ruling and obtain a dismissal with prejudice of Expo's counterclaims.
Under 35 U.S.C. § 116 a patented invention may be the work of two or more joint inventors. Failure to name all the true inventors will invalidate a patent under 35 U.S.C. § 102(f) unless the patent's list of inventors can be corrected under 35 U.S.C. § 256. Once a patent is issued, however, its list of inventors is presumed to be correct. Attacks on the validity of a patent based on errors in the list of inventors are considered technical defenses and are disfavored.Levin v. Septodont, Inc., 34 Fed. Appx. 65, 69 (4th Cir. 2002) (internal citations omitted).
A person who alleges that he is a co-inventor of the invention claimed in an issued patent who was not listed as an inventor on the patent may bring a cause of action to correct inventorship in a district court under 35 U.S.C. § 256. . . . The text of [35 U.S.C.] section 116, however, only grants the Director of the Patent and Trademark Office the authority to take certain actions and plainly does not create a cause of action in the district courts to modify inventorship on pending patent applications.Eli Lilly Co. v. Aradigm Corp., 376 F.3d 1352, 1356 n. 1 (Fed. Cir. 2004) (internal citations omitted) (footnote added).
Title 35 U.S.C. § 256 provides in pertinent part:
Whenever through error . . . an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Director [of the Patent and Trademark Office] may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.
The error of omitting inventors . . . shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned[.]35 U.S.C. § 256 (emphasis added).
Kuster, the purported co-inventor, has not brought such a cause of action to correct inventorship. In March 2004, Expo filed a petition with the PTO as part of its continuation application for the '417 patent which contains claims of Kuster's alleged claims of inventorship. Exhibit 1, attached to Defendants' Opposition to Ramsey's Motion for Reconsideration and Vacation of Summary Judgment, etc., filed November 5, 2004. Section 256 provides that a proceeding to correct inventorship may be raised in either the PTO or the district court. Iowa State Univ. Research Found., Inc. v. Sperry Rand Corp., 444 F.2d 406, 410 (4th Cir. 1971). At the time that Expo made its filing with the PTO, Ramsey was not a party to such a proceeding because it was not an inventor, omitted co-inventor or assignee. Nichols Inst. Diagnostics, Inc. v. Scantibodies Clinical Lab., Inc., 218 F.Supp.2d 1243, 1246 n. 6 (S.D. Cal. 2002). However, in September 2004, Ramsey purchased Kuster's purported interest in the patent and became a licensee. Expo still had no obligation to make Ramsey aware of the PTO proceeding since it became "a mere licensee." Id., at 1247 n. 8.
[T]he language of § 256 provides two means of obtaining the remedy of correction without reference to any limiting circumstances. Read literally, § 256 provides for correction by either the PTO or the district court. There simply is no literal or explicit limiting provision in § 256 stating that only the district court can correct a patent after a nonjoinder issue has been raised first in infringement litigation.Id., at 1248 (internal citations omitted). Here, Ramsey did not raise an issue in this Court of non-joinder of a co-inventor and Expo initiated the PTO proceeding while the infringement action was pending. Expo clearly had a right to do so without providing any notice to Ramsey. Id. In fact, no party has moved for adjudication of that issue in this Court. While Ramsey claims that summary judgment should be vacated based on that issue, the fact is that such a claim has never been raised in the complaint. See, e.g., Eli Lilly, supra. On the other hand, that claim has been pending in the PTO for a year. Indeed, Ramsey does not seek any relief in this Court based on co-inventorship except dismissal of Expo's counterclaims on the basis that all parties have not been joined in the action, i.e., Kuster has not been joined.
The application does not disclose whether it is brought pursuant to 35 U.S.C. § 116 or § 256.
"As a general proposition, the Federal Circuit has found no jurisdictional problem where the PTO takes action on a patent that is the subject of an infringement action. . . . It seems reasonable to infer that an alleged infringer's challenge to the validity of a patent in a court and the patent owners' requesting PTO correction are also `concepts not in conflict.'" Nichols, 218 F.Supp.2d at 1249 (quoting In re Etter, 756 F.2d 852, 857 (Fed. Cir. 1985)). "`The inventors as named in an issued patent are presumed to be correct.'" Eli Lilly, supra, at 1358 (quoting Hess v. Advanced Cardiovascular Sys., Inc., 106 F.3d 976, 980 (Fed. Cir. 1997)). Since there is no proceeding pending before this Court to correct or determine inventorship, the inventors named in the '417 patent are presumed correct and the Court will not enter into the murky waters of co-inventorship.
Ramsey moves for discovery sanctions against Expo for failing to disclose Kuster's purported claim of invention in the context of discovery in this action. Ramsey claims that had it known, it would have contested the validity of the patent pursuant to 35 U.S.C. § 102(f) based on co-inventorship. Yet, Ramsey admits that it has known of Kuster's claim since early 2004 and, as previously noted, Ramsey does not seek to insert the issue into the litigation. The Court finds no discovery abuse on the part of Defendants. Likewise, the Court finds Ramsey's motion to dismiss for failure to join Kuster as a party is frivolous. Kuster has not been adjudicated a co-inventor and, therefore, is not a necessary party.
VI. ORDER
IT IS, THEREFORE, ORDERED as follows:
1. Defendants' Proposal for Expeditiously Resolving this Action, filed June 11, 2004, is hereby DENIED as moot;
2. Ramsey's Motion for Reconsideration and Clarification of April 22, 2004 Memorandum of Opinion regarding Summary Judgment and Request for Oral Argument, filed June 11, 2004, is hereby DENIED;
3. Ramsey's Motion for dismissal without prejudice, certification for appeal and stay pending appeal, filed June 11, 2004, is hereby DENIED;
4. Expo's Motion for Injunctive Relief against further Infringement, filed June 11, 2004, is hereby DENIED provided that Ramsey shall post a bond in the amount of $200,000, and in accordance with the terms and provisions contained herein; and
5. Ramsey's Motion for Reconsideration and Vacation of Summary Judgment based on Newly Discovered Evidence, Motion for Sanctions and Motion to Dismiss, filed October 22, 2004, are hereby DENIED. IT IS FURTHER ORDERED that the pleadings which the parties have requested to be filed under seal shall be sealed pending further order of this Court.
IT IS FURTHER ORDERED that the parties may file a stipulation of dismissal as to Defendant Kenneth Cotton in view of their agreement that he no longer remains a party to the action.
IT IS FURTHER ORDERED that, should the Defendants determine not to pursue certain claims, the Court shall be notified by motion to dismiss no later than 20 days from entry of this Order.
IT IS FURTHER ORDERED that, with the exception of the dismissals referenced infra, the Court will not entertain any further motions to reconsider, clarify, or for other relief except motions related to the trial of the action.
IT IS FURTHER ORDERED that the Clerk calendar this action for trial during the Court's May 2005 term.