Opinion
Civil Action No. 99-301-SLR
December 14, 2001
MEMORANDUM OPINION
I. INTRODUCTION
Plaintiff Pechiney Rhenalu filed this action against defendant Alcoa Inc. on May 12, 1999, seeking a declaration of invalidity and noninfringement of defendant's U.S. Patent No. 5,213,639 (the "`639 patent"), as well as damages for tortious interference with business relations. (D.I. 1) Plaintiff filed an amended complaint in March 2000 adding a claim of inequitable conduct. (D.I. 175) Defendant filed a counterclaim for infringement. (D.I. 189) Currently before the court is defendant's motion for partial summary judgment on plaintiff's claim of tortious interference with business relations. (D.I. 261)
The parties later stipulated that they "withdraw with prejudice their pending requests for monetary relief, and further agree that no monetary relief (including damages) will be sought in this litigation." (D.I. 245)
II. BACKGROUND
A. The `639 Patent
Defendant's `639 patent, issued on May 25, 1993 and entitled "Damage Tolerant Aluminum Alloy Products Useful for Aircraft Applications Such as Skin," discloses and claims a new aluminum alloy product for fuselage skin applications. (`639 patent, col. 9, Ins. 30-31; col. 1, Ins. 47-54) The new alloy possesses improved damage tolerance properties such as fracture toughness and fatigue crack growth resistance. (Id., col. 1, lns. 12-18, 62-66) The improved damage tolerance properties enable aircraft manufacturers to save weight by reducing or eliminating the need for "crack stoppers," metal strips that are attached inside the fuselage skin to prevent the growth of cracks. (Id., col. 21, lns. 23-42)
"Fracture toughness" is the ability of a material to resist ripping a pre-existing crack all the way through the material. (`639 patent, col. 9, lns. 55-'58) "Fatigue crack growth resistance" refers to the ability of a material to resist the slow advance of a crack during cycles of stressing and relaxing, such as changes in pressurization. (Id., col. 11, Ins. 56-67)
The `639 patent also discloses and claims processes for producing the alloy. (Id., claim 22) The patent provides processes for fabricating "clad" products having a thin outer layer to provide added corrosion protection, and "bare" products without an outer layer. (Id., col. 4, lns. 36-42)
B. Defendant's 2524 Alloy
Defendant's commercial embodiment of the `639 patent is the "2524" alloy, principally sold as a thin, clad product used as fuselage skin. (D.I. 266 at 5) The Boeing Company ("Boeing") is currently using 2524 as the fuselage skin on its 777-model aircraft. (D.I. 267 at A83) 2524 has also been selected by Daimlerchrysler Aerospace Airbus GmbH ("Daimlerchrysler") for use as the fuselage skin on the Airbus A340-50Q and A340-600 jets ("A340.-500/600") (D.I. 290 at B195-B202)
C. Plaintiff's 2024A Alloy
Plaintiff, a French corporation, produces aluminum and aluminum alloys for the aerospace industry as well as other end-users. Plaintiff's principal customers have been the members of the Airbus consortium ("Airbus"), including Aerospatiale Matra S.A. ("Aerospatiale") and DaimlerChrysler. (D.I. 290 at B6) Boeing has also qualified plaintiff as a supplier of 2024 plate and wing skin products. (Id., at B3)
In 1996, Airbus requested that plaintiff create an improved damage tolerant aluminum alloy for potential use on the A340-500/600, which was being developed at the time. (D.I. 267 at ABS; DI. 290 at B55) Plaintiff created what was later designated the "2024A" alloy, and submitted qualification reports on 2024A products, designed to meet Airbus specifications, to Aerospatiale and DaimlerChrysler in July 1997. (D.I. 267 at A6) In early 1998, Airbus qualified plaintiff's 2024A processes and products for the A340-500/600. (Id. at A84) Airbus also issued a product specification governing sales and delivery to Airbus of 2024A using plaintiff's qualified processes. (Id. at A51-A56)
Aerospatiale purchased 2024A for use on the prototype A340-500/600. (Id., at A104a) However, in late 1998, Aerospatiale shifted orders for aluminum alloy plates from plaintiff to defendant. (D.I. 290 at B206) Similarly, DaimlerChrysler ultimately chose defendant's 2524 alloy, despite a policy of dual-sourcing. (Id., at B196, B136) Plaintiff argues that defendant forced Aerospatiale and DaimlerChrysler to purchase 2524 by threatening to enforce the `639 patent if they chose plaintiff's 2024A alloy. (D.I. 289 at 5-12)
Upon the advice of counsel, plaintiff permitted the use of 2024A only on A340-500/600 aircraft that "are not destined to American, Canadian, Australian or Brazilian companies." (D.I. 267 at A104b, A59) Aerospatiale originally ordered 2024A for three test aircraft, one of which was to be sold into the commercial market. (D.I. 290 at B122) Aerospatiale ultimately cancelled the order for the third aircraft, allegedly because of its concern that the aircraft could never be sold in the United States due to Alcoa's patent. (D.I. 289 at 14).
Defendant claims that Aerospatiale and DaimlerChrysler purchased 2524 because plaintiff refused to indemnify them in the event its 2024A alloy infringed the `639 patent. (D.I. 311 at 8)
D. Defendant's Alleged Bad Faith
Plaintiff claims that defendant threatened to enforce the `639 patent despite knowing that the patent was invalid, unenforceable and not infringed by plaintiff's 2024A alloy. For instance, plaintiff alleges that defendant intentionally failed to inform the Patent Office of two material prior art references: processes that feature the use of a high temperature reheating step used by defendant to produce its own commercial 2124 plate and 2024 sheet products, and a 1976 article by Alcoa engineer Dr. James Staley entitled, "Microstructure and Toughness of High-Strength Aluminum Alloys." (D.I. 287 at 9) Plaintiff also claims that defendant withheld information regarding its allegedly "commercial" sales of the C188 embodiment of the `639 patent more than one year before its filing date. Furthermore, plaintiff alleges that defendant deliberately mischaracterized a prior art reference and the nature of the comparison 2024 alloy during the prosecution of the `639 patent. (D.I. 287 at 10)
As to defendant's knowledge that plaintiff's 2024A alloy did not infringe the `639 patent, plaintiff cites an April 5, 1998 e-mail from Alcoa marketing employee Claude Brichet ("Brichet") to senior Alcoa sales personnel regarding negotiations with DaimlerChrysler. In that e-mail, Brichet wrote, "I am convinced that we would not win our case to defend our patent on [sic] court after they have placed the orders 50/50 for 2524 and 2024A and are in production, or at least it would take a tremendous time." (D.I. 288 at B43) In the same e-mail, Brichet recommended that defendant "use [its] patent position in commercial negotiations." (Id.) Plaintiff also cites a July 1989 memorandum, in which inventor Robert Westerlund ("Westerlund") noted that "[w]hen discussing this with Boeing, we should treat all information proprietary since there will be nothing patentable. This way, we may be able to keep it from the Japanese (for a while)." (D.I. 280, Ex. 40) Lastly, plaintiff cites an e-mail by Alcoa executive Helmut Steinkusch ("Steinkusch") memorializing the September 1998 meeting between defendant and DaimlerChrysler in which defendant was pressing for a sole-source contract. Steinkusch wrote,
Defendant argues that Brichet was not referring to the legal merits of a lawsuit regarding the `639 patent, but rather to the commercial viability of persuading its customers, the Airbus companies, that defendant would in fact enforce its patent once they had actually begun producing aircraft containing 2024A. (D.I. 314 at 7)
Defendant points out that this memorandum was written before the `639 patent application was filed, and that Westerlund was writing about internal experiments regarding a preheat process that was later abandoned in order to pursue the reheat process that was ultimately claimed in the `639 patent. (D.I. 314 at 6)
based on information from r. westerlund, . . . if competition met the aims spec. for high damage tolerant 2024 sheet (alcoa 2524, pechiney 2524A) the claims 70/72 and 73 for toughness and crack propagation would be violated (possibly more).
(D.I. 288 at B61) Plaintiff argues that in light of defendant's covenant not to sue on claims 70 and 71, this statement was made in bad faith.
III. STANDARD OF REVIEW
A court shall grant summary judgment only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the burden of proving that no genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U, S. 574, 586 n. 10 (1986). "Facts that could alter the outcome are 'material,' and disputes are 'genuine' if evidence exists from which a rational person could conclude that the position of the person with the burden of proof on the disputed issue is correct." Horowitz v. Fed. Kemper Life Assurance Co., 57 F.3d 300, 302 n. 1 (3d Cir. 1995) (internal citations omitted). If the moving party has demonstrated an absence of material fact, the nonmoving party then "must come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(e)). The court will "view the underlying facts and all reasonable inferences therefrom in the light most favorable to the party opposing the motion." Pa. Coal Ass'n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995). The mere existence of some evidence in support of the nonmoving party, however, will not be sufficient for denial of a motion for summary judgment; there must be enough evidence to enable a jury reasonably to find for the nonmoving party on that issue. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If the nonmoving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
IV. DISCUSSION
A federal district court generally applies the choice of law rules of the state in which it sits. See Diamond v. Reynolds, 1986) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941)). For a tort claim brought under Delaware choice of law rules, a court should apply the law of the state that has the most significant relationship to the conduct which underlies the litigation. See Travelers Indem Co. v. Lake, 594 A.2d 38, 40 (Del. 1991). The parties agree that this court should apply Iowa law. However, without a sufficient showing of bad faith, a state law claim of tortious interference with business relations is preempted by the federal patent laws. See Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1355 (Fed. Cir. 1999).
Bad faith can be demonstrated by a patentee's threatening to enforce a patent that it knew was either invalid, procured by fraud on the Patent and Trademark Office, or not infringed. See Zenith, 182 F.3d at 1354 ("Obviously, if the patentee knows that the patent is invalid, unenforceable, or not infringed, yet represents to the marketplace that a competitor is infringing the patent, a clear case of bad faith representations is made out."). In the present case, plaintiff alleges that defendant threatened to enforce the `639 patent against Potential purchasers of plaintiff's 2024A products while knowing that the `639 patent was invalid, unenforceable, and not infringed by the 2024A products.
Until the resolution of this case, the `639 patent is presumed valid.See 35 U.S.C. § 282. Therefore, to the extent that plaintiff relies on invalidity or fraud on the Patent Office to support its claims, it must prove invalidity or fraud, and defendant's knowledge thereof, by clear and convincing evidence. See Baxa Corp. v. McGaw, Inc., 996 F. Supp. 1044, 1054 (D. Colo. 1997) (citing Hewlett-Packard Co. v. Bausch Lomb Inc., 909 F.2d 1464, 1467 (Fed. Cir. 1990)). In this regard, plaintiff's mere reiterations of its inequitable conduct arguments without additional proof of affirmative knowledge by defendant are unpersuasive. See Dow Chem. Co. v. Exxon Corp., 139 F.3d 1470, 1476 n. 6 (Fed. Cir. 1998), cert. denied, 525 U.S. 1138 (1999) ("We note that to survive a motion . . . for summary judgment, more than a mere allegation of knowledge of the patent's unenforceability would be required.").
Similarly, plaintiff has not presented sufficient proof of knowledge by defendant that plaintiff's 2024A products did not infringe the `639 patent. To support its claim, plaintiff cites a few statements by Alcoa employees, none of which evidences bad faith. Moreover, plaintiff's refusal to give DaimlerChrysler and Aerospatiale indemnities against an infringement claim, and plaintiff's restrictions on flying 2024A aircraft to the United States, provide support to defendant's reasonable belief that plaintiff's 2024A alloy potentially infringes the `639 patent.
Therefore, since no reasonable juror can conclude that defendant asserted its rights in the `639 patent in bad faith based on the record presented, plaintiff's claim of tortious interference with business relations is preempted by federal patent law.
The court also finds that plaintiff has presented insufficient evidence to create a genuine issue of material fact as to whether defendant "intentionally and improperly interfere[d] with another's prospective contractual relationships with the sole or primary purpose to injure or destroy the plaintiff" under Iowa law. Act, Inc. v. Sylvan Learning Sys., Inc., 104 F. Supp.2d 1096, 1104 (N.D. Iowa 1999).
V. CONCLUSION
For the reasons stated, defendant's motion for partial summary judgment on plaintiff's claim of tortious interference with business relations is granted. An appropriate order shall issue.
ORDER
At Wilmington this 14th day of December, 2000, consistent with the memorandum opinion issued this same day,
IT IS ORDERED that defendant's motion for partial summary judgment on plaintiff's claim of tortious interference with business relations (D.I. 261) is granted.
ORDER
At Wilmington this 13th day of December, 2000,
IT IS ORDERED that defendant's motion for judgment on the pleadings as to portions of plaintiff's count six pursuant to Rules 12(c) and 9(b) and to strike portions of plaintiff's fourth affirmative defense to defendant's counterclaim pursuant to Rules 12(f) and 9(b) (D.I. 217) is denied. Reviewing the complaint at issue, it is apparent that the pleading requirements have been met by plaintiff.
ORDER
At Wilmington this 13th day of December, 2000,
IT IS ORDERED that defendant's motion for issuance of letters of request pursuant to the Hague Convention of 18 March 1970 on the taking of evidence abroad in civil or commercial matters (D.I. 225) is denied. Defendant's motion, filed five days before the deadline for fact discovery in this case, is untimely and unduly burdensome to the parties involved.