Advanced Magnetic Closures, Inc. v. Rome Fastener Corp.

607 F.3d 817, 95 U.S.P.Q. 2d (BNA) 1513, 2010 U.S. App. LEXIS 11926, 2010 WL 2331169
Court of Appeals for the Federal Circuit·Decided June 11, 2010·No. 2009-1102, 2009-1118·Published·Cited by 39 cases

Opinions

Opinion for the court filed by Circuit Judge GAJARSA. Concurring opinion filed by Chief Judge RADER.

GAJARSA, Circuit Judge.

Advanced Magnetic Closures, Inc. (“AMC”) brought an action against Rome Fastener Corp., Rome Fastener Sales Corp., Romag Fasteners Inc., and Rings Wire, Inc. (collectively “Romag”) for allegedly infringing U.S. Patent No. 5,572,773 (the “'773 patent”). After AMC finished presenting its case in chief, the U.S. District for the Southern District of New York (the “district court”) granted Romag’s Rule 50(a) motion for judgment as a matter of law (“JMOL”). The district court subsequently assessed attorney’s fees and costs against AMC under 35 U.S.C. § 285 based on (1) the '773 patent applicants’ inequitable conduct before the U.S. Patent and Trademark Office (the “PTO”) and (2) AMC’s litigation misconduct. Pursuant to 28 U.S.C. § 1927, the court also held AMC’s attorneys jointly and severally liable for a portion of Romag’s attorney’s fees, including the law firm Abelman, Frayne & Schwab (“Abel-man”) and David Jaroslawicz — the sole member of Jaroslawicz & Jaros, LLC. AMG, Abelman, and Mr. Jaroslawicz all appealed the judgment to this court. But Abelman subsequently settled with Romag, and this court dismissed Abelman’s appeal. Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 331 Fed. Appx. 732, 733 (Fed.Cir.2009). We affirm the district court’s holding that the '773 patent is unenforceable based on inequitable conduct and its award of 35 U.S.C. § 285 attorney’s fees and costs against AMC, but we reverse its 28 U.S.C. § 1927 sanction against Mr. Jaroslawicz.

Background

AMC owns the '773 patent, which discloses a magnetic snap fastener commonly used in women’s handbags. Magnetic snap fasteners typically consist of two halves — a male and female half. Both halves contain a rivet in the center. In one of the '773 patent preferred embodiments, the female half contains a magnetic rivet positioned just below a plate, creating an opening into which the male rivet can insert or “snap” into place. '773 patent col.4 11.38-41. Once the male half has snapped inside the female half, claim 1 of the '773 patent states that the two create a magnetic circuit that “passes at least through a periphery of [the] first rivet of [the] female member.” Id. at col.8 11.17— 19. The last element of claim 1 requires a “small hole” in at least one of the “rivets increasing the magnetic attraction of [the] magnetic member [in the female half] by modifying a resistance to said magnetic circuit at said first and second rivets.” Id. at col.8 11.19-23. Figure 1 from the '773 patent below shows holes running through both the female and male halves, numbered as 32 and 35 respectively.

[823]*823[[Image here]]

On October 30, 1998, AMC filed suit against Romag, alleging, among other things, that Romag’s magnetic snap 'fasteners infringed claim 1 of the '773 patent. Romag holds U.S. Patent No. 5,722,126 (the “'126 patent”) for a magnetic snap fastener and marks all of its fasteners with the '126 patent number. To determine whether Romag’s fasteners infringed, the district court construed the last element of the '773 patent’s claim 1 to cover a magnetic snap fastener “in which the magnet causes lines of magnetic flux to pass through at least the outer sides of the rivet in the female half, and the small hole(s) in one or both rivets modifies their resistance to the flux and thereby increases the magnetic attraction.” Advanced Magnetic Closures, Inc. v. Rome Fastener Corp. (“AMC I ”), No. 98 Civ. 7766, 2005 WL 1241896, at *6 (S.D.N.Y. May 24, 2005). Accordingly, claim 1 only covers fasteners with rivet holes that increase magnetic attraction, but not rivet holes that do not increase magnetic attraction. Neither party disputes the district court’s claim construction.

In an attempt to prove its claims, AMC submitted reconstructed evidence, presented contradictory testimony, and engaged in evasive litigation tactics. AMC submitted an expert report from Dr. Dev Ratnum in support of its claim for infringement. Dr. Ratnum opined that the '773 patent covered Romag’s fasteners. As part of his analysis, Dr. Ratnum purportedly performed a magnetic finite element analysis that produced images showing the magnetic flux of magnetic rivets with and without a hole. Based on these images, he concluded that “[t]he pictures obtained from the well established [finite element] analysis do not lie and it appears, the hole has a dramatic effect of increasing the flux in the center rivet.” J.A. 2784. However, Dr. Ratnum failed to disclose in his report that he had not performed the finite element analysis. Subsequently, Dr. Ratnum identified Brian Bell as the person who had performed the analysis, causing Romag to request that AMC produce Mr. Bell’s communications with Dr. Ratnum. As a result, AMC’s trial counsel, Mr. Jaroslawicz, withdrew Dr. Ratnum as an expert based on “[i] rreconcilable differences” and refused Romag’s request to produce Mr. Bell’s reports. J.A. 2762. The district court, therefore, ordered AMC to produce Mr. Bell’s reports. One of Mr. Bell’s memorandums to Dr. Ratnum directly contradicted the expert’s report. Mr. Bell wrote, “The results were the same, the no hole part had the most force.... This does not help your case.” J.A. 2217.

Before trial, AMC moved for summary judgment, attempting to remove several of Romag’s defenses, including an “unclean hands” defense. Advanced Magnetic Closures, Inc. v. Rome Fastener Corp. (“AMC II”), No. 98 Civ. 7766, 2006 WL 3342655, at *1 (S.D.N.Y. Nov.16, 2006). The defense had been advanced by Romag on the basis that Irving Bauer, AMC’s president, had misrepresented to the PTO that he was the only inventor of the '773 patent’s [824]*824fastener. Id. at *1-2. Although Mr. Bauer is the named inventor, both he and his former employee, Robert Riceman, claim to have invented the '773 patent’s fastener. The district court, however, deferred on ruling on Romag’s defense of unclean hands because Mr. Riceman could not testify against Mr. Bauer. Id. at *4. In a previous lawsuit, Mr. Riceman had settled his claims to inventorship and agreed not to voluntarily assist anyone in litigating against Mr. Bauer. Id. Because of this restriction, the district court directed Romag to subpoena Mr. Riceman and depose him. Id.

At the deposition, Mr. Riceman contradicted Mr. Bauer’s explanation of how he had invented the '773 patent’s fastener. Mr. Bauer testified that he became interested in magnetic snap fasteners when an acquaintance, Alexander Fischer, solicited him in the summer of 1992 about investing in the magnetic snap fastener business. Advanced Magnetic Closures, Inc. v. Rome Fastener Corp. (“AMC IV”), No. 98 Civ. 7766, 2008 WL 2787981, at *6 (S.D.N.Y. July 17, 2008). According to Mr. Bauer, Mr. Fischer planned to acquire U.S. Patent Nos. 4,021,891 (the “'891 patent”) and 4,453,294 (the “'294 patent”), both of which also cover magnetic snap fasteners. Id. Mr. Bauer further testified that before he invested, he experimented with some fasteners at home in an attempt to design around the '294 patent. Id. at *7.

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Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 607 F.3d 817, 95 U.S.P.Q. 2d (BNA) 1513, 2010 U.S. App. LEXIS 11926, 2010 WL 2331169 (Fed. Cir. 2010).

607 F.3d 817 (Advanced Magnetic Closures, Inc. v. Rome Fastener Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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