Broyhill Furniture Industries, Inc. v. Craftmaster Furniture Corporation

12 F.3d 1080, 27 Fed. R. Serv. 3d 1247, 29 U.S.P.Q. 2d (BNA) 1283, 94 Daily Journal DAR 3922, 1993 U.S. App. LEXIS 33013, 1993 WL 522817
Court of Appeals for the Federal Circuit·Decided December 20, 1993·No. 91-1014·Published·Cited by 50 cases

Opinion

LOURIE, Circuit Judge.

Broyhill Furniture Industries appeals from the order of the United States District Court for the Western District of North Carolina granting Craftmaster Furniture Corporation’s motions for relief'from a consent judgment and for leave to file various counterclaims. Broyhill Furniture Indus., Inc. v. Craftmaster Furniture Corp., Civ. No. STC-85-0034-M (W.D.N.C. Sept. 11, 1990). Because the court abused its discretion in granting Craftmaster’s motion for relief from the consent judgment, we vacate that part of the order and remand. Because Broyhill’s appeal from the court’s order granting Craft-master’s motion for leave to file its counterclaims is interlocutory and not otherwise ap-pealable, we dismiss that portion of the appeal.

BACKGROUND

Broyhill is the owner of U.S. Design Patent 274,485 which relates to an ornamental design for upholstered furniture. Two lawsuits are pertinent to the present appeal. The first was commenced on July 17, 1984, when three furniture manufacturers and sellers, collectively referred to as “Benchcraft,” brought a declaratory judgment action against Broyhill in the United States District Court for the Northern District of Mississippi, seeking a declaration that the ’485 patent was, inter alia, unenforceable. Benchcraft asserted that Broyhill had engaged in inequitable conduct in procuring its patent by intentionally withholding material prior art photographs from the Patent and Trademark Office (PTO) during patent prosecution. *1082 Broyhill counterclaimed, asserting willful infringement.

The lawsuit from which this action arises was instituted by Broyhill against Craftmas-ter for- infringement of the ’485 patent on February 19, 1985, while the Mississippi lawsuit was pending. Soon thereafter, Broyhill .and Craftmaster entered into a settlement agreement pursuant to which the District Court for the Western District of North Carolina entered a consent order and judgment on June 5, 1985, enjoining Craftmaster from infringing the patent.

In June of 1986, while the Mississippi lawsuit was still pending, Broyhill petitioned the North Carolina district court to hold Craft-master in contempt of the consent judgment on the ground that Craftmaster was selling infringing furniture in violation of the judgment. . Following an evidentiary hearing, the court held Craftmaster in contempt. Approximately one year later, in June of 1987, Broyhill filed a second petition seeking to hold Craftmaster in contempt.

On March 14; 1988, while the second contempt petition was pending, the Mississippi district court in Benchcraft found that Broy-hill, through the actions of certain of its employees, including its president and patent attorney, had engaged in inequitable conduct before the PTO by withholding material prior art photographs. The court thus held that the ’485 patent was unenforceable. Benchcraft, Inc. v. Broyhill Furniture Indus., Inc., 681 F.Supp. 1190, 7 USPQ2d 1257 (N.D.Miss.1988). Thereafter, Broyhill filed a motion to stay the contempt proceedings pending appeal. On appeal, the Mississippi court’s judgment in Benchcraft was vacated and remanded by this court for further proceedings. Benchcraft, Inc. v. Broyhill Furniture Indus., Inc., 871 F.2d 1096, 10 USPQ2d 2036 (Fed.Cir.1989) (nonpreeedential). On remand, the Mississippi court again found that Broyhill had engaged in inequitable conduct before the PTO and that the patent was unenforceable. Benchcraft, Inc. v. Broyhill Furniture Indus., Inc., Civ. No. WC 84-143-D-D, 1989 WL 436445 (N.D.Miss. Nov. 7, 1989).

Broyhill did not appeal the Mississippi decision on remand and immediately moved to dismiss with prejudice its contempt petition against Craftmaster. Craftmaster then filed a motion in the North Carolina court pursuant to Federal Rule of Civil Procedure 60(b) to vacate and set aside the consent judgment, asserting that “[t]he circumstances surrounding entry of [the consent] judgment amounted] to fraud both on the defendant and on th[e c]ourt.” Craftmaster also filed a motion for leave to file counterclaims for fraud, unfair competition, and unfair trade practices, seeking, inter alia, damages in the amount of previously paid royalties. The district court granted both of Craftmaster’s motions, and Broyhill now appeals from that order.

DISCUSSION

A. Rule 60(b) Relief

The first issue before us is whether the court properly granted Craftmaster’s motion to set aside the consent judgment pursuant to Rule 60(b). Generally, in reviewing rulings under Rule 60(b), we defer to the law of the regional circuit in which the district court sits because such rulings commonly involve procedural matters that are not unique to patent law. See, e.g., Fraige v. American-National Watermattress Corp., 996 F.2d 295, 27 USPQ2d 1149 (Fed.Cir.1993) (under Ninth Circuit law, testimony based on fraudulent documentation was sufficient to justify setting aside a jury verdict under Rule 60(b) and ordering a new trial on the issue of patent validity); W.L. Gore & Assocs., Inc. v. C.R. Bard, Inc., 977 F.2d 558, 561 n. 3, 24 USPQ2d 1451, 1453 n. 3 (Fed.Cir.1992) (under Third Circuit law, the district court did not abuse its discretion in declining to modify a consent order under Rule 60(b)(5) following a change of law); Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 3 USPQ2d 1412 (Fed.Cir.1987) (failure to disclose publicly available prior art references to district court did not justify Rule 60(b) relief under Tenth Circuit standard); Ashland Oil, Inc. v. Delta Oil Prods. Corp., 806 F.2d 1031, 1 USPQ2d 1073 (Fed.Cir.1986) (change in law of obviousness after entry of judgment of invalidity does not justify Rule 60(b) relief under Seventh Circuit standard).

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Broyhill Furniture Industries, Inc. v. Craftmaster Furniture Corporation, 12 F.3d 1080, 27 Fed. R. Serv. 3d 1247, 29 U.S.P.Q. 2d (BNA) 1283, 94 Daily Journal DAR 3922, 1993 U.S. App. LEXIS 33013, 1993 WL 522817 (Fed. Cir. 1993).

12 F.3d 1080 (Broyhill Furniture Industries, Inc. v. Craftmaster Furniture Corporation) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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