Dentsply International, Inc. v. Centrix, Inc.

553 F. Supp. 289, 220 U.S.P.Q. (BNA) 948, 1982 U.S. Dist. LEXIS 16374
CourtDistrict Court, D. Delaware
DecidedDecember 20, 1982
DocketCiv. A. 82-174
StatusPublished
Cited by5 cases

This text of 553 F. Supp. 289 (Dentsply International, Inc. v. Centrix, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dentsply International, Inc. v. Centrix, Inc., 553 F. Supp. 289, 220 U.S.P.Q. (BNA) 948, 1982 U.S. Dist. LEXIS 16374 (D. Del. 1982).

Opinion

MEMORANDUM OPINION

LATCHUM, Chief Judge.

This is an action, brought pursuant to 28 U.S.C. §§ 1338 and 2201, by Dentspiy International Inc. (“Dentspiy”), for a declaratory judgment of noninfringement, invalidity and unenforceability of three patents, which are registered as United States Patents 3,581,399 (“399 patent”), 3,900,954 (“954 patent”), and 4,198,756 (“756 patent”). Defendant Centrix, Inc. (“Centrix”) has moved to dismiss this action, pursuant to Federal Rule of Civil Procedure 12(b)(1), (2) and (7), on the ground that Dentspiy has failed to join a necessary party, namely the patent owner. In the alternative, Centrix seeks transfer of this case, pursuant to 28 U.S.C. § 1404(a), to the District Court of Connecticut, where a related action is pending. 1 - In addition, Centrix contends that no case or controversy exists as to the 954 patent.

The patents in suit involve dental syringe construction. The 399 patent, 954 patent, and 756 patent respectively cover the products known to the market as the Mark I syringe, Mark II syringe, and Mark III syringe. These three products were invented by Dr. William B. Dragan, a practicing dentist working and residing in Connecticut. At present, Dr. Dragan owns the 954 and 756 patents. He has granted oral licenses for the manufacture and sale of the dental syringes covered by the 954 and 756 patents to Centrix. The 399 patent has been assigned to Centrix. 2

The nature of these oral licensing agreements are most indefinite on the present record. This is due in part to Dr. Dragan’s relationship with Centrix. Centrix is a small, closely held corporation, with only 2 *291 permanent employees and a president, incorporated in Delaware with its principal place of business in Connecticut. (Docket Item [“D.I.”] 24, at 12.) It “was initially organized as a corporation in about 1970 for the express purpose of developing the market and selling the dental syringe which was invented by Dr. William B. Dragan.” (D.I. 13, at A-16.) At present, there are approximately 19 shareholders of Centrix. (Id) Dr. Dragan is a member of the board of directors of Centrix and currently serves as secretary and treasurer of the corporation (D.I. 18A, at A24), although he has stated that he does “not partake in or control the day to day business operations of Centrix.” (D.I. 13, at A-2.) Dr. Dragan owns approximately 30% of the outstanding shares of Centrix. (Id) Dr. Dragan also provides Centrix with his new product inventions. This is based upon “a rough understanding, but it’s a gentleman’s agreement,” (D.I. 18A at A28) that is totally oral, (id at A29). If Dr. Dragan develops a product, he “offer[s] it to Centrix. They evaluate it,” (id at A29); “[i]f they felt it was a commercially viable product, they’d use it,” (id at A30), “and would take care of [Dragan’s] expenses in obtaining [the] patent,” and Dragan would “give them an oral license to use it.” (Id at A31.) Centrix compensates Dr. Dragan, “based upon an accounting of profitability relating to [Dragan’s] products.” (Id at A33.) Dr. Dragan is apparently compensated on a weekly basis. (Id at A34.) He has characterized the board of directors as “a loosely arranged group.” (Id at A36.) The board meets when it “feel[s] like it,” but not often. (Id at A36.)

This informal relationship between Dr. Dragan and Centrix explains the indefinite nature of the patent licenses. At the outset, it must be noted that the 399 patent was assigned to Centrix (which assignment was duly filed with the U.S. Patent and Customs Office), thus giving Centrix full rights in this patent. Centrix’s status as to rights in the 954 or 756 patent are not quite as clear. Dr. Dragan states that these two patents have been licensed to Centrix, but that “Centrix, Inc. has no right to sue in [his] behalf for any infringement of these patents.” (D.I. 13, at A-2.) Dr. Dragan further acknowledges that these licenses were orally given without any form of writing. (D.I. 22A, at RA8.) Thus, on the present record, it is impossible to characterize the nature (exclusive or nonexclusive), or the other terms and duration of these licenses.

Dentsply’s involvement with Centrix began in 1979, when Dentsply’s Caulk division entered into negotiations with Centrix for a licensing agreement to permit Dentsply to use the Mark III syringe in conjunction with the dispensing of dental restorative materials produced by Caulk. Officials of Caulk and Centrix continued negotiations until the fall of 1981 but failed to reach an agreement. Subsequently, Caulk manufactured its own syringe which it displayed at the Chicago Mid-Winter Dental Products Show in February, 1982.

At the time that the licensing negotiations between Caulk and Centrix broke off, Centrix began a series of notifications to protect the Dragan patents from infringement. In a letter dated October 19, 1981, from Frank G. Symcak, the President of Centrix, to Emery Dougherty, Corporate Director of Product Development for Dentsply, Symcak warned Dougherty that disclosure made by Centrix to Dentsply during their prior negotiations were confidential and not to be utilized by Dentsply. In this respect, Symcak stated in the letter that “Centrix, therefore, will not tolerate any encroachment of its [756] patent and/or proprietary rights.” (D.I. 18A, at A7.)

Subsequently, Mr. Melvin Drumm, Vice President of Marketing and Sales for Centrix, casually spoke, in the course of his business, to various customers, some of whom mentioned that Dentsply had a similar type of syringe. In response, Drumm informed these customers, in vague terms, that if they sold the Dentsply syringe, they might be subject to infringement litigation. (D.I. 18A, at A62-A70.)

Thereafter, on March 31, 1982, Symcak, writing on Centrix stationery, sent letters *292 to general dental equipment purchasers and suppliers, which referred to all three patents in suit, and stated that, “It has come to Centrix’s attention that competitors are seeking to copy the CENTRIX Syringe and tubes and plugs, and are infringing the above identified patents [the 399, 954 and 756 patents] under which the CENTRIX syringe is being manufactured.” (D.I. 18A, at A9, A18, A22.) In addition, the letter stated, “Centrix intends to diligently police its patent rights and to prosecute all known infringers and/or manufacturers who copy the CENTRIX patented procedure.” (Id.)

In response to these notices, Dentsply commenced this action for declaratory judgment, contending that the 399 patent, 954 patent, and 756 patent are invalid and unenforceable and that the activity of Dents-ply does not constitute infringing conduct.

Centrix first contends that there is no actual controversy as to the 954 patent and that therefore the suit should be dismissed as to this patent. In particular, Centrix argues that there is no controversy because Dentsply is not manufacturing any product which could be considered to infringe upon the 954 patent. (D.I.

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Bluebook (online)
553 F. Supp. 289, 220 U.S.P.Q. (BNA) 948, 1982 U.S. Dist. LEXIS 16374, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dentsply-international-inc-v-centrix-inc-ded-1982.