Goss v. MAN Roland, et al.

2006 DNH 062

Opinion

Goss v . MAN Roland, et a l . 03-CV-513-SM 06/02/06 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Goss International Americas, Inc., Plaintiff

v. MAN Roland, Inc. and MAN Roland Druckmaschinen AG, Defendants Civil N o . 03-cv-513-SM Opinion N o . 2006 DNH 062 MAN Roland, Inc. and MAN Roland Druckmaschinen AG, Counterclaim Plaintiffs

v. Goss International Americas, Inc. and Heidelberger Druckmaschinen AG, Counterclaim Defendants

O R D E R

A previous order (document n o . 405) disposed of six of the

fifteen pending motions for summary judgment in this case. This

order addresses four more, granting the motion presented in

document n o . 1 3 2 , granting in part the motion presented in

document n o . 1 4 0 , and denying the motions presented in documents

nos. 130 and 139.

As a result of a previous order (document n o . 1 0 1 ) ,

Heidelberger remained potentially subject to liability on Counts

4 , 5 , and 7-11 of MAN Roland’s counterclaim. Count 5 alleges Sherman Act violations based upon Walker Process fraud and sham

litigation. Count 4 alleges conspiracy to perform the

anticompetitive acts alleged in Count 5 , and Counts 7-11 are all

state law claims based upon the same conduct alleged in Count 5 .

Heidelberger has filed four motions for summary judgment

pertaining to the remaining counts of MAN Roland’s counterclaim.

In document n o . 1 3 0 , Heidelberger moves for partial summary

judgment on Counts 4 , 5 , and 7-11, asserting that it could not be

liable under any of the theories advanced in those counts because

it never sued MAN Roland for patent infringement. In document

n o . 1 3 2 , Heidelberger moves for partial summary judgment Count 4 ,

pointing to the absence of evidence of an agreement in restraint

of trade or a conspiracy to monopolize. In document n o . 139,

Heidelberger moves for partial summary judgment on Counts 4 and

5 , asserting that MAN Roland has no evidence of antitrust injury.

In document n o . 1 4 0 , Heidelberger moves for partial summary

judgment on Counts 4 , 5 , and 7-11, asserting that MAN Roland has

no evidence of Walker Process fraud or sham litigation, which is

the anticompetitive conduct underlying the Sherman Act claims in

Counts 4 and 5 as well as the state law claims in Counts 7-11.

2 Count 4

In document n o . 1 3 2 , Heidelberger moves for partial summary

judgment on M A N Roland’s fourth counterclaim, asserting that M A N

Roland has produced no evidence of an agreement in restraint of

trade or a conspiracy to monopolize. M A N Roland objects, and

moves for relief under F E D . R . C I V . P . 56(f) (document n o . 2 0 1 ) .

Goss objects. Heidelberger is entitled to summary judgment on

Count 4 of M A N Roland’s counterclaim for the reasons set out in

the court’s May 2 , 2006, order discussing, inter alia, Goss’s

motion for partial summary judgment on Count 4 of M A N Roland’s

counterclaim. Accordingly, the motion for partial summary

judgment presented in document n o . 132 is granted.

Count 5

In document n o . 139, Heidelberger moves for partial summary

judgment on M A N Roland’s fifth counterclaim on grounds that M A N

Roland has produced no evidence of antitrust injury. (As

drafted, document n o . 139 pertained to both Counts 4 and 5 , but,

as explained above, Heidelberger has been granted summary

judgment on Count 4 on other grounds.)

This motion for summary judgment is based, at least in part,

on Heidelberger’s claim that M A N Roland has failed, during

3 discovery, to produce adequate evidence to support its claims.1

However, unlike evidence of the existence of a conspiracy

involving Heidelberger and Goss, evidence of MAN Roland’s

antitrust injury is entirely within MAN Roland’s control. Thus,

MAN Roland responded to Heidelberger’s motion for summary

judgment not by seeking relief under Rule 56(f), but, rather, by

producing a fact witness to provide deposition testimony

concerning its antitrust injuries. Specifically, MAN Roland

claims injuries of three sorts: (1) legal costs associated with

evaluating Heidelberger’s pre-litigation enforcement actions; (2)

the loss of a sale due to Heidelberger’s threats; and (3) the

costs of defending this action.

Heidelberger responds to MAN Roland’s claim for pre-

litigation legal costs by arguing that MAN Roland did not

adequately plead a Walker Process claim based upon pre-litigation

conduct – an argument rejected below – and argues that the

evidence produced by MAN Roland does not mean what MAN Roland

says it means. In particular, Heidelberger contends that MAN

Roland mistakenly characterizes a letter sent by HWS’s president

1 To demonstrate MAN Roland’s lack of evidence, Heidelberger focuses on the report and testimony of MAN Roland’s economics expert, who listed four categories of potential antitrust damages, but did not identify any specific facts in the record that would support claims for damages in those four categories.

4 on Heidelberger letterhead as one from Heidelberger rather than

from HWS. But that factual dispute, to the extent it actually

proves material, is not for the court to resolve on summary

judgment. Heidelberger makes similar arguments regarding MAN

Roland’s claim of a lost sale, contending that MAN Roland has

either misconstrued evidence or taken it out of context. Again,

sorting out the relative weight of seemingly contradictory

evidence is generally a jury function, not the court’s on summary

judgment. Finally, regarding MAN Roland’s claim for litigation

costs, there is at least some evidence suggesting that HWS might

have been an alter ego of Heidelberger, such that Heidelberger

could be held liable for HWS’s actions.2 As this presents yet

another disputed question of fact that may prove material, rather

than an instance in which there is no relevant evidence at all,

summary judgment is not appropriate. That i s , because

Heidelberger’s arguments depend upon the court’s adopting

Heidelberger’s view of a disputed factual record rather than

applying the law to an undisputed factual record, the motion for

2 That evidence includes: (1) letter attempting to enforce the ’734 patent, referred to as “our patent,” written by the president of HWS on Heidelberger letterhead (MAN Roland’s O b j . to Summ. J., Ex. 5 ) ; a September 1 8 , 2003, letter from HWS’s president, on HWS letterhead, threatening “appropriate action to protect Heidelberg’s patent interests” (id., Ex. 3 0 ) . At the time HWS’s president wrote the second letter, the patents in question were not HWS’s to enforce; Heidelberger did not assign them until two months later.

5 summary judgment presented in document n o . 139 is necessarily

denied.

Counts 5 and 7-11

In document nos. 130 and 1 4 0 , Heidelberger makes two

separate arguments for summary judgment on Counts 5 and 7-11 of

MAN Roland’s counterclaim. (As with document n o . 139, document

nos. 130 and 1 4 0 , as originally drafted, also cover Count 4 ,

which is no longer a part of the case.) The court considers each

motion in turn.

A . Document N o . 130

In document n o . 1 3 0 , Heidelberger asserts that it could not

be liable under any of the theories advanced in Counts 5 and 7-11

because it never sued MAN Roland for patent infringement. In

Heidelberger’s view, its November 1 8 , 2003, assignment of the

’734 and ’100 patents to Heidelberg Web Systems (“HWS”),

completed one week before HWS sued MAN Roland for infringing

those patents, precludes liability under any of the theories

advanced in Counts 5 , and 7-11. Heidelberger supports its

position, in part, by pointing out that at the time HWS sued MAN

Roland for infringement, HWS and Heidelberger were separate

corporate entities. And, once Heidelberger assigned the ’734 and

6 ’100 patents, it no longer had standing to enforce them. MAN

Roland counters that a Walker Process claim may be premised upon

patent enforcement activities other than filing an infringement

action, and that Heidelberger is subject to liability for HWS’s

litigation activities, under both Walker Process and sham

litigation theories, by means of corporate veil-piercing.

It is undisputed that Heidelberger did not sue MAN Roland,

but that fact alone is not an absolute bar to MAN Roland’s Walker

Process claims. For purposes of a Walker Process claim, the

enforcement element may also be met by action short of filing

suit, for example sending warning letters to alleged infringers.

See, e.g., Unitherm Food Sys., Inc. v . Swift-Eckrich, Inc., 375

F.3d 1341, 1344-45, 1357-58 (Fed. Cir. 2004). But Heidelberger

says it is entitled to summary judgment on MAN Roland’s Walker

Process claim because the second amended answer frames the Walker

Process claim solely in terms of the patent infringement suit.

Heidelberger reads the counterclaim too narrowly,3 especially

3 MAN Roland has asserted that counterclaim defendants’ anticompetitive conduct includes “baselessly enforcing the fraudulently procured ’734, ’100, and ’251 patents and . . . commencing a sham litigation to enforce Counterclaim-Defendants’ ’734, ’100, and ’251 patents. . .” (Second Am. Answer, ¶ 116 (emphasis added).) That assertion is sufficient to place Heidelberger on notice that MAN Roland intends to hold it liable for both litigation to enforce the patents and other enforcement activities.

7 given the relatively light burden imposed by federal notice

pleading. See Brown v . Credit Suisse First Boston LLC (In re

Credit Suisse First Boston Corp. Analyst Repts. Secs. Litig.),

431 F.3d 3 6 , 46 (1st Cir. 2005) (referring to “the generous

notice pleading formulation of Fed. R. Civ. P. 8(a)(2)).

Heidelberger is not entitled to summary judgment on the Walker

Process claims on the grounds asserted.

Summary judgment on the sham litigation claims is precluded

by the apparent existence of a genuine dispute as to a material

fact. At issue is the degree to which Heidelberger is liable for

the actions of its wholly owned subsidiary. On the one hand, it

is undisputed that HWS and Heidelberger were separate corporate

entities, and there is some evidence that Heidelberger did not

support HWS’s suit against MAN Roland, because Heidelberger was

in the process of selling HWS to Goss International Corp. At the

same time, however, the record includes at least some evidence of

possible joint action which implies a degree of coordination that

might prove inconsistent with Heidelberger’s claim that HWS acted

independently in the enforcement of the patents-in-suit.4

Accordingly, at this juncture, given the relatively undeveloped

See supra, note 2 .

8 record on this point, the motion for summary judgment presented

in document n o . 130 is denied.

B . Document N o . 140

In document n o . 1 4 0 , Heidelberger moves for partial summary

judgment on grounds that MAN Roland has offered no evidence of

Walker Process fraud or sham litigation.

1 . Walker-Process Fraud

In its second amended answer and counterclaim, MAN Roland

identifies five general categories of inequitable conduct by

Heidelberger during the prosecution of the patents-in-suit that

assertedly renders the patents-in-suit unenforceable and that

also supports MAN Roland’s claims of fraud on the PTO: (1)

failure to disclose prior art and related U.S. litigation; (2)

failure to disclose foreign proceedings; (3) other misstatements

and omissions; (4) failure to disclose the best mode; and (5)

misrepresentations and omissions concerning the abandonment of

the ’587 application. Along with various general allegations

(i.e., “fail[ure] to disclose to the PTO foreign proceedings”),

MAN Roland makes the following more specific allegations of

inequitable conduct in its counterclaim: (1) failure to disclose

Canadian patent application n o . 2,026,954; (2) failure to

disclose published foreign counterparts of U.S. Patent N o .

9 5,316,798 (“Tittgemeyer”); (3) misrepresentation and omission of

material information of record in an infringement action

involving another patent based upon the same application as the

patents-in-suit; (4) failure to disclose information from a

European patent opposition proceeding involving European patent

application n o . EP 421,145 (“Gaffney”); (5) failure to disclose

information from the Japanese proceeding involving Japanese

Patent N o . 2569,213; (6) misrepresenting the description of U.S.

Patent N o . 4,913,048 (“Tittgemeyer”); (7) concealing the best

mode of carrying out the invention; (8) falsely stating that the

’587 application was abandoned unintentionally; and (9) failing

to disclose evidence that the abandonment of the ’587 application

was intentional.

a. Rule 9(b)

Heidelberger contends that under Rule 9(b) of the Federal

Rules of Civil Procedure, MAN Roland is limited to pursuing only

those instances of fraud pled with specificity in its

counterclaim, and may not pursue three additional claims first

made in responses to interrogatories. MAN Roland counters that

it is entitled to use its objection to summary judgment as a de

facto amendment or supplement to its counterclaim.

10 MAN Roland relies on Bonilla v . Trebol Motors Corp., 150

F.3d 77 (1st Cir. 1998), a RICO case, in which the First Circuit

was faced with a Rule 9(b) challenge to the specificity of the

complaint. The complaint in Bonilla alleged that the defendant

Volvo automobile dealer defrauded customers by “modif[ying] or

alter[ing] 240 DL models by providing some new accessories and

upgraded emblems and then [selling] these ‘disguised’ vehicles

‘as if they were factory made models’ and for much more than the

price that the defendants ‘would have normally charged for the

240 DL Volvo models with such alterations or modifications.’”

Id. at 8 1 . On summary judgment, the defendant argued that the

complaint failed to meet the Rule 9(b) standard for specificity

because “it did not identify any individual instance in which an

individual car was sold with a false emblem and accessories added

[by the defendant].” Id. Because the plaintiffs’ opposition to

summary judgment did describe specific instances of the

fraudulent scheme alleged in the complaint, id., the court of

appeals decided not to remand to allow an amendment of the

complaint to add that information, but rather, opted to “treat[]

the plaintiffs’ opposition to summary judgment . . . as a de

facto amendment or supplement to the complaint’s allegations.”

Id. (citations omitted).

11 Heidelberger, in turn, cites EMC Corp. v . Storage Tech.

Corp., 921 F. Supp. 1261 (D. Del. 1996), for the proposition

that, in the specific context of a patent inequitable conduct

claim, interrogatory responses may not be used to fulfill the

Rule 9(b) particularity requirement.5 Id. at 1264.

While discovery responses may be used to add details to an

otherwise sufficient pleading, see EMC, 921 F. Supp. at 1264

(citations omitted), they may not be used to cure deficient

pleadings or to add new claims entirely. Unlike the plaintiff in

Bonilla, who sought simply to add specific fraudulent acts to a

complaint that set out with some precision the nature of the

fraudulent scheme alleged, MAN Roland seeks to add several

additional categories of fraudulent conduct, separate and

5 Regarding the contours of the Rule 9(b) particularity requirement, EMC explains:

Pleadings that disclose the name of the relevant prior art and disclose the acts of the alleged fraud fulfill the requirements of Rule 9 ( b ) . See Schwarzkopf Tech. Corp. v . Ingersoll Cutting Tool Co., 820 F. Supp. 1 5 0 , 154 (D. Del. 1992) (disclosure of prior art patent fulfills pleading requirements of 9(b)). Rule 9(b) does not require that the complaint allege the date, time or place of the alleged inequitable conduct, provided the complaint gives the defendants notice of the precise misconduct alleged. Seville Indus. Machinery Corp. v . Southmost Machinery Corp., 742 F.2d 786 (3d Cir. 1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1179, 84 L.Ed.2d 327 (1985).

921 F. Supp. at 1263.

12 distinct from those alleged in its counterclaim. That is

impermissible.

Because MAN Roland is not entitled to use interrogatory

responses or its opposition to summary judgment to amend its

counterclaim, it is not entitled to pursue claims that

Heidelberger misrepresented the commercial success of its

invention,6 failed to inform the PTO of a prior offer of sale of

a “Sunday Press,”7 and failed to disclose arguments or briefing

papers concerning Ross ’009.8

b . The Allegedly Fraudulent Conduct at Issue

In its motion for summary judgment, Heidelberger argues that

i t : (1) had no duty to disclose Canadian patent application n o .

2,026,954; (2) did disclose the European counterpart to the

Tittgemeyer ’798 patent; (3) properly disclosed the Mitsubishi

litigation and the Ross ’286 patent; (4) did not breach any duty

to the PTO regarding foreign proceedings; and (5) did not breach

6 Of the three claims at issue, this appears to be the only one that MAN Roland is actively pursuing. 7 Heidelberger’s obligation to disclose that offer of sale would appear to be contingent, at best; that offer would only be an invalidating event if MAN Roland were successful in challenging the 1989 priority date of the patents-in-suit. 8 MAN Roland appears not to have pursued this claim of inequitable conduct.

13 any duty to the PTO concerning the Tittgemeyer ’048 patent.

Heidelberger further argues that its alleged failure to disclose

the best mode does not rise to the level of inequitable conduct.

Heidelberger does not address MAN Roland’s claims regarding the

abandonment of the ’587 application, presumably because MAN

Roland’s amendment to its counterclaim was not allowed until

after the deadline for submitting summary judgment motions. In

its objection to summary judgment, MAN Roland appears to abandon

several grounds for its counterclaim,9 although that is not

entirely clear given the lack of congruity between the motion for

summary judgment and the objection. In any event, beyond the

question of the ’587 application, MAN Roland appears to engage on

four issues: (1) misrepresentation of Ross ’286; (2) concealment

of information from foreign proceedings; (3) concealment of

Heidelberger’s Mitsubishi litigation; (4) and concealment of

Walenski and JP ’165. Accordingly, those four issues comprise

the totality of MAN Roland’s Sherman Act claims.

9 Specifically, MAN Roland does not address Heidelberger’s alleged: (1) misrepresentation of Tittgemeyer ’048; and (2) failure to disclose: (a) a best mode; (b) Canadian patent application n o . 2,026,954; and (c) the European counterpart to Tittgemeyer ’798.

14 c. The Legal Standard

Section 2 of the Sherman Antitrust Act makes it unlawful for

any person to “monopolize, or attempt to monopolize . . . any

part of the trade or commerce among the several States.”

15 U.S.C. § 2 . See also 15 U.S.C. § 15(a) (granting a private

right of action to “any person who shall be injured in his

business or property by reason of anything forbidden in the

antitrust laws”). A successful monopolization claim under

section 2 requires actual monopoly power and a wrongful act

designed to enhance that power. Town of Norwood v . N.E. Power

Co., 202 F.3d 4 0 8 , 420-21 (1st Cir. 2000) (citing Otter Tail

Power C o . v . United States, 410 U.S. 366, 377 (1973); United

States v . Grinnell Corp., 384 U.S. 563, 570-71 (1966)). A

successful attempted monopolization claim under section 2

requires anticompetitive conduct, a specific intent to

monopolize, and a dangerous probability of success. Spectrum

Sports, Inc. v . McQuillan, 506 U.S. 4 4 7 , 454-56 (1993).

Walker Process claims form a subset of section 2 claims in

which the allegedly anticompetitive conduct is the enforcement of

a fraudulently procured patent. Walker Process Equip., Inc. v .

Food Mach. & Chem. Corp., 382 U.S. 1 7 2 , 177 (1965). To establish

a claim for Walker Process fraud, the antitrust plaintiff must

prove, inter alia, that the patentee “obtained the patent by

15 knowingly and willfully misrepresenting facts to the [PTO],” id.,

and that the party enforcing the patent was aware of the fraud at

the time of enforcement. Nobelpharma AB v . Implant Innovations,

Inc., 141 F.3d 1059, 1069 (Fed. Cir. 1998) (citation omitted).

Moreover,

a finding of Walker Process fraud . . . must be based on independent and clear evidence of deceptive intent together with a clear showing of reliance, i.e., that the patent would not have issued but for the misrepresentation or omission.

Id. at 1071.

d. Ross ’286

MAN Roland contends that Heidelberger committed fraud on the

PTO by disclosing the Ross ’286 patent only at the end of the

’734/’100 prosecution, “buried” among a number of other

references, and by misrepresenting the teaching of that patent,

presumably by submitting the Federal Circuit’s decision in the

Mitsubishi case, which included a brief discussion of Ross

’286.10 (MAN Roland also contends that Heidelberger committed

fraud on the PTO by failing to disclose statements it had made

10 In MAN Roland’s view, Heidelberger acted with intent to defraud the PTO by submitting the opinion in the Mitsubishi case because the Federal Circuit’s characterization of Ross ’286 i s , assertedly, incongruous with various characterizations of Ross ’286 that Heidelberger had made to the European Patent Office.

16 about Ross ’286 before the EPO. That contention is addressed

below, in Section g, which focuses on foreign proceedings.)

Ross ’286 is a patent for a compressible roll, “especially

suited as a printing roll.” ’286 patent, col. 1 . Ross ’286 was

first disclosed to the PTO in connection with the ’734/’100

prosecution in a pair of Supplemental Information Disclosure

Statements (“IDSs”) dated August 2 , 2001.11 (Heidelberger’s

Reply Mem. (document n o . 2 8 3 ) , Exs. 2 & 3.) Those IDSs were

intended to inform the PTO of a suit involving two patents

related to the pending applications “and the references cited

against the patents by the defendants in that litigation.” (Id.,

Ex. 2 at 2 ; Ex. 3 at 2.) Each IDS included a list of U.S. Patent

Documents, including Ross ’286. (Id., Exs. 2 & 3.) On each

list, the patent examiner initialed the box next to listing of

Ross ’286, indicating that he had considered the reference.

(Id.) In addition, Heidelberger appended a copy of the Federal

Circuit’s decision in the case that prompted the submission of

the IDSs, Heidelberg Harris, Inc. v . Mitsubishi Heavy Industries,

Ltd. That decision included the following statement: “We also

11 The ’734 patent issued on April 2 3 , 2002, from an application filed on November 1 1 , 1997. (MAN Roland’s O b j . to Summ. J. (document n o . 2 2 1 ) , Ex. 1.) The ’100 patent issued on May 1 4 , 2002, from an application filed on March 1 1 , 1997. (Id., Ex. 2.)

17 must accept Heidelberg’s assertion that the Ross patent teaches

only a rigid roll with a solid core, which can be transformed

into a removable blanket only by slitting along a line parallel

to its axis and unwinding its porous filamentary layer from its

nonresilient core.” 243 F. 3d 560 (unpublished table decision),

2000 WL 1375270, at *10 (Fed. Cir. Sept. 1 8 , 2000). While a

passage from the Mitsubishi decision was quoted in the narrative

portion of the IDS, the Mitsubishi court’s discussion of Ross

’286 that MAN Roland asserts to be misleading was not quoted.

Heidelberger contends that neither the timing nor the manner

of its disclosure of Ross ’286 constitute evidence of intent to

defraud the PTO. Heidelberger is correct; no reasonable jury

could conclude, based upon the undisputed factual record, that

Heidelberger’s disclosure of Ross ’286 demonstrated an intent to

defraud the patent office.

MAN Roland relies upon Molins PLC v . Textron, Inc., 48 F.3d

1172 (Fed. Cir. 1995), for the proposition that a last-minute

disclosure of prior art, buried among numerous other references,

does not satisfy a patent applicant’s duty of disclosure to the

PTO. But in Molins, the Federal Circuit reversed, as clearly

erroneous, the district court’s ruling that “by ‘burying’

Wagenseil in a multitude of other references, [the applicants]

18 intentionally withheld it from the PTO because this manner of

disclosure was tantamount to a failure to disclose.” Id. at

1183. Here, as in Molins, the applicant submitted a list of

prior art references which the examiner evidently actually

considered. Id. at 1184.

Moreover, this case is distinguishable from Penn Yan Boats,

Inc. v . Sea Lark Boats, Inc., 359 F. Supp. 948 (S.D. Fla. 1972),

aff’d, 479 F.2d 1328 (5th Cir. 1973), in which a patent was held

to be unenforceable because the attorney prosecuting it made

deliberate misrepresentations to the PTO. There, the applicant

submitted a list of references that were all alleged to have been

uncovered during a pre-examination search, but the list included

one reference – the thirteenth out of thirteen – that was a

patent issued more than one year after the application at issue

was filed and which, therefore, could not possibly have been

discovered during a pre-examination search. Id. at 964-65.

Unlike the applicant in Penn Yan Boats, who tried to “hide” a

post-application reference at the bottom of a list of pre-

examination references, Heidelberger did not mischaracterize Ross

’286. Rather, Ross ’286 is exactly what Heidelberger said it

was, a reference cited by Mitsubishi against the patents on which

it was sued. Finally, while Heidelberger did quote a section of

the Mitsubishi decision in the narrative portion of its IDS, it

19 did not quote the discussion of Ross ’286 to which MAN Roland

objects and, more importantly, because the examiner had Ross ’286

before him, he hardly had to rely upon the Federal Circuit’s

interpretation of Heidelberg’s characterization of that patent

from the Mitsubishi litigation.

Because Heidelberger disclosed Ross ’286, and did not do so

in a misleading way, no reasonable jury could conclude that

Heidelberger’s conduct regarding disclosure of Ross ’286

evidenced an intent to deceive the PTO. Moreover, because the

patent examiner actually considered Ross ’286, it cannot be said

that the patents-in-suit issued as a result of Heidelberger’s

concealment of that reference. See Nobelpharma, 141 F.3d at 1071

(explaining that a finding of Walker Process fraud requires “a

clear showing . . . that the patent would not have issued but for

the misrepresentation or omission). Thus, Heidelberger is

entitled to judgment as a matter of law that it is not liable for

Walker Process fraud based upon its disclosure of ’286.

e . Mitsubishi Litigation

PTO by disclosing the existence of its litigation against

Mitsubishi, and information from that litigation, both

20 incompletely and suspiciously near the end of the ’734/’100

prosecution.

In 1995, Heidelberg Harris, Inc., sued Mitsubishi Heavy

Industries, in the Northern District of Illinois, for infringing

two patents related to the patents at issue here. On July 2 2 ,

1998, the district court entered judgment in favor of Heidelberg

Harris. Mitsubishi appealed the judgment, and the Federal

Circuit issued a decision in the case on September 1 8 , 2000.

The application from which the ’734 patent issued was filed

on November 1 1 , 1997, and the application from which the ’100

patent issued was filed on March 1 1 , 1997. Heidelberger first

disclosed the Mitsubishi litigation to the PTO by means of the

two IDS forms dated August, 2 , 2001.

MAN Roland argues that Heidelberger was obligated to

disclose the existence of the Mitsubishi litigation much earlier

than it did, given that Heidelberg Harris had sued Mitsubishi

before the applications leading to the ’734 and ’100 patents were

ever filed. MAN Roland further argues that Heidelberger’s

disclosure obligation extended t o : (1) a January, 1996, decision

denying Heidelberg Harris’s motion for a preliminary injunction,

N o . 95 C 0673, 1996 WL 189398 (N.D. Ill. Jan. 9, 1996); (2) a

21 January, 1998, decision denying Mitsubishi’s summary judgment

motion, N o . 95 C 0673, 1998 WL 42277 (N.D. Ill. Jan. 2 9 , 1998);

and (3) trial testimony from Mitsubishi’s expert witness

concerning Ross ’286. Heidelberger counters that it adequately

disclosed the Mitsubishi litigation by informing the PTO of its

name and docket number, while the relevant applications were

pending, and by submitting a copy of the Federal Circuit’s

decision in the case.

MAN Roland’s argument regarding the Mitsubishi litigation is

somewhat hard to follow. In its discussion of Ross ’286, MAN

Roland argues that Heidelberger committed fraud on the PTO by

submitting the Federal Circuit opinion in Mitsubishi (“HDAG

further misrepresented the teaching of Ross ’286 through

submission of the Federal Circuit opinion [in Mitsubishi]”),

which suggests a belief that Heidelberger could have (or should

have) avoided defrauding the PTO by choosing not to submit the

Mitsubishi opinion. But MAN Roland also argues that Heidelberger

submitted information about the Mitsubishi litigation so late in

the ’734/’100 prosecution that its submission amounted to

actionable non-disclosure, thus suggesting that the Mitsubishi

material should have been disclosed much earlier, rather than not

at all.

22 In any event, Heidelberger’s disclosure of the Mitsubishi

litigation, which included a copy of the appellate decision and a

list of the references cited in the Mitsubishi defendants’ 35

U.S.C. § 282 notice (see Heidelberger’s Reply Mem., Exs. 2 & 3 ) ,

was substantially more complete than the “bare bones” disclosure

that was held to be evidence of intent to mislead the PTO in

Boehringer Ingelheim Vetmedica, Inc. v . Schering-Plough Corp., 68

F. Supp. 2d 5 0 8 , 550-51 (D.N.J. 1999). Finally, even assuming

for argument’s sake that Heidelberger’s disclosure of the

Mitsubishi litigation was either untimely or insufficient, MAN

Roland has failed to demonstrate the materiality of any of the

things it claims Heidelberger failed to disclose and, as a

consequence, has no basis for arguing that the patents-in-suit

would not have issued but for the manner in which Heidelberger

disclosed the Mitsubishi litigation.

“[I]nformation is material to patentability when it is not

cumulative to information already of record . . . and (1) [i]t

establishes, by itself or in combination with other information,

a prima facie case of unpatentability of a claim; or (2) [i]t

refutes, or is inconsistent with, a position the applicant takes

i n : (I) [o]pposing an argument of unpatentability relied on by

the Office, or (ii) [a]sserting an argument of patentability.”

37 C.F.R. § 1.56(b). Moreover, in the context of a Walker

23 Process fraud claim, liability for a failure to disclose ensues

only if the patent in question would not have issued but for the

omission. See Nobelpharma, 141 F.3d at 1071.

The closest MAN Roland comes to making an argument for

materiality is its suggestion that Heidelberger’s manner of

disclosure facilitated its misrepresentations of the basis for

the commercial success of the Sunday Press, but, as explained

above, MAN Roland’s counterclaim fails to plead a fraud claim

based upon a misrepresentation of commercial success in a manner

that comports with Rule 9 ( b ) . Beyond its argument concerning

commercial success, MAN Roland simply does not indicate any way

in which any of the allegedly suppressed information (i.e., pre-

judgment district court decisions in Mitsubishi and trial

testimony), meets the definition of materiality set out in 37

C.F.R. § 1.56(b).12

Because MAN Roland has articulated no theory of materiality

for the material it charges Heidelberger with fraudulently

concealing and, as a consequence, has failed to demonstrate that

12 Because Heidelberger has identified no material information from the Mitsubishi litigation, the timing of Heidelberger’s disclosure of that litigation is irrelevant; Heidelberger was under no duty to make timely disclosure of non- material information.

24 the patents-in-suit would not have issued but for Heidelberger’s

conduct, Heidelberger is entitled to judgment as a matter of law

that it is not liable for Walker Process fraud based upon its

disclosure of the Mitsubishi litigation.

f. JP ’165 and Walenski

PTO by concealing JP ’165 and Walenski during the ’734/’100

prosecution. Heidelberger concedes that it did not disclose

either reference, but contends that it had no duty to do so

because both references were cumulative to other references

already of record.

1 . JP ’165

“JP ’165” is “Japanese Unexamined Utility Model Application

Publication S63-30165,” published on February 2 7 , 1988. (MAN

Roland’s O b j . to Summ. J., Ex. 6.) Heidelberger became aware of

JP ’165 in early 1997 when it was cited in an objection to

Heidelberger’s Japanese Patent N o . 2-569213 (“JP ’213”), which

issued from a counterpart to Heidelberger’s U.S. ’587

application. In response to the objection, and based in part on

JP ’165, the Japanese Patent Office cancelled fifteen claims in

Heidelberger’s JP ’213 patent. (Id., Ex. 63.)

25 MAN Roland contends that Heidelberger was obligated to

disclose JP ’165 because “JP ’165 – and, in particular, Figure 3

– teaches a tubular printing blanket with an intermediate

compressible layer.” MAN Roland’s position appears to be based

upon a belief that JP ’165 is prior art which establishes the

prima facie unpatentability of the inventions claimed in the

patents-in-suit, presumably on the basis of obviousness.

However, no reasonable jury could conclude, from the

evidence produced by MAN Roland, that JP ’165 teaches a tubular

printing blanket. Neither the word “tubular” nor the word

“sleeve,” nor any synonym of those terms, appears anywhere in JP

’165. And while that patent describes the layers of a printing

blanket, it is absolutely silent regarding printing blanket form,

i.e., flat versus tubular.

JP ’165 includes five figures, three depicting the

invention, two depicting the conventional printing blankets over

which the ’165 invention was an improvement. (Id., Ex. 6.) Two

of the figures showing the invention depict a flat blanket.

MAN Roland charges Heidelberger with concealing Figure 3 ,

which depicts the claimed printing blanket installed on a blanket

cylinder which is engaged, at the “nip,” with a plate cylinder.

26 Because the blanket cylinder is round, the blanket installed on

it also appears to be round. Based upon the specification of JP

’165, is clear that Figure 3 was included not to teach a tubular

printing blanket – which teaching is nowhere supported by the

specification – but to depict the increase in nip width afforded

by the invention, which is the means by which it achieves its

advantage over traditional printing blankets with other kinds of

layers which produce narrower nips. Moreover, while MAN Roland

asserts, in its brief, that its expert testified that Figure 3

“illustrates a tubular configuration . . . that a person of

ordinary skill in the art would recognize,” that expert actually

testified that “the JP ’165 is also unique in having a diagram

which certainly strongly suggests a sleeve.” (Id., Ex. 79 at

266.) A patent with a diagram suggesting a sleeve is hardly one

that teaches a tubular printing blanket.

Because JP ’165 does not teach a tubular printing blanket,

its disclosure would not have compelled a conclusion that the

inventions claimed in the patents-in-suit were unpatentable.

Thus, JP ’165 was not material, and not required to be disclosed.

Accordingly, Heidelberger is entitled to judgment as a matter of

law that it is not liable for Walker Process fraud for failing to

disclose JP ’165.

27 2 . Walenski

“Walenski” is a 1971 book titled Introduction to Offset

Printing. (MAN Roland’s O b j . to Summ. J., Exs. 5 & 61.) On

August 3 1 , 1994, MAN Roland cited Walenski in its opposition to

Heidelberger’s EP ’145.13 (Id., Ex. 55.) Subsequently, the EPO

revoked EP ’145, and cited Walenski in its decision, issued in

early 1996. (Id., Ex. 56.) Later in 1996, Heidelberger itself

made various representations to the EPO concerning the

materiality of Walenski. (See, e.g., id., Ex. 59.) However,

during the ’734/’100 prosecution, Heidelberger first disclosed

Walenski to the PTO in its August 2 , 2001 IDS, when it

transmitted copies of the references listed in its modified Form

1449, “(with the exception of . . . Walenski, “Introduction to

Offset Printing” (1971)), copies of which have not been found as

of this date.” While Heidelberger listed Walenski on the

modified Form 1449 it submitted, the examiner drew a line through

the reference, indicating that he did not consider i t .

PTO by disclosing Walenski late in the prosecution, by failing to

explain the reference (as required by 37 C.F.R. § 1.98(a)(3), by

failing to provide a copy of i t , and by falsely stating that it

13 Additionally, in the Mitsubishi litigation, Mitsubishi listed Walenski in its § 282 prior art notice.

28 was unable to obtain a copy. (MAN Roland also charges

Heidelberger with fraud for failing to disclose an EPO decision

concerning Walenski as well as its own representations to the EPO

about Walenski. Those contentions are addressed below, in

Section g, which focuses on foreign proceedings.) As noted,

Heidelberger argues that it had no duty to disclose Walenski

because it was a cumulative reference.

MAN Roland counters that a jury could conclude that Walenski

was not cumulative, and thus material, based upon: (1) the

discussion of Walenski in an EPO decision; (2) Heidelberger’s

statements to the EPO regarding Walenski; (3) the fact that

Walenski was a textbook; (4) an alleged admission by the head of

Heidelbergar’s patent department that EP ’145 should have been

disclosed to the PTO; and (5) Heidelberger’s alleged

misrepresentation to the PTO that it was unable to locate a copy

of Walenski.

What is missing from MAN Roland’s argument is any indication

of how Walenski itself – as opposed to various characterizations

of Walenski – “establishes, by itself or in combination with

other information, a prima facie case of unpatentability.” 37

C.F.R. § 1.56. In other words, while MAN Roland has identified

some circumstantial evidence of Heidelberger’s knowledge of the

29 potential importance of Walenski in other contexts, it has failed

to meet Heidelberger’s motion for summary judgment with an

adequate proffer of the materiality of Walenski. Unless Walenski

was material in this context, Heidelberger was under no

obligation to disclose i t . As with JP ’165, MAN Roland’s failure

to explain why the patents-in-suit would not have issued but for

the non-disclosure of Walenski dooms its claim. Heidelberger is

entitled to judgment as a matter of law that it is not liable for

Walker Process fraud for failing to disclose Walenski.

g. Foreign Proceedings

PTO by failing to disclose: (1) the existence of three foreign

proceedings involving EP ’740, EP ’145, and JP ’213; (2) EPO and

JPO decisions that included discussions of the teachings of

Walenski and JP ’165; (3) its admission to the EPO, in defense of

its European ’145 patent, that Walenski was the closest prior art

for an intermediate compressible layer in a tubular blanket; and

(4) its admission to the EPO, in an opposition to MAN Roland’s

European ’740 patent, that Ross ’286 teaches a compressible,

tubular blanket, as well as a similar admission to the EPO, in

defense of its own European ’145 patent.

30 EP ’145 and JP ’213 are foreign patents, issued to

Heidelberger, that were revoked in full or in part, and EP ’740

is a foreign patent that was issued to MAN Roland and challenged

by Heidelberger before the EPO. In the course of defending its

own patents, or attacking MAN Roland’s patents, Heidelberger made

various arguments concerning the teachings of Ross ’286, JP ’165,

and Walenski and, in response, the EPO and the JPO issued

decisions that discussed those three references.

“The details of foreign prosecution[s] are not an additional

category of material information [that must be disclosed to the

PTO].” ATD Corp. v . Lydall, Inc., 159 F.3d 5 3 4 , 547 (Fed. Cir.

1998) (citing Molins, 48 F.3d 1180) (holding that where prior art

reference was of record in U.S. patent application, applicant was

under no obligation to submit foreign search report and

prosecution records applying that reference to foreign

counterpart application). Rather, “it is the [prior art]

reference itself, not the information generated in prosecuting

foreign counterparts, that is material to prosecution in the

United States.” Id.

MAN Roland has identified no viable legal theory under which

Heidelberger was obligated to disclose either the existence of

foreign patent office proceedings or the arguments it made during

31 those proceedings. That is not surprising, as the Federal

Circuit has often noted “the fact that the theories and laws of

patentability vary from country to country, as do examination

practices . . . [and that] international uniformity in theory and

practice has not been achieved.” Heidelberger Druckmaschinen AG

v . Hantscho Commercial Prods., Inc., 21 F.3d 1068, 1072 n.2 (Fed.

Cir. 1994).

Moreover, while the definition of materiality refers to

“information . . . [that] refutes , or is inconsistent with a

position the applicant takes,” 37 C.F.R. § 1.56(b) (emphasis

added), the kind of “information” the regulation refers to is

prior art or other factual information, not previous arguments

for or against patentability in other fora. See ATD, 159 F.3d at

547. According to a section of the Manual of Patent Examining

Procedure (“MPEP”) titled “Prior Art Cited in Related Foreign

Applications”:

Applicants . . . have a duty to bring to the attention of the [Patent] Office any material prior art or other information cited or brought to their attention in any related foreign application. The inference that such prior art or other information is material is especially strong ** where it has been used in rejecting the same or similar claims in the foreign application.

32 MPEP 2001.06(a). Because the arguments Heidelberger made to

foreign patent offices do not qualify as information cited or

brought to Heidelberger’s attention, Heidelberger had no duty to

disclose those arguments.

MAN Roland places considerable emphasis on its allegation

that Heidelberger made arguments concerning the teachings of

various prior art references to the PTO that contradicted

arguments it had made to one or more foreign patent offices, and

contends that Heidelberger was obligated to disclose the

arguments it made to those foreign offices. Failure to disclose

arguments made to foreign patent offices might support a partial

defense to infringement based upon “unclean hands.” See Rixon,

Inc. v . Racal-Milgo, Inc., 551 F. Supp. 163, 179 (D. Del. 1982)

(“Having taken the position it did in the German patent office

proceeding, Milgo, at least in the absence of disclosure of that

fact, was precluded from urging upon the Kansas Court an

inconsistent infringement theory.”) But in Rixon, the alleged

infringer’s successful invocation of an unclean hands defense did

not even support a determination of unenforceability – much less

antitrust liability. Rather, the court merely barred the

applicant from relying on any theory of infringement contrary to

a position taken in a foreign patent office proceeding.

Moreover, Rixon is distinguishable, and the applicant’s actions

33 substantially more egregious, because there the applicant’s

inconsistent statements concerned the definition of its

invention, not its interpretation of the teachings of prior art

references.14

Foreign patent office decisions stand on a somewhat

different footing from the categories of information discussed

above, but on the facts of this case, Heidelberger had no duty to

disclose the decisions at issue.

As a preliminary matter, and as noted above, “[c]ourts

should be ‘mindful of the risk in relying on foreign patent

prosecution in light of differences in disclosure requirements,

claim practice, form of application, and standard of

patentability.’” Inverness Med. Switz. GmbH v . Acon Labs., Inc.,

14 In Molins, the court was presented with evidence about what a patent applicant had said about a prior art reference, Wagenseil, during the course of several foreign prosecutions. 48 F.3d at 1180-81. But the question in that case was not whether the applicant had a duty to disclose to the PTO what he had said about Wagenseil in foreign proceedings. Rather, the question was whether the applicant’s failure to disclose Wagenseil to the PTO was inequitable conduct, and his statements about Wagenseil to foreign examiners was used to support the court’s holding that the reference was material and that the applicant had withheld it with the requisite degree of intent to deceive the PTO. In other words, Molins does not stand for the proposition that an applicant’s interpretive statements to foreign patent offices about prior art references fall within a category of information that must be disclosed to the PTO.

34 323 F. Supp. 2d 2 2 7 , 248 (quoting Molins, 48 F.3d at 1180). In

addition, “it is the [prior art] reference itself, not the

information generated in prosecuting foreign counterparts, that

is material to prosecution in the United States.” ATD, 159 F.3d

at 547 (Fed. Cir. 1998). Here, MAN Roland contends that

Heidelberger was obligated to disclose several foreign patent

office decisions because of their discussions of JP ’165 and

Walenski. But because MAN Roland has failed to explain how those

references are material, as discussed above, foreign decisions

interpreting those references must, necessarily, be immaterial.

Moreover, this case is easily distinguishable from

Inverness, the case MAN Roland cites for the proposition that a

foreign patent office decision can be material to a U.S.

prosecution.15 At issue in that case was the materiality of a

foreign patent office decision revoking a European counterpart

based upon a combination of four prior art references. 323 F.

Supp. 2d at 249. In ruling on a request for a preliminary

injunction, the court held that the patent challenger was likely

15 In addition to ruling, on the facts of the case before her, that a foreign patent office decision could be material, Judge Saris also noted “the lack of clear caselaw requiring an applicant to disclose an adverse decision by a foreign patent examiner and the basis for it,” and held that the patent challenger in that case had failed to “demonstrate[] an ability to prove the requisite intent [to defraud the PTO] by clear and convincing evidence.” 323 F. Supp. 2d at 249.

35 to succeed on its materiality argument based, in part, on “a

prior request by the patent examiner for information regarding

European patents in light of the over 200 prior art references

made in the ’982 patent.” Id. Here, by contrast, Heidelberger

did not deluge the examiner with prior art references, and the

examiner made no request for assistance. Accordingly, the result

in Inverness is not applicable to this case.

Because Heidelberger had no duty to disclose any information

from the foreign proceedings identified by MAN Roland,

Heidelberger is entitled to judgment as a matter of law that it

is not liable for Walker Process fraud for failing to do s o .

2 . Sham Litigation

Sham litigation claims form another subset of section 2

claims in which the allegedly anticompetitive conduct is the

enforcement of a patent through litigation, with knowledge that

the patent is invalid or not infringed. C.R. Bard, Inc. v . M3

Sys., Inc., 157 F.3d 1340, 1368 (Fed. Cir. 1998). To establish a

claim for sham litigation, the antitrust plaintiff must prove,

inter alia, that the challenged lawsuit is objectively baseless

and subjectively motivated “to interfere directly with the

business relationships of a competitor.” Prof’l Real Estate

Investors v . Columbia Pictures Indus., Inc., 508 U.S. 4 9 , 60-61

36 (1993) (quoting E . R.R. Presidents Conf. v . Noerr Motor Freight,

Inc., 365 U.S. 1 2 7 , 144 (1961)) (emphasis added by P R E ) . A

lawsuit is objectively baseless if “no reasonable litigant could

realistically expect success on the merits.” PRE, 508 U.S. at

60. A patent infringement suit is objectively baseless when the

infringement plaintiff knows that the patent is invalid or not

infringed. See C.R. Bard, 157 F.3d at 1368.

In its counterclaim, MAN Roland asserts that when the

counterclaim defendants commenced litigation they “knew and/or

should have known that the patents in issue were invalid and/or

unenforceable in view of prior art, failures to comply with the

requirements of 35 U.S.C. § 1 1 2 , double patenting, and

inequitable conduct and were not infringed by Counterclaim-

Plaintiffs.” Heidelberger’s argument for summary judgment on MAN

Roland’s sham litigation claims consists of a single point made

in one paragraph: that MAN Roland has not presented evidence that

it brought this action with knowledge that the patents-in-suit

were unenforceable, invalid, and/or not infringed. In its

objection to summary judgment, MAN Roland appears not to address

its sham litigation claim, concentrating, instead, on its Walker

Process claim. It seems that MAN Roland may be letting its sham

litigation claim fade away, but on the record as developed and

37 the arguments presented, Heidelberger is not entitled to summary

judgment on that part of Count 5 .

3 . What Remains

Because of the volume of the pleadings in this case, the

existence of multiple motions addressing the same count of the

counterclaim,16 the interrelationships between various theories,17

the fact that the same conduct serves as the basis for multiple

legal claims,18 and the lack of congruity among the pleadings,19

16 In this order alone, the court has been faced with three different summary judgment motions pertaining to Count 5 of the counterclaim. 17 For example, the grounds for invalidity stated in Count 2 of the counterclaim might support the sham litigation claim stated in Count 5 . 18 For example, various actions and inactions during the prosecution of the patents-in-suit have been asserted as the basis for: (1) an affirmative defense of unenforceability for inequitable conduct; (2) a declaratory judgment of unenforceability for inequitable conduct (Count 3 of the counterclaim); and (3) a claim of Walker Process fraud (Count 5 of the counterclaim). 19 For example, the motion for summary judgment presented in Heidelberger’s document n o . 140 addresses the full range of grounds set forth in MAN Roland’s Walker Process claim, while MAN Roland’s response, document n o . 2 2 1 , discusses only a subset of those grounds. On the other hand, some of those grounds, such as failure to disclose a Canadian patent application, would appear to be eliminated, based upon the granting of the motion for partial summary judgment presented in document n o . 153, concerning the effective filing date of that application.

38 it is not easy to keep track of which parts of this case are

still alive and which parts have been eliminated. But here goes.

As a result of this order, Count 4 of the counterclaim is

out, as to Heidelberger.

The Walker Process portion of Count 5 remains, in part, but

only to the extent it is based upon allegations of fraud during

the prosecution of the ’587 application;20 Heidelberger is

entitled to judgment that it is not liable for Walker Process

fraud based upon its conduct regarding Ross ’286, the Mitsubishi

litigation, JP ’165, Walenski, and proceedings involving EP ’740,

EP ’145, and JP ’213. Because allegations concerning the ’587

application came into the case after the deadline for summary

judgment motions, Heidelberger may file a concise summary

20 The court further notes the rather anomalous status of MAN Roland’s contentions regarding the prosecution of the ’587 application. In MAN Roland’s counterclaim, Heidelberger’s alleged misrepresentations to the PTO concerning the ’587 application appear to be one of the grounds for a Walker Process claim, but in MAN Roland’s objection to summary judgment (document n o . 2 2 1 ) , Heidelberger’s conduct concerning the ’587 application is not raised as an independently actionable instance of fraud or inequitable conduct but, rather, as evidence of Heidelberger’s intent to deceive the Patent Office. It is difficult to imagine how so much confusion can remain after so many words have been spilled on so many pages, unless obfuscation itself has become both a tactic and an objective. Simplicity, clarity of presentation, and candor, probably require just as much time (likely more) as obfuscation, and no doubt would prove more effective and as remunerative.

39 judgment motion limited to MAN Roland’s claim of Walker Process

arising out of the prosecution of the ’587 application, if,

indeed, MAN Roland is making such a claim.

The sham litigation portion of Count 5 also remains but, as

noted above, appears to be hanging by the proverbial thread.

Conclusion

For the reasons given, the motion for summary judgment

presented in document no. 132 is granted; the motion for summary

judgment presented in document no. 140 is granted in part, and

the motions for summary judgment presented in document nos. 130

and 139 are denied.

SO ORDERED.

Steven J. McAuliffe Chief^ Judge

June 2, 2006

40 cc: Daniel E . Will, Esq. Hugh T . Lee, Esq. Richard S . Gresalfi, Esq. Georg C . Reitboeck, Esq. Mark A . Hannemann, Esq. Michael J. Lennon, Esq. T . Cy Walker, Esq. Danielle L . Pacik, Esq. Jonathan M . Shirley, Esq. Alfred H . Hemingway, Jr., Esq. Irvin D. Gordon, Esq. Martin B . Pavane, Esq. Michael J. Songer, Esq. Shari R. Lahlou, Esq. Sidney R. Bresnick, Esq. Teodor J. Holmberg, Esq. Richard D. Margiano, Esq. John F. Sweeney, Esq. Steven F. Meyer, Esq. Tony V . Pezzano, Esq. Bruce W . Felmly, Esq. Seth J. Atlas, Esq. Anthony S . Augeri, Esq.