Haden Schweitzer Corp. v. Arthur B. Myr Industries, Inc.

901 F. Supp. 1235, 36 U.S.P.Q. 2d (BNA) 1020, 1995 WL 608361, 1995 U.S. Dist. LEXIS 12159
CourtDistrict Court, E.D. Michigan
DecidedJune 20, 1995
DocketNo. 94-CV-73958-DT
StatusPublished
Cited by3 cases

This text of 901 F. Supp. 1235 (Haden Schweitzer Corp. v. Arthur B. Myr Industries, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Haden Schweitzer Corp. v. Arthur B. Myr Industries, Inc., 901 F. Supp. 1235, 36 U.S.P.Q. 2d (BNA) 1020, 1995 WL 608361, 1995 U.S. Dist. LEXIS 12159 (E.D. Mich. 1995).

Opinion

OPINION

DUGGAN, District Judge.

I. Introduction

On September 29, 1994, plaintiffs Haden Schweitzer Corporation (“Haden”), Thermal Engineering Corporation (“TEC”) and Willie H. Best (“Best”) filed a patent infringement action against defendants Arthur B. Myr Industries, Inc. (“Myr”) and Richard P. Marsh-ke (“Marshke”), Myr’s president, for defendants’ installation of a curved wall, radiant oven at Ford Motor Company’s Kansas City facility (“Ford-Kansas City”). Currently before this Court are defendants’ motion for partial summary judgment and plaintiffs’ cross-motion for partial summary judgment1 based on Patent No. 4,546,553’s (“553 Patent”) enforceability from October 15, 1989 through May 12, 1994. See 35 U.S.C. § 41(c)(2).

[1237]*1237 II. Background.

For all patent applications filed after December 12,1980 (which includes ’553 Patent), maintenance fees must be paid to the United States Patent and Trademark Office (“PTO”) by the patent owners no later than the 4th, 8th and 12th years after the date of the patent’s issuance. See 35 U.S.C. § 41(b).2 PTO maintenance fees are calculated at two different rates, one for “large” entities and another for “small” entities. Id. Under 35 U.S.C. § 41(h)(1), fees charged under subsection (b) shall be reduced by fifty percent with respect to “small entities,” which includes small businesses, independent inventors or nonprofit organizations. See Centigram Communications Corp. v. Lehman, 862 F.Supp. 113, 114-16 (E.D.Va.1994), appeal dismissed, 47 F.3d 1180 (Fed.Cir.1995) and Laerdal Medical Corp. v. Ambu, Inc., 877 F.Supp. 255, 256-57 (D.Md.1995) for a discussion of § 41’s history. “[T]he purpose of implementing such a maintenance fee system was to have patent owners pay for certain operations of the PTO.” Id. at 256.

On October 15, 1985, the ’553 Patent, claiming “Radiant Wall Oven and Process of Drying Coated Objects,” was issued. At that time, the patent owner (Best) was a “small entity,” which would entitle him to pay the reduced maintenance fee under §§ 41(b) and 41(h)(1). However, in mid-1988, TEC and Best entered into an agreement with Haden regarding ’553 Patent. Before the first maintenance fee became due on October 15, 1989 (four years3 from the patent’s issuance), the patent was licensed to Haden, a “large entity.”4 In fact, on April 6,1989, the patent owner (through counsel) paid the first maintenance fee ($225) as a “small entity.”

On June 9,1989, defendants were awarded a contract for installation of the curved wall oven at Ford-Kansas City based on a bid previously submitted. On June 14, 1989, a meeting was held between Ford Motor and various persons (including defendant Marsh-ke and Haden representatives) regarding paint building and the upgrade of the paint system at the Kansas City plant. (Pls.’ Mem. in Resp., Ex. 5). Defendants allege that they completed the oven on December 1, 1989.5

On April 18, 1994, plaintiffs learned for the first time that they erred in remitting the “small entity” fee in April of 1989. Once discovered, Haden moved for the PTO to accept late payment of the proper maintenance fee. On May 12, 1994, the PTO accepted Haden’s late payment.

On September 29, 1994, plaintiffs filed the present lawsuit against defendants for patent infringement of ’553 Patent based on defendants’ oven installation at Ford-Kansas City.

On March 22, 1995, defendants filed then-present motion for partial summary judgment. Defendants contend that they are entitled to the affirmative defense of “absolute intervening rights” based on ’553 Patent’s invalidity from October 15, 1989 through May 12, 1994 because of plaintiffs’ failure to remit the proper maintenance fee to the PTO in April of 1989. On April 13, 1995, plaintiffs filed their cross-motion for partial summary judgment, arguing that because defendants did not rely on the patent’s infirmity, defendants are not entitled to any “intervening rights.”6 Therefore, the legal issue to be resolved by this Court is whether reliance on the part of defendants is required [1238]*1238in order for defendants to assert the affirmative defense of “intervening rights.”7

III. Discussion

Defendants contend that the first sentence of 35 U.S.C. § 41(c)(2) entitles them to the affirmative defense of “absolute” intervening rights during the period of October 15, 1989 through May 12,1994, and that because their “infringing” activity occurred between those dates, relief should be granted in their favor.

Plaintiffs contend that defendants did not rely on the invalidity of plaintiffs’ patent based on the maintenance fee infirmity, and therefore, defendants are prevented from asserting the defense of “intervening rights” under either the “equitable” or “absolute” doctrine.8 Plaintiffs also contend that even if the Court concludes, based on defendants’ “intervening rights” defense, that the activity between October 15, 1989 and May 12, 1994 would not constitute “infringing” activity on the part of defendants, such defense will not bar plaintiffs’ claim because defendants cannot meet their burden of proof that the oven installation was “made, purchased or used” by defendants after October 15, 1989 and prior to May 12, 1994. Plaintiffs contend that a substantial portion of the infringing oven was likely to have been commenced and completed before October 15, 1989.

A. Intervening Rights Doctrine

35 U.S.C. § 41(b) provides that:

[u]nless payment of the applicable maintenance fee is received in the Patent and Trademark Office on or before the date the fee is due or within a grace period of six months thereafter, the patent will expire as of the end of such grace period.

35 U.S.C. § 41(b).9 Section 41(c)(1) provides that:

[t]he Commissioner may accept the payment of any maintenance fee required by subsection (b) of this section ... if the delay is shown to the satisfaction of the Commissioner to have been unintentional, or ... unavoidable.10 ... If the Commissioner accepts payment of a maintenance fee after the six-month grace period, the patent shall be considered as not having expired at the end of the grace period.

35 U.S.C. § 41(c)(1). See 37 C.F.R. § 1.378

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901 F. Supp. 1235, 36 U.S.P.Q. 2d (BNA) 1020, 1995 WL 608361, 1995 U.S. Dist. LEXIS 12159, Counsel Stack Legal Research, https://law.counselstack.com/opinion/haden-schweitzer-corp-v-arthur-b-myr-industries-inc-mied-1995.