The Dow Chemical Company v. Exxon Corporation and Exxon Chemical Patents, Inc., Defendants/cross

139 F.3d 1470, 46 U.S.P.Q. 2d (BNA) 1120, 1998 U.S. App. LEXIS 5910, 1998 WL 130725
CourtCourt of Appeals for the Federal Circuit
DecidedMarch 24, 1998
Docket97-1347, 97-1351
StatusPublished
Cited by72 cases

This text of 139 F.3d 1470 (The Dow Chemical Company v. Exxon Corporation and Exxon Chemical Patents, Inc., Defendants/cross) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
The Dow Chemical Company v. Exxon Corporation and Exxon Chemical Patents, Inc., Defendants/cross, 139 F.3d 1470, 46 U.S.P.Q. 2d (BNA) 1120, 1998 U.S. App. LEXIS 5910, 1998 WL 130725 (Fed. Cir. 1998).

Opinions

Opinion for the court filed by Circuit Judge MICHEL. Circuit Judge LOURIE dissents in part.

MICHEL, Circuit Judge.

Plaintiff-Appellant, The Dow Chemical Company (“Dow”), appeals from a final judgment of the United States District Court for the District of Delaware, entered on March 20, 1997, dismissing Dow’s state law unfair competition claim against Exxon Corporation (“Exxon Corp.”) because no justiciable issues remained in the case and denying Dow’s claim for attorney fees pursuant to 35 U.S.C. § 285 because the requisite exceptional circumstances had not been shown to exist. Dow Chem. Co. v. Exxon Corp., No. 94-572-SLR (D.Del. Mar. 20, 1997). Exxon Corp. and Exxon Chemical Patents, Inc. (“ECPI”) (together, “Exxon”) cross-appeal the district court’s order entered on September 24,1996, dismissing ECPI from the case due to ECPI not being found an indispensable party pursuant to Fed.R.Civ.P. 19(b). Dow Chem. Co. v. Exxon Chem. Patents, Inc., No. 94-572-SLR (D.Del. Sept. 24, 1996). Both Dow’s appeal and Exxon’s cross-appeal were timely filed and this ease was submitted for our decision following oral argument on January 6,1998.

Because Dow’s state law unfair competition claim was not coterminous with a claim of inequitable conduct and was not otherwise preempted by the federal patent laws, we reverse the district court’s dismissal of that claim and remand for further proceedings. However, because the district court did not commit clear error in finding that there were no exceptional circumstances, we affirm the district court’s judgment to the extent it denied Dow an award of attorney fees. In addition, because ECPI was properly found not to be an indispensable party, we affirm the district court’s dismissal of ECPI from the case.

BACKGROUND

U.S. Patent No. 5,246,783 (the “ ’783 patent”) was issued to Lawrence Spenadel, Monica L. Hendewerk and Aspy K. Mehta on September 21, 1993, and assigned to ECPI. ECPI, a Delaware corporation, is a wholly owned subsidiary of Exxon Corp., a New Jersey corporation with its principal place of business in Texas. E CPI’s ’783 patent discloses certain wire and cable devices manufactured using a particular insulating polymer. Such devices are commonly used to transmit electrical power to residential and business consumers. Exxon Corp. manufactures the polymer used in the patented devices under the trade names VISTALON and EXACT. At about the same time the ’783 patent was issued, Dow, a Delaware corporation with its principal place of business in Michigan, introduced its first line of “ITP” polymer products under the trade name AFFINITY. By February 1994, Dow had introduced a second line of ITP products, known as ENGAGE, with two polymers specifically for cable use. By June 1994, Dow had also developed a third ENGAGE product designed for cable and wire use. Subsequently, Dow introduced further ENGAGE products as well as a line of polymers, the Nordel IP polymers, for use in wire and cable devices.

On October 25, 1994, Dow filed an action against Exxon in the United States District Court for the District of Delaware. The complaint consisted of two counts. Count I [1472]*1472was for a declaratory judgment that certain polymers made by Dow for wires and cables did not infringe the ’783 patent. This count also contained an allegation that the ’783 patent was invalid and unenforceable. Count II was a state law claim for unfair competition based upon alleged threats by Exxon, made in meetings and by letter, to sue prospective and actual Dow ENGAGE customers for infringement of the ’783 patent. Count II was later amended to allege that Exxon had no good faith belief that Dow infringed the patent when Exxon made those threats. In a second amendment to Count II, Dow alleged that Exxon obtained the ’783 patent by inequitable conduct before the Patent and Trademark Office (the “PTO”). The alleged inequitable conduct was that Exxon claimed its polymers were superior in various electrical tests to the prior art while withholding its knowledge of a group of polymers, sold by Mitsui Petrochemical Industries, Ltd. under the trade name TAFMER, which reputedly could achieve the same or better results than the Exxon polymers and which allegedly anticipated the claims in the ’783 patent.

On August 5, 1996, Exxon filed a “Statement of Non-Liability” with the district court which gave Dow and its customers, at no cost, perpetual immunity from suit for infringement of the ’783 patent. As a result of the filing of this Statement of Non-Liability, the district court dismissed Count I of Dow’s complaint in an Order entered on September 24, 1996. Dow Chem. Co. v. Exxon Chem. Patents, Inc., No. 94-572-SLR (D.Del. Sept. 24, 1996). This same Order also dismissed ECPI from the litigation. The district court did not deem ECPI an “indispensable” party to the action pursuant to Fed.R.Civ.P. 19(b) because, “as a practical matter, Exxon [Corp.] has both the duty and the capability of protecting ECPI’s interests. Joinder, therefore, is not required.” Dow, slip op. at 12 (D.Del. Sept. 24,1996) (footnote omitted).

After further briefing, the district court held in a Memorandum Order entered November 26, 1996, that Dow would not be permitted to present evidence of Exxon’s alleged inequitable conduct in connection with its remaining state law unfair competition claim.1 Dow, slip op. at 6-7 (D.Del. Nov. 26, 1996). The district court posited that “[t]he question for the court, then, is whether issues of patent validity, and specifically of Exxon’s alleged inequitable conduct, may be decided in the context of a business tort claim where all claims arising directly under the patent laws have been dismissed.” Id. at 3-4. The court explained that its decision to exclude evidence of inequitable conduct relied upon precedent indicating that a court should not reach beyond the scope of a given controversy to invalidate a patent. Id. at 5 (citing Pro-Mold & Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d 1568, 1575, 37 USPQ2d 1626, 1631 (Fed.Cir.1996); Vieau v. Japax, Inc., 823 F.2d 1510, 1517-20, 3 USPQ2d 1094, 1100-02 (Fed.Cir.1987)). Thus, the district court “decline[d] to allow what in essence is a patent trial to proceed in the guise of a business tort trial.” Id. at 6. In addition, the district court further declared that the presumptive validity attaching to patents meant that “a patent owner who exercises the right to exclude others [1473]*1473from using the invention is presumed to be acting in good faith, even if the patent is later deemed invalid or unenforceable.” Id. (citing Concrete Unlimited, Inc. v. Cementcraft, Inc., 776 F.2d 1537, 1539, 227 USPQ 784, 785 (Fed.Cir.1985)). Hence, the court reasoned:

[the patentee in Concrete Unlimited ] ‘had the right to exclude others from making, using, and selling the invention and to enforce those rights until the ...

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139 F.3d 1470, 46 U.S.P.Q. 2d (BNA) 1120, 1998 U.S. App. LEXIS 5910, 1998 WL 130725, Counsel Stack Legal Research, https://law.counselstack.com/opinion/the-dow-chemical-company-v-exxon-corporation-and-exxon-chemical-patents-cafc-1998.