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HARSCO CORP. v. KERKAM

May 21, 1997

HARSCO CORPORATION, Plaintiff
v.
KERKAM, STOWELL, KONDRACKI & CLARKE, P.C.; EDWARD J. KONDRACKI; and JOHN C. KERINS; Defendants



The opinion of the court was delivered by: CALDWELL

 I. Introduction.

 In this diversity action controlled by Pennsylvania law, the plaintiff, Harsco Corporation, sued the defendants, Kerkam, Stowell, Kondracki & Clarke, P.C., a law firm, and Edward J. Kondracki and John C. Kerins, two lawyers with the firm. Harsco sets forth two claims. Its first claim is for negligence and alleges that the individual defendants committed malpractice while representing IKG Industries, a division of Harsco, in patent litigation in the Eastern District of Michigan, resulting in a substantial judgment against IKG. The second claim is for intentional or negligent misrepresentation and seeks a declaratory judgment that the defendants improperly told IKG to appeal the trial court's judgment when an appeal would be wholly without merit.

 We are considering cross-motions for partial summary judgment filed by the plaintiff and the defendant law firm on the issue of proximate cause in the negligence claim. *fn1" The plaintiff argues that, aside from the other elements it must prove to show legal malpractice, the record shows that when the individual defendants moved for judgment as a matter of law under Fed. R. Civ. P. 50(a)(2), their failure to specify the grounds on which they relied was the proximate cause of its injury. Conversely, the defendant maintains that any error (and it denies one was made) did not affect the outcome of the trial.

 We will evaluate the motion under the well established standard, see Davis v. Portline Transportes Maritime Internacional, 16 F.3d 532, 536 n.3 (3d Cir. 1994), and we provide the following undisputed background from the summary-judgment record. *fn2"

 II. Background.

 W.S. Molnar Co. (the Company) brought the underlying suit, W.S. Molnar Co. v. IKG Industries, No. 93-CV-60028-AA (E.D. Mich.), aff'd, 82 F.3d 434, 1996 WL 128262 (Fed. Cir.) (unpublished disposition), against IKG for infringement of two of its patents.

 The individual defendants represented IKG in those proceedings, and one of the defenses they presented was the failure of either patent to disclose the "best mode" of the invention, as required by 35 U.S.C. § 112. A patent that fails to set forth the "best mode" is invalid and cannot be infringed. See Spectra-Physics, Inc. v. Coherent, Inc., 827 F.2d 1524, 1537 (Fed. Cir. 1987). Some background on the Molnar patents is necessary to understanding the defense as it was presented at trial.

 The patent applications were made on October 20, 1987. The first patent was granted on October 9, 1990, and the second on December 31, 1991. The patents were granted for making articles with a hard, slip resistant surface, primarily for work areas in commercial settings. Part of the process for creating the surface is the heating of a hollow, low-carbon steel wire filled with iron powder, carbon, high-carbon iron particles and aluminum. The invention was claimed to be an improvement over nonslip surfaces that used grit because the patented surface did not wear away. The hardness of the final product depends to a major degree on the carbon content.

 The patents advised that:

 
The total amount of carbon by weight, in the total combination of the hollow wire and fill materials, is selected to be between around 0.25% to around 0.70%. Preferably the amount of carbon is selected to be between around 0.30% to around 0.60% . . . The amount of aluminum in the total combination of hollow wire and fill materials is selected to be around 1% to around 3% by weight . . . The resultant coating forms a hard, slip resistant surface of iron alloy having a Rockwell hardness in the range from around 40 Rc to around 65 Rc; in a preferred form the result was a slip resistant surface having a file hard surface with a Rockwell hardness in the range from around 50 Rc to around 65 Rc. It should be understood that hardnesses in excess of 65 Rc can be provided.

 (Plaintiff's exhibits at A1430 and A1439).

 Actually, William S. Molnar, the inventor, preferred a wire that had 2.0% to 4.0% total carbon and 5.0% total aluminum. As the plaintiff points out, this is more than 3 times the carbon content and 1.5 times the aluminum content disclosed in the patents.

 The best mode defense focused on the failure of the patents to disclose these percentages of carbon and aluminum. IKG presented evidence that the use of these percentages, by Molnar's own admission, did not give him the hardness he preferred in the surface. Molnar preferred a surface with a Rockwell hardness of 61, and the patent disclosures would have resulted in a hardness of 42. This best mode defense was presented pretrial in a motion for summary judgment (which was denied) and at trial.

 To oppose the defense, the Company presented evidence to show that the discrepancy in the figures was unintentional. Molnar testified that he was not a metallurgist, just someone with practical and business exposure to nonslip articles. Additionally, he stated that he did not know the exact composition of the wire because he obtained it from Midwest Thermal Spray which in turn obtained it from a company called Cor-Met. In the months preceding the patent application, Molnar realized that his preferred wire was Cor-Met 1362FC, a wire with the preferred composition of 2.0% to 4.0% total carbon and 5.0% total aluminum, but he did not know its exact composition. Cor-Met supplied the percentages that were listed in the patents when he needed the composition for the patent applications.

 As additional support for the innocent nature of the misstatements, his company submitted evidence that, when he wanted to find another supplier for the wire, he used the figures from the patent applications. The other company's wire had to be modified because of the initial inferior results from using the patents' ratio of carbon and aluminum. Molnar also specifically denied that he had intentionally concealed the percentages of carbon and aluminum in the wire.

 Further, the Company elicited testimony indicating that a surface in the preferred hardness range could be created from the disclosures in the patents, although not without some experimentation. IKG's vice-president, Mr. Piontek, testified on cross-examination that when IKG prepared its competing product, it simply asked its metal supplier to make a suitable wire. The Company's expert, Mr. Eldis, testified that the patents revealed the "basics" that "would allow you to get to that hardness range" and, as a metallurgist, Eldis could have produced the preferred hardness ranges from the disclosures.

 At trial, IKG presented its best mode defense including Molnar's preference for Cor-Met 1362FC at the time of the patent applications in October 1987 and his Company's continued reliance on Cor-Met 1362FC through at least the time of trial. The individual defendants moved at the close of Molnar's case for judgment as a matter of law under Fed. R. Civ. P. 50(a)(1) but, as found by the Federal Circuit on appeal, did not specify the grounds for doing so, as required by Fed. R. Civ. P. 50(a)(2). *fn3" The trial court denied the motion and gave the case to the jury. The jury returned a verdict upholding the validity of the Molnar patents.

 The individual defendants then filed several post-trial motions, including one that renewed its motion for judgment as a matter of law (JMOL), and specifying that it was relying on a "best mode" defense to the validity of Molnar's patents. It also moved for a new trial. The Company opposed the JMOL motion by arguing that IKG had violated Rule 50(a)(2).

 The district court denied IKG's post-trial motions. In doing so, it held that IKG had not properly preserved its right to move for JMOL on the basis of the best mode defense. It also decided that no new trial was warranted because the verdict was not against the great weight of the evidence. The Federal Circuit affirmed. Agreeing that IKG had waived its right to move for JMOL on the best mode defense, the appellate court, although conceding there was "strong evidence of a best mode violation," 1996 WL 128262 at *2, rejected that defense by examining it under a plain error standard of review.

 Harsco then filed the instant lawsuit. It alleged that the individual defendants were negligent when they failed to comply with Rule 50(a)(2) by not specifying the facts or the law on which they sought JMOL on the best mode defense, thereby causing the trial court and appellate court not to give this defense the full consideration it deserved. Harsco also alleged that, absent the waiver, it would have prevailed on its best mode defense.

 As part of the current summary judgment proceedings, the defendant has submitted other evidence from the trial that bore on other issues. First, it points out that during the application process the patent examiner had objected that the patent was obvious because "routine experimentation" would reveal the "optimum ratio" "depending upon the end results desired" and that "it would be ...


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