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Corsage Collection, Inc. v. GN Diamond

March 26, 2009

CORSAGE COLLECTION, INC., PLAINTIFF,
v.
GN DIAMOND, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Slomsky, J.

MEMORANDUM AND ORDER

I. INTRODUCTION

This patent action was filed in 2006 by Corsage Collection, Inc. ("Corsage") alleging six causes of action against Defendants GN Diamond, LLC ("GN Diamond"), SKR Diamonds, Ltd. ("SKR Diamonds"), Eithan Raviv ("Raviv"), and Mark Friedman ("Friedman").*fn1 In its Complaint, Corsage seeks (1) a declaratory judgment of non-infringement of Defendants' patent (Count I); (2) a declaratory judgment of invalidity of Defendants' patent (Count II); and (3) a declaratory judgment of unenforceability of Defendants' patent (Count III). In the Complaint, Corsage also alleges: (1) unfair competition under the Lanham Act (Count IV); (2) tortious interference with contractual relations (Count V); and (3) tortious interference with prospective economic relations (Count VI). Defendants GN Diamond and SKR Diamonds ("Diamond Defendants" or "Defendants") counterclaimed against Plaintiff for infringement of United States Design Patent D460,379 (the "'379 Patent"). Diamond Defendants, through contractual arrangements with Raviv, to whom the '379 Patent was granted, had received the exclusive licence to manufacture and sell the patented jewelry design at issue in this case.

On December 15, 2007, Diamond Defendants filed a Motion for Summary Judgment on Patent Infringement (Doc. No. 55), seeking dismissal of Plaintiff's claim for a declaratory judgment of non-infringement (Count I) and seeking an entry of judgment on Diamond Defendant's Counterclaim that Plaintiff has infringed the '379 Patent. On December 24, 2007, Diamond Defendants filed a second Motion for Summary Judgment (Doc. No. 60). This Motion was for partial summary judgment dismissing Plaintiff's claim of patent invalidity, and sought dismissal of Plaintiff's claim for a declaratory judgment of invalidity (Count II). On January 14, 2008, Plaintiff filed its Combined Response to Defendants' Motions to Dismiss Certain Claims and for Summary Judgment on Infringement (Doc. No. 65). Plaintiff opposed the Motions of Diamond Defendants, asserting that the factual issues in this case are both material and genuine and that summary judgment should be denied. Diamond Defendants, on January 28, 2008, filed their Combined Reply in Further Support of their Motions for Summary Judgment (Doc. No. 71). Finally, on February 26, 2008, Plaintiff filed its Notice of Non-Opposition to Summary Judgment on Infringement (Doc. No. 75), conceding only that in the event this Court holds that the '379 Patent is valid, then Plaintiff has infringed the patent by selling jewelry with the flower design.*fn2

Subsequent to Plaintiff's Notice of Non-Opposition to Summary Judgment on Infringement, Diamond Defendants, on April 24, 2008, filed a Motion for Summary Judgment Dismissing Plaintiff's Cause of Action for Unfair Competition (Count VI) (Doc. No. 78).

Defendants claim that they could not have made this motion earlier because infringement was still in dispute. Diamond Defendants now argue there is no genuine issue of material fact as to Plaintiff's unfair competition cause of action and that it too should be dismissed. Plaintiff responded to Defendant's Motion for Summary Judgment on Unfair Competition on May 13, 2008 (Doc. No. 80).

On January 23, 2009, the Court ordered that oral argument would be held on all outstanding Motions on February 5, 2009. Four days later-and only nine days before the scheduled oral argument-Diamond Defendants filed yet another Motion for Summary Judgment (Doc. No. 84). This motion sought dismissal of Plaintiff's claims of invalidity (Count II) and Unenforceability (Count III) based upon inventorship. Oral argument was held on all outstanding Motions on February 5, 2009. All non-mooted motions are now ripe for decision by the Court.

II. FACTUAL BACKGROUND

Plaintiff Corsage is a domestic jewelry distributor that was the exclusive American distributor of floral designed jewelry manufactured pursuant to an Israeli patent. (Pl. Compl. at 2, 4.) The floral design used an invisible setting to lock six precious stones around a central, hexagonally shaped stone, creating the appearance of a flower ("Flower Design"). (Id. at 4.) As noted, Plaintiff is alleging that Defendants, who subsequently obtained rights to a patent for jewelry with a similar floral design, have an invalid patent for their design and that Plaintiff could properly use the Flower Design in the jewelry it was distributing in the United States. In order to properly understand the factual setting of this case, and to place in proper context the competing claims, a chronology of facts is set forth.

1. The Flower Design jewelry that Plaintiff distributes is manufactured pursuant to an Israeli design patent. The Israeli design patent was procured pursuant to an application by an Israeli jewelry designer named Ezra Boaron, on September 17, 2000. (Id.) The Israeli Patent Office issued a design patent to Boaron for the Flower Design on June 11, 2002 (the "Boaron Design"). (Id.)

2. Boaron transferred his interest in the Boaron Design to an Israeli jewelry manufacturer, Geraldo Jewelry, which subsequently contracted with Plaintiff Corsage to exclusively distribute and promote jewelry featuring the Boaron Design. (Id.)

3. On November 16, 2000, two months after Boaron had applied for patent protection for the Flower Design in Israel, another Israeli jewelry designer named Eithan Raviv applied for patent protection for a similar floral jewelry design in the United States. (Exh. 1, Def.'s Mot. For Summary Judgment Dismissing Claim of Invalidity and Unenforceability Based on Inventorship, '379 Patent [hereinafter '379 Patent].)

4. Raviv's patent application was submitted on his behalf by his attorney, Defendant Mark Friedman. (Id.)

5. Friedman is an Israeli citizen who practices patent law in both Israel and the United States. Although Friedman was named as a defendant in this case and was served with the Complaint, he has not filed an answer and a default has been entered against him.

6. Early in 2002, while Raviv's United States patent was pending, Boaron met with Friedman to discuss Friedman representing Boaron in an action against Defendant SKR Diamonds for infringing the Boaron Design in Israel. (Pl. Compl. at 5-6.) At that meeting, Boaron showed Friedman the Flower Design. (Id. at 6.)

7. At their meeting, Friedman did not inform Boaron that Friedman also represented Raviv or that Friedman was involved in filing a patent application on Raviv's behalf in the United States for a floral design that was very similar to Boaron's Flower Design. (Id. at 6.)

8. Friedman drafted a cease and desist order to send to Defendant SKR Diamond on Boaron's behalf, but never mentioned Raviv's design and its pending American patent.

9. The United States Patent and Trademark Office ("PTO") issued U.S. Design Patent 460,379 to Raviv in July, 2002, one month after Boaron received his patent for the same design in Israel. (Id.)

10. As part of the patent application process in the United States, Raviv was required to affirm the truth of the statements made in his application. Raviv swore to the PTO that he was the sole inventor of the design for which patent protection was sought. Accordingly, the '379 Patent listed Raviv as the sole inventor, and the Patent was issued solely in Raviv's name. (Id.)

11. Raviv assigned his interest in the '379 Patent to Paco Jewelry Ltd. and Natan Goldman. Goldman is also an Israeli jewelry designer and is another inventor of the floral design jewelry covered by the '379 Patent. Goldman was not listed as an inventor in the application for the '379 Patent, or the patent itself. (Exh. 3, Decl. of Guy Yonay in Support of Mot. for Summary Judgment Dismissing Unfair Competition Claim [hereinafter Yonay Decl.], Assignment of Patent at 1.)

12. Because Goldman was not listed as an inventor on Raviv's application for the '379 Patent but instead was described to the PTO only as an assignee of the Patent,*fn3 the PTO did not conduct a review of Goldman's prior art to determine if the floral design submitted by Raviv deserved to be patented. (See Pl. Post-Hearing Submission on Summary Judgment at 3 [hereinafter Pl. Post-Hearing].)

13. After the '379 Patent was issued, Raviv and Goldman then contracted with Defendant SKR Diamonds, giving SKR Diamonds an exclusive license to make, use and sell diamond jewelry under the '379 Patent. (See Def.'s Memorandum of Law in Support of Mot. For Summary Judgment of Patent Infringement, at 4-5.)Defendant SKR Diamonds manufactures the flower jewelry pursuant to the '379 Patent. (See id. at 5).

14. SKR Diamonds then contracted with GN Diamond to be the sole distributer of the jewelry that SKR Diamonds manufactures based on the '379 Patent. (See id.)

15. In 2005, the holder of the Israeli Boaron Design Patent, Geraldo Jewelry, brought a patent infringement suit against Defendant SKR Diamonds in Israel based on Boaron's Design. (Id. at 3; Def.'s Answer, Affirmative Defenses and Counterclaim to Pl.'s Compl. at 7.) As part of that action, Raviv stated in an affidavit that he was not the sole inventor of the design protected by the '379 Patent, but instead that he had collaborated on the design with his partner, Goldman. (Exh. 3, Def.'s Mot. for Summary Judgment Dismissing Claim of Invalidity and Unenforceability Based on Inventorship, Raviv Affidavit at ¶ 5 [hereinafter Raviv Affidavit].) Raviv's affidavit stated: "Nathan Goldman and I decided to work jointly with relation to the Flower Design." (See id. at ¶ 5). Raviv also stated in his affidavit: "After the submission of the ['397 Patent] design patent registration application, I continued to cooperate with Nathan Goldman . . ." (See id. at ¶ 9). Goldman also submitted an affidavit in the Israeli suit in which he corroborated Raviv's statement. In his affidavit, Goldman stated: "I hereby declare that I am the one who conceived . . . the Model named the 'Flower Model.'" (See Exh. 4, Def.'s Mot. for Summary Judgment Dismissing Claim of Invalidity and Unenforceability Based on Inventorship, Goldman Affidavit [hereinafter Goldman Affidavit].)

16. While Plaintiff distributed Flower Design jewelry in United States pursuant to the Israeli patent, Defendants were also engaged in the manufacture and distribution of the similar floral jewelry in the United ...


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