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Quad/Tech, Inc. v. Q.I. Press Controls B.V.

April 1, 2010

QUAD/TECH, INC. PLAINTIFF,
v.
Q.I. PRESS CONTROLS B.V., ET. AL, DEFENDANTS.



The opinion of the court was delivered by: Eduardo C. Robreno, J.

MEMORANDUM

I. INTRODUCTION

At issue in this litigation is a patent licensed to Plaintiff Quad/Tech, Inc. ("Quad/Tech"), for a printing registration control system used with newspaper and commercial printing presses. Quad/Tech alleges that Defendants Q.I. Press Controls, B.V. ("Q.I., B.V."), Q.I. Press Controls North America, LTD., Inc. ("Q.I. N.A.") or (collectively, "Q.I. Defendants"), and Print2Finish, LLC ("Print2Finish") (collectively, "Defendants"), designed, marketed, and sold a competing product -the mRC System that infringes upon its patent.

Presently before the Court is Quad/Tech's Motion for Preliminary Injunction. (Doc. no. 8.) Because it has failed to demonstrate either a reasonable likelihood of success on the merits as to its claim of infringement or irreparable harm, Quad/Tech's Motion for Preliminary Injunction will be denied.

II. BACKGROUND

Quad/Tech filed the instant action against Defendants alleging the following claims: (1) infringement of claims of the "577 Patent," in violation of 35 U.S.C. § 271; (2) unfair competition under the Lanham Act, in violation of 15 U.S.C. § 1125(a); (3) tortious interference with prospective contractual relationships; (4) Pennsylvania unfair competition.*fn1 In addition, Q.I. Defendants filed two counterclaims that seek a declaratory judgment of: (1) non-infringement of the '577 Patent; and (2) invalidity of the '577 Patent.

Quad/Tech has filed a motion for preliminary injunction. (Doc. no. 8). The Court held a hearing on the motion and preliminary claim construction. Afterwards, the parties filed post-hearing briefs and proposed findings of fact and conclusions of law. (Docs. no. 85, 89 and 90.) The motion is now ripe for disposition.

A. Quad/Tech Background

Quad/Tech is a wholly-owned subsidiary of Quad/Graphics. Since its inception in 1971, Quad/Graphics has become the largest privately-held printer company in the country.

Quad/Tech specializes in the development, design, market, and sale of printing presses. Quad/Tech's products are used in commercial printing, newspaper printing, and packaging printing. Quad/Tech's core products are color registration systems. In the development of these systems, Quad/Tech has filed approximately 234 patent applications in the United States and abroad.

The '577 Patent is at issue in this case. The technology of this patent operates to ensure that colors of ink are properly and precisely placed on a "web" of paper. To understand the 577 Patent, a brief discussion of the commercial color printing process is necessary.

1. Color Printing Process

Four inks are used to print full-color images ("four-color-process printing"). The four inks include three primary colors (cyan, magenta, and yellow) and black; these colors are abbreviated as CMYK. Using the CMYK method, countless colors are reproduced by various application of the color dots on the surface (paper or other medium) to be printed; the surface is often referred to as the "web."*fn2

To reproduce colors accurately, the ink dots must be precisely placed on the web. This placement process is referred to as "registration." Conversely, when the ink spots are not properly aligned, it is referred to as "misregistration." Various technologies have developed to ensure that color registration occurs properly. One method is to place small marks ("registration marks") of various colors in various positions on the web; printed systems using this method are referred to as "marked" systems, and are said to operate in "marked mode". Registration marks are commonly placed on the margins of the web, distinct from the image itself. Color registration systems which operate without registration marks on the web are referred to as "markless systems," and are said to operate in "markless mode."

2. 577 Patent

Quad/Tech developed a printing color registration system which can be used in both "marked" and "markless" mode. On October 28, 1992, Quad/Tech filed with the United States Patent and Trademark Office ("PTO"), United States Patent Application Serial No. 07/967,978, in the names of Jeffrey W. Sainio and John C. Seymour, and entitled, "Color Registration System for A Printing Press." The PTO allowed the claim without amendment. Quad/Tech filed the same patent application in Germany, and other countries, which led to the issuance of European Patent No. 0 598 490 and German patent DE 693 17 625.

On May 2, 1995, the PTO issued the '577 Patent entitled Color Registration Systems For a Printing Press, based upon the '978 Application (hereinafter, "'577 Patent"). Quad/Tech claims the '577 Patent discloses the first system that can function in both marked and markless modes, based upon data and information about the image being printed that can be obtained from pre-print data or information. Defendants argue the '577 Patent only discloses and cover a color registration control system that operates in markless mode with any registration marks. The '577 Patent does not contain the terms "marked" or "markless". It is undisputed that Quad/Tech does not have a product available that implements Claim 29*fn3 of the '577 Patent into a marketed product.

B. Q.I. and Print2Finish Background

In 1996, four years after the '577 Patent was filed with the PTO, Q.I. B.V was created by two former Quad/Tech Europe employees, Menno Jansen and Erik Van Holten. According to Plaintiff, while Jansen and Van Holten were still employed at Quad/Tech, they started Q.I. B.V. and solicited Quad/Tech employees in the United States and Europe. Upon learning this information, Quad/Tech immediately terminated Jansen and Van Holten and instructed them to turn in their computers.

Print2Finish is a manufacturer's representative based in Yardley, Pennsylvania. Print2Finish represents a number of European companies in the printing business and earns commission for sales of components used in the printing industry. By Print2Finish's admission, it represents the Q.I. Defendants and offers for sale the mRC registration system (hereinafter, "mRC system").*fn4

C. German Action

In April 2008, Q.I. began to offer for sale its mRC system. According to Plaintiff, Q.I. advertise that the mRC system can be used in both marked and markless modes. When Quad/Tech learned that Q.I. was offering this system for sale, Quad/Tech sought a preliminary injunction against Q.I.B.V. in Germany. Plaintiff contends that the German patent ...


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