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Ductmate Industries, Inc. v. Famous Distribution, Inc.

United States District Court, W.D. Pennsylvania

August 19, 2014

DUCTMATE INDUSTRIES, INC., Plaintiff,
v.
FAMOUS DISTRIBUTION, INC., FAMOUS INDUSTRIES, INC., Defendants.

MEMORANDUM ORDER RE: PLAINTIFF'S MOTION TO STRIKE AFFIRMATIVE DEFENSE OF INEQUITABLE CONDUCT AND MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM RE: COUNTERCLAIM FOR DECLARATORY JUDGMENT OF UNENFORCEABILITY (DOC. NO. 128)

ARTHUR J. SCHWAB, District Judge.

I. Introduction

This case centers on alleged infringement of four United States Patents: No. 7, 478, 467 ("the '467 Patent"); No. 7, 708, 034 ("the '034 Patent"); No. 8, 151, 430 ("the '430 Patent"); and No. 8, 505, 185 ("the '185 Patent). Doc. No. 51. Claims before this Court have been raised by Plaintiff in its five count Complaint for Patent Infringement (Doc. No. 51) and by Defendants in their First Amended Answer, in which Defendants set forth nine affirmative defenses and nine counterclaims (Doc. No. 124). Defendants' Amended Answer includes an affirmative defense and counterclaim based inequitable conduct in which Defendants contend that Plaintiff, through its current lead trial counsel and the patents' inventors, made false statements and failed to disclose material information during proceedings before the United States Patent and Trademark Office. Doc. No. 124.

Presently before this Court is Plaintiff's Motion to Strike Affirmative Defense of Inequitable Conduct and Motion to Dismiss for Failure to State a Claim re: Counterclaim for Declaratory Judgment of Unenforceability. Doc. No. 128. Plaintiff moves this Court to strike Defendants' affirmative defense of inequitable conduct with prejudice and dismiss Defendants' counterclaim for declaratory judgment of unenforceability due to inequitable conduct. Id . Defendants oppose this motion in its entirety. The matter has been fully briefed and is ripe for disposition. Doc. Nos. 128, 129, 132, 134, 135. After review of the Amended Answer and applicable case law, Plaintiff's Motion to Strike Affirmative Defense of Inequitable Conduct (Doc. No. 128) will be DENIED. However, the affirmative defense of inequitable conduct (ninth affirmative defense) and counterclaim for declaratory judgment of unenforceability due to inequitable conduct (ninth counterclaim) will be bifurcated from Plaintiff's infringement claims. Discovery and all other proceedings as to inequitable conduct will be stayed until a jury determination on infringement and other patent issues.

II. Statement of Facts

The following are the pertinent facts of Defendants' Ninth Affirmative Defense, Inequitable Conduct, and Ninth Counterclaim, Declaratory Judgment of Unenforceability Due to Inequitable Conduct, taken as true from Defendants' Amended Answer solely for the purposes of this Memorandum Order:

Douglas G. Gudenburr ("Gudenburr") and Vincent L. Bloom ("Bloom") are the sole inventors named on the '467 patent, '034 patent, '430 patent, and '185 patent. Doc. No. 124, ¶¶ 44 and 45. Each of these patents are directed to the same basic alleged invention, a self-sealing circular sheet metal duct, and are related to "circular sheet metal ducts" and the "liquid applied gasketing sealant" applied in the manufacturing of such ducts. Id. at ¶ 45. The '034, '430 and '185 patents claim priority to the '467 patent. Id. at ¶ 45. Plaintiff was represented by attorney John M. Thomas during the prosecution of each of these patents. Id. at ¶ 44. Thomas serves as Plaintiff's lead trial counsel in this present federal case. Id.

1. Alleged False Assertions Made Related to Prior Art

During the prosecution of the '467 patent, Thomas, Gudenburr, and Bloom argued that the industry and related art is divided between custom made ductwork (square or rectangular) and mass produced ductwork (circular or round). Id. at ¶ 47. They further argued that because of this division, the Applicant Admitted Prior Art was inapplicable to the invention in the pending application. Id . No such division exists between the custom made and mass produced ductwork. Id. at ¶ 50.

A telephone interview was conducted between Thomas, Gudenburr, and Bloom and a United States Patent and Trademark Office ("USPTO") patent examiner on June 25, 2008, during which prior art was discussed. Id. at ¶ 49. On July 3, 2008, the USPTO patent examiner rejected pending claims 15-25 over the prior art. Id. at ¶ 48. Thomas, in his response, summarized the telephone interview, and amended the single independent claim to specify "circular" duct. Id. at ¶ 49. In October 2008, the patent examiner allowed the claims as amended. Id . Claims were made, through declarations, about the alleged difference between circular and square ducts during reexamination proceedings related to the '467 patent and the '430 patent. Id. at ¶ 51. But for these statements, the patents would not have issued because of the applicable prior art. Id. at ¶ 53.

2. Alleged Failure to Disclose a Prior Art Manufacturing Process

The manufacturing process of applying a sealant to a locking mechanism or flange duct is a key distinction between the prior art and the alleged invention. Id. at ¶ 56. Bloom and Gudenburr failed to disclose that sealant is positioned within a locking mechanism while the duct and locking mechanism are formed on a machine. Id . The patents would have been rejected over the prior art or would not have issued if the prior manufacturing process had been disclosed. Id.

3. Alleged Misrepresentations and Failure to Disclose re: the 5511M Sealant

The prior art mentions use of Ductmate 5511 Sealant. Id. at ¶ 58. Thomas, Gudenburr, and Bloom told the USPTO that the prior art sealant and Ductmate 5511M Sealant could not be used on a roll-forming line and packaged, shipped, and stored in bundles. Id . This statement was false. Id . Thomas, Bloom, and Gudenburr intentionally failed to fully dislose documents related to the 5511M sealant. Id. at ¶ 59. These documents were relevant to the patents and was cited by the USPTO to reject at least one of the claims of the '034 patent during reexamination. Id. at ¶ 60.

4. Alleged Misrepresentations Re: Q'So Sealant

Thomas stated that the "Q'So Product does not perform the same function as the claimed invention" in response to an April 10, 2009 action. Id. at ¶ 62. Gudenburr, Bloom, and Thomas explained the difference between the Q'So Product and the claimed invention to a USPTO examiner during a June 25, 2008 interview. Id. at ¶ 63. These statements were false; there is no difference between the Q'So Product and the products at issue. Id. at ¶¶ 62 and 63. Gudenburr, Bloom, and Thomas intentionally made material representations to the USPTO. Id. at ¶ 64. But for these statements, the '034 patent and other patents at issue would have been rejected over the prior art and would not have issued. Id. at ¶ 64.

5. Alleged Failure to Disclose the Nordson FoamMelt 200 Adhesive Applicator

Bloom intentionally failed to disclose the use of the FoamMelt 200 Adhesive Applicator as prior art during the prosecutions of the patents in issue. Id. at ¶ 66. Plaintiff had a 2003 brochure for the applicator in its possession. Id.. If Bloom had disclosed the applicator, the claim of the ...


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