168 F.3d 1322 (Fed. Cir. 1998), 97-1473, Minigrip Inc. v. Recpro Co., Ltd.

Docket Nº:97-1473.
Citation:168 F.3d 1322
Party Name:MINIGRIP INC., Plaintiff-Appellee, v. RECPRO COMPANY, LTD., AMI Inc., Holmes J. Hawkins, III, and Jones & Askew, Defendants-Appellants,and Excelsior Transparent Bag Mfg. Corp., Defendant.
Case Date:August 27, 1998
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 1322

168 F.3d 1322 (Fed. Cir. 1998)

MINIGRIP INC., Plaintiff-Appellee,


RECPRO COMPANY, LTD., AMI Inc., Holmes J. Hawkins, III, and Jones & Askew, Defendants-Appellants,and

Excelsior Transparent Bag Mfg. Corp., Defendant.

No. 97-1473.

United States Court of Appeals, Federal Circuit

August 27, 1998

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTAF Rule 47.6 and FI CTAF App. V, IOP 9 regarding use of unpublished opinions)

Before MICHEL, LOURIE, and SCHALL, Circuit Judges.


SCHALL, Circuit Judge.

This case involves the effect of a consent decree on later litigation between the same parties. Defendants-Appellants Recpro Company, Ltd., and AMI Inc. (collectively, "AMI") appeal from the September 15, 1997 order of the United States District Court for the Southern District of New York, granting Plaintiff-Appellee Minigrip Inc.'s ("Minigrip's") motion for an order enforcing the district court's January 12, 1995 consent decree. See Minigrip Inc. v. Recpro Co. Ltd., No. 93 Civ. 7658 (S.D.N.Y. Sept. 15, 1997). In addition, Defendant-Appellants AMI, attorney Holmes J. Hawkins, III, and the law firm of Jones & Askew appeal from the district court's order holding them in civil contempt. See id. Because the district court did not abuse its discretion in granting the motion for enforcement or in holding AMI in contempt, but it did abuse its discretion in holding Mr. Hawkins and Jones & Askew in contempt, weaffirm-in-part and reverse-in-part. 1


On November 8, 1993, Minigrip filed a complaint in the Southern District of New York, alleging that AMI had infringed United States Patent Nos. 4,101,355, 4,355,494, 4,430,070, 4,652,496, 4,633,915, and 4,840,012. All six patents relate to reclosable storage bags. AMI answered the complaint, raising several defenses and a counterclaim.

On March 4, 1994, while the New York suit was pending, AMI wrote to the Department of Justice, Antitrust Division, complaining of Minigrip's conduct. AMI stated:

We are being sued for patent infringement in case number 93CIV7658CLR, U.S. District Court, Southern District of New York. We are accused of infringing six (6) patents and a trademark. For almost two (2) years now, we have been reviewing many of Minigrip's 250 plus patents including the six (6) we are accused of infringing. I have been shocked and angered by the circumstances under which many of the patents were secured, including the six (6) included in the infringement suit. I feel we can prove no infringement on the six (6) patents in question, but the futility of our situation is that after trial, Minigrip could go to six (6) more patents to accuse us of infringing and we could repeat the same scenario and, once again, spend hundreds of thousands of dollars in discovery, depositions, witnesses, attorneys, trial etc. Knowing the above, the Minigrip objective is to get us to sign an agreement, which will validate their patents, illegally attained, and enable them to continue dominance over an industry they have had since the 1960's.


Minigrip ... began to create an "arsenal" of patents to protect their dominance in the recloseable bag market. It mattered not whether the patents met the requirements of patent law, the important thing to Minigrip was that they cover all the possible avenues recloseables could take in the future and gain a legal right to these avenues to continue domination of the industry and block competition. This included many instances of fraud on the U.S. Patent and Trademark Offices, and is the case in patents used against us in the infringement claim.

It is difficult to say how many patents Minigrip owns, but we know it is in excess of 250. Minigrip has never become a large Company and anyone with any knowledge of legitimate patent concepts would agree that this many patents created by one company on one topic, recloseable packaging, is very unreasonable.

On April 26, 1994, through an attorney, AMI again wrote to the Department of Justice, requesting that the Antitrust Division conduct an investigation of Minigrip's business practices. AMI alleged that, by "abusing its patent position," Minigrip was engaged in "a conspiracy to monopolize" the zippered plastic bag market. AMI asserted that "Minigrip's market share, together with the other acts described in [the earlier, March 4, 1994] letter, would satisfy the requirements of a meritorious monopoly action." Finally, AMI charged that Minigrip's "conduct ... meets the classic test of Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965)." 2

On January 5, 1995, AMI and Minigrip entered into a License and Settlement Agreement. The agreement contained waivers by both parties. AMI's waiver read as follows:

Ami, Recpro, Excelsior waiver. By execution of this Agreement Ami, Recpro and Excelsior, including their officers, directors, employees and representatives waive all claims of any kind that they have or may discover against Minigrip (its parent and related companies including their officers, directors, employees and representatives) arising out of any act of Minigrip that occurred prior to the Effective Date [of this agreement, which is January 5, 1995]. Without limitation, this Paragraph is intended to address all claims, complaints and statements made by or on behalf of Ami and/or Recpro by its officers, counsel and possibly other representatives to customers, competitors, the FTC, the Department of Justice and members of Congress relative to actions of Minigrip and/or its parent ITW as well as their past or present officers or employees.

A major issue in this appeal concerns the scope of the AMI waiver.

On January 12, 1995, the district court entered a Judgment and Decree, which read in pertinent part as follows:

4. Except as and to the extent permitted by the terms of the LICENSE AND SETTLEMENT AGREEMENT attached hereto and incorporated herein, defendants and their agents, servants, officers, employees and attorneys are hereby permanently enjoined against infringing or inducing or contributing to the infringement of any claim of U.S. patents 4,101,355, 4,355,494, 4,430,070, 4,652,496, 4,663,915 and 4,840,012 during the unexpired term thereof.


8. This Court retains jurisdiction of the parties for enforcement of the terms of this Judgment and Decree and the LICENSE AND SETTLEMENT AGREEMENT.


On December 6, 1996, AMI filed a complaint in the United States District Court for the Northern District of Georgia, seeking a declaratory judgment that it did not infringe certain patents owned by Minigrip that were not the subject of the New York action. See AMI/Recpro, Inc. v. Illinois Tool Works Inc., No. 1:96-CV-3260-FMH (N.D. Ga. filed Dec. 6, 1996). On January 30, 1997, AMI filed an amended complaint, in which it added claims of patent misuse (Count VI) and claims of violations of the antitrust laws, including monopolization (Count VII), attempted monopolization (Count VIII), and restraint of trade (Count IX). The amended complaint was signed by Holmes J. Hawkins, III, of the law firm of Jones & Askew in Atlanta, Georgia. Mr. Hawkins was local counsel for AMI. Neither Mr. Hawkins nor Jones & Askew represented AMI in the New York action.

In Count VI, the patent misuse claim, AMI charged Minigrip with asserting and enforcing, against AMI and others, patents that "Minigrip knew were not actually infringed by the alleged infringers" and patents that "Minigrip knew were not valid and enforceable" under 35 U.S.C. §§ 102, 103 and 112. Paragraphs 31 and 48 of...

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