275 F.3d 1378 (Fed. Cir. 2002), 01-1121, H.R. Technologies Inc v. Astechnologies Inc

Docket Nº:01-1121
Citation:275 F.3d 1378
Party Name:H.R. TECHNOLOGIES, INC., Plaintiff-Appellee, v. ASTECHNOLOGIES, INC., Defendant-Appellant.
Case Date:January 11, 2002
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1378

275 F.3d 1378 (Fed. Cir. 2002)

H.R. TECHNOLOGIES, INC., Plaintiff-Appellee,

v.

ASTECHNOLOGIES, INC., Defendant-Appellant.

No. 01-1121

United States Court of Appeals, Federal Circuit

January 11, 2002

Appealed from: United States District Court for the Eastern District of Michigan, Senior Judge George E. Woods

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[Copyrighted Material Omitted]

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Joseph C. Basta, Dykema Gossett, PLLC, of Detroit Michigan, argued for plaintiff-appellee. With him on the brief were Jill M. Wheaton, Robert L. Kelly, and Adam B. Strauss.

Stephen G. Rudisill, Jenkens & Gilchrist, of Chicago, Illinois, argued for defendant-appellant. With him on the brief was Paul R. Kitch.

Before NEWMAN, BRYSON, and DYK, Circuit Judges.

BRYSON, Circuit Judge.

In this unusual case, the defendant, Astechnologies, Inc., appeals from an order dismissing an action without prejudice. The principal basis for the appeal is Astechnologies' contention that the district court should have dismissed the plaintiff's claims of patent infringement with prejudice rather than dismissing them without prejudice. We hold that the district court did not abuse its discretion in dismissing the plaintiff's claims without prejudice. The district court did err, however, in dismissing Astechnologies' counterclaims over Astechnologies' objection. We therefore affirm in part, vacate in part, and remand.

I

H.R. Technologies ("HRT") filed this patent infringement action against Astechnologies in the United States District Court for the Eastern District of Michigan. In its complaint, HRT alleged that Astechnologies had infringed U.S. Patent No. 5,665,185 ("the '185 patent"), which claims a process for preparing a glass fiber containing polymer sheet. Astechnologies responded and filed counterclaims in which it sought a declaratory judgment of noninfringement and attorney fees under 35 U.S.C. § 285. Astechnologies was later permitted to add a federal counterclaim of unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125, and a state law

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counterclaim of tortious interference with potential business relations.

At the time it filed suit, HRT believed that it had obtained ownership of the '185 patent pursuant to an October 6, 1998, assignment from ESFI Acquisition, a company owned by Brian L. Meeker, the inventor of the '185 patent. During discovery, however, the parties learned that HRT did not actually own the '185 patent because ESFI did not own the patent at the time of the purported assignment. Meeker initially had assigned the patent to ESFI on January 5, 1996, but as he was winding up ESFI, he transferred the '185 patent back to himself on June 27, 1996. When HRT executed the October 6, 1998, agreement with ESFI purporting to transfer ownership of the '185 patent, HRT was unaware of the prior June 27, 1996, assignment to Meeker.

Astechnologies moved to dismiss the complaint with prejudice on the ground that HRT lacked standing at the time the action was brought. HRT in turn moved to dismiss the action without prejudice. The district court decided the cross-motions to dismiss by dismissing the action without prejudice to HRT's right to file another action in the event that it obtained standing. HRT promptly corrected the assignment error and re-filed its complaint against Astechnologies. The re-filed case was assigned to the same judge.

Astechnologies filed a motion for reconsideration of the dismissal order. In denying the motion, the district court clarified that by dismissing the action it was not only dismissing HRT's complaint, but also was dismissing Astechnologies' counterclaims. The court noted that Astechnologies could reassert its counterclaims in the new action. Astechnologies accordingly re-filed the same counterclaims in response to HRT's complaint in the second action. A sanctions motion filed by Astechnologies to recover costs, expenses, and attorney fees incurred in defending the first action is still pending before the district court.

Astechnologies appeals from the dismissal order, contending that the district court should have dismissed HRT's complaint with prejudice, which would have barred HRT from pursuing its claim of infringement in the second action. Astechnologies also appeals the district court's dismissal of its counterclaims in the first action.

II

We must first determine whether we have jurisdiction to hear Astechnologies' appeal from the without-prejudice dismissal of the action. As a preliminary matter, it is clear that Astechnologies has standing as an aggrieved party to appeal from the without-prejudice dismissal of HRT's claims. Although Astechnologies succeeded in having the claims against it dismissed, the dismissal order was not as favorable as Astechnologies sought. Astechnologies asked for a with-prejudice dismissal and did not get it. Instead, the without-prejudice dismissal subjects Astechnologies to further litigation and thus is not entirely in its favor, just as a judgment awarding money damages is not entirely in favor of a plaintiff who had sought a larger award. It is well established that a party can appeal from a judgment in its favor if the judgment is not as favorable as the appealing party sought. See Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 333-34 (1980); Elec. Fittings Corp. v. Thomas & Betts Co., 307 U.S. 241, 242 (1939); Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal...

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