412 F.3d 1340 (Fed. Cir. 2005), 04-1365, Fort James Corp. v. Solo Cup Co.

Docket Nº:04-1365.
Citation:412 F.3d 1340
Party Name:75 U.S.P.Q.2d 1257 FORT JAMES CORPORATION, Plaintiff-Appellee, v. SOLO CUP COMPANY, Defendant-Appellant.
Case Date:June 22, 2005
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 1340

412 F.3d 1340 (Fed. Cir. 2005)

75 U.S.P.Q.2d 1257

FORT JAMES CORPORATION, Plaintiff-Appellee,

v.

SOLO CUP COMPANY, Defendant-Appellant.

No. 04-1365.

United States Court of Appeals, Federal Circuit

June 22, 2005

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[Copyrighted Material Omitted]

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Russell E. Levine, Kirkland & Ellis LLP, of Chicago, Illinois, argued for plaintiff-appellee. With him on the brief was Christopher R. Liro.

Bradley F. Rademaker, Wallenstein Wagner & Rockey, Ltd., of Chicago, Illinois, argued for defendant-appellant. With him on the brief were Linda A. Kuczma and Jeffrey R. Gargano.

Before RADER, SCHALL, and GAJARSA, Circuit Judges.

OPINION

GAJARSA, Circuit Judge.

Solo Cup Company appeals from a post-trial order of the district court that dismissed for lack of jurisdiction its counterclaim for a declaration of unenforceability of a patent owned by Fort James Corporation ("Fort James"). Fort James Corp. v. Solo Cup Co., No. 99-C-0827 (E.D.Wis. Jan.15, 2003) (order dismissing counterclaim as moot). Solo Cup also appeals the court's pre-trial evidentiary decision holding that an invention disclosure form was protected by attorney-client privilege. Fort James Corp. v. Solo Cup Co., No. 99-C-0827 (E.D.Wis. Nov.6, 2002) (order denying motion to compel). Because the district court erred in concluding that a post-trial covenant not to sue filed by Fort James divested it of jurisdiction to hear Solo Cup's counterclaim, we reverse for further proceedings consistent with this opinion. We also reverse the court's determination that the contested disclosure form is protected by attorney-client privilege.

I. BACKGROUND

In 1999, Fort James brought suit against Solo Cup alleging infringement of three patents related to disposable pressed paperboard containers (e.g., paper plates) and their methods of manufacture: U.S.

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Patent Nos. 4,609,140 ("the '140 patent"); 4,606,496 ("the '496 patent") 1; and 4,721,499 ("the '499 patent"). Solo Cup denied the infringement allegations and counterclaimed for declarations that the patents were invalid, unenforceable, and not infringed. In addition to seeking injunctive relief on its counterclaims, Solo Cup also sought an award of its reasonable attorney fees.

Solo Cup's allegations of invalidity and unenforceability were directed at the '140 patent and grounded in Fort James's conduct during the time period in which the patented invention was developed. The '140 patent claims a high rigidity paper plate and its method of manufacture, which the inventors discovered "by accident" in the course of evaluating production processes used by Fort James between 1980 and 1981. In August and September 1980, commercial production studies were conducted at Fort James's plants in Fort Smith, Arkansas and Darlington, South Carolina. Both subject plants used die A-87, which produced plates with more rigidity than those Fort James manufactured on other dies. The inventors studied die A-87 and determined that it exerted greater pressure on the rim portion of the plate than other die sets, a discovery that resulted in the '140 patent. While Fort James was studying its commercial production methods, plates manufactured using die A-87 were sold to the public along with other paper plates. Based on this chronology, Solo Cup alleged that commercial sales of the invention claimed in the '140 patent occurred more than one year prior to the patent's application date of April 13, 1982. Accordingly, Solo Cup claimed that the '140 patent was invalid based on the on-sale bar to patentability found in 35 U.S.C. § 102(b).

Solo Cup also claimed that Fort James had knowingly failed to disclose to the Patent and Trademark Office ("PTO") information regarding its pre-critical date commercial activities. During prosecution, Fort James submitted to the PTO a written declaration signed by Patrick Wnek, one of the inventors named on the '140 patent, that described the process by which Fort James discovered the claimed invention. The Wnek Declaration that was submitted to the PTO indicated that "paper plates produced on the presses used in the test runs starting in August 1980 were batched together with other paper plates produced at the plant, warehoused, and ultimately sold to customers." In contrast to this broad statement regarding the initial commercial sales of the invention, an early draft of the Wnek Declaration included a specific date on which the claimed plates were sent to consumers. According to Solo Cup, Fort James's deliberate deletion of the specific dates of its initial commercial sales constituted inequitable conduct such that the '140 Patent should be declared unenforceable and Solo Cup should be entitled to attorney fees pursuant to 35 U.S.C. § 285.

In the course of conducting discovery on its counterclaims, Solo Cup identified a Fort James document referred to as JR0028487. It is a product development engineering report dated February 2, 1982, which includes the statement "[l]egal counsel has advised a bar was not established during experimental trials at Darlington and Fort Smith." Solo Cup requested the underlying opinion of counsel referenced in JR0028487 and all related documents. Because Fort James had produced the same document during previous litigation concerning the patents in suit, it determined that it could not claim that the

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document had been produced inadvertently. Accordingly, Fort James produced the requested opinion of counsel and at least four other documents previously withheld as privileged. Included among the produced documents were additional opinions of counsel regarding the applicability of the on-sale bar to the Fort James patents and correspondence with counsel indicating how the claimed invention was discovered and estimating when customers would have seen or used the product.

On December 8, 2000, Solo Cup filed a motion to compel production of a document that it believed properly fell within the scope of the Fort James waiver. Specifically, Solo Cup sought the production of Document 99 identified on Fort James's Schedule of Withheld Documents as an "[i]nvention disclosure statement discussing invention of pressed paperboard plates to maximize plate rigidity." Document 99, which was dated March 20, 1981, was authored by Patrick Wnek and sent to Fort James's in-house counsel. Solo Cup argued that Document 99 concerned the same subject matter as the other previously privileged documents produced by Fort James, namely the conception and commercialization of the claimed invention, and therefore Fort James could not continue to assert that the document was privileged.

The district court reviewed Document 99 in camera to resolve Solo Cup's motion to compel. On November 6, 2002, the court issued an order denying Solo Cup's motion to compel reasoning that the scope of Fort James's waiver should be construed narrowly by reference only to JR0028487, the document that constituted the initial waiver. In so holding, the district court rejected Solo Cup's argument that the scope of Fort James's waiver should be defined by reference to all the previously privileged documents Fort James produced in acknowledgement of JR0028487. Accordingly, the court determined that the subject matter of Fort James's waiver was "whether the work carried out by Fort James research personnel prior to June 1, 1981, specifically the sale of plates produced during test runs of die A-87 constituted a 'public use' or a 'commercial offer of sale' under 35 U.S.C. § 102(b)." After examining Document 99, the court found that it "does not contain any information concerning" the bars to patentability found in § 102(b). The court expressly found that "[t]he document contains dates surrounding the conception of the invention and a description of it," but that "[t]he spaces on the form that specifically ask for information concerning the dates on which the invention was 'first offered for sale in commerce' have been left blank." Based on its narrow definition of the scope of Fort James's waiver, the court refused to compel Fort James to produce Document 99.

Approximately one month before trial, Fort James filed a motion in limine to preclude Solo Cup from presenting evidence to the jury on inequitable conduct and unclean hands, the issues underlying Solo Cup's unenforceability counterclaim and its request for attorney fees pursuant to 35 U.S.C. § 285. Because the issues were to be tried to the bench and out of concern that Fort James would be prejudiced by Solo Cup's "parade of horribles" before the jury, the district court granted Fort James's motion and effectively bifurcated the trial.

A ten-day jury trial was held in November 2002. After the close of evidence, but before the case was submitted to the jury, Solo Cup filed several written motions for judgment as a matter of law, including a motion for judgment as a matter of law on patent invalidity. The district court deferred ruling on Solo Cup's JMOL motions

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and submitted the case to the jury. On November 25, 2002, the jury returned a verdict finding that the '140 patent was not invalid and that Solo Cup did not infringe any of the patents in suit.

Immediately after the jury was dismissed, Solo Cup asked the court to schedule a hearing on the issues bifurcated from the jury trial. Fort James opposed Solo Cup's request on the ground that the jury verdict negated the controversy underlying the counterclaim of unenforceability. The parties submitted briefs regarding whether the district court had jurisdiction to hear Solo Cup's counterclaim and claim for attorney fees. As an exhibit to its post-trial brief, Fort James attached a declaration of its general counsel stating that Fort James covenanted not to sue Solo Cup on the three patents originally at issue and that it would not seek to overturn the jury's verdict (the "Post-Verdict Covenant"). On January 16, 2003, the...

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