557 F.Supp. 739 (S.D.Tex. 1983), C. A. 74-H-790, Rohm and Haas Co. v. Dawson Chemical Co., Inc.

Docket NºC. A. 74-H-790
Citation557 F.Supp. 739
Party NameRohm and Haas Co. v. Dawson Chemical Co., Inc.
Case DateJanuary 05, 1983
CourtUnited States District Courts, 5th Circuit, Southern District of Texas

Page 739

557 F.Supp. 739 (S.D.Tex. 1983)

217 U.S.P.Q. 515

ROHM AND HAAS COMPANY

v.

DAWSON CHEMICAL COMPANY, INC., et al.

C.A. No. 74-H-790.

United States District Court, S.D. Texas, Houston Division.

Jan. 5, 1983

Nunc Pro Tunc Order Jan. 5, 1983.

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Rudolf E. Hutz, Januar D. Bove, Jr., F.L. Peter Stone and Jeffrey B. Bove, Connolly, Bove & Lodge, Wilmington, Del., for plaintiff.

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James C. Winters and David E. Arnold, Winters, Deaton & Briggs, Houston, Tex., for plaintiff.

Ned L. Conley, Butler, Binion, Rice, Cook & Knapp, Charles M. Cox, Pravel, Gambrell, Hewitt, Kirk & Kimball, Houston, Tex., for defendants.

NUNC PRO TUNC ORDER

On October 27, 1982, this Court entered its Findings of Fact and Conclusions of Law in the above-captioned cause. It has come to the attention of the Court that the Findings of Fact and Conclusions of Law entered on October 27, 1982, contained several typographical and non-substantive errors. Hence, to ensure the accuracy and completeness of the Findings of Fact and Conclusions of Law of October 27, 1982, the Court hereby directs that the attached corrected version of the Findings of Fact and Conclusions of Law be entered. This Order shall relate back to the time of entry of the Findings of Fact and Conclusions of Law of October 27, 1982.

TABLE OF CONTENTS

Page
I. Introduction 749
II. Findings of Fact 751
A. Parties Involved in this Suit 751
The Patent in Suit 752
B. Discovery of the Invention 753
C. History of Patent in Suit 759
1. Rohm and Haas' 1958 Application 759
2. Rohm and Haas' 1960 Application 765
3. Rohm and Haas' 1961 Application 767
4. Interference Proceeding 769
5. Litigation Between Monsanto and Rohm and Haas 773
6. Renewed Prosecution of 1961 Application 774
D. Construction of Patent Claims 783
E. Prior Art 785
F. Defendants' Propanil Activities 788
G. Defendants' Affirmative Defenses 790
H. Antitrust Counterclaims 793
1. Relevant Market 793
2. Bayer-Rohm and Haas Agreements 793
3. Rohm and Haas Marketing and Pricing Practices 794
III. Conclusions of Law 799
A. Jurisdiction and Venue 799
B. Validity of Patent in Suit 799
C. Fraud on the Patent Office 810
D. Infringement 811
E. Should the Supreme Court's Decision Be Applied Only Prospectively? 815
F. Personal Liability of Joe Eller 818
G. Laches and Estoppel 819
H. Antitrust Counterclaims 823
1. Statute of Limitations 823
2. Defendants' Standing to Assert Their Antitrust Counterclaims 827
3. The Bayer-Rohm and Haas Agreements Subject Matter Jurisdiction 830
4. Act of State Doctrine 831
5. Defendants' Section 1 Counterclaims 833
6. Defendants' Monopolization Counterclaims 837
7. Defendants' Section 14 Counterclaims 845
I. Injunctive and Legal Relief, Attorney's
Fees 845
Interest 850
IV. Conclusion 850

FINDINGS OF FACT AND CONCLUSIONS OF LAW CARL O. BUE, Jr., District Judge. A brief recapitulation of the procedural history of this litigation may be helpful in placing the multitudinous and complex issues under consideration into proper perspective. I. Introduction On the day of the issuance of United States Patent 3,816,092, June 11, 1974, plaintiff Rohm and Haas Company (hereinafter Rohm and Haas), commenced this action against the Helena Chemical Company (unless indicated otherwise, hereinafter Helena), Crystal Chemical Company, Dawson Chemical Company, and Crystal Manufacturing Corporation (unless indicated otherwise, hereinafter Crystal), alleging that defendants contributorily infringed and actively induced others to infringe United States Patent 3,816,092. The defendants filed answers denying infringement and contending also that Rohm and Haas' patent was invalid and unenforceable. Defendants Crystal and Helena filed also a counterclaim alleging that Rohm and Haas had violated various sections of the antitrust laws. Specifically, defendants alleged that Rohm and Haas Page 750 had violated sections 1, 2 of the Sherman Act, and section 3 of the Clayton Act, 15 U.S.C. §§ 1, 2, 14 (1973 & Supp.1982). In addition, Helena counterclaimed for a declaratory judgment that plaintiff's patent was invalid, unenforceable and not infringed. 1 Shortly, after the commencement of this cause, the defendants took the position that the Rohm and Haas patent was unenforceable as a result of Rohm and Haas' alleged misuse of its patent. Subsequently, the parties entered into a stipulation of facts which was filed in this cause on October 31, 1974, see Plaintiff's Exhibit 21, and thereafter filed cross-motions for partial summary judgment seeking to resolve the threshold issue of patent misuse. On August 10, 1976, this Court entered its Memorandum and Opinion granting defendants' motions for partial summary judgment "only insofar as they seek adjudication of the legality of plaintiff's monopolization of the sale of propanil, but [denying defendants' motions] to the extent that they seek dismissal of plaintiff's complaint." See Rohm and Haas Co. v. Dawson Chemical Co., Inc., 191 U.S.P.Q. 691, 695 (S.D.Tex.1976). Shortly thereafter, defendants moved the Court to reconsider its decision not to dismiss Rohm and Haas' complaint. On November 23, 1976, the Court granted defendants' motions and dismissed this cause "without prejudice to plaintiff's right to re-file upon sufficient showing that it has purged its misuse." Thereafter, Rohm and Haas appealed the various rulings of this Court and on July 30, 1979, the United States Court of Appeals for the Fifth Circuit reversed this Court's decision and remanded this case to this Court for further proceedings. See Rohm and Haas Co. v. Dawson Chemical Co., 599 F.2d 685 (5th Cir.1979). On June 27, 1980, the United States Supreme Court affirmed the Fifth Circuit's decision. See Dawson Chemical Co. v. Rohm and Haas Co., 448 U.S. 176, 100 S.Ct. 2601, 65 L.Ed.2d 696 (1980). On September 18, 1980, Rohm and Haas filed suit against Vertac Chemical Company (hereinafter Vertac) in the United States District Court for the District of Delaware alleging that Vertac contributorily infringed and actively induced others to infringe United States Patent 3,816,092. Plaintiff's Exhibit 26. On November 3, 1980, Rohm and Haas was permitted to amend its complaint in the case sub judice to add Joe C. Eller (hereinafter Eller) and Wilton W. Vardeman (hereinafter Vardeman) as individual party defendants. Rohm and Haas alleged that Eller and Vardeman were contributorily infringing and actively inducing others to infringe its patent. Additionally, in its amended complaint Rohm and Haas particularized its claim for damages. Plaintiff's Exhibit 22. In addition to filing an answer denying the claims asserted against them, Eller and Vardeman filed counterclaims alleging that Rohm and Haas had violated Sections 1, 2 of the Sherman Act, and section 3 of the Clayton Act, 15 U.S.C. §§ 1, 2, 14 (1973 & Supp.1982). Plaintiff's Exhibit 22. While the Delaware action against Vertac was pending, Helena filed a third-party complaint against Vertac in the instant cause. Subsequently, on February 10, 1981, Rohm and Haas filed a complaint against Vertac raising essentially the same allegations it had advanced in the Delaware action. Plaintiff's Exhibit 22. Vertac then filed its answer and asserted counterclaims and defenses similar to those asserted by Crystal. On November 12, 1980, plaintiff filed a separate suit in this Court against American Rice Growers Exchange (hereinafter ARGE), alleging that ARGE contributorily infringed and actively induced infringement of its patent. ARGE thereafter filed its answer and also advanced counterclaims asserting violations of various sections of the Sherman Act. Plaintiff's Exhibit 22. Page 751 On January 14, 1981, this Court, at the request of all parties to this cause, consolidated the instant case with the separately filed suit against ARGE for both discovery and trial pursuant to Rule 42(a), Fed.R.Civ.P. On September 1, 1981 the parties filed and this Court approved a stipulation wherein all claims brought by Rohm and Haas against Vardeman were dismissed with prejudice. Pursuant also to the stipulation, Vardeman's counterclaims against Rohm and Haas were dismissed with prejudice. On September 24, 1981, Crystal filed a Voluntary Petition in Bankruptcy under Chapter 7, Title 11 of the United States Code, 11 U.S.C. § 701 et seq. (1979), and at the time of trial the bankruptcy action was still pending before the United States Bankruptcy Court for the Southern District of Texas, Houston Division. Pursuant to an Order entered by the Bankruptcy Court, the automatic stay provision of 11 U.S.C. § 362 (1979) was modified to permit Crystal to participate in this case. Shortly before the commencement of the trial of the case sub judice, Rohm and Haas and Helena entered into a settlement agreement thereby resolving their differences with respect to the patent in suit. In partial consideration for the settlement of the suit against it, Helena agreed to this Court's entry of a consent decree and injunction. Plaintiff's Exhibit 135; Defendants' Exhibit 293. Subsequently, during the trial of this cause, Rohm and Haas and Vertac settled all of the issues outstanding between them, Plaintiff's Exhibit 143, and the suit with respect to Vertac was dismissed on December 8, 1981. In an Order entered by the Court pursuant to the consent of Helena and Vertac, Helena's third party action against Vertac was also dismissed. The cause was tried to the Court sitting without a jury from November 2, 1981 to January 7, 1982. 2...

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