Aia Eng'g Ltd. v. Magotteaux Int'l Sia

• Decision Date: 03 September 2010
• Docket Number: No. 3:09–00255.,3:09–00255.
• Court: U.S. District Court — Middle District of Tennessee
• Parties: AIA ENGINEERING LIMITED, Plaintiff/Counterclaim Defendant,v.MAGOTTEAUX INTERNATIONAL SIA and Magotteaux, Inc., Defendant/Counterclaim PlaintiffsMagotteaux International S/A and Magotteaux, Inc., Third Party Plaintiffs,v.Vega Industries, Ltd., Inc., Third Party Defendant.

745 F.Supp.2d 852

AIA ENGINEERING LIMITED, Plaintiff/Counterclaim Defendant,

v.MAGOTTEAUX INTERNATIONAL SIA and Magotteaux, Inc., Defendant/Counterclaim PlaintiffsMagotteaux International S/A and Magotteaux, Inc., Third Party Plaintiffs,

v.Vega Industries, Ltd., Inc., Third Party Defendant.

No. 3:09–00255.

United States District Court, M.D. Tennessee, Nashville Division.

Sept. 3, 2010.

David Lieberworth, Jared Van Kirk, Garvey Schubert Barer, Seattle, WA, Edward D. Lanquist, Jr., Waddey & Patterson, Nashville, TN, for Plaintiff/Counterclaim Defendant/Third Party Defendant.Jimmie Kirk Tolliver, John J. Gresens, Robert S. Rigg, William J. Voller, III, Vedder Price, P.C., Chicago, IL, Jonathan D. Rose, Thor Y. Urness, Bradley Arant Boult Cummings LLP, Nashville, TN, for Defendant/Counterclaim Plaintiffs/Third Party Plaintiffs.

MEMORANDUM

WILLIAM J. HAYNES, JR., District Judge.

Plaintiff, AIA Engineering Limited (“AIA”), an India corporation, filed this action under 28 U.S.C. § 2201, et seq., the declaratory judgment statutes against the Defendants: Magotteaux International S/A, a Belgian corporation and Magotteaux, Inc., an affiliated Tennessee corporation (“Magotteaux”). AIA seeks a declaratory judgment that its products do not infringe Magotteaux's U.S. Patent No. RE 39,998 (the “998 patent”), a reissue patent based upon Magotteaux's earlier U.S. Patent No. 6.399,176 B1 (the “176 patent”) as well as a declaration of the invalidity and unenforceability of the '998 patent. AIA's claims arise under the patent laws of the United States, 35 U.S.C. § 101 et seq. with subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1338(a). In response to Plaintiff's action, Magotteaux filed a third party complaint for patent infringement against AIA and Vega Industries, LTD, an AIA subsidiary with its principal place of business in Brentwood, Tennessee that sells and distributes AIA's products in the United States.

Before the Court are AIA's motions for summary judgment on its challenges to Magotteaux's patent reissue contending, in sum: (1) that in its '998 patent, Magotteaux improperly recaptured claims surrendered in its '176 patent (Docket Entry Nos. 88 and 97); (2) that Magotteaux cannot recover damages in this action for AIA's sales of its non-infringing product in foreign countries (Docket Entry No. 100); (3) that AIA's products do not infringe Magotteaux's '998 patent (Docket Entry No. 116); (4) that Magotteaux's ' 998 patent is invalid as obvious from prior art (Docket Entry No. 118); and (5) that the public use of Magotteaux's product more than a year prior to its '998 patent application precludes the enforceability of that patent. (Docket Entry No. 120). These motions are interrelated to the parties' briefs on the Markman ¹ issues and hearing on the appropriate construction of the terms “homogeneous solid solution,” “homogeneous ceramic composite,” “consisting of” and “comprising” in claims 1 and 12 of Magotteaux's '176 and ' 998 patents. (Docket Entry Nos. 50, 52, 53, 61, 62 and 63).

A. Findings of Fact²

1. The Parties

AIA designs, develops, manufactures, installs and services high chromium wear corrosion and abrasion resistant products for the cement, mining and thermal power generation industries. Among AIA's products are parts for machines that grind abrasive materials, such as rock and other hard abrasive substances. Among other things, these ceramic products contain certain combinations of metal oxides that are resistant to wear. AIA's products are sold under the Sintercast mark. AIA manufactures its Sintercast products at facilities in India, but Vega sells and distributes Sintercast products in the United States.

AIA's Sintercast products are ceramic grains that contain alumina/zirconia ceramic material purchased from Treibacher Schleifmittel, GmbH (“Treibacher”), an Austrian company. (Docket Entry No. 101, Exhibit 2 at 32–36; Exhibit 3, Carr Deposition at 66–63). Treibacher manufactures these grains in Germany and ships them directly to India or to either Antwerp or Belgium for later shipment to India. Id. at Exhibit 2 at 32–33; Exhibit 3, Carr Deposition at 63; Exhibit 4 at 76. AIA has made only one purchase of ceramic grains from Treibacher's warehouse in Niagara Falls, New York. Id. at Exhibit 3, Carr Deposition at 69–70 and 70–71. Vega negotiates the purchases of these ceramic grains with Treibacher's North American subsidiary. Id. at 62–63 and 66. Vega pays Treibacher for AIA. Id. Treibacher's ceramic grains purchased by Vega never reach the United States with the one exception. Id. at Exhibit 2 at 32–33 and at 47–48 (identifying the “Country of Origin” of ZK40 and ZZK40 as the “Federal Republic of Germany”); id. at Exhibit 3, Carr Deposition at 62–63 and at 70.

Magotteaux International was created in 1920 and owns foundries world-wide that produce composite wear products that have resistant castings and media for grinding rock and abrasive materials. Magotteaux's customers include firms in the cement and mining industry, aggregates, the recycling industry, and power stations. These composite wear products are sold under the tradename Xwin. Magotteaux International owned the '176 patent and now owns the '998 reissued patent at issue under the name “Composite Wear Components.” Magotteaux “Composite Wear Components” were produced under its former '376 patent and its current '998 patent. Magotteaux's wear products for the grinding process include high chromium content grinding media. In the United States market, Magotteaux provides grinding, linings, grinding diaphragms, rollers and tyres, hollow balls, as well as rings and grinding tables to fit vertical roller mills.

Magotteaux describes itself as an industry leader in technological innovations for developing industrial wear mechanisms and grinding processes. Magotteaux also uses alumina/zirconia ceramic grains products of Saint–Gobain as the material for its ceramic pad. Prior to Saint–Gobain, the Norton Company produced these materials. (Docket Entry No. 122, Van Kirk Declaration, Exhibit 7) (noting in an entry dated April 9, 1996 that Magotteaux had tested the composition of an alumina/zirconia ceramic composite identified as the “Norton Hagenburger” product).

Magotteaux manufactures and sells Xwin products using its own facilities and/or through related companies in various regions around the world. Magotteaux manufactures Xwin products at its facilities in Pulaski, Tennessee and Mexico, from which Magotteaux sells Xwin products in the United States, Canada, and Mexico. Magotteaux retained the right to sell Xwin products in the United States directly through subsidiaries. Other entities were allowed to sell Xwin in the United States. An internal Magotteaux “Executive News Letter” in 2001 announced a supply agreement with a Spokane, Washington company for Xwin products. Id. at Exhibit 10 at 221 (M020804). This newsletter reported that the products “would be mainly manufactured in Magotteaux's Pulaski and Monterrey [Mexico] and, perhaps, partially, in Europe if the overall economic situation allows for it (according to the future $/Euro exchange rate).” Id.

AIA's and Magotteaux's dispute in this action of whether AIA's wear component products infringe any valid and enforceable claim of Magotteaux's '998 patent is not the parties' first legal controversy. On March 24, 2008, Magotteaux filed a complaint before the International Trade Commission (“ITC”) alleging that AIA wear component products and Fonderie Acciaierie Roiale SPA (“FAR”) ³ products infringed its ' 998 patent. In response to ITC's investigation, AIA filed an action in India seeking an injunction against Magotteaux. In the India action, AIA was awarded an interim ex parte order barring Magotteaux from proceeding against AIA and Vega before the ITC, but did not require dismissal of the ITC proceedings. Based upon that order, AIA and Vega ceased their participation in the ITC proceeding. In November, 2008, an India appellate court dissolved that injunction and remanded for an evidentiary hearing. The India Supreme Court upheld that ruling in December 2008. On June 10, 2010, the ITC granted, in part, Magotteaux's motion for default and sanctions for AIA's failure to participate in the discovery process. (Docket Entry No. 167–4). The parties do not contend that either ruling is binding on this Court.

2. Magotteaux's '176 Patent

The patents at issue here are the '176 and '998 patents that describe a wear component used in the crushing, grinding, or conveyance of abrasive materials that contains ceramic materials with a mixture of aluminum oxide, Al2O3 (“alumina”) and zirconium oxide, ZrO2 (“zirconia”).

After initial review of Magotteaux's application for its original '176 patent, the United States Patent and Trademark (“USPTO”) examiner rejected all of the Magotteaux's claims on several grounds, including anticipation and obviousness in light of the prior art. (Docket Entry No. 89–2 at 2–10). In response, Magotteaux submitted multiple materials to the USPTO examiner relying upon “solid solution” in Claim 1 limitation of the '176 patent to distinguish the proposed patent from prior art. Magotteaux construed Claim 1 for the '176 patent as follows:

Claim 1 can only be understood as meaning a cast product (working part) consisting of a (continuous) metal matrix including inserts which are ceramic pads which have been impregnated by the liquid metal during casting of the cast product. Thus, the metal will form, as usual, the cast product and the pads will include the same metal impregnated as such in the pads. In other words, due to the impregnation or infiltration, the metal matrix is not only continuous but also is included in the pads and is solid with these pads.

(Docket Entry No. 89–2 at 20).⁴

Magotteaux's counsel explained to the USPTO examiner that Magotteaux's invention was limited to ceramic pads and that “[a]s the application mentions on page 5, lines 4–17, the ...