Avery Dennison Corp. v. Cont'l Datalabel Inc, Case No. 10 C 2744
| Decision Date | 30 November 2010 |
| Docket Number | Case No. 10 C 2744 |
| Parties | AVERY DENNISON CORP., Plaintiff, v. CONTINENTAL DATALABEL, INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Avery Dennison Corp. has sued Continental Datalabel, Inc., claiming that Continental infringed a patent owned by Avery. Continental has asserted a five-count counterclaim against Avery. Avery has moved to dismiss counts 3, 4, and 5. For the reasons set forth below, the Court grants Avery's motion.
Avery1 is a Delaware corporation with its principal place of business in Pasadena, California. Pl.'s Compl. ¶ 4. It produces and sells pressure-sensitive adhesive labels and other office products. Id. Avery is also the assignee of U.S. Patent No. 7, 709, 071 ("the '071 patent"), entitled "Label Sheet Design for Easy Removal of Labels." Id. ¶ 7. According to its abstract, the '071 patent describes "[a] label sheet having a release liner and a column of labels releasably attached thereto," such that "a user can tear off the liner... thus leaving a minor edge of a column of labels exposed for easy removal from the label sheet." Def.'s Mem., Ex. E at 1 (internal citations omitted).
The '071 patent was issued based on Application 10/504, 600 ("the application"), originally filed with the United States Patent and Trademark Office ("PTO") on February 28, 2003. Id. During the prosecution of the Application, Avery submitted an information disclosure statement ("IDS") identifying certain prior art references, including U.S. Patent Nos. 3, 038, 597 and 3, 588, 829 (). Pl.'s Mem., Ex. 2. The patent examiner assigned to the application at the time was Nasser Ahmad. Id. at 1. He initialed these references on the IDS on June 21, 2007, indicating that he had considered them. Id. at 1-2.
In a final office action dated May 5, 2009, the PTO rejected certain claims in the application, relying on PCT International Publication No. WO 01/89825 ("the Do publication") and U.S. Patent Nos. 2, 765, 205 and 3, 480, 198 (). See Def.'s Mem., Ex. B at 18. On January 12, 2010, Avery filed an interview response and amendment ("the amendment") in reply to the final office action. Id. at 1-18. By this time, the PTO had reassigned the application to examiner Victor S. Chang. See id. at 1. The amendment canceled all previous claims in the application and presented thirty-four new claims. Id. at 8-17. The amendment contained a section ("the bullet points") distinguishing the new claims from the Do publication and the Capella and Repko patents. Id. at 2-4.
On May 4, 2010, the PTO issued the '071 patent. That same day, Avery filed the present action. Continental filed its answer and counterclaim on June 25, 2010.
In considering Avery's motion to dismiss under Rule 12(b)(6), the Court accepts the facts stated in the counterclaims as true and draw all reasonable inferences in favor of Continental. Parish v. City of Elkhart, 614 F.3d 677, 679 (7th Cir. 2010). Though a complaint need not contain "detailed factual allegations,... a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rather, the complaint must contain "enough facts to state a claim to relief that is plausible on its face." Id. at 570. A complaint fails to state a claim under Rule 8(a)(2) "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct[.]" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009).
In count 3, Continental alleges that the '071 patent is unenforceable because Avery engaged in inequitable conduct before the PTO during the prosecution of the Application.
The Federal Circuit has held that "a patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution." Dippin' Dots, Inc. v. Mosey, 476 F.3d 1337, 1345 (Fed. Cir. 2007) (internal citation and quotation marks omitted). "Information is 'material' when there is a substantial likelihood that a reasonable examiner would have considered the information important in deciding whether to allow the application to issue as a patent." Molins PLC v. Textron, Inc., 48 F.3d 1172, 1179 (Fed. Cir. 1995).
In count 3, Continental alleges two bases for concluding that Avery engaged in inequitable conduct. The first involves allegedly misleading statements in the bullet points, while the second involves an omission relating to the allegedly inherent curling of adhesive labels.
Continental argues that Avery committed inequitable conduct because it "intentionally omitted to tell Examiner Chang" in the bullet points that certain limitations Avery outlined "were already known from prior art that had been previously submitted by" Avery--namely, the Brady references. Countercl. ¶ 29; see also generally id. ¶¶ 2647.
Taking these allegations as true, count 3 fails to state a claim of unenforceability based on inequitable conduct. As Continental concedes in its counterclaim, Avery filed an IDS disclosing the Brady references to the PTO on April 17, 2007. Id. ¶ 19. It is well settled that "[a]n applicant cannot be guilty of inequitable conduct if the reference was cited to the examiner" in a previous filing. Fiskars, Inc. v. Hunt Mfg. Co., 221 F.3d 1318, 1327 (Fed. Cir. 2000); see also Molins PLC v. Textron, Inc., 48 F.3d 1172, 1185 (Fed. Cir. 1995) () (internal quotation marks omitted). This is so "whether or not [the prior art reference] was a ground of rejection by the examiner." Id.
Further, as noted above, in the bullet points, Avery sought only to distinguish the Do publication and the Capella and Repko patents. See Def's. Mem., Ex. B at 2 () (emphasis in original). Avery had no obligation to offer its view on how the Brady references bore on their arguments regarding these other references, given that "an inventor's opinions regarding a prior art device known to the examiner are not within the domain of material that must be submitted to the PTO." Mentor H/S, Inc. v. Med. Device Alliance, Inc., 244 F.3d 1365, 1378 (Fed. Cir. 2001). Accordingly, Avery's failure to raise the Brady references again in the bullet points is not a material omission for purposes of inequitable conduct.
Continental also alleges in count 3 that "[a]dhesive-coated paper labels are known to exhibit curling during and after separation from a release liner." Countercl. ¶ 50. According to Continental, this property prevents the exposed edge of a partially-separated label from adhering to a flat surface on which the label sheet is placed unless pressure is applied. Id. ¶¶ 53-54. For this reason, the limitation offered by Avery in the fourth bullet point—"the label sheet assembly is configured to be placed on a flat surface after the separation of the portion of the release liner from the part of the first label without creating an adhesive bond between the first label and the flat surface"—is "inherent or obvious in view of prior art label assemblies." Id. ¶¶ 55, 60. Continental contends that because Avery "intentionally did not disclose the inherent curling of paper labels" to the PTO, but instead "presented the fourth bullet point... as an important feature distinguishing" the application from prior art, it engaged in inequitable conduct. Id. ¶¶ 58-59.
These allegations also fall short of what the law defines as inequitable conduct. Assuming that curling is an inherent feature of paper labels, Avery's disclosure of prior art describing paper labels is sufficient to disclose inherent curling to the Examiner. As the Federal Circuit has noted, when a patent applicant discloses a prior art reference, "'the content of [the reference] is presumed to be before the examiner[.]'" McKesson Info. Solutions, Inc. v. Bridge Med., Inc., 487 F.3d 897, 924 (Fed. Cir. 2007) (quoting Li Second Family Ltd. P'ship v. Toshiba Corp., 231 F.3d 1373, 1378 (Fed. Cir. 2000)).
Though McKesson and Li did not discuss whether disclosure of a prior art reference necessarily constitutes disclosure of the invention's properties, other courts have concluded that the "content" of a prior art reference includes properties or features inherent in the reference. See, e.g., Jeneric/Pentron, Inc. v. Dillon Co., 171 F. Supp. 2d 49, 79-80 (D. Conn. 2001) (); Standard Mfg. Co. v. United States, 25 Cl. Ct. 1, 73 (1991) ().
The Court finds these decisions persuasive, particularly given that the Federal Circuit "deem[s a patent examiner] to have experience in the field of the invention." In re Sang-Su Lee, 277 F.3d 1338, 1345 (Fed. Cir. 2002). Accordingly, the Court concludes that disclosure to the Examiner of a prior art reference describing paper labels is sufficient to disclose an allegedly inherent property of paper labels—namely, curling.
In this case, Continental's inequitable conduct claim is premised on the allegation that the prior...
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