B & G Plastics v. Eastern Creative Industries

• Decision Date: 03 July 2003
• Docket Number: No. 98 Civ. 0884 (RMB)(JCF).,98 Civ. 0884 (RMB)(JCF).
• Citation: 269 F.Supp.2d 450
• Parties: B & G PLASTICS, INC., Plaintiff, v. EASTERN CREATIVE INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

269 F.Supp.2d 450

B & G PLASTICS, INC., Plaintiff, v. EASTERN CREATIVE INDUSTRIES, INC., Defendant.

No. 98 Civ. 0884 (RMB)(JCF).

United States District Court, S.D. New York.

July 3, 2003.

DECISION AND ORDER

BERMAN, District Judge.

I. Background

On February 6, 1998, B & G Plastics, Inc. ("Plaintiff") filed a complaint ("Complaint") against Eastern Creative Industries, Inc. ("Defendant") alleging patent infringement of U.S. Patent No. 5,556,014 ("'014 patent") under 35 U.S.C. § 27 Complaint ¶ 6, and tortious interference with business relations, id. ¶ 16, in connection with the sale of the clip portion of a clip-on tie. Id. ¶¶ 5-6. The '014 patent consists essentially of a combination of two unpatented pieces of equipment, namely a metal clip with a hole in the back for clip-on ties and a plastic security hanger from which the ties are hung and displayed in stores. See '014 patent (attached to Complaint at Exhibit 1).

On or about January 8, 1999, Defendant moved for summary judgment with respect to Plaintiffs patent infringement claim and Plaintiffs tortious interference claim. On or about January 19, 1999, Plaintiff submitted two cross-motions for summary judgment, i.e., one concerning patent infringement and the other concerning its tortious interference claim. On or about July 22, 1999, Plaintiff also moved for summary judgment with respect to the validity of the '014 patent.

On March 31, 2003, United States Magistrate Judge James C. Francis IV, to whom this matter had been referred, issued a thorough and well-reasoned Report and Recommendation ("Report") recommending that the Court deny Defendant's motion for summary judgment on infringement, grant Defendant's motion for summary judgment on tortious interference, and deny Plaintiff's motions with respect to patent infringement, tortious interference, and patent validity. Report at 471.

The Report advised the parties that "[p]ursuant to 28 U.S.C. § 636(b)(1) and Rules 72, 6(a), and 6(e) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days to file written objections to this report and recommendation." Id. On April 11, 2003, Plaintiff filed objections to the Report ("Plaintiff's Objections"), and on April 14, 2003, Defendant filed objections ("Defendant's Objections").¹ For the reasons set forth below, the Court adopts the Report in its entirety.

II. Standard of Review

A district court evaluating a magistrate's report may adopt those portions of the report to which no "specific, written objection" is made, as long as those sections are not clearly erroneous. Fed.R.Civ.P. 72(b); Thomas v. Am, 474 U.S. 140, 149, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Greene v. WCI Holdings Corp., 956 F.Supp. 509, 513 (S.D.N.Y.1997). "Where a party makes a `specific written objection' within `[ten] business days after being served with a copy of the [magistrate judge's] recommended disposition,' however, the district court is required to make a de novo determination regarding those parts of the report." Cespedes v. Coughlin, 956 F.Supp. 454, 463 (S.D.N.Y.1997) (quoting United States v. Raddatz, 447 U.S. 667, 676,100 S.Ct. 2406, 65 L.Ed.2d 424 (1980)). A district judge may accept, reject, or modify, in whole or in part, the findings and recommendations of the magistrate. See DeLuca v. Lord, 858 F.Supp. 1330, 1345 (S.D.N.Y.1994); Walker v. Hood, 679 F.Supp. 372, 374 (S.D.N.Y.1988).

A motion for summary judgment may be granted only when no genuine issue of material fact remains for trial and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); see also Westnau Land Corp. v. U.S. Small Bus. Admin., 1 F.3d 112, 116 (2d Cir.1993). The role of the Court on such a motion "is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986) (citing Anderson v. Liberty Lobby, Inc., All U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The burden of showing the absence of a factual dispute rests on the party seeking summary judgment. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); FDIC v. Giammettei, 34 F.3d 51, 54 (2d Cir.1994). In assessing the record to determine whether there is a genuine issue of material fact, the Court must resolve all ambiguities and draw all factual inferences in favor of the non-moving party. See Anderson, All U.S. at 255, 106 S.Ct. 2505; Thornton v. Syracuse Sav. Bank, 961 F.2d 1042, 1046 (2d Cir.1992). Summary judgment "is as appropriate in a patent case as in any other." Avia Group Int'l, Inc. v. LA. Gear Cal., Inc., 853 F.2d 1557, 1561 (Fed.Cir.1988); see also Spectra Corp. v. Lutz, 839 F.2d 1579, 1581 n. 6 (Fed.Cir. 1988). When cross-motions for summary judgment are made, the standard is the same as that for individual motions for summary judgment. See Morales v. Quintet Entm't, Inc., 249 F.3d 115, 121 (2d Cir.2001). The Court must consider each motion independently of the other and evaluate the facts in the light most favorable to the non-moving party. See id.

III. Analysis

The facts as set in the Report are incorporated herein by reference.

The Court has conducted a de novo review of the Report, the record, and applicable legal authorities, along with Plaintiffs and Defendant's Objections, and concludes that Magistrate Francis' legal and factual determinations are supported by the record and the law in all respects. Neither party's objections provide a legal basis for departing from the Report's recommendations.² There are material fact issues on nearly all of the parties' claims which should be presented to the trier of fact.

A. Patent Validity

Magistrate Francis correctly determined that Plaintiff has failed to establish, upon summary judgment, that the '014 patent is valid and that the '014 patent is not "obvious." Report at 463-164 ("[P]laintiff has provided the Court with no evidence, aside from its own assertions, to prove the non-obviousness of the patent."). A patent is not valid if "the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103; see Monarch Knitting Mach. Corp. v. Sulzer Morat GmbH, 139 F.3d 877, 881 (Fed.Cir.1998); see also 2 Donald S. Chisum, Chisum on Patents § 5.01. "Prior art includes any relevant knowledge, acts, descriptions, and patents which pertain to, but predate, the invention in question." Gittes v. GMIS, Inc., 95 Civ. 2296, 1999 WL 500144, at *4 n. 2 (S.D.N.Y. July 15, 1999); see, e.g., Depaul v. Toshiba Corp., 91 Civ. 4481, 1995 WL 489567, at *3 (S.D.N.Y. Aug.15, 1995).

The parties dispute the extent to which prior art made the '014 patent "obvious." See Report at 462-463. The Report correctly concludes that summary judgment is inappropriate because "[t]he parties have provided little in the way of evidence" for the Court to make this factual determination. Report at 463; see also SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp., 225 F.3d 1349, 1356 (Fed.Cir.2000) ("Determining whether there is a suggestion or motivation to modify a prior art reference is ... a fact question subsidiary to the ultimate conclusion of obviousness.").

Plaintiff objects to the Report's reliance on the declaration, dated August 16, 1999, of Defendant's president, John Najarian, arguing that it "is not `evidentiary' and is not properly before the Court." Plaintiffs Objections at 2. The Najarian declaration does not affect the Magistrate's determination that "given the plaintiffs burden in this summary judgment case, coupled with the lack of evidence in support of its contention of non-obviousness, the defendant has offered enough evidence that a triable issue exists as to the validity of the '014 patent." Report at 464; see also Scanner Techs. Corp. v. Icos Vision Sys., 253 F.Supp.2d 624, 640 (S.D.N.Y.2003) ("Questions of fact exist as to what the prior art discloses and how a person of ordinary skill in the art would interpret it in the context of obviousness.").

Plaintiff also argues here that the '014 patent is presumptively valid. See Plaintiffs Objections at 4 ("Given the fact that Defendant has offered no admissible evidence on the issue of validity, such presumption of validity is submitted as being confirmed."); see also 35 U.S.C. § 282. A presumption "does not constitute `evidence' to be weighed against a challenger's evidence." Avia Group Int'l, 853 F.2d at 1562; see also ACS Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2d 1572, 1574-75 (Fed.Cir.1984). Defendant, by presenting evidence of prior art and combination, has met its burden at this stage. See, e.g. Kalman v. Berlyn Corp., 914 F.2d 1473, 1476 (Fed.Cir.1990) ("The Court ... found that there existed genuine issues of material fact concerning the validity of the '017 patent, and denied Dr. Kalman's summary judgment motion as to the validity of the patent.").

B. Patent Infringement

Magistrate Francis correctly declined to decide either party's infringement motion because "[t]he validity of the '014 patent ... is a threshold consideration for [both] motions." Report at 465; see also ConMed Corp. v. Erbe Electromedizin GmbH, 241 F.Supp.2d 187, 191 (N.D.N.Y. 2003) ("The validity of the '745 patent is the threshold consideration on the instant motions. If the '745 patent is not valid, it follows as a matter of law that ConMed's ABC probe cannot infringe on it.").

Defendant argues that Magistrate Francis incorrectly determined that "[t]he validity of the '014 patent ... is a threshold consideration," Report at 465, and that the Court may (and should) decide that Defendant has an implied license defense. See Defendant's Objections at 2.³ Assuming, arguendo, that the Court were to address this issue prior to determining the validity of the...