Contech Stormwater Solutions v. Baysaver Tech., Civil Action No. CCB-07-358.

• Decision Date: 15 January 2008
• Docket Number: Civil Action No. CCB-07-358.
• Parties: CONTECH STORMWATER SOLUTIONS, INC. v. BAYSAVER TECHNOLOGIES, INC., and Accubid Excavation, Inc.
• Court: U.S. District Court — District of Maryland

534 F.Supp.2d 616

CONTECH STORMWATER SOLUTIONS, INC. v. BAYSAVER TECHNOLOGIES, INC., and Accubid Excavation, Inc.

Civil Action No. CCB-07-358.

United States District Court, D. Maryland.

January 15, 2008.

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C. Dennis Southard, IV, Thompson Hine LLP, Washington, DC, Jeffrey Cooper Metzcar, Thompson Hine LLP, Dayton, OH, Stephen Joseph Butler, Thompson Hine LLP, Cinncinnati, OH, for Contech Stormwater Solutions Inc.

Joseph J. Zito, Zito TLP, Washington, DC, for Baysaver Technologies, Inc., and Accubid Excavation, Inc.

MEMORANDUM

CATHERINE C. BLAKE, District Judge.

Now pending before the court is a motion for summary judgment filed by plaintiff Contech Stormwater Solutions, Inc. ("Contech") against defendants BaySaver Technologies, Inc. ("BaySaver") and AccuBid Excavation, Inc. ("AccuBid"). Having already granted the defendants' motion for summary judgment on Contech's infringement claim, the court must now consider the defendants' counterclaims asserting business tort theories and patent invalidity as to Contech's United States Patent Nos. 5,707,527 (the "'527 patent"), entitled "Apparatus and Method for Treating Stormwater," and 6,027,639 (the "'639 patent"), entitled "Self-Cleaning Siphon-Actuated Radial Flow Filter Basket." Contech filed this motion on October 12, 2007 seeking summary judgment on all counterclaims asserted by BaySaver and AccuBid. The issues in this case have been fully briefed and no oral hearing is necessary. For the reasons stated below, Contech's motion will be granted.¹

BACKGROUND

Contech's complaint involved the possible infringement of patents that grant Contech rights to a specific storm water filtration method and apparatus. The court previously granted BaySaver's and AccuBid's motion for summary judgment on the infringement claim, finding that the BayFilter, the accused device, did not literally infringe the '527 and '639 patents as construed by the court. Contech Stormwater Solutions v. Baysaver Techs. Inc., 2007 WL 2872074 (D.Md2007). BaySaver's and AccuBid's still pending counterclaims assert that Contech's patents are invalid and that Contech committed various business torts. More specifically, BaySaver and AccuBid argue that Contech's patents are invalid as either anticipated or obvious under 35 U.S.C. §§ 102 and 103;² invalid for failure to disclose the best mode in violation of 35 U.S.C. § 112; or unenforceable because Contech's predecessor failed in its duty of candor to the USPTO under 37 C.F.R. § 1.56 by failing to disclose known relevant prior art during the prosecution of the patents. Additionally, BaySaver and AccuBid assert that Contech defamed the defendants, tortiously interfered with contractual and prospective business relationships, and engaged in unfair competition.

In its motion, Contech asserts that, because the defendants failed to provide sufficient evidence to establish the prima facie elements of any of their counterclaims as of the close of discovery on September 28, 2007, it is entitled to summary judgment on all" claims. Contech further suggests that, even if the court considers the defendants' late evidentiary submissions for the purpose of this summary judgment motion, those factual allegations are insufficient to establish the required elements of the defendants' counterclaims. This opinion will consider these arguments in turn.

ANALYSIS

Summary Judgment Standard

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The Supreme Court has clarified this does not mean that any factual dispute will defeat the motion:

By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original).

"The party opposing a properly supported motion for summary judgment `may not rest upon the mere allegations or denials of [his] pleadings,' but rather must `set forth specific facts showing that there is a genuine issue for trial.'" Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 525 (4th Cir.2003) (alteration in original) (quoting Fed.R.Civ.P. 56(e)); see also SunTiger, Inc. v. Scientific Research Funding Group, 189 F.3d 1327, 1334 (Fed. Cir.1999). The court must "view the evidence in the light most favorable to ... the nonmovant, and draw all reasonable inferences in her favor without weighing the evidence or assessing the witnesses' credibility," Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 644-45 (4th Cir.2002), but the court also must abide by the "affirmative obligation of the trial judge to prevent factually unsupported claims and defenses from proceeding to trial." Bouchat, 346 F.3d at 526 (internal quotation marks omitted) (quoting Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993), and citing Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

I. Rule 37(c)(1)

Federal Rules of Civil Procedure 26(a)(1) requires that a party must, without awaiting a discovery request, provide the other parties: (A) the identity of potential witnesses and the purpose for which they may be called, and (B) a copy of all documents that the disclosing party may use to support its claims. Rule 26(e)(1) further provides that a party has a duty to supplement its initial disclosures and answers to interrogatories when previous disclosures are incorrect or incomplete. When a party "fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." Rule 37(c)(1). Thus, Rule 37(c)(1) could prevent a non-moving party in a summary judgment proceeding from offering evidence to support its claims when that party has previously failed to meet its disclosure and duty to supplement requirements. Excluding evidence as a sanction for non-disclosure, even in the absence of bad faith, supports what the Fourth Circuit has identified as the "basic purpose" of Rule 37(c)(1), which is to prevent surprise and prejudice to the opposing party. Southern States Rack and Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592, 596 (4th Cir.2003).

As previously noted, in order to defeat summary judgment, a non-moving party must provide specific factual support for every element of a claim. See Bouchat, 346 F.3d at 526. Evidence offered to rebut a summary judgment motion may be excluded under Rule 37(c)(1), however, if the non-moving party has failed to provide the opposing party with proper disclosures and supplements as required by Rule 26(a) and (e). See Southern States, 318 F.3d at 596; MicroStrategy Inc. v. Business Objects, 429 F.3d 1344, 1356-57 (Fed.Cir. 2005) (upholding a district court's exclusion of non-expert damages evidence on the grounds that the party failed to properly supplement discovery interrogatories as required under Southern States). The only exceptions to exclusion are when the nondisclosure is substantially justified or harmless. Southern States, 318 F.3d at 596-97. "[I]n exercising its broad discretion to determine whether a nondisclosure of evidence is substantially justified or harmless for purposes of a Rule 37(c)(1) exclusion analysis, a district court should be guided by the following factors: (1) the surprise to the party against whom the evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to which allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5) the nondisclosing party's explanation for its failure to disclose the evidence." Id. at 597.

Here, Contech argues that it is entitled to summary judgment on all of the defendants' counterclaims, contending that late evidentiary disclosures and failures to supplement interrogatories should lead to the exclusion of evidence. Contech asserts that "[d]espite numerous requests, Defendants have not identified under Rule 26(a), or elsewhere in discovery, information or fact or expert witnesses that would enable them to establish the elements of their counterclaims." (PL's Mem. at 4.) More specifically, Contech states that as to the patent counterclaims, the defendants' Rule 26(a) initial disclosures do not identify any prior art, documents, or individuals that would support or provide a basis for their claims. Contech alleges that despite its numerous informal attempts to obtain the requested information, BaySaver and AccuBid failed to supplement their initial disclosures or interrogatory responses and never submitted any expert reports. (Id. at 7.) According to Contech, it was not until after the close of discovery when, on October 1, 2007, it first received a summary of testing done on the Contech patents by Tom Panic, CEO of BaySaver. (PL's Reply Mem. at 18.) Furthermore, Contech alleges that it was not specifically notified as to which prior art patents defendants planned to use to prove invalidity until October 15, three days after Contech had filed this summary judgment motion, when Contech electronically received supplemental interrogatory responses.³ Contech concludes that by failing to disclose the facts and theories supporting their patent law claims, BaySaver and AccuBid "have prevented Contech from preparing its defense through its own testing and through expert rebuttal," and...