CTS Corp. v. Piher Intern. Corp.

• Decision Date: 17 February 1984
• Docket Number: 83-1146 and 83-1147,83-1120,Nos. 83-1119,s. 83-1119
• Citation: 727 F.2d 1550,221 USPQ 11
• Parties: , 1984-2 Trade Cases 66,201 CTS CORPORATION, Appellee, v. PIHER INTERNATIONAL CORPORATION and Piher Sociedad Anonima, Appellants. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1550

727 F.2d 1550

221 U.S.P.Q. 11, 1984-2 Trade Cases 66,201

CTS CORPORATION, Appellee, v. PIHER INTERNATIONAL CORPORATION and Piher Sociedad Anonima Appellants.

Appeal Nos. 83-1119, 83-1120, 83-1146 and 83-1147.

United States Court of Appeals Federal Circuit.

Feb. 17, 1984.

R.A. Blackstone, Jr., Chicago, Ill., argued for appellants. With him on the brief was Richard R. Trexler, Chicago, Ill.

Walther E. Wyss, Chicago, Ill., argued for appellee. With him on the brief were Robert L. Rohrback, Joseph Krieger and Larry J. Palguta, Chicago, Ill.

Before KASHIWA and SMITH, Circuit Judges, and WISDOM, ^* Senior Circuit Judge.

KASHIWA, Circuit Judge.

This is a consolidated appeal from a judgment order of the United States District Court for the Northern District of Illinois (Nos. 72 C 1891 and 76 C 1152), entered May 25, 1983. In its oral findings of fact and conclusions of law, the district court denied, inter alia, Piher International Corporation and Piher Sociedad Anomina's ("Piher") Rule 60(b)(6) ¹ motion to modify the district court's judgment order entered January 25, 1982. CTS Corp. v. Piher International Corp., 219 USPQ 1180. The Rule 60(b)(6) motion was sought in order to render unenforceable the agreements and the CTS patents which were cited in the January 25, 1982 judgment order because of appellee's, CTS Corporation ("CTS"), failure to file certain documents with the United States Patent and Trademark Office (the "PTO") pursuant to 35 U.S.C. Sec. 135(c). ² In addition, the district court denied appellee's motion for attorneys' fees. We affirm.

Background

This case is the latest in a series of decisions dating back to 1975; the instant action is an appeal of the denial of a post-judgment motion relating to a patent infringement lawsuit. ³ During the relevant period of this appeal, late 1981 and early 1982, the infringement action was in its accounting phase in the U.S. District Court for the Northern District of Illinois (the "Illinois court"). Concurrently, a related interference civil action ⁴ was proceeding through the U.S. District Court for the Northern District of Indiana (the "Indiana court") and the Seventh Circuit Court of Appeals. ⁵ The Indiana court's decision granting priority of invention to CTS was affirmed by the Seventh Circuit on November 4, 1981. Piher S.A. v. CTS Corp., 664 F.2d 122, 212 USPQ 914.

On November 5, 1981, CTS contacted Piher concerning possible settlement. The Seventh Circuit issued its mandate for the interference case on November 6. On November 18, Piher filed a petition for rehearing at the Seventh Circuit regarding the interference case, and the Seventh Circuit withdrew its mandate shortly thereafter. On November 21, the PTO terminated its interference proceeding after receipt of the Seventh Circuit's affirmance of November 4 and the mandate of November 6. The PTO was not aware and the parties did not inform it that the November 6 mandate had subsequently been withdrawn.

In the afternoon of November 23, management representatives of CTS and Piher met to discuss and settle the accounting phase of the infringement case. It was a meeting between businessmen to negotiate a settlement. Legal matters were not discussed at this meeting. At the close of the meeting, CTS proposed a number of basic terms which could be used to form the basis of an agreement and gave Piher 24 hours to accept or reject them.

The next day, November 24, Piher accepted the basic terms presented by CTS. On November 25, CTS forwarded to Piher a draft of the proposed agreement. After exchanging several drafts, a copy of the agreement, entitled "Agreement in Principle" ("Document A"), was signed by CTS on December 10 and by Piher on December 16.

On December 2, the petition for rehearing of the interference was denied by the Seventh Circuit. The Seventh Circuit issued its mandate on December 10. Piher did not move to stay the issuance of the mandate for possible petition to the Supreme Court.

"Settlement Agreement" ("Document B") and "License Agreement" ("Document C"), the two remaining settlement documents, were executed by the parties on January 14, 1982. Both Documents A and B made references to the interference. For example, Document A, in relevant part, states:

I. FULL SETTLEMENT

CTS and PIHER shall join in an understanding for a release of PIHER and CTS of any claim or claims arising under the subject matter of paragraph III which either party has or could have asserted against the other, before a United States District Court, including but not limited to The United States Patent and Trademark Office, The United States District Court for the Northern District of Indiana, and The United States District Court for the Northern District of Illinois, Eastern Division, or any State Court of the United States or any Federal or Provincial Court of Canada.

Similarly, Document B, in relevant part, states:

WHEREAS, PIHER and CTS have been adverse parties in each of the following proceedings:

A. CTS Corporation v. Piher International Corporation and Piher Sociedad Anonima, Civil Action No. 72 C 1891, pending in the United States District Court for the Northern District of Illinois, Eastern Division, and Appeal Nos. 75-1100, 75-1104, 78-1535, 81-1635 and 81-1829 in the United States Court of Appeals for the Seventh Circuit taken therefrom;

B. CTS Corporation v. Piher International Corporation and Piher Sociedad Anonima, Civil Action No. 76 C 1152, pending in the United States District Court for the Northern District of Illinois, Eastern Division;

C. Piher Sociedad Anonima (assignee of Juan Luis Heredero) v. CTS Corporation (assignee of Jack A. English), Civil Action Nos. S78-0174 and S80-1026, pending in the United States District Court for the Northern District of Indiana, South Bend Division, and Appeal Nos. 79-2350 and 81-1672 in the United States Court of Appeals for the Seventh Circuit; and

D. English v. Heredero, Interference proceeding No. 98-455 in the United States Patent and Trademark Office.

* * *

* * *

NOW, THEREFORE, in consideration of the mutual promises set forth herein, the parties agree as follows:

* * *

* * *

2. Termination of Disputes.

The parties hereto agree to terminate each of the above-identified civil actions and administrative proceedings between the parties by executing and causing to be filed the following documents:

In the United States District Court for the Northern District of Illinois, Eastern Division, in lieu of accounting procedures, there shall be a consent judgment entered by motion * * * and stipulation * * *, such judgment providing for termination and final settlement of all such civil actions and the consent judgment and final order * * * of the Court shall incorporate this Settlement Agreement, the Agreement in Principle, * * * and the patent License Agreement * * *, by which Piher shall hereafter be entitled to use, sell, distribute, and import into the United States and Canada products within the terms of the subject matter of Paragraph 6 hereafter.

On January 25, 1982, a stipulated consent judgment in lieu of accounting was entered by the Illinois court. Documents A, B and C were filed in that court under seal. On February 5, 1982, a copy of the January 25 consent judgment was filed in the PTO, but the three documents were not filed. In January, 1983, Piher filed the Rule 60(b)(6) motion in the Illinois court to modify the January 25, 1982 consent judgment because of CTS' failure to file Documents A, B and C with the PTO.

District Court Proceeding

The district court, in its oral findings of fact and conclusions of law, held that Piher failed to meet its burden of proving by the greater weight of the evidence that the parties had entered into an understanding or agreement which was required to be filed and was not filed with the PTO prior to the termination of the interference. Thus, the district court denied Piher's Rule 60(b)(6) motion to modify the final judgment order of January 25, 1982.

In its pre-trial memorandum opinion dated April 15, 1983, the district court interpreted section 135(c) to require, inter alia, that there must be a causal relationship between agreements or understandings and the termination of the interference. CTS Corp. v. Piher International Corp., 219 USPQ 1177.

In determining the facts of this case, the district court, after hearing conflicting testimony, found that the evidence did not demonstrate a causal relationship between the settlement and the termination of the interference. It found that the possibility of filing a petition for certiorari to the Supreme Court was not discussed by the participants at the November 23, 1981 conference. Next, the district court found that there was no bilateral understanding between the parties that the termination of the interference was part of the consideration for the settlement. Since the negotiations between the parties were not causally related to the termination of the interference, the district court found that the agreements need not be filed.

In addition, the district court denied CTS' motion for attorneys' fees since Piher's motion was not frivolous.

OPINION

The standard of review of a district court's denial of a Rule 60(b) motion is abuse of discretion. See Darlington v. Studebaker-Packard Corp., 261 F.2d 903, 905 (7th Cir.), cert. denied, 359 U.S. 992, 79 S.Ct. 1121, 3 L.Ed.2d 980 (1959); see generally Bell Telephone Laboratories, Inc. v. Hughes Aircraft Co., 73 F.R.D. 16 (D.Del.1976). Unless exceptional or extraordinary circumstances are shown, a Rule 60(b)(6) motion is generally not granted. Ackermann v. United States, 340 U.S. 193, 71 S.Ct. 209, 95 L.Ed. 207 (1950). The underlying factfindings by the district court in support of the denial must be upheld unless they are clearly erroneous. Fed.R.Civ.P. 52(a); United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1948).

Our jurisdiction is based on 28 U.S.C....