Curtis Mfg. Co., Inc. v. Plasti-Clip Corp.

Citation888 F. Supp. 1212
Decision Date21 November 1994
Docket NumberCiv. No. 89-430-SD.
CourtU.S. District Court — District of New Hampshire



Jack R. Pirozzolo, Willcox Pirozzolo, & McCarthy, Boston, MA, Craig L. Staples, Cleveland, Waters & Bass, PA, Concord, NH, for Curtis Mfg. Co., Inc.

William O. Hennessey, Hayes, Soloway, Hennessey, Grossman & Hage, Jamie N. Hage, Roussos, Hage & Hodes, W. Wright Danenbarger, Wiggins & Nourie, Manchester, NH, for defendants.


DEVINE, Senior District Judge.

In this consolidated civil action, the parties raise a number of issues relating to bankruptcy, patent infringement, and certain business-related competitive torts. The court has federal question jurisdiction, which encompasses supplemental state law issues as well. 28 U.S.C. §§ 1331, 1334, 1338, 1367. Presently before the court is the motion to dismiss or for summary judgment filed by both Curtis and Judd,1 to which Plasti-Clip and Faneuf object.

Factual History

Daniel Faneuf invented a plastic clip device which is manufactured and sold through a company of which he is the president and sole stockholder, Plasti-Clip Corporation (Plasti-Clip). The Faneuf clip was issued United States Letters Patent Number 4,277,863 ('863 patent) on July 14, 1981. In late March or early April of 1989, Faneuf entered into negotiations with Curtis Manufacturing Company (Curtis), a computer peripheral products company, and its president, Thomas W. Judd, at Curtis's instigation regarding the feasibility of adapting the Faneuf clip to accommodate Curtis's document holder application. Prior to the complete breakdown of negotiations between Faneuf and Curtis in September of 1989, Curtis's patent counsel filed a patent application which incorporated Faneuf's revised clip design but indicated Judd as the inventor. On February 12, 1990, United States Letters Patent Number 4,902,078 ('078 patent) was issued to Curtis as the assignee of Judd for a plastic clip document holder device which incorporates the accused plastic clip.

Procedural History

On September 8, 1989, Curtis brought action against Plasti-Clip and Faneuf under federal patent law seeking a declaration of noninfringement and invalidity as to the '863 Patent. For the nearly five years thereafter, plaintiffs and defendants have been litigating the validity of the patents at issue. Plasti-Clip and Faneuf filed counterclaims against Curtis and Judd on October 19, 1989. Said action, Curtis Manufacturing Company, Inc. v. Plasti-Clip Corporation, et al, Civil No. 89-430-SD, was automatically stayed on March 1, 1991, based on Curtis's filing for reorganization pursuant to Chapter 11 of the Bankruptcy Act, 11 U.S.C. § 1101, et seq.

Plasti-Clip and Faneuf brought direct action against Judd on July 13, 1992, and amended their complaint on August 11, 1992. Plasti-Clip Corporation, et al v. Judd, Civ. No. 92-360-B. The amended complaint contains claims under federal patent law for infringement of the '863 Patent and fraudulent procurement of the '078 Patent and claims for violation of federal and New Hampshire antitrust laws, and for violation of New Hampshire prohibitions on unfair trade practices, as well as common law claims for breach of contract/quantum meruit, tortious interference with contractual relations, and conversion/idea misappropriation.

On September 22, 1992, Judd filed counterclaims against Plasti-Clip and Faneuf under federal patent law for noninfringement and invalidity as to the '863 Patent. In their amended counterclaim, Plasti-Clip and Faneuf brought claims for infringement of the '863 and/or the '078 Patent since April 1, 1993, fraudulent procurement of the '078 Patent, violation of federal and New Hampshire antitrust claims, violation of New Hampshire prohibitions on unfair trade practices, as well as a common-law claim for conversion/idea misappropriation.

Plasti-Clip and Faneuf moved to consolidate the two actions on March 2, 1994. On March 31, 1994, this court, recognizing the substantial similarity between the factual allegations and legal theories supporting the claims raised in each of the respective actions, ordered their consolidation pursuant to Rule 42(a), Fed.R.Civ.P.2 In addition, since plaintiffs argued that defendants' claims were barred by operation of the Bankruptcy Act at 11 U.S.C. 524(a)(2) and 1141(d)(1)(A), they were ordered by the court to file a motion for summary judgment to that effect. On May 16, 1994, plaintiffs, complying with the court's order, submitted the instant motion to dismiss or for summary judgment, along with a substantial number of materials outside the pleadings. Defendants, in turn, filed a motion in opposition thereto, similarly appended. In light of the voluminous materials presented in conjunction with the briefs, the court will treat the motion as one for summary judgment pursuant to Rule 12(b), Fed.R.Civ.P.

1. Summary Judgment Standard

Summary judgment shall be ordered when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. Since the purpose of summary judgment is issue finding, not issue determination, the court's function at this stage "`is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'" Stone & Michaud Ins., Inc. v. Bank Five for Savings, 785 F.Supp. 1065, 1068 (D.N.H. 1992) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2516, 91 L.Ed.2d 202 (1986)). Although summary judgment may well be appropriate if the nonmovant chooses to merely rely upon some combination of "conclusory allegations, improbable inferences, and unsupported speculation," Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990), the entire record will be scrutinized in the light most favorable to the nonmovant, with all reasonable inferences indulged in that party's favor. Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994); see also Brennan v. Hendrigan, 888 F.2d 189, 191 (1st Cir.1989); Mack v. Great Atlantic & Pacific Tea Co., 871 F.2d 179, 181 (1st Cir.1989).

The respective roles of the movant and the nonmovant in summary judgment practice are precisely choreographed. The First Circuit has described the steps in the following manner:

The movant must put the ball in play, averring "an absence of evidence to support the nonmoving party's case." The burden then shifts to the nonmovant to establish the existence of at least one fact issue which is both "genuine" and "material." A "genuine" issue is one "that properly can be resolved only by a finder of fact because it may reasonably be resolved in favor of either party." Put another way, a "genuine" issue exists if there is "sufficient evidence supporting the claimed factual dispute" to require a choice between "the parties' differing versions of the truth at trial." A "material" issue is one that "affects the outcome of the suit," that is, an issue which, perforce, "needs to be resolved before the related legal issues can be decided."
Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir.1990) (citing and quoting, inter alia, Celotex Corp. v. Catrett, 477 U.S. 317, 325 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986), and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (other citations omitted)).

Maldonado-Denis, supra, 23 F.3d at 581.

"Motions for summary judgment must be decided on the record as it stands, not on litigants' visions of what the facts might some day reveal." Id. Thus, on issues as to which the nonmovant bears the ultimate burden of proof, he must "`present definite, competent evidence to rebut the motion.'" Id. (quoting Mesnick v. General Elec. Co., 950 F.2d 816, 822 (1st Cir.1991), cert. denied, 504 U.S. 985, 112 S.Ct. 2965, 119 L.Ed.2d 586 (1992)). Finally, summary judgment, and its concomitant standard, "is as available in patent cases as in other areas of litigation." Continental Can Co. U.S.A., Inc. v. Monsanto Co., 948 F.2d 1264, 1265 (Fed. Cir.1991).

2. The Effect of Curtis's Bankruptcy

As a preliminary matter, plaintiffs allege that the Curtis reorganization (1) bars Plasti-Clip from asserting claims based upon pre-petition events and (2) vests in Curtis its property (the '078 patent) free of all claims by Plasti-Clip. Defendants oppose these contentions, arguing that Curtis's bankruptcy discharge neither operates as a bar to post-confirmation causes of action nor prevents the use of pre-confirmation facts to establish said post-confirmation causes of action. Moreover, defendants assert that regardless of the effect a discharge from bankruptcy has on the property of the debtor, the validity of the '078 patent is at issue and reasonable doubt exists concerning who is the rightful "owner" of said patent.

Two sections of the Bankruptcy Act are implicated by plaintiffs' motion. Section 1141 outlines the effect of confirmation of the reorganization. In pertinent part, section 1141 provides as follows:

(a) Except as provided in subsections (d)(2) and (d)(3) of this section, the provisions of a confirmed plan bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, equity security holder, or general partner in the debtor, whether or not the claim or interest of such creditor, equity security holder, or general partner is impaired under the plan and whether or not such a creditor, equity security holder, or general partner has accepted the plan.
(b) Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.
(c) Except as provided in subsections (d)(2) and (d)(3) of this section and except as otherwise provided in the plan

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