Eutectic Corp. v. Metco, Inc., 80 C 268.
| Decision Date | 18 December 1980 |
| Docket Number | No. 80 C 268.,80 C 268. |
| Parties | EUTECTIC CORPORATION, New Metals Corporation, and Metallizing Company of America, Inc., Plaintiffs, v. METCO, INC., Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Hopgood, Calimafde, Kalil, Blaustein & Lieberman, New York City by John M. Calimafde, Marvin N. Gordon, New York City, for plaintiffs.
Sprung, Felfe, Horn, Lynch & Kramer, New York City, for defendant; Arnold Sprung and Nathaniel D. Kramer, New York City, Salvatore A. Giarratana, Norwalk, Conn., of counsel.
This is an action by an adjudged patent infringer to set aside a judgment of patent validity alleged to have been obtained by a fraud committed on the court, and to recover treble antitrust damages resulting from defendant's allegedly fraudulent enforcement of the patents held valid. In its original action, 72 C 102, plaintiff Eutectic Corporation ("Eutectic") sought a declaratory judgment that defendant's ("Metco") patents, which disclose a novel flame spraying powder and process, were invalid and not infringed by Eutectic's flame spray materials. After trial this court entered a judgment declaring the patents valid but not infringed, 418 F.Supp. 1186 (E.D.N.Y.1976). Upon appeal by both parties the Court of Appeals affirmed the finding of patent validity but reversed the determination of noninfringement, concluding independently that the evidence amply demonstrated infringement. 579 F.2d 1 (2d Cir.), cert. denied, 439 U.S. 867, 99 S.Ct. 192, 58 L.Ed.2d 177 (1978). Pending denial of the petition for certiorari, and following the denial of Eutectic's petition for rehearing and its subsequent motion to recall the decision on the petition for rehearing, the Court of Appeals' mandate issued. In accordance therewith, this court entered an interlocutory judgment on July 13, 1978 which adjudged the patent claims valid and infringed, enjoined future infringement after July 31, 1978, dismissed the claim for declaratory relief and directed an accounting of Metco's damages.
During the accounting proceeding Metco produced to Eutectic a sequence of three documents which discuss two prereacted nickel aluminum powders sold by a Metco competitor, Alloy Metals, Inc. ("AMI"). Under the subject heading "AMI Self-bonding powders" the earliest document reported the market presence of the powders and recommended further study of their bond strengths and chemistry. A final memorandum discussed Metco's engineering analysis, the subject of the second document, also under the subject heading "Self-Bonding Competitive Powders." This memorandum stated that the bonding tests, which were conducted after the powders were sprayed in plasma onto both ground and blasted substrates, showed that the AMI powders "will achieve bond strengths equivalent" to Metco's exothermically reacting nickel aluminum powder. Observing, however, that the AMI powders "are alloys" the author doubted that either AMI powder "would exhibit any self-bonding" sprayed through an oxyacetylene gun.
Thereafter Eutectic filed the present action, 80 C 268, to set aside and be relieved from the July 13, 1978 judgment.1 According to Eutectic, the recently produced documents described above establish that in 1970 Metco knew of other "self-bonding" flame spray materials, long before 1973 when Eutectic asked Metco in Interrogatory No. 52(b) to "identify all self-bonding spray flame materials then known" to Metco, to which Metco answered only "Molybdenum and the nickel aluminum exothermic materials." Eutectic's present complaint charges that Metco's answer to Interrogatory 52 and Metco's contentions at trial that self-bonding was unique to the patented composite powders, and that an exothermic reaction was necessary to achieve self-bonding, were, in light of the above documents, knowingly false and constituted a fraud upon this court which led it and the Court of Appeals to uphold the validity of the patents.
In a second claim, Eutectic charges that Metco has monopolized and attempted to monopolize the market for flame spray materials through fraudulent enforcement of its patents against Eutectic and others, and through causing the leading consumers of flame spray materials to specify the Metco composite powders. Eutectic seeks as damages three times the profits it has lost since the injunction against infringement took effect.
Presently before the court are Eutectic's appeal from a magistrate's order staying discovery in the new action, and Metco's motion for an order summarily dismissing the entire complaint. For the reasons given below, summary judgment is granted in Metco's favor dismissing both claims in the new action, and the magistrate's order is affirmed.
At the outset there is doubt whether the misconduct alleged in Eutectic's complaint may be viewed as a fraud upon the court. Nevertheless, whatever may be the correct characterization of that conduct, there is no genuine issue that the prereacted nickel aluminum powders do not self-bond. Because that conclusion removes any issue that Metco's interrogatory answer or contentions at trial could be considered fraudulent, it is appropriate to grant judgment to Metco dismissing Eutectic's fraud claim.
Even if relevant to the material issues of the nonobviousness and novelty of the patented inventions in relation to the prior art,2 the newly produced documents simply do not establish that a fraud was committed on this court. Admittedly, they identify the AMI prereacted nickel aluminum powders as "self-bonding," and the expectation expressed in the final memorandum that the powders would not "exhibit any self-bonding in ThermoSpray" fairly suggests as well that the Metco author considered the AMI products to be self-bonding when sprayed in plasma. Nonetheless, the record amply shows that the prereacted nickel aluminum powders do not self-bond in the sense that the witnesses at trial, this court and the Court of Appeals all understood that term to mean, viz., that the powder will adhere to a smooth, clean surface in an as-sprayed condition, i. e., with all the types of flame spray equipment, oxyacetylene as well as plasma type guns. See 418 F.Supp. at 1198, 1202. Eutectic's materials engineer Patel tested the prereacted nickel aluminum powders, spraying them through a non-plasma type gun, and he testified that the prereacted powders he...
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