Filmtec Corp. v. Hydranautics, 94-1034
| Decision Date | 12 October 1995 |
| Docket Number | No. 94-1034,94-1034 |
| Citation | 67 F.3d 931 |
| Parties | 1995-2 Trade Cases P 71,145, 32 Fed.R.Serv.3d 1199, 36 U.S.P.Q.2d 1410 FILMTEC CORPORATION, Plaintiff-Appellee, v. HYDRANAUTICS, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Federal Circuit |
James R. Martin, Gibson, Dunn & Crutcher, Los Angeles, CA, argued for plaintiff-appellee. Bernd W. Sandt and Gary C. Cohn, The Dow Chemical Company, Midland, MI, were on the brief, for plaintiff-appellee.
Carl W. Schwarz, McDermott, Will & Emery, Washington, DC, argued for defendant-appellant. With him on the brief was Seth D. Greenstein.
Before NEWMAN, PLAGER, and CLEVENGER, Circuit Judges.
This case addresses the tension between the rights of a patentee seeking a remedy and the rights of a competitor seeking recompense for litigation that is claimed to be anticompetitive and violative of the antitrust laws. The district court denied the alleged infringer's motion to amend its answer to a complaint of patent infringement. The amendment was for the purpose of adding a counterclaim for antitrust violations. The district court also denied a motion for restitution for losses caused by a wrongful injunction arising out of the original infringement suit. We affirm.
This court has already told much of the rather tortuous story of the litigation surrounding this invention. See FilmTec Corp. v. Hydranautics, 982 F.2d 1546, 25 USPQ2d 1283 (Fed.Cir.1992), cert. denied, --- U.S. ----, 114 S.Ct. 85, 126 L.Ed.2d 53 (1993) (FilmTec v. Hydranautics); see also FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568, 19 USPQ2d 1508 (Fed.Cir.1991) (FilmTec v. Allied ). We repeat only what is necessary to understand this phase of the litigation.
In 1977, an inventor named John Cadotte, working for a not-for-profit research corporation called Midwest Research Institute (MRI) on a government-funded project, invented a reverse osmosis membrane used for the desalinization of water. 1 Soon thereafter, Cadotte and others established a for-profit corporation, FilmTec, for the purpose of commercially manufacturing reverse osmosis membranes. Cadotte filed for a patent on his membrane, and assigned all his rights in his invention to FilmTec. United States Patent No. 4,277,344 (the '344 patent) issued to Cadotte.
Hydranautics, defendant-appellant in this case, competes with plaintiff-appellee FilmTec in manufacturing and selling reverse osmosis membranes. Another competitor is Allied-Signal, Inc. (Allied). FilmTec has sued, separately, both Hydranautics and Allied for infringement of the '344 patent. It is necessary to describe the parallel litigation between FilmTec and Allied in order to appreciate fully the course of the litigation between FilmTec and Hydranautics.
FilmTec filed suit against Allied first, in April 1988. The suit, filed in the District Court for the District of Delaware, alleged that Allied's membranes infringed the '344 patent. FilmTec sought injunctive relief. The suit was subsequently transferred to the District Court for the Southern District of California. In its answer, Allied challenged FilmTec's ownership of the '344 patent. The district court issued a preliminary injunction ordering Allied to stop producing its allegedly infringing products pending the outcome of the patent litigation.
Allied appealed the preliminary injunction to this court. In July 1991 this court vacated the preliminary injunction and remanded the case for further proceedings. FilmTec v. Allied, 939 F.2d at 1569, 19 USPQ2d at 1509. Our remand instructed the trial court to look further at the question of whether ownership of the invention was ever in Cadotte. The answer to this question turned on whether FilmTec, as assignee of Cadotte, had acquired any rights in the '344 patent, a key factor in its entitlement to a preliminary injunction.
Meanwhile, in May 1990, shortly after the District Court had issued its preliminary injunction against Allied, FilmTec sued Hydranautics in the Southern District of California, alleging that Hydranautics' membrane also infringed the '344 patent. This case was placed before the same judge who was responsible for the proceedings between FilmTec and Allied. The judge bifurcated the trial of the issues of liability and damages, and in May 1991 conducted a bench trial on the liability issues. As part of its defense, Hydranautics, as did Allied, challenged whether FilmTec's title to the patent was fatally defective.
In August 1991, now having before it our remand in the Allied litigation, the district court in the Hydranautics case held that FilmTec had good title to the '344 patent, and enjoined Hydranautics from commercial activity that might infringe or induce infringement. In light of its finding that FilmTec had title to the '344 patent, the district court, in the litigation between FilmTec and Allied, reinstated the preliminary injunction barring Allied from manufacturing membranes covered by the '344 patent. Both Hydranautics and Allied appealed to this court.
In April 1992, while its case was on appeal here, Allied filed in the district court a separate complaint against FilmTec, alleging antitrust violations, specifically that FilmTec was fraudulently using the patent system to monopolize the market for such membranes. Allied also moved to consolidate its antitrust claim with the still pending patent infringement litigation against it, or, in the alternative, to amend its answer in that litigation to counterclaim violations of the antitrust laws.
FilmTec moved to dismiss Allied's antitrust complaint, arguing that Allied failed to state a claim on which relief could be granted because FilmTec was immune from antitrust liability on the basis of the Noerr- Pennington doctrine. See Eastern R.R. Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961) (Noerr); United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965) (Pennington ). In August 1992 the district court denied FilmTec's motion to dismiss the antitrust claims, and granted Allied's motion to consolidate the antitrust and patent infringement litigations between FilmTec and Allied. The dispute between FilmTec and Allied was concluded eventually without further involvement by this court.
The appeal taken by Hydranautics from the adverse decision of August 1991 was decided by this court in December 1992. FilmTec v. Hydranautics, 982 F.2d 1546, 25 USPQ2d 1283. We held, for reasons related to Cadotte's employment at the time the invention was conceived and in light of governing federal statute, that title to the invention was and always had been in the United States, and that FilmTec was without standing to sue on the '344 patent.
Hydranautics then attempted to follow Allied's strategy in countersuing for antitrust violations. In March 1993 Hydranautics filed in the district court an antitrust suit against FilmTec. Hydranautics' claim tracked that earlier filed by Allied. Again following Allied's strategy, Hydranautics moved in the alternative for leave to amend its answer in the infringement litigation in order to raise its antitrust claim as a counterclaim. (Hydranautics' proposal to consolidate its antitrust claim with that brought by Allied became moot when Allied and FilmTec settled.)
FilmTec responded by moving to dismiss the antitrust suit and arguing that the motion to amend by way of counterclaim in the pending patent litigation should be denied. With regard to the counterclaim, FilmTec argued that leave to amend should not be granted because the patent infringement litigation was immune from suit under the Noerr- Pennington doctrine, and because Hydranautics had unduly delayed before filing its motion to amend. With regard to the separate antitrust suit, FilmTec argued that, since Hydranautics' antitrust claims were compulsory counterclaims, Hydranautics was barred by Fed.R.Civ.P. 13(a) from bringing such claims at this stage in the litigation.
While these matters were pending before the trial judge, Hydranautics filed a motion seeking restitution for its monetary losses during the period the injunction against it, issued by the court in August 1991, was wrongfully in place, and for an injunction prohibiting FilmTec from enforcing all foreign patents based on the same invention. The claim regarding the foreign patents has since been settled, and is not further discussed.
In August 1993 the district court denied all of Hydranautics' motions and granted FilmTec's motion to dismiss the antitrust claim. The dismissal of the antitrust action is on appeal to the Ninth Circuit. Hydranautics appeals to this court from the district court's denial of leave to amend its answer in the patent infringement litigation, and of its denial of its motion for restitution.
Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served. "Otherwise a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). Determining whether to give leave of court requires an exercise of discretion by the trial court. The exercise of that discretion is of course not unfettered, and the rule itself makes clear that leave shall be freely given when justice so requires. Unless a procedural matter is importantly related to an area of this court's exclusive jurisdiction, as a matter of convenience for district judges we will usually be guided by the views of the circuit in which the trial court sits with regard to general procedural issues. In re...
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