FLEXSYS America LP v. KUMHO TIRE USA. INC.

• Decision Date: 15 July 2010
• Docket Number: Case No. 5:05CV156.
• Parties: FLEXSYS AMERICA LP, Plaintiff, v. KUMHO TIRE U.S.A., INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

726 F.Supp.2d 778

FLEXSYS AMERICA LP, Plaintiff,

v.KUMHO TIRE U.S.A., INC., et al., Defendants.

Case No. 5:05CV156.

United States District Court, N.D. Ohio,Eastern Division.

July 15, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

John C. Fairweather, Amanda M. Leffler, Lisa S. Delgrosso, Brouse McDowell, David C. Minc, Akron, OH, Robert M. Masters, Bhaskar Kakarla, Brock S. Weber, Elizabeth M. Roesel, Erin Sears, Timothy P. Cremen, Paul, Hastings, Janofsky & Walker, Washington, DC, Jun Ji, Broad & Bright, Chaoyang District Beijing, China, Qin Shi, Edgetech Law, Palo Alto, CA, for Plaintiff.

Benjamin C. Sasse, Robert J. Hanna, Tucker, Ellis & West, Cleveland, OH, David B. Perry, Maureen A. Sheehy, Alexandra Sepulveda, Gia L. Cincone, Jeb B. Oblak, Kyle Vos Strache, Mark T. Jansen, Mehrnaz Boroumand, Nancy L. Tompkins, Townsend & Townsend & Crew, Guy W. Chambers, Duane Morris, San Francisco, CA, Vision L. Winter, O'Melveny & Myers, William H.V. Park, Kim Park Choi & Yi, Los Angeles, CA, David G. Utley, Gregory H. Collins, Davis & Young, Clay K. Keller, Philip R. Wiese, Buckingham, Doolittle & Burroughs, Akron, OH, Manni Li, Law Office of Nicholas T. Hua, Beverly Hills, CA, Marcia Henninger Sundeen, Michael M. Shen, Scott Cunning, T. Cy Walker, Kenyon & Kenyon, Paul J. Zegger, Stanton T. Lawrence, III, Sidley Austin, Washington, DC, Mark J. Skakun, Buckingham, Doolittle & Burroughs, Canton, OH, for Defendants.

MEMORANDUM OPINION (Nunc Pro Tunc) ¹

SARA LIOI, District Judge.

This patent matter comes before the Court on the motion of Defendants Sinorgchem Co., Shandong Sinorgchem International Chemical Industry Co., Ltd., Sinorgchem Co., Tai'an, Tongling Xinda Chemical Co., Ltd., Anhui Sinorgchem Technology Co., Ltd., and Jiangsu Sinorgchem Technology Co., Ltd. (collectively “Sinorgchem”) for summary judgment on the issue of non-infringement. (Doc. No. 268.) In a separate motion, Defendants Kumho Tire USA, Inc., Kumho Tire Co., Inc., and Korea Kumho Petrochemical Co., Ltd. (“KKPC”) (collectively “Kumho”) also request summary judgment on the issue of non-infringement. (Doc. No. 275.) Both motions seek the dismissal of all claims in the Amended Complaint.

I. Background

For purposes of this litigation, Plaintiff Flexsys America LP (“Flexsys”) is the holder of several patents, including: United States Patent No. 5,117,063 (“the '063 patent”), United States Patent No. 5,453,541 (“the '541 patent”), and United States Patent No. 5,608,111 (“the '111 patent”). The ' 541 patent, issued on a continuation-in-part application, is based on the ' 063 patent. ² The ' 111 patent, in turn, is based on a continuation of the ' 541 patent. The ' 541 patent was previously dismissed from this suit. ³

The Process

The patents-in-suit identify a new, environmentally-friendly method for making 4-aminodiphenylamine (4-ADPA) and its alkylated derivatives, namely alkylated p-phenylenediamines. These derivatives are used as anti-degradants in automobile tires. The patents identify a three-step process: (1) the coupling of aniline and nitrobenzene to produce 4-ADPA intermediates; (2) hydrogenating the 4-ADPA intermediates into 4-ADPA; and (3) alkylating 4-ADPA to form the antidegradant additive, N-(1,2-dimethylbutyl)-N'-phenyl-p-phenylenediamine (6PPD).

The '063 and '111 patents focus on the coupling step. During this initial phase, aniline is combined directly with nitrobenzene in an environment containing a suitable base, solvent, and protic material-a substance, such as water or methanol, which is capable of donating a proton to the reaction. The earliest patent, the '063 patent, represented a significant departure from the traditional method of making antidegradant additives. Prior to Plaintiff's invention, the conventional process for creating 6PPD involved coupling aniline with chlorinated nitrobenzene. By eliminating chlorine from the process, the ' 063 inventors were able to produce the desired 6PPD without the highly corrosive chlorinated waste by-products. The same chlorine-free process was carried through the '541 and '111 patents.

In 1997, Sinorgchem began working on its own process for producing 4-ADPA and 6PPD. Sinorgchem acknowledges that it was aware of the '063 and '111 patents, but claims that it understood that the process outlined in those pre-existing patents relied on the presence of protic material, i.e., water, in amounts less than “up to about 4%” of the reaction mixture volume when aniline was the solvent. Because Sinorgchem's process always utilized water in amounts significantly greater than 4%, Sinorgchem believed that it could produce 4-ADPA and 6PPD without infringing upon the patents held by Flexsys.

KKPC is in the business of manufacturing and selling chemicals related to rubber and semiconductors. (Doc. No. 276, Ex. 2, Declaration of Sung Kyu Lim at ¶ 1.) KKPC produces 6PPD, and purchases the precursor chemical, 4-ADPA, to make 6PPD for use in the manufacture of tires. ⁴ ( Id. at ¶ 4.) In 1987, KKPC entered into a joint venture with Monsanto, wherein Monsanto agreed to supply KKPC with 4-ADPA. ( Id. at ¶ 6.) In 1995, Monsanto spun this portion of its business off to the newly formed Flexsys, and KKPC began purchasing 4-ADPA from Flexsys. ( Id. at ¶¶ 10-11.) When the relationship between KKPC and Flexsys soured, KKPC sought alternative suppliers to satisfy its need for 4-ADPA. ( Id. at ¶¶ 13, 16.) In 2004, KKPC began purchasing 4-ADPA from Sinorgchem. ( Id. at ¶ 16.)

It is not disputed that the remaining two Kumho defendants do not produce any chemicals and do not practice any of the steps outlined in the patents-in-suit. Kumho Tire Co., Inc. is in the business of producing tires, and Kumho Tires U.S.A., Inc. imports the tires produced by Kumho Tire Co., Inc. into the United States for distribution to various retailers. ( Id. at ¶ 2.)

Litigation History

While the parties have already litigated this matter before the International Trade Commission (ITC) on two separate occasions, only the details from the first lawsuit are relevant to Defendants' dispositive motions. The first action, In re Certain Rubber Antidegradants, Components Thereof, and Products Containing Same (Antidegradants I ), Inv. No. 337-TA-553, was filed in 2005. The key issue in that action was the construction to be given to the term “controlled amount” of protic material in the '063 and '111 patents when aniline is the solvent. The Administrative Law Judge (ALJ) adopted Flexsys's definition of “controlled amount,” which contained unspecified upper and lower limits designed to ensure the desired selectivity for 4-ADPA intermediates without inhibiting the reaction of nitrobenzene and aniline, rejecting Sinorgchem's definition, which focused on the presence of no greater than “up to about 4%” protic material. Applying this definition, the ALJ found that Sinorgchem had literally infringed upon the patents-in-suit. On appeal, the ITC rejected this definition, and determined that “controlled amount” of protic material was “an amount up to that which inhibits the reaction of aniline with nitrobenzene.” Under this new definition, the ITC likewise found literal infringement.

The Federal Circuit reversed the ITC's decision, adopting, instead, the definition previously urged by Sinorgchem. Sinorgchem v. ITC, 511 F.3d 1132 (Fed.Cir.2007). The court turned to a portion of the '063 patent specification, which provided:

A “controlled amount” of protic material is an amount up to that which inhibits the reaction of aniline with nitrobenzene, e.g., up to about 4% H₂O based on the volume of the reaction mixture when aniline is utilized as the solvent.

('063 patent, col. 4, ll. 48-52.) The Federal Circuit found that, by this language, the drafter had expressly defined the term “controlled amount” when aniline was the solvent. In so ruling, the court noted that the term “controlled amount” was set off by quotation marks-“often a strong indication that what follows is a definition.” Sinorgchem, 511 F.3d at 1136. Further, the term was followed by “is,” which signified that the patentee was acting as his own lexicographer. Id. The Federal Circuit concluded that “the drafter clearly, deliberately, and precisely defined the term ‘controlled amount’ of protic material [...].” The court found telling the fact that “[e]lsewhere in the same paragraph, the specification again refers to the 4% limit.” Id.

Applying its definition of “controlled amount,” the court found that there was no literal infringement. In reaching this conclusion, the court relied, in part, upon the parties' stipulation before the ITC that Sinorgchem always used between 10 and 15% water throughout the reaction of aniline and nitrobenzene. Sinorgchem, 511 F.3d at 1140-41. The court remanded the matter to the ITC for consideration of the question of infringement under the doctrine of equivalents. On remand, the ITC determined that Sinorgchem did not infringe under the doctrine of equivalents, and the ITC approved of this decision without taking a position on the ALJ's findings with respect to the doctrine of equivalents. (Doc. No. 268, Exs. F and G, respectively.)

The Present Lawsuit

Plaintiff filed the present action on January 28, 2005. The matter has been stayed on multiple occasions in anticipation of rulings in the ITC actions. On April 24, 2009, the Court granted Plaintiff's motion to reopen the case. (Doc. No. 184.) In the Amended Complaint, Flexsys alleges that Sinorgchem's processes for producing 4-ADPA and alkylated derivatives of A-DPA, including 6PPD, is covered by Flexsys's patents. (Doc. No. 65, Ex. 1, First Amended Complaint at ¶¶ 13-16.) Flexsys further alleges that Sinorgchem imported 6PPD into the United States, with full knowledge of the Flexsys patents, in violation of 35 U.S.C. § 271(g), and induced others to infringe the Flexsys patents, in violation of 35 U.S.C. § 271(b). ( Id. at ¶¶ 17-18.)

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