Hydranautics v. Filmtec Corp.

• Decision Date: 05 August 2003
• Docket Number: No. 93-CV-0476 W(JAH).,93-CV-0476 W(JAH).
• Court: U.S. District Court — Southern District of California
• Parties: HYDRANAUTICS, Plaintiff, v. FILMTEC CORPORATION, Defendant.

306 F.Supp.2d 958

HYDRANAUTICS, Plaintiff, v. FILMTEC CORPORATION, Defendant.

No. 93-CV-0476 W(JAH).

United States District Court, S.D. California.

August 5, 2003.

Order Denying Reconsideration September 26, 2003.

Jeffrey D. Lewin, Donald G. Rez, Sullivan, Hill, Lewin, Rez and Engel, San Diego, CA, Carl W. Schwarz, Robert E. Kohn, Seth D. Greenstein, Melvin White, Christopher Kliefoth, Karla L. Palmer, Craig P. Seebald, Diane L. Cafritz, Linda M. Holleran Michael S. Nadel, McDermott, Will and Emery, Washington, DC, John J. Wright, Fish and Neave, Palo Alto, CA, for Plaintiff.

James Richard Martin, Steven Eugene Sletten, Antoinette D. Paglia, Gibson, Dunn and Crutcher, Los Angeles, CA, Bruce M. Kanuch, The Dow Chemical Company, Midland, MI, for Defendant.

ORDER GRANTING PLAINTIFF HYDRANAUTICS' MOTION FOR PARTIAL SUMMARY JUDGMENT

WHELAN, District Judge.

Plaintiff Hydranautics ("Plaintiff") moves for partial summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Defendant FilmTec Corporation ("Defendant") opposes. The Court finds the matter suitable for disposition on the papers submitted and without oral argument. See Civil Local Rule 7.1(d.1). For the reasons expressed below, the Court GRANTS Plaintiff's motion for partial summary judgment.

I. BACKGROUND

On November 17, 1977 Midwest Research Institute ("MRI") scientist John Cadotte invented a reverse osmosis desalinization membrane by reacting trimesoyl chloride ("TMC") and metaphenylene diamene ("MPD"). FilmTec v. Hydranautics, 982 F.2d 1546, 1549 (Fed.Cir.1992). At the time of the experiment, MRI had been conducting government reverse osmosis research according to a Saline Water Conversion Act contract. Id. at 1548.

One month after recording his initial discovery at MRI, Cadotte resigned and founded Defendant FilmTec Corporation. On February 23, 1978 Cadotte chronicled an identical TMC-MPD chemical reaction. Id. at 1553. Subsequently, Cadotte filed a reverse osmosis membrane patent application and assigned his rights in the claimed invention to Defendant. Id. at 1549. The patent application eventually issued as the '344 patent. Id.

Defendant is a Dow Chemical Company ("Dow") subsidiary.¹ This malicious prosecution case arises from Defendant's May 1990 patent infringement lawsuit against Plaintiff. In that lawsuit, Defendant alleged that Plaintiff infringed the '344 patent. In defending the action, Plaintiff disputed Defendant's patent title rights. More specifically, Plaintiff argued that Cadotte conceived the invention while working for government contractor MRI. The district court, Honorable Gordon Thompson Jr. presiding, ultimately concluded that Defendant owned lawful title to the '344 patent; the district court enjoined Plaintiff's reverse osmosis membrane manufacturing enterprise.

In December 1992 the Federal Circuit reversed, concluding as a matter of law that: (1) the invention had been conceived on November 17, 1977 — prior to Cadotte founding FilmTec; (2) the United States, as opposed to FilmTec, owned the '344 patent; and (3) FilmTec could not maintain a patent infringement suit against Hydranautics. See id. at 1554.

Equipped with the Federal Circuit's ruling, Plaintiff filed this malicious prosecution action against Defendant Filmtec in 1993. The Court later consolidated Plaintiff's antitrust claims with its malicious prosecution claims in this case. This case has been heavily litigated for almost three decades. Indeed, the present matter is over 10 years old, arises from facts which took place one quarter of a century ago, and has generated several lengthy Circuit Court opinions. On January 19, 1999 the Court bifurcated the action and confined the first phase's issue to "whether Defendant FilmTec, its officer, directors, managing agents, attorneys and all others acting on behalf of FilmTec or in concert with it, had and maintained a reasonable belief that the invention disclosed in [the '344 patent] was the lawful property of ... Cadotte and Defendant FilmTec from the date the invention was conceived through the patent litigation instituted by FilmTec against Plaintiff Hydranautics." (Order Denying Def's Recon. Mtn., Feb. 25, 1999, at 3).

Plaintiff now seeks Rule 56 partial summary judgment on two issues. Plaintiff asks this Court to find as a matter of law that: (1) Dow knew² that John Cadotte, inventor of the reverse osmosis membrane disclosed in the '344 patent, made an invalid assignment to FilmTec of his rights to that invention when Dow authorized FilmTec to sue Hydranautics for patent infringement in May 1990; and (2) Dow knew³ that title to the ['344 patent] relating to the reverse osmosis membrane invention was not vested in FilmTec when it authorized FilmTec to sue Hydranautics for patent infringement. (Pl's Notice of Mtn., June 23, 2003, at 2).

II. LEGAL STANDARD

Summary judgment is appropriate under Federal Rule of Civil Procedure Rule 56 where the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. See FED. R. CIV. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir.1997). A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

Rule 56(d) provides for partial summary judgment. See FED. R. CIV. P. 56(d) ("[T]he court...shall if practicable ascertain what material facts exist without substantial controversy and what material facts are actually and in good faith controverted."). Under Rule 56(d) the court may grant summary judgment on less than the non-moving party's whole claim. Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., Inc., 313 F.3d 385, 391 (7th Cir.2002) (Posner, J.). Partial summary judgment is a mechanism through which the Court deems certain issues established before trial. Lies v. Farrell Lines, Inc., 641 F.2d 765, 769 n. 3 (9th Cir.1981) (quoting 6 MOORE'S FEDERAL PRACTICE ¶ 56.20 (3.-2) (2d ed.1976)). "The procedure was intended to avoid a useless trial of facts and issues over which there was really never any controversy and which would tend to confuse and complicate a lawsuit." Id.

A party seeking summary judgment, either whole or partial, always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. Id. at 322-23, 106 S.Ct. 2548. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987). "The district court may limit its review to the documents submitted for the purpose of summary judgment and those parts of the record specifically referenced therein." Carmen v. San Francisco Unified School Dist., 237 F.3d 1026, 1030 (9th Cir.2001). Therefore, the court is not obligated "to scour the record in search of a genuine issue of triable fact." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir.1996) (citing Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir.1995)). If the moving party fails to discharge this initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

If the moving party meets this initial burden, the nonmoving party cannot defeat summary judgment merely by demonstrating "that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir.1995) (citing Anderson, 477 U.S. at 252, 106 S.Ct. 2505) ("The mere existence of a scintilla of evidence in support of the nonmoving party's position is not sufficient."). Rather, the nonmoving party must "go beyond the pleadings and by her own affidavits, or by `the depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (quoting FED. R. CIV. P. 56(e)).

III. ANALYSIS

A. DOW KNEW OR SHOULD HAVE KNOWN THAT CADOTTE MADE AN INVALID ASSIGNMENT OF HIS INVENTION RIGHTS DISCLOSED IN THE '344 PATENT WHEN FILMTEC INITIATED PATENT INFRINGEMENT PROCEEDINGS AGAINST HYDRANAUTICS

Plaintiff first contends that the undisputed evidence reveals Dow knew or should have known that Cadotte's prior invention assignment to FilmTec was invalid when Defendant commenced patent infringement proceedings against Plaintiff on May 30, 1990. Plaintiff bases this assertion on Dow's alleged knowledge of certain invention-related documents and the subsequent Cadotte assignment. Plaintiff argues that the uncontradicted evidence, taken together, establishes that in May 1990 Dow knew that Cadotte's invention assignment — and associated patent title — to FilmTec was invalid as a matter of law.

The Court agrees.

Plaintiff advances its request for partial summary judgment by principally relying on the following documents:

1. The '6521 Contract

Under the '6521 contract, MRI (through its employees) researched reverse osmosis desalinization membrane technology for the United States Government. (Seebald Decl....