James River Corp. of Virginia v. Hallmark Cards

• Decision Date: 04 January 1996
• Docket Number: No. 93-C-1330 [JPS].,93-C-1330 [JPS].
• Citation: 915 F. Supp. 968
• Parties: JAMES RIVER CORPORATION OF VIRGINIA, Plaintiff, v. HALLMARK CARDS, INCORPORATED, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

915 F. Supp. 968

JAMES RIVER CORPORATION OF VIRGINIA, Plaintiff, v. HALLMARK CARDS, INCORPORATED, Defendant.

No. 93-C-1330 JPS.

United States District Court, E.D. Wisconsin.

January 4, 1996.

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Russell E. Levine, David K. Callahan, Thomas G. Pasternak, Garland Eugene Autrey, Kirkland & Ellis, Chicago, IL, C. Thomas Sylke, Whyte, Hirschboeck, Dudek, S.C., Milwaukee, WI, for Plaintiff.

John F. Flannery, Philip T. Petti, Mark A. Hamill, Mark W. Hetzler, Fitch, Even, Tabin & Flannery, Chicago, IL, Howard A. Pollack, Godfrey & Kahn, Milwaukee, WI (Larry L. McMullen, Michael Thompson, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, MO, Theodore W. Anderson, Leydig, Voit & Mayer, Ltd., Chicago, IL, of counsel), for Defendant.

STADTMUELLER, Chief Judge.

The plaintiff, James River Corporation of Virginia, ("James River") filed this patent infringement action against defendant Hallmark Cards, Inc. ("Hallmark") on November 29, 1993. Before the court are Hallmark's dispositive motions. Hallmark moves that it be granted summary judgment in its favor on its defenses of laches, estoppel, and on the issue of infringement, and partial summary judgment on its defense of invalidity.

I. FACTUAL OVERVIEW

At issue are four patents of which James River is the assignee. James River asserts in its complaint that Hallmark's Sturdy II plates and the processes used in making them infringe these patents. Patent No. 4,609,140 ("`140 patent") is a product patent directed to a pressed paperboard container, the rim of which has pleats that include three layers of paperboard reformed into substantially integrated fibrous structures generally inseparable into their constituent layers. Patent No. 4,721,500 ("'500 patent") is a division of the '140 patent; it is directed to the method of making the container of the '140 patent. Patent No. 4,606,496 ("'496 patent") is a product patent directed to a container including the integrated pleats of the '140 patent in both the rim and sidewall of the container. Patent No. 4,721,499 ("'499 patent") is a division of the '496 patent directed to the method of making the container of the '496 patent.

On April 13, 1982, James River filed a patent application that was the "grandparent" of the '140 patent that eventually issued on September 2, 1986. The division of the original claim resulted in the '500 patent issuing separately as a process patent on January 26, 1988. On March 20, 1984, James River filed a patent application that resulted in the '496 patent issuing on August 19, 1986. The division of the application resulted in the '499 process patent issuing separately on January 26, 1988.

In December 1988, James River became aware of Hallmark's Sturdy II plates and requested a legal opinion as to whether they infringed the patents. HF-12, DX-83. After receiving the opinion, James River sent Hallmark a notice of infringement of the four patents in suit on March 3, 1989. James River asked Hallmark to discontinue the manufacture and distribution of the accused plates. HF-14, 15. Hallmark investigated James River's claims. James River sent a second letter dated April 13, 1989 in which it sought a reply to its March 3, 1989 letter. Hallmark responded in a letter dated April 17, 1989, in which it asserted its plates did not infringe any of the four patents and gave reasons for this assertion. Hallmark sought any information that James River could provide in rebuttal. James River did not respond to Hallmark. During 1989, James River's General Patent Counsel became ill and eventually died. Ross Affidavit, ¶ 16. Shortly thereafter, James River embarked on a series of reorganizations that lasted two and a half years. Nemura Affidavit, ¶¶ 2-12. There was no further communication between the parties on this matter until James River filed its complaint on November 29, 1993.

Before the litigation commenced, James River and Hallmark had a vendor-buyer relationship. This was alluded to in the original notice of infringement. DX-82 at JR6780.

Hallmark contends that after it sent the letter of April 17, 1989, to James River and heard nothing, it invested substantial sums in paper plate technology, manufacturing, and marketing. Hallmark states that it spent over $200,000 on new and additional dies for paper plate presses. DX-2002, PX-49, HF-38. It also spent money to develop laminated paperboard. DX-2003, HF-39. During this period Hallmark continued to sell the allegedly infringing plates. DX-2001, HF-29.

In its complaint, James River alleges that under the patent laws of the United States, 35 U.S.C. § 1 et seq., Hallmark "has infringed and still is infringing the Patents in this District and elsewhere" by manufacturing and selling paper plates that embody or employ claims in the patent in suit. James River seeks entry of a permanent injunction restraining Hallmark from further infringement. 35 U.S.C. § 283. James River also seeks damages, prejudgment interest, and an award of increased damages for willful infringement, 35 U.S.C. § 284. Finally, James River seeks attorney's fees, 35 U.S.C. § 285, and costs of suit, 35 U.S.C. § 284.

II. LEGAL STANDARD

Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, does not establish a genuine issue of material fact, and judgment is proper as a matter of law. Courtney v. Biosound, Inc., 42 F.3d 414, 418 (7th Cir. 1994). "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986) (emphasis in original). Facts are material if they might affect the outcome of the case under applicable law. Id. at 248, 106 S.Ct. at 2510. A dispute over a material fact is "genuine" if a reasonable jury could resolve it in favor of the non-moving party. Id.

The party moving for summary judgment has the initial burden of showing that there are no disputed material facts and that it is entitled to judgment in its favor. Hannon v. Turnage, 892 F.2d 653, 656 (7th Cir.), cert. denied, 498 U.S. 821, 111 S.Ct. 69, 112 L.Ed.2d 43 (1990). A defendant may satisfy this initial burden by pointing to a plaintiff's failure to introduce sufficient evidence to support each essential element of the cause of action alleged. See Anderson, 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986); Celotex, 477 U.S. at 323-24, 106 S.Ct. at 2552-53. Once the movant carries its initial burden, the burden shifts to the nonmoving party, who must "go beyond the pleadings" and designate specific facts to support each element of its cause of action, showing that there is a genuine issue for trial. Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552; Becker v. Tenenbaum-Hill Associates, Inc., 914 F.2d 107, 110 (7th Cir.1990). In evaluating a motion for summary judgment, the Court must draw all reasonable inferences in favor of the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Johnson v. Pelker, 891 F.2d 136, 138 (7th Cir.1989).

III. LACHES & ESTOPPEL

Both the laches and estoppel defenses "ultimately turn on underlying factual determinations." Hemstreet v. Computer Entry Systems Corp., 972 F.2d 1290, 1292 (Fed.Cir. 1992) (citing A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1037-38, 1041 (Fed.Cir.1992)). Summary judgment thus is appropriate only when there is no genuine issue of material fact and when the movant is entitled to judgment as a matter of law. Hemstreet, 972 F.2d at 1292 (citing Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, 91 L.Ed.2d 202 (1986); Winner Intern. Corp. v. Wolo Mfg. Corp., 905 F.2d 375, 376, 15 U.S.P.Q.2D 1076, 1077 (Fed.Cir.1990)).

A. Laches

Laches is available as a defense to a patent infringement suit. A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1032 (Fed.Cir.1992).

To invoke the laches defense, a defendant has the burden to prove two factors:

a. The plaintiff delayed filing suit for an unreasonable and inexcusable length of time from the time the plaintiff knew or reasonably should have known of its claim against the defendant, and

b. the delay operated to the "prejudice or injury of the defendant."

Id. A court must look at all of a case's particular facts and circumstances and must weigh the equities of the parties. Id.

1. Unreasonable Delay

A delay of six years is required for a presumption of laches. Meyers v. Asics Corp., 974 F.2d 1304, 1307 (Fed.Cir.1992). A court must consider and weigh any justification or excuse offered by the plaintiff for its delay. Aukerman, 960 F.2d at 1033 (listing examples). Furthermore, a court must draw reasonable inferences in favor of the patentee that would shorten the delay period and that could show the delay was reasonable. Gasser Chair Co., Inc. v. Infanti Chair Mfg. Corp., 60 F.3d 770, 774 (Fed.Cir.1995).

James River delayed bringing suit less than six years, so there is no presumption of laches. Moreover, this case is distinguishable from cases in which laches was applied despite a delay of less than six years. James River neither took an express position it later tried to alter, nor did it expressly threaten litigation then delay bringing suit. See, e.g., ASICS,...