Johnson v. Con-Vey/Keystone, Inc.

• Decision Date: 24 June 1994
• Docket Number: Civ. No. 92-1349-FR.
• Citation: 856 F. Supp. 1443
• Court: U.S. District Court — District of Oregon
• Parties: Alan T. JOHNSON, Mary Johnson, A M Industries, Inc., and Hydraulic Service & Supply, Inc., Plaintiffs, v. CON-VEY/KEYSTONE, INC., Donald Goeckner, Judith Goeckner, Robert Doran, Yvonne Doran, Charles Larecy, Joan Larecy, David Morton, Sharlee Morton, Rosemarie Tennant, and E.M. Woody Clark, Defendants.

856 F. Supp. 1443

Alan T. JOHNSON, Mary Johnson, A M Industries, Inc., and Hydraulic Service & Supply, Inc., Plaintiffs, v. CON-VEY/KEYSTONE, INC., Donald Goeckner, Judith Goeckner, Robert Doran, Yvonne Doran, Charles Larecy, Joan Larecy, David Morton, Sharlee Morton, Rosemarie Tennant, and E.M. Woody Clark, Defendants.

Civ. No. 92-1349-FR.

United States District Court, D. Oregon.

June 24, 1994.

COPYRIGHT MATERIAL OMITTED

J. Pierre Kolisch and Francine H. Gray, Kolisch, Hartwell, Dickinson, McCormack & Heuser, Portland, OR, for plaintiffs.

James D. Hibbard and Russell W. Pike, Bullivant, Houser, Bailey, Pendergrass & Hoffman, Portland, OR, for defendant Con-Vey/Keystone, Inc.

OPINION

FRYE, District Judge:

The matter before the court is the motion of defendant Con-Vey/Keystone, Inc. for partial summary judgment (# 69).

UNDISPUTED FACTS

1. Background Facts

Defendant Con-Vey/Keystone, Inc. (Con-Vey) is in the business of manufacturing and marketing industrial lumber-handling equipment. In 1987, Con-Vey obtained a patent on a continuous breakdown hoist, a piece of industrial lumber-handling equipment used in saw mills. Con-Vey has marketed this continuous breakdown hoist since 1984.

At all relevant times, the plaintiffs, Alan T. Johnson and Mary Johnson, were the sole stockholders in AM Industries, Inc. and Hydraulic Service & Supply, Inc. (hereinafter collectively referred to as "AMI"). In early 1988, AMI began to market a continuous breakdown hoist.

In March of 1988, representatives of Con-Vey saw the continuous breakdown hoist marketed by AMI at the Portland Forest Industries Machinery Show. The continuous breakdown hoist marketed by AMI performed the same function as the continuous breakdown hoist for which Con-Vey had obtained a patent in 1987. Concerned about infringement of its patent, Con-Vey retained the law firm of Klarquist, Sparkman, Campbell, Leigh & Whinston to investigate possible infringement. The Klarquist law firm wrote to AMI on April 11, 1988, asking for information about the continuous breakdown hoist marketed by AMI.

AMI then contacted Robert Harrington, a patent attorney. Harrington told AMI that it was possible that it had infringed claim 9 of the Con-Vey patent. AMI then sought a second legal opinion. In a letter dated May 25, 1988, the consulting attorney advised counsel for Con-Vey that it was his opinion that claim 9 of Con-Vey's patent was not enforceable, and that AMI's continuous breakdown hoist did not infringe Con-Vey's patent. On June 27, 1988, counsel for Con-Vey sought further information about AMI's continuous breakdown hoist.

Con-Vey independently obtained photographs of AMI's continuous breakdown hoist when it examined one of AMI's hoists that had been purchased by the Crater Lake Lumber Co. After a review of the operation of AMI's hoist, counsel for Con-Vey concluded that AMI's continuous breakdown hoist infringed claims 9 and 10 of Con-Vey's patent.

On August 31, 1988, counsel for Con-Vey sent a letter to counsel for AMI demanding that AMI cease and desist the manufacture and sale of its hoist and demanding damages from AMI for its sale of a continuous breakdown hoist to the Crater Lake Lumber Co. When AMI refused to halt the marketing of its continuous breakdown hoist, Con-Vey filed a complaint for infringement of its patent.

2. The Preliminary Injunction

In the patent infringement case, Con-Vey sought a preliminary injunction prohibiting AMI from manufacturing and selling its continuous breakdown hoist until the conclusion of the lawsuit. On March 7, 1990, the Honorable William M. Dale, United States Magistrate Judge, issued a preliminary injunction prohibiting AMI from manufacturing and selling its continuous breakdown hoist until the conclusion of the lawsuit.

Con-Vey mailed a copy of the injunction issued by Magistrate Judge Dale to Kaibab Forest Products, a prospective customer of AMI. At that time, Samuel W. Roundy of Kaibab Forest Products had a verbal agreement with AMI to purchase one of its hoists and had already purchased a piece of ancillary equipment from AMI. Although Roundy had not issued the purchase order for the AMI hoist, Dave Morton of Con-Vey told Roundy that the ruling of Magistrate Judge Dale was temporary, and that the district court judge who would review that ruling could "agree or disagree." Morton told Roundy that, traditionally, a district court judge will agree with a magistrate judge, and the injunction will be in force until the trial is over. Morton also warned Roundy that if Kaibab Forest Products did business with AMI, he would not get delivery from AMI; that Con-Vey intended to put AMI out of business; and that if Kaibab Forest Products bought AMI's hoist, no parts would be available for the hoist in the future. As a result of the conversation with Dave Morton and the receipt of a copy of the opinion and ruling of Magistrate Judge Dale, Roundy did not purchase a continuous breakdown hoist from AMI.

In February of 1989, Con-Vey notified two or three hundred members of the timber industry by mail of its patent and the possible infringement of its patent by others in the trade. On February 14, 1989, AMI was notified of Con-Vey's mailing.

On June 4, 1990, this court set aside the findings of Magistrate Judge Dale and remanded this case to Magistrate Judge Dale to determine the validity of Con-Vey's patent. This court did not ask Magistrate Judge Dale to determine whether AMI's continuous breakdown hoist infringed Con-Vey's patent. Thereafter, Con-Vey withdrew its motion for a preliminary injunction, and the case came before this court for trial.

3. Discovery Issues in the Patent Infringement Case

In its answer to Con-Vey's complaint, AMI alleged that its hoist did not infringe Con-Vey's patent and further alleged that Con-Vey's patent was invalid. During discovery, a dispute arose because Con-Vey could not locate the original drawings of its breakdown hoist. Because the original drawings could not be located, Con-Vey recreated the drawings in response to AMI's request for production. In its response to AMI's request for production, Con-Vey stated: "Document 10000001 bears a 4-16-84 date. This is the date of conception. This drawing is a reconstruction of an earlier drawing which cannot presently be located. The drawing date is March 1989."

Shortly before trial, AMI sought to amend the pretrial order to raise the defense of unclean hands. The court denied the motion as untimely, but allowed AMI to present evidence before the Patent Office on the issue of whether Con-Vey engaged in inequitable conduct in obtaining its patent.

4. The Patent Infringement Trial and the Court's Judgment

A trial was held in April of 1991. AMI objected to the introduction into evidence of the recreated drawings. Both parties submitted post-trial memoranda and proposed findings of fact and conclusions of law. In its post-trial memoranda and proposed findings of fact and conclusions of law, AMI argued that both AM Industries, Inc. and Hydraulic Service & Supply, Inc. had been injured by Con-Vey's inequitable conduct during the patent prosecution.

On September 19, 1991, this court ruled against Con-Vey on its claims of infringement. The court also declined to award attorney fees to any party, concluding that no party had filed frivolous claims. On November 8, 1991, the court entered a judgment of non-infringement, ruling that AMI did not infringe claims 9 and 10 of the Con-Vey patent, that claims 9 and 10 of Con-Vey's patent were not invalid for obviousness, and that Con-Vey was not guilty of inequitable conduct before the Patent Office. On August 13, 1992, the United States Patent Court of Appeals upheld the decision of this court.

In the third amended complaint, AMI alleges that Con-Vey engaged in unfair competition, intentionally interfered with prospective business relationships, and violated federal and state antitrust laws. The allegations are based on the acts taken by Con-Vey in its patent infringement lawsuit against AMI.

APPLICABLE STANDARD

Summary judgment should be granted only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits ... show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The burden to establish the absence of a material issue of fact for trial is on the moving party. British Airways Bd. v. Boeing Co., 585 F.2d 946, 951 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). This burden "may be discharged by `showing' ... that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). The burden shifts to the nonmoving party to "go beyond the pleadings and ... designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. at 2553.

Assuming there has been adequate time for discovery, summary judgment should then be entered against "a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. at 2552. All inferences drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 993, 8 L.Ed.2d 176 (1962). When different ultimate inferences can be reached, summary judgment is not appropriate. Sankovich v. Life Ins. Co. of N. Am., 638 F.2d 136, 140 (9th Cir.1981). Finally, summary judgment is inappropriate where credibility is at issue. Credibility issues are appropriately resolved only after an evidentiary hearing or full trial. SEC v. Koracorp Indus., 575 F.2d 692, 699 (9th Cir.), cert. denied, 439 U.S. 953, 99 S.Ct. 348, 58 L.Ed.2d 343 (1978).

...