Kothmann Enterprises, Inc. v. Trinity Industries

• Decision Date: 13 January 2006
• Docket Number: No. Civ.A. II-01-2668.,Civ.A. II-01-2668.
• Citation: 455 F.Supp.2d 608
• Parties: KOTHMANN ENTERPRISES, INC., successor by merger to Kothmann and Kothmann, Inc., Plaintiff, v. TRINITY INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

455 F.Supp.2d 608

KOTHMANN ENTERPRISES, INC., successor by merger to Kothmann and Kothmann, Inc., Plaintiff, v. TRINITY INDUSTRIES, INC., Defendant.

No. Civ.A. II-01-2668.

United States District Court, S.D. Texas, Houston Division.

January 13, 2006.

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Andrew Paul Mouton, Mouton Mouton et al., Big Spring, TX, Charles John Rogers, Max Lalon Tribble, Jr., Susman Godfrey, Thomas L. Warden, Conley Rose PC, Houston, TX, for Plaintiff.

Russell Clay Brown, Wellborn Houston Adkinson et al., Henderson, TX, Steven E. Ross, Thomas Michael Wall, Thomas Copeland Wright, Gardere Wynne et al., Dallas, TX, for Defendant.

MEMORANDUM AND ORDER

ROSENTHAL, District Judge.

The issues remaining in this case are the equitable defenses that the accused infringer, Trinity Industries, Inc., has asserted against the patentee, Kothmann Enterprises, Inc. (KEI). Trinity alleges that the claims of United States Patent No. 6,022,003 (the `003 Patent) and United States Patent No. 6,505,820 (the `820 Patent) are unenforceable because KEI and its predecessors engaged in inequitable conduct before the Patent and Trademark Office during the prosecution of both patents. In prior rulings, this court denied KE I's application for a preliminary injunction, construed the patent terms, and denied motions for summary judgment on the equitable defenses. (Docket Entry Nos. 62, 90, 252). This court held a bench trial on the equitable defenses in May 2005. (Docket Entry Nos. 224-26). In an opinion issued in September 2005, this court ruled on the parties' other summary judgment motions, holding that KEI owns both the '003 Patent and the '820 Patent; that the accused devices, Trinity's MP350 and TRACC, do not infringe the asserted claims of the '003 Patent or the '820 Patent; and that the asserted claims of the '003 Patent and the '820 Patent are not invalid for lack of a written description or as anticipated by prior art. (Docket Entry No. 252).

Based on the record, the bench trial on the equitable defenses, the parties' posttrial briefs, and the applicable law, this court now enters findings of fact and conclusions of law on Trinity's claims of inequitable conduct and prosecution laches. This court does not find inequitable conduct as to the '003 Patent. This court finds that although KEI used information obtained from this litigation in prosecuting the '820 Patent and the '755 Application, and that KEI delayed disclosing to the Patent Office the existence of the litigation and materials from the litigation, there is not .clear and convincing evidence that the delay deprived the Patent Office of material information or was the result of an intent to deceive, so as to warrant a finding of inequitable conduct that would preclude enforceability. Finally, this court does not find prosecution delay that would preclude enforceability. This court orders the parties to identify any remaining issues, or submit a proposed final judgment by January 27, 2006.

The findings and conclusions set out below explain the results reached. A detailed description of the patents in this suit, the accused devices, and the parties' litigation history was included in this court's September 30, 2005 Memorandum and Opinion. It is repeated here only when and as necessary.

I. Findings of Fact

A. Background

The application for what issued as the '003 Patent was filed on November 7, 1994; the patent issued on February 8, 2000.¹ On August 8, 2001, Kothmann and Kothmann, Inc. ("KKI"), KEI's predecessor, filed this suit, alleging that Trinity's MPS-350 and TRACC devices infringed claims 6, 8, and 12 of the '003 Patent. (Docket Entry No. 1 ¶¶ 6, 9). The divisional application for what issued as the '820 Patent was, filed on October 1, 1999. That patent issued on January 14, 2003, subject to a terminal disclaimer.² On that same date, KEI filed its first amended complaint in this lawsuit, asserting that Trinity's MPS-350 and the TRACC infringed claims 6, 8, and 12 of the '003 Patent and that the TRACC infringed claims 3, 4, 11, and 14 of the '820 Patent.³

In April 2002, this court held a four-day evidentiary hearing on KKI's motion for a preliminary injunction. The parties presented evidence on infringement, validity, and enforceability. In September 2002, shortly before this court issued its ruling, KEI filed U.S. Patent Application No. 10/236,755 ("the '755 Application") as a continuation of the '003 and '820 Patents.⁴ In September 2002, this court denied KEI's motion for a preliminary injunction. In detailed findings and conclusions, this court explained that KKI had not met its burden of showing a reasonable likelihood of success on the merits of its claim that the TRACC and MPS-350 infringed the asserted claims of the '003 Patent. (Docket Entry No. 62).

In September 2003, after an evidentiary hearing, this court issued a Markman order construing the disputed terms of the '003 Patent and the '820 Patent.⁵ (Docket Entry No. 90). Within a few weeks, KEI filed a continuation application and claim amendments in the '755 Application, adding language to address — and change — an aspect of the Markman ruling unfavorable to KE I's infringement allegations in this suit, and disclosed the purpose to the examiner. In February 2004 and again in December 2004, the patent examiner issued notices of allowance of the pending claims in the '755 Application. The '755 Application was pending in May 2005 when this court held a bench trial on Trinity's affirmative defenses of inequitable conduct and prosecution laches. (Docket Entry Nos. 229-31).

At the bench trial, this court heard testimony from Charles Rogers, a partner at Winstead, Sechrest, and Minick, P.C. who is one of KEI's trial counsel of record in this case. Rogers is a member of the patent bar who specializes in litigating rather than prosecuting patents. He testified as to his role in the prosecution of the '820 Patent Application and the '755 Application. Henry Ehrlich, a partner at the same firm who was primarily responsible for the prosecution of the '820 Patent Application and the '755 Application, also testified as to his work. Two expert witnesses, Michael Sutton and Alan Gordon, both experienced patent lawyers knowledgeable about practice before the Patent Office, opined as to whether under the custom and practice of prosecuting patents, KEI violated duties of disclosing related litigation pending during a patent prosecution. Dr. Dean Sicking, one of the inventors listed on the patents at issue, also testified as to statements made in the '003 Patent prosecution.

B. The Inequitable Conduct Assertions

In its posttrial brief, Trinity challenges two aspects of the prosecution of the '003 Patent. First, Trinity asserts that the applicant misrepresented that it had tested the device claimed in a prior art reference, U.S. Patent No. 4,655,434 issued to Bronstad (the "Bronstad '434 Patent"). Second, Trinity asserts that the applicant failed to disclose a separate patent application filed by Dr. Sicking pending before a different examiner. This separate patent application, which later issued as U.S. Patent No. 5,775,675 (the "Sicking '675 Patent"), was filed after the '003 Patent applicant had urged the distinction between "cutting" and "shredding" to overcome the examiner's objection based on the Bronstad prior art reference. Trinity argues that in the '675 Patent Application, Sicking had described the Bronstad device as "cutting" a guardrail, while in the '003 Patent Application, Sicking described it as "shredding" and not "cutting."

As to the '820 Patent, Trinity asserts that KEI failed to disclose this litigation and certain information from this litigation during the prosecution of the '820 Patent. Trinity also asserts that KEI delayed in disclosing the existence of, and information from, this litigation during the '755 Application prosecution. This inequitable conduct allegation arises from what is described as a highly unusual circumstance: the simultaneous prosecution of a lawsuit alleging infringement of a parent patent (the '003 Patent) and of an application for a divisional patent (the '820 Patent). The unusual pattern continued in that before the divisional patent issued, a continuation application (the '755 Application) was filed. When the divisional patent issued, it was added to the lawsuit as the basis for additional allegations of infringement. The expanded lawsuit based on the parent and divisional patents proceeded at the same time as the prosecution of the continuation application. The witnesses agreed that it is rare for litigation over a parent patent to be pending during the prosecution of a divisional or continuation patent. Rogers acknowledged that this case presented an "unusual" overlap between litigation and " patent prosecution. Both Erlich and Rogers testified that they had never encountered a similar situation. (Tr. (Rogers) 384:16-385:8). The task before this court is to apply the rules governing disclosures to the Patent Office to this unusual factual context.

KEI has responded by accusing Trinity of engaging in inequitable conduct itself, resulting in unclean hands. KEI argues that Trinity failed to tell the Patent Office about this litigation and litigation it filed against KEI's predecessors and. Dr. Sicking in federal district court in the " Eastern District of Texas, Beaumont Division, during the pendency of Trinity's (or its licensor's) prosecution of a patent application on an allegedly related device. In other words, KEI argues that Trinity engaged in conduct similar to the acts it alleges as inequitable when done by KEI. Trinity responds by arguing that KEI should not be able to present the evidence at all because it was not timely disclosed. Trinity also argues that the evidence is irrelevant because it concerns litigation that had a very different relationship to the patent application than the...