Mark Industries, In re

• Decision Date: 21 December 1984
• Docket Number: No. 84-1550,84-1550
• Citation: 751 F.2d 1219,224 USPQ 521
• Parties: In re MARK INDUSTRIES, Petitioner. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1219

751 F.2d 1219

224 U.S.P.Q. 521

In re MARK INDUSTRIES, Petitioner.

Appeal No. 84-1550.

United States Court of Appeals, Federal Circuit.

Dec. 21, 1984.

Robert R. Thornton, Leff & Mason, Beverly Hills, Cal., for petitioner.

Charles E. Wills, Los Angeles, Cal., for respondent.

Before MARKEY, Chief Judge, and BENNETT and SMITH, Circuit Judges.

ORDER

MARKEY, Chief Judge.

MARK INDUSTRIES, (MARK) petitions for a writ of mandamus ordering the United States District Court, Central District of California to vacate its "Order on Motion to Dismiss", (Order) insofar as it: (1) voided the presumption of validity attached to Reissue Patent No. 31,400 ('400 patent); and (2) set the date for accrual of damages as the issue date of the '400 patent. We grant the petition and require that the Order be vacated. ¹

Background

On October 23, 1980, MARK sued Calavar Corporation (Calavar), (Civil Action No. CV-80-4707 AWT), alleging infringement of U.S. Patent No. 4,226,300, issued October 7, 1980 and entitled SELF PROPELLED AND EXTENSIBLE BOOM (Original Patent).

On October 26, 1981, MARK filed reissue application Serial No. 315,222 (Reissue Application) in the Patent and Trademark Office (PTO). Notice of the filing of the Reissue Application was published in the Official Gazette on April 13, 1982. The Reissue Application issued as the '400 patent on October 4, 1983.

A pretrial conference had been repeatedly reset by a series of stipulated orders. In mid-September 1983, MARK'S counsel notified Calavar's of the imminent issuance of the Reissue Patent. The parties stipulated a request to continue the October 17 pretrial conference until after Calavar determined whether it would stipulate substitution of the '400 patent for the Original Patent in the suit. The district court signed the Stipulation and Order, reset the pretrial conference for April 16, 1984, set January 16, 1984 as the date by which to file a motion to amend the complaint by substituting the Reissue Patent, and set March 12, 1984 as the last date for all other pretrial motions.

Calavar did not stipulate to substitution of the '400 patent. On February 27, 1984, the district court granted MARK'S motion to file an amended complaint substituting the '400 patent and MARK filed the amended complaint on that date.

On March 19, 1984, Calavar moved to dismiss the amended complaint, asserting that MARK'S counsel was guilty of inequitable conduct. The charge was a failure to notify opposing counsel when the reissue application was filed, a notification Calavar said was a "custom" among patent lawyers. Calavar did not assert that MARK'S counsel knew of that "custom". Calavar claimed prejudice because, if it had received direct notice, it would have filed a protest in the PTO pursuant to 37 CFR Sec. 1.291 (1981).

MARK denied the existence of any such "custom", denied knowledge thereof (if it existed), and cited 37 CFR 1.11(b) (publication in the Official Gazette constitutes notice for filing protests) and 1017 O.G. 10, dated April 13, 1982 (the public notice that the Reissue Application had been filed).

District Court Order

On June 18, 1984, the district court declined the motion to dismiss and in the alternative issued the Order now before us, the pertinent provisions of which are:

1. No presumption concerning validity or invalidity of the '400 patent shall apply in this case. The burden of establishing validity of the '400 patent or any claim thereof shall rest on MARK. The jury instructions shall reflect the foregoing.

2. Damages recoverable by MARK and any accounting for damages shall be limited to the period commencing October 4, 1983, the issue date of the '400 patent.

The court based its Order on a finding that MARK'S counsel was guilty of inequitable conduct and willful misconduct in failing to follow the "custom" described by Calavar. The district court stated:

I find that the defendant has been misled and prejudiced by plaintiff's inequitable conduct; therefore, that an appropriate remedial order should issue. I find that it is the custom among patent lawyers to notify opposing counsel when a reissue application is made to the PTO, after litigation has commenced concerning either validity and/or infringement of a patent. Such is the case here and no notice was given. (emphasis in original).

Defendant was prejudiced because at the time this reissue application was filed PTO regulations permitted defendant's active participation in the reissue proceedings as a "protestor". Even after the interim regulations were adopted, which governed protests filed after December 8, 1981, although inter partes participation was precluded, defendant still had the right to file a protest listing the relevant prior art and other information. Defendant was deprived of this opportunity through the willful misconduct of plaintiff's counsel.

Issues

(1) Does this Court have jurisdiction to act on the present petition?

(2) Were the district court's findings which led to the conclusion that MARK'S counsel was guilty of "inequitable conduct" and "willful misconduct" clearly erroneous?

(3) Did the district court exceed its discretion in voiding the statutory presumption of validity and in substituting a burden on MARK of establishing validity for the statutory burden on Calavar of establishing invalidity?

(4) Did the district court exceed its discretion in limiting damages recoverable by MARK to a period commencing with the date on which the '400 patent issued?

Analysis

(1) Jurisdiction

This Court has authority to act on the present petition under the All Writs Act, 28 U.S.C. Sec. 1651(a) (1976). Issuance of the requested writ is "necessary or appropriate in aid of" our jurisdiction. See Mississippi Chemical Corp. v. Swift Agricultural Chemicals, 717 F.2d 1374, 219 USPQ 577 (Fed.Cir.1983). See also Beacon Theatres v. Westover, 359 U.S. 500, 511, 79 S.Ct. 948, 957, 3 L.Ed.2d 988 (1959); La Buy v. Howes Leather Co., 352 U.S. 249, 255, 77 S.Ct. 309, 313, 1 L.Ed.2d 290 (1957).

Use of the writ is not restricted to instances in which failure to issue it would preclude an appeal to the issuing court. The writ may be employed in exceptional circumstances to correct a "clear abuse of discretion or 'usurpation of judicial power' " by the trial court. Bankers Life & Casualty Co. v. Holland, 346 U.S. 379, 382, 74 S.Ct. 145, 147, 98 L.Ed. 106 (1953) (quoting De Beers Consolidated Mines v. United States, 325 U.S. 212, 217, 65 S.Ct. 1130, 1132, 89 L.Ed. 1566 (1945)). See In re Snap-on Tools Corp., 720 F.2d 654, 220 USPQ 8, amended by 735 F.2d 476 (Fed.Cir.1983); Mississippi Chemical, supra; United States v. Boe, 543 F.2d 151, 64 CCPA 11 (1976); Duffy v. Tegtmeyer, 489 F.2d 745, 749, 180 USPQ 317, 320 (CCPA 1974).

Because the jurisdiction of the district court was based on 28 U.S.C. Sec. 1338, this court has exclusive jurisdiction of any appeal from the final decision in the case. 28 U.S.C. Sec. 1295(a)(1). Thus this court, and only this court, has authority to issue a writ appropriately in aid of jurisdiction in this case. If the writ is available at all under the circumstances here, it is available only from this court.

This court has no administrative authority over any district court. In Re Precision Screen Machines, Inc., 729 F.2d 1428 (Fed.Cir.1984). The present petition, however, is directed not to an administrative matter, but to application of the statutory patent law in the conduct of a suit for patent infringement. Because this court must apply the same patent law in considering any appeal in the case, issuance of a writ governing application of that law at trial is, as above indicated, "necessary and appropriate in aid of" our jurisdiction.

(2) The District Court's Finding

The sole fact found by the district court, and on which it based its order, was that MARK'S counsel violated the asserted "custom". ² That finding, like all findings, is reversible only under the "clearly erroneous" standard. Fed.R.Civ.P. 52(a). A finding may be held clearly erroneous when, on the entire record, the appellate court is left with a "definite and firm conviction that a mistake has been committed". Inwood Labs, Inc. v. Ives Labs, Inc., 456 U.S. 844, 855, 102 S.Ct. 2182, 2189, 72 L.Ed.2d 606 (1982) (citing United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948)). That definite and firm conviction is compelled here.

Doubtless courtesy and candor are better served when opposing counsel is informed of the filing of a reissue application. It is quite another thing, however, to find inequitable conduct and willful misconduct of counsel on the basis of violation of a "custom", duty, or obligation, the existence of which is nowhere supported in the record.

MARK'S counsel, Robert R. Thornton (Thornton), told the district court in a Memorandum in Opposition to Motion to Dismiss that he knew of no "custom" of notifying opposing counsel of the filing of a reissue application, and that MARK'S requests for continuance of pretrial conferences were due to ongoing discovery occasioned by Calavar's newly-announced infringing device. Thornton signed the Memorandum, which, under Federal Rule of Civil Procedure 11, constituted "a certificate by him that he had read the ... paper, that to the best of his knowledge, information and belief formed after reasonable inquiry it is well grounded in fact ...".

Calavar cites no case making any reference whatever to the purported "custom" and cited none to the district court. The only basis for the court's assumption that such a "custom" exists appears in the argument of Calavar's counsel wherein counsel related he "had never heard" of a suit that was not stayed during reissue proceedings. Charles E. Wills, Calavar's counsel, filed a Declaration "under penalty of perjury". That Declaration contains no allegation or even suggestion that any such "custom" exists or that MARK'S counsel knew of any such "custom".

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