Mars, Inc. v. Nippon Conlux Kabushiki-Kaisha

• Decision Date: 08 June 1994
• Docket Number: Civ. A. No. 92-578-RRM.
• Parties: MARS, INCORPORATED, Plaintiff, v. NIPPON CONLUX KABUSHIKI-KAISHA, Defendant.
• Court: U.S. District Court — District of Delaware

855 F. Supp. 673

MARS, INCORPORATED, Plaintiff, v. NIPPON CONLUX KABUSHIKI-KAISHA, Defendant.

Civ. A. No. 92-578-RRM.

United States District Court, D. Delaware.

June 8, 1994.

Charles S. Crompton, Jr., William J. Marsden, Jr., and Joanne Ceballos, Potter Anderson & Corroon, Wilmington, DE, John B. Pegram, Peter H. Priest, Wayne S. Breyer, and Jeffrey M. Weinick, Davis Hoxie Faithfull and Hapgood, New York, NY, for plaintiff.

Allen Terrell, Jr., Robert W. Whetzel, Richards, Layton and Finger, Wilmington, DE, Richard H. Zaitlen, David M. Simon, and Steven C. Sereboff, Spensley Horn Jubas & Lubitz, Los Angeles, CA, for defendant.

OPINION

McKELVIE, District Judge.

This is a patent case. The plaintiff, Mars, Incorporated, alleges that the defendant, Nippon Conlux Kabushiki-Kaisha, infringed and induced its subsidiary to infringe Mars' Patent No. 3,198,565. In an earlier action, Mars sued Nippon Conlux's subsidiary, Conlux USA, for patent infringement, and won a judgment of $545,562. See Mars Incorporated v. Conlux USA Corporation, Civil Action No. 90-751-RRM. Pending before the court is Nippon Conlux's Motion for Summary Judgment for Claim Preclusion, Mars' Motion for Reargument, and Mars' Motion to Amend the Complaint. Briefing is complete on these motions, and the court heard oral argument on March 29, 1994. This is the court's decision on these motions.

FACTS

Mars is the owner of U.S. Patent No. 3,918,565 ("the '565 patent"), which is titled "Method and Apparatus for Coin Selection Utilizing a Programmable Memory." The apparatus described in the '565 patent may be used in a coin-operated device, such as a soda vending machine. When a person places a coin in the vending machine, the patented apparatus will determine if the coin is genuine and the denomination of the coin. See generally Mars Incorporated v. Conlux USA Corporation, 818 F.Supp. 707, 28 U.S.P.Q.2d 1161 (D.Del.1993), aff'd, 16 F.3d 421 (Fed.Cir.1993). Claims 1, 2, 3, and 60 of the '565 patent read as follows:

1. A method of examining coins with respect to authenticity including the steps of examining a first unidentified coin by making a measurement with respect to a first characteristic of the coin and thereby producing a first electrical signal having a quality with a first value indicative of the first characteristic of the first coin, comparing the first value with a stored value of the same quality in a programmable memory, and producing a signal indicative of the acceptability of the first coin with respect to the first characteristic when the first value is within predetermined limits for acceptable coins of a given denomination of the stored value.

2. The method of claim 1 further including the steps of examining a second, representative coin and thereby producing an electrical signal having a second value of the same quality indicative of the first characteristic of the second coin, causing the second value to be stored in the programmable memory, and subsequently conducting the other steps with respect to the first coin.

3. The method of claim 2 wherein the step of examining the first coin includes the substep of subjecting the first coin to an electromagnetic field, wherein the value of the first quality is indicative of the degree of interaction of the coin with the field.

60. A method of examining coins with respect to authenticity including the steps of examining a disc of known characteristics and causing a value to be stored in a programmable memory as a result of the examination, examining an unidentified coin at a later time and thereby producing a first electrical signal having a quality with a first value indicative of a first characteristic of the first coin, comparing the first value with the value stored in the programmable memory, and producing a signal indicative of the acceptability of the first coin with respect to the first characteristic when the first value is within predetermined limits for acceptable coins of a given denomination, the limits being dependent at least in part upon the stored value.

The defendant, Nippon Conlux is a Japanese corporation. It manufactures the "Premier" coin changer and the "E920" coin discriminator, which is a part of the Premier coin changer. Nippon Conlux sold Premier coin changers to its wholly owned subsidiary, Conlux USA. Conlux USA sold these coin changers in the United States.

In 1990, Mars filed suit against Conlux USA, alleging that Conlux USA infringed the '565 patent by using and selling Premier coin changers. That case proceeded to trial, and on May 11, 1992, a jury found that Conlux USA infringed claims 1, 2, 3, 8, 11, 20, 21, 22, 23, 24, 27, 49, 57, 60, and 61 of the '565 patent, and that the patent was not invalid or unenforceable. On December 18, 1992, the jury awarded Mars actual damages of $545,562, but found that Mars had not proven that Conlux USA's infringement was willful. This court resolved post-trial motions by Memorandum Opinion and Order of April 15, 1993. Mars Incorporated v. Conlux USA Corporation, 818 F.Supp. 707 (D.Del. 1993). The United States Court of Appeals for the Federal Circuit affirmed the judgment and this court's order. Mars Incorporate v. Conlux USA Corporation, 16 F.3d 421 (1993). Conlux USA has satisfied the judgment against it. Nippon Conlux controlled and paid for Conlux USA's defense in the Conlux USA litigation. Mars' Brief Opposing Claim Preclusion, p. 5; Nippon Conlux's Reply to Mars' Brief Opposing Nippon Conlux's Motion for Summary Judgment for Claim Preclusion, p. 5.

Mars filed this suit against Nippon Conlux on October 2, 1992. Mars alleged three causes of action in its Complaint. The first cause of action alleged that Nippon Conlux infringed claims 2, 3, and 60 of the '565 patent and induced Conlux USA to infringe these claims. In the second cause of action, Mars alleged that certain directors of Nippon Conlux and Conlux USA caused and induced Conlux USA to infringe the '565 patent. The second cause of action and the individual defendants were dismissed with prejudice pursuant to a Stipulated Order. In the third cause of action, Mars alleged that Nippon Conlux infringed Japanese Patent No. 1557883. The court dismissed this cause of action by Memorandum Opinion and Order dated June 10, 1993. Mars, Incorporated v. Nippon Conlux Kabushiki-Kaisha, 825 F.Supp. 73, 27 U.S.P.Q.2d 1951 (D.Del.1993). The Federal Circuit affirmed this order. 24 F.3d 1368, 30 U.S.P.Q.2d 1621 (Fed.Cir.1994)

On May 27, 1993, Nippon Conlux filed a Motion for Summary Judgment on the Issue of Direct Infringement. The court granted this motion by Memorandum Opinion and Order of September 28, 1993. Mars, Incorporated v. Nippon Conlux Kabushiki-Kaisha, 855 F.Supp. 670, 1993 WL 383571 (D.Del.1993). Mars requested reargument. The court has permitted extensive rebriefing and reargument.

DISCUSSION

Nippon Conlux filed a Motion for Summary Judgment for Claim Preclusion on December 27, 1993. Nippon Conlux argues that as a result of the proceedings in the Conlux USA litigation, Mars' claims in these proceedings are barred by the doctrine of claim preclusion, which is also known as res judicata. Mars argues that the motion should be denied because Nippon Conlux has failed to show that the parties and claims at issue here are the same as in Conlux USA.

I. Choice of Law

The first question before this court is whether it should follow the precedents of the Federal Circuit or the Third Circuit. In a patent case, when an issue pertains to a matter not unique to the Federal Circuit's exclusive appellate jurisdiction, this court should follow the discernable law of the Third Circuit. This court, however, will follow the precedent of the Federal Circuit when an issue involves substantive questions coming exclusively within the jurisdiction of the Federal Circuit, the disposition of which would have a direct bearing on the outcome. Mars, Incorporated v. Nippon Conlux Kabushiki-Kaisha, 24 F.3d 1368 (Fed.Cir.1994). Generally, the application of principles of res judicata is not a matter that is committed to the exclusive jurisdiction of the Federal Circuit. Epic Metals Corp. v. H.H. Robertson Co., 870 F.2d 1574, 1576 (Fed.Cir.1989) ("in applying the doctrine of res judicata in this case, we must look to Third Circuit law"), cert. denied 493 U.S. 855, 110 S.Ct. 160, 107 L.Ed.2d 117 (1989); Hartley v. Mentor Corp., 869 F.2d 1469, 1471 n. 1 (Fed.Cir. 1989); see Foster v. Hallco Mfg. Co., Inc., 947 F.2d 469, 477 n. 7 (Fed.Cir.1991).

Mars appears to argue that in Foster Chief Judge Nies, writing for the Federal Circuit, abandoned the choice of law rule she had announced in 1989 in Hartley. This interpretation is incorrect. In Foster, the question before the Federal Circuit was "not simply whether the Federal Circuit should apply the regional circuit's law of res judicata with respect to a consent decree, but whether the public policies expressed in Lear, Inc. v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969) override the general res judicata principles which would otherwise apply." Foster, 947 F.2d at 475. The Federal Circuit held that it should pronounce its own interpretation of Lear, but that it would look to regional circuits to determine the general principles of res judicata. Foster, 947 F.2d at 475, 477 n. 1.

The court concludes that it should follow the Third Circuit's precedents on the issue of claim preclusion.

II. Claim Preclusion and Issue Preclusion

The Supreme Court explained the importance and rationale of the doctrines of claim preclusion and issue preclusion in Montana v. United States:

Application of both doctrines is central to the purpose for which civil courts have been established, the conclusive resolution of disputes within their jurisdictions. To preclude parties from contesting matters that they have had a full and fair opportunity to litigate protects their adversaries from the expense and vexation attending multiple lawsuits,

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