Mississippi Chemical Corp. v. Swift Agr. Chemicals Corp., No. 83-766

• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
• Writing for the Court: Before FRIEDMAN, RICH and DAVIS; FRIEDMAN
• Citation: 717 F.2d 1374,219 USPQ 577
• Parties: MISSISSIPPI CHEMICAL CORPORATION, Petitioner, v. SWIFT AGRICULTURAL CHEMICALS CORPORATION, Respondent.
• Docket Number: No. 83-766
• Decision Date: 23 September 1983

Page 1374

717 F.2d 1374 219 U.S.P.Q. 577 MISSISSIPPI CHEMICAL CORPORATION, Petitioner,
v.
SWIFT AGRICULTURAL CHEMICALS CORPORATION, Respondent. No. 83-766. United States Court of Appeals,
Federal Circuit. Sept. 23, 1983.

Arthur I. Neustadt, Arlington, Va., for petitioner; Richard D. Kelly, Arlington, Va., of counsel.

John W. Hofeldt, Chicago, Ill., for respondent.

Before FRIEDMAN, RICH and DAVIS, Circuit Judges.

Page 1375

ON PETITION FOR A WRIT OF MANDAMUS

FRIEDMAN, Circuit Judge.

This is a petition for a writ of mandamus directing a United States District Judge to grant a motion for summary judgment of patent invalidity in a patent infringement suit. The motion, based on Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971), urges that the patentee be estopped from relitigating the validity of the patent at issue in the present case because it has already been declared invalid in a prior case after a full and fair trial. We grant the petition, and direct the district judge to grant the motion.

I.

The respondent, Swift Agricultural Chemicals Corporation (Swift) (now named Estech, Inc.), owns a patent covering a process for the manufacture of liquid ammonium polyphosphate fertilizer (the Kearns patent). There have been two prior conflicting decisions involving the validity of this patent.

A. In 1974, Swift filed in the United States District Court for the Eastern District of Louisiana an infringement suit against Usamex Fertilizers. After trial, the district court held the patent valid and infringed. Swift Chemical Co. v. Usamex Fertilizers, Inc., 197 USPQ 10 (E.D.La.1977). Usamex noted an appeal, which was dismissed in March 1978 after the parties had settled the outstanding issues in the case, and the court had entered a consent judgment on damages.

Approximately a year later, Usamex filed a motion for relief from the judgment on the ground that newly discovered evidence showed that there had been no infringement. In a lengthy opinion, the district court denied the motion. Swift Chemical Co. v. Usamex Fertilizers, Inc., 490 F.Supp. 1343 (E.D.La.1980). It held that "Usamex not only has failed to prove it exercised due diligence in discovering its new evidence, but the evidence, even if admitted at a new trial and found to be credible, would not produce a different result, because it is legally immaterial." 490 F.Supp. at 1355. The court also denied Usamex's request for a declaratory judgment of noninfringement. 490 F.Supp. at 1355-1358.

On Usamex's appeal from the denial of its motion for relief from judgment, the court of appeals summarily "[a]ffirmed on the basis of the opinion of" the district court. Swift Chemical Co. v. Usamex Fertilizers, Inc., 646 F.2d 1121 (5th Cir.1981).

B. In 1978, Swift filed in the United States District Court for the District of Kansas an infringement suit against Farmland Industries. After an eight-day trial, the district court held the Kearns patent invalid because the patented invention was anticipated by the prior art and would have been obvious, and not infringed. Swift Agricultural Chemicals Corp. v. Farmland Industries, Inc., 499 F.Supp. 1295, 210 USPQ 137 (D.Kan.1980). The court noted the prior contrary decision in the Usamex case. It pointed out, however, that the unsuccessful argument for invalidity pressed in Usamex was based upon different contentions from the argument urged by Farmland, which the district court accepted. 499 F.Supp. at 1305-06, 210 USPQ at 146. The court also pointed out that since one of the grounds upon which it held the patent invalid for obviousness had not been raised in Usamex, "there was evidently no evidence introduced [in Usamex ] on the question of whether representatives of the prior art might have" shown obviousness on that ground. Id. at 1305, 210 USPQ at 146.

The Court of Appeals for the Tenth Circuit affirmed. Swift Agricultural Chemicals Corp. v. Farmland Industries, Inc., 674 F.2d 1351, 213 USPQ 930 (10th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 132, 74 L.Ed.2d 113 (1982). In a comprehensive opinion which discussed the evidence in considerable detail, the court of appeals held that the findings of the district court were not clearly erroneous, and agreed with the district court's conclusions that the patented invention would have been obvious and had been anticipated. Like the district

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court, the court of appeals noted the prior contrary decision in Usamex. It pointed out that one of the prior art references it discussed had not been before the district court in Usamex, and that in any event, based on all the evidence before it, the district court's determination that the patent was invalid was correct. 674 F.2d at 1358-59, 213 USPQ at 936.

C. In the present case, filed in 1978 in the United States District Court for the Southern District of Mississippi, Swift charged that the petitioner Mississippi Chemical Corporation had infringed the Kearns patent. Shortly before the case was scheduled for trial in October 1980, the district court in Farmland rendered its decision holding the patent invalid. On the motion of the parties, the district judge here then stayed the present case "until ultimate disposition" of Farmland.

Following the denial of the petition for certiorari in Farmland in October 1982, Mississippi Chemical filed a supplemental motion for summary judgment of patent invalidity. It contended that the decision in Farmland holding the patent invalid collaterally estopped Swift "from asserting patent validity" in the present case. The district judge denied the motion for summary judgment in a brief order, ruling that it "cannot in all fairness to both parties say with any degree of conclusiveness that there is not, indeed, any genuine issue of material fact, and that the defendant is entitled to a judgment as a matter of law ...." The judge invited Swift to submit findings of fact and conclusions of law.

The judge subsequently adopted verbatim, with two exceptions discussed later in this opinion, Swift's proposed findings and conclusions. The judge stated that "considerations of efficiency and economy" are "the entire basis and rationale" of the Blonder-Tongue decision that a determination of patent invalidity ordinarily bars the patentee from relitigating that question; and that

t]hese considerations of economy are obviously not present in this case for the reasons that (1) the parties have expended the bulk of any sums that would have been expended through extensive and massive discovery and the case has been ready since 1980; (2) the Defendant is attempting to obtain attorney's fees on the ground of fraud in the procurement of Plaintiff's patent, and, therefore, the validity of Plaintiff's patent is put directly at issue and the same facts would be presented as would be presented in the trial of this issue; and, (3) Claim Three was not litigated in the Kansas proceeding and must be litigated under any circumstances

The judge further stated that "[w]here there are clear inconsistent determinations on a matter at issue, it should be strong indication that the application of collateral estoppel would work an injustice" and that "it would be fundamentally offensive to deprive Swift of the opportunity to litigate this issue when Swift has shown in the courts of this circuit in a full and fair fight that its patent was valid, and that in each instance, the Defendant sued had infringed its patent."

The judge concluded that "the underlying considerations as expressed in the Supreme Court decision of Blonder-Tongue are simply not applicable in this case," and that the "[p]laintiff should be allowed to present its claim for patent infringement before a fair and impartial jury of this District."

II.

A. In Blonder-Tongue, the Supreme Court held that where a patent has been declared invalid in a proceeding in which the "patentee has had a full and fair chance to litigate the validity of his patent" (402 U.S. at 333, 91 S.Ct. at 1445), the patentee is collaterally estopped from relitigating the validity of the patent. If an alleged infringer raises the defense of collateral estoppel, the burden is on the patentee "to demonstrate, if he can, that he did not have 'a fair opportunity procedurally, substantively and evidentially to pursue his claim the first time' " (quoting Eisel v. Columbia Packing Co., 181 F.Supp. 298, 301 (D.Mass.1960)). Id. See also Carter-Wallace,

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