Polymer Industrial Prods. v. Bridgestone/Firestone

• Decision Date: 20 October 2003
• Docket Number: No. 03-1176.,03-1176.
• Citation: 347 F.3d 935
• Parties: POLYMER INDUSTRIAL PRODUCTS COMPANY and Polymer Enterprises Corporation, Plaintiffs-Appellants, v. BRIDGESTONE/FIRESTONE, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 935

347 F.3d 935

POLYMER INDUSTRIAL PRODUCTS COMPANY and Polymer Enterprises Corporation, Plaintiffs-Appellants, v. BRIDGESTONE/FIRESTONE, INC., Defendant-Appellee.

No. 03-1176.

United States Court of Appeals, Federal Circuit.

Decided October 20, 2003.

Rehearing En Banc Denied November 26, 2003^*.

Joseph Decker, Gefsky & Lehman, P.C., of Pittsburgh, Pennsylvania, argued for plaintiffs-appellants.

Regan J. Fay, Jones, Day, Reavis & Pogue, of Cleveland, Ohio, argued for defendant-appellee. With him on the brief was Jenny L. Sheaffer; and Gregory A. Castanias, Jones, Day, Reavis, & Pogue, of Washington, DC.

Before NEWMAN, MICHEL, and RADER, Circuit Judges.

RADER, Circuit Judge.

The United States District Court for the Northern District of Ohio dismissed the infringement suit brought by Polymer Industrial Products Company and Polymer Enterprises Corporation (collectively PIPCO). Polymer Indus. Prods. Co. v. Bridgestone/Firestone, Inc., 211 F.R.D. 312 (N.D.Ohio 2002). Because PIPCO's infringement claim was a compulsory counterclaim under Fed.R.Civ.P. 13(a) in prior litigation and PIPCO waived the claim by not asserting it in the prior action, this court affirms.

I.

PIPCO is the owner of United States Patent No. 4,381,331, which claims improvements in turn-over bladders. These bladders are important for the manufacture of pneumatic vehicle tires.¹ In January 1995, PIPCO filed an action against Bridgestone/Firestone, Inc. (Bridgestone) in the Northern District of Ohio alleging that Bridgestone's Skim-1 turn-over bladder infringed the '331 patent. After that complaint was filed, Bridgestone began to make and use a new turn-over bladder — Skim-2. In 1997, Bridgestone amended its answer, with leave of the court, to include a counterclaim for declaratory judgment that the Skim-2 bladders did not infringe the '331 patent. PIPCO, in turn, denied the allegations of Bridgestone's counterclaim but did not amend its complaint to assert an affirmative claim that the Skim-2 product infringed the '331 patent.

Following trial, the jury considered the Skim-1 and Skim-2 products and found that both infringed the '331 patent. The jury awarded damages based on the infringement and found willful infringement. The parties now dispute whether the jury awarded damages based on the Skim-1 product, the Skim-2 product, or both. Because this appeal arises under Fed. R.Civ.P. 12(b)(6), this court must construe the complaint in the light most favorable to the plaintiff-appellant and accept its factual allegations as true. See Advanced Cardiovascular Sys., Inc. v. SciMed Life Sys., Inc., 988 F.2d 1157, 1160 (Fed.Cir.1993). Accordingly, this court assumes that damages were not awarded for the Skim-2 product in the prior litigation. After the jury reached its damages figure, the district court doubled that amount based on the finding of willfulness and issued a final judgment. This court affirmed that judgment in all respects in Polymer Industrial Products Co. v. Bridgestone/Firestone, Inc., 10 Fed.Appx. 812 (Fed.Cir.2001) (nonprecedential opinion).

Later PIPCO filed this action seeking damages for Bridgestones infringement of the '331 patent by its manufacture, use, and sale of the Skim-2 product, claiming that the earlier litigation established Bridgestones liability for Skim-2 infringement. Thus, the only unresolved issue, according to PIPCO, is the quantum of damages. In response, Bridgestone filed a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), alleging that PIPCO waived its right to damages with respect to the Skim-2 product by failing to assert an associated claim of infringement in the prior litigation. The district court granted Bridgestones motion, finding that PIPCOs claim was barred by either of two alternative and independent legal theories: Fed.R.Civ.P. 13(a) and res judicata. Because Rule 13(a) is sufficient to resolve this case, this court does not discuss res judicata.

This court has jurisdiction to hear this appeal, because it is from a final decision of a district court in an action where jurisdiction was based on 28 U.S.C. 1338. See 28 U.S.C. 1295(a)(1) (2000).

II.

PIPCO challenges the district courts dismissal of its claim under Fed.R.Civ.P 12(b)(6), arguing that the Declaratory Judgment Acts further relief section, 28 U.S.C. 2202, allows PIPCO to now seek further relief of damages based on the declaratory judgment of infringement in the previous litigation.

Application of Rule 12(b)(6) is a procedural question not pertaining to patent law. Therefore, this court applies the rule of the regional circuit, in this case the United States Court of Appeals for the Sixth Circuit. C&F Packing Co. v. IBP, Inc., 224 F.3d 1296, 1306 (Fed.Cir.2000) (citing Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir.1999) (en banc in relevant part)). In the Sixth Circuit, a dismissal under Fed. R.Civ.P. 12(b)(6) raises a question of law that is subject to de novo review. Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 360 (6th Cir.2001); In re Sofamor Danek Group, Inc., 123 F.3d 394, 400 (6th Cir. 1997). The court must construe the complaint in the light most favorable to the plaintiff, accept its factual allegations as true, and determine whether the plaintiff can prove a set of facts in support of its claims that would entitle it to relief. Mayer v. Mylod, 988 F.2d 635, 637-38 (6th Cir.1993).

Compulsory Counterclaim

The district court held that PIPCOs present infringement claim was a compulsory counterclaim to Bridgestones declaratory judgment claim of noninfringement in the prior litigation. Consequently, having failed to bring it then, PIPCO is forever barred from revisiting the issue. In arriving at this conclusion, the district court relied on Fed.R.Civ.P. 13(a). Although finding this authority sufficient, the district court garnered further support for its conclusion from this courts decision in Vivid Technologies, Inc. v. American Science Engineering, Inc., 200 F.3d 795 (Fed.Cir. 1999). Particularly, the district court relied on the following language from Vivid Technologies: [W]hen the same patent is at issue in an action for declaration of noninfringement, a counterclaim for patent infringement is compulsory and if not made is deemed waived. Id. at 802.

PIPCOs claim of infringement against the Skim-2 product satisfies the requirements for a compulsory counterclaim under Fed.R.Civ.P. 13(a). Rule 13(a) states:

Compulsory Counterclaims. A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.

In the prior litigation, Bridgestone brought a declaratory judgment claim of noninfringement of the '331 patent for their Skim-2 product. PIPCOs affirmative claim of infringement involving the same patent and the same product: (1) raises the same issues of law and fact as did the declaratory judgment claim of noninfringement; (2) requires the examination of the same evidence analyzed in the declaratory judgment claim of noninfringement; and (3) involves a logical relationship to the declaratory judgment claim of noninfringement. See id. at 801 (citing 6 Charles Alan Wright, Arthur R. Miller Mary Kay Kane, Federal Practice and Procedure 1410 (2d ed.1990)). Thus, PIPCOs affirmative claim of patent infringement in the prior litigation involving the same patent and the same accused product was compulsory.

In Vivid Technologies, the manufacturer, Vivid Technologies (Vivid), brought a declaratory judgment action seeking a declaration that its x-ray security device did not infringe a patent owned by American Science Engineering, Inc. (AS E) or that the AS E patent was invalid. The district court denied AS Es motion for leave to file a counterclaim. Finding an abuse of discretion, this court reversed and required entry of the counterclaim on remand. This court based its ruling on the compulsory nature of AS Es claim. Beginning with Fed.R.Civ.P. 13(a), this court noted that [a] counterclaim for patent infringement, in an action for declaration of noninfringement of the same patent, readily meets all [of the] four [tests] identified by Professor Wright and used by the various circuit courts, any one of which renders a counterclaim compulsory. Vivid Techs., 200 F.3d at 801 (citing 6 Charles Alan Wright, Arthur R. Miller Mary Kay Kane, Federal Practice and Procedure 1410 (2d ed.1990)).

Additionally, this court noted that, of the authorities examined at the time, every court that has discussed the issue has recognized that an infringement counterclaim is compulsory in an action for declaration of noninfringement. Vivid Techs., 200 F.3d at 801-02 (citing cases). After this analysis and conclusion, this court stated the implications of a compulsory counterclaim: [I]t is generally recognized that when the same patent is at issue in an action for declaration of noninfringement, a counterclaim for patent infringement is compulsory and if not made is deemed waived. Id. at 802.

In sum, Rule 13(a) makes an infringement counterclaim to a declaratory judgment action for noninfringement compulsory. In addition, this court finds that the compulsory nature of an infringement claim in response to a declaratory judgment action for patent noninfringement and the resulting waiver and bar that occurs if not exercised warrant a uniform national rule. See Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d 850, 858-59, (Fed.Cir.1991) (committing the resolution of a procedural issue to this courts jurisprudence where there is an essential relationship between this courts exclusive statutory mandate and procedural issue). Accordingly, this court reiterates that a claim for a declaration of...