PPG Industries, Inc. v. Celanese Polymer Specialties Co., Inc.

• Decision Date: 03 March 1988
• Docket Number: No. 87-1437,87-1437
• Citation: 840 F.2d 1565
• Parties: , 6 U.S.P.Q.2d 1010 PPG INDUSTRIES, INC., Plaintiff-Appellee, v. CELANESE POLYMER SPECIALTIES CO., INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1565

840 F.2d 1565

56 USLW 2540, 6 U.S.P.Q.2d 1010

PPG INDUSTRIES, INC., Plaintiff-Appellee, v. CELANESE POLYMER SPECIALTIES CO., INC., Defendant-Appellant.

No. 87-1437.

United States Court of Appeals Federal Circuit.

March 3, 1988.

Edward M. O'Toole, Marshall, O'Toole, Gerstein, Murray & Bicknell, Chicago, Ill., argued, for plaintiff-appellee.

Herbert Schwartz, Fish & Neave, New York City, argued, for defendant-appellant. With him on the brief were Patricia A. Martone and Ron E. Shulman. Also on the brief were John T. Ballantine, Ogden & Robertson, Louisville, Ky. and Andrew F. Sayko, Jr., Celanese Specialty Operations, Chatham, N.J., of counsel.

Before RICH, Circuit Judge, COWEN, Senior Circuit Judge, and BISSELL, Circuit Judge.

BISSELL, Circuit Judge.

Celanese Polymer Specialties Co., Inc. (Celanese) appeals that portion of the district court's order, PPG Industries v. Celanese Polymer Specialties Co., 658 F.Supp. 555, 3 USPQ2d 1683 (W.D.Ky.1987), which awarded Celanese attorney fees for less than the amount it sought. We reverse and remand.

BACKGROUND

PPG Industries, Inc. (PPG), as assignee, sued Celanese for infringement of its Jerabek patents, No. 4,031,050 ('050) and No. 3,984,299 ('299), both relating to the electrodeposition of coating compositions. See generally PPG Indus. v. Celanese Polymer Specialties Co., 1 USPQ2d 1584 (W.D.Ky.1986. During discovery Celanese uncovered a reference, the Sattler patent, which disclosed subject matter similar to that claimed in the '050 and '299 patents. Discovery also revealed that PPG knew of, but had not disclosed, the reference to the United States Patent and Trademark Office (PTO) during prosecution of the patents in suit. To allow for filing and prosecution of reissue applications in the PTO, PPG moved for a stay of the district court's proceedings. The court, over the objections of Celanese, granted PPG's motion and stayed further judicial proceedings pending the outcome of the reissue proceedings. PPG agreed to be bound on all issues considered by the outcome of the reissue proceedings.

The Board of Patent Appeals and Interferences (Board) affirmed the examiner's rejection of all the claims in the reissue applications as unpatentable under 35 U.S.C. Secs. 131, 132 (1982) for inequitable conduct and under 35 U.S.C. Sec. 103 (1982 and Supp. III 1985) in view of the Sattler patent. On appeal, this court affirmed the Board's rejection of the reissue applications based on inequitable conduct. In re Jerabek After our decision in Jerabek, the district court awarded Celanese attorney fees under 35 U.S.C. Sec. 285 (1982). PPG Indus., 658 F.Supp. 555, 3 USPQ2d 1683. However, Celanese appeals because it applied to the district court for an award of $1,281,807.24 in attorney fees and disbursements, but the district court awarded only $320,328.97, of which $273,107.31 was for attorney fees. PPG Indus., 658 F.Supp. at 558, 566, 3 USPQ2d at 1684, 1690. Specifically, Celanese appeals the trial court's denial of its request for the following categories of fees:

89 F.2d 886, 229 USPQ 530 (Fed.Cir.1986). Celanese actively participated as protestor and intervenor throughout all stages of these proceedings.

1. attorney fees paid to Celanese's outside counsel in opposing PPG's reissue applications before the PTO;

2. attorney fees paid to outside counsel in opposing PPG's consolidated appeal to this court from the decisions of the Board; and

3. attorney fees for in-house counsel during the time period up to January 1, 1980 in which in-house counsel were lead trial counsel.

ISSUES

Whether the district court abused its discretion in denying Celanese attorney fees incurred for:

1. its participation in the reissue proceedings instituted by PPG in the PTO;

2. its participation in PPG's consolidated appeal of the Board's decisions to this court; and

3. the services of its in-house litigation counsel.

OPINION

Our appellate jurisdiction in this case turns on whether the district court issued a final decision. See 28 U.S.C. Sec. 1295(a)(1)(1982). "A 'final decision' generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945) (citation omitted); see Stringfellow v. Concerned Neighbors in Action, --- U.S. ----, 107 S.Ct. 1177, 1181, 94 L.Ed.2d 389 (1987) (quoting Catlin, 324 U.S. at 233, 65 S.Ct. at 633-34). Here the district court decided the attorney fees award on its merits and entered its "final and appealable order." PPG Indus., 658 F.Supp. at 566, 3 USPQ2d at 1690. See Bandag, Inc. v. Al Bolser Tire Stores, Inc., 719 F.2d 392, 393, 219 USPQ 1049, 1049-50 (Fed.Cir.1983) (court that enters judgment is best qualified to assert whether it intended that judgment as final). Under these circumstances, the district court's order is a final decision over which we may exercise appellate review.

In reviewing an award of attorney fees under 35 U.S.C. Sec. 285, generally we first consider whether the district court's fact finding of an exceptional case was clearly erroneous, and whether the district court invoked the proper legal standards in making this decision. Reactive Metals and Alloys Corp. v. ESM, Inc., 769 F.2d 1578, 1582-83, 226 USPQ 821, 824 (Fed.Cir.1985). Because the parties in this case do not dispute either the findings or legal analysis underlying the district court's exceptional case determination, however, these issues are not before us.

After concluding this was an exceptional case, the district court went on to exercise its discretion in awarding fees. PPG Indus., 1 USPQ2d at 1585-86. This brings us to the next step in our analysis: determining whether the district court abused its discretion in making the award. Reactive Metals, 769 F.2d at 1583, 226 USPQ at 824. That is the sole question before us on appeal. Specifically, Celanese must convince us that the district court abused its discretion in excluding the noted categories of fees from the award.

In determining if the district court abused its discretion in excluding these categories of fees, the principles guiding this court are whether the district court's decision was based on an erroneous conclusion of law or clearly erroneous factual findings, or whether the district court committed a clear error of judgment. Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1542, 3 USPQ2d 1412, 1415 (Fed.Cir.1987); Heat & Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1022, 228 USPQ 926, 930 (Fed.Cir.1986); Seattle Box Co. v. Industrial Crating & Packing Inc., 756 F.2d 1574, 1581, 225 USPQ 357, 363 (Fed.Cir.1985). To prevail on appeal, this is what Celanese must establish.

I. The Reissue Proceedings

Celanese requested $275,827.25 for legal services rendered before the PTO in opposing PPG's reissue applications. After reviewing conflicting, non-controlling case law, the trial court denied the amount requested in its entirety, concluding that the better view was not to award attorney fees for any of the services rendered before the PTO. PPG Indus., 658 F.Supp. at 560-61, 3 USPQ2d at 1686. The district court cited Webb v. Dyer County Board of Education, 471 U.S. 234, 105 S.Ct. 1923, 85 L.Ed.2d 233 (1985), as support for its conclusion. Id. Webb held that attorney fees should not be awarded in non-mandatory, non-judicial proceedings where the party has the option of proceeding directly to Court unless the party can demonstrate that the work product "was both useful and of a type ordinarily necessary." Webb, 471 U.S. at 243, 105 S.Ct. at 1929. The district court reasoned:

In this case, as in Webb, resort to the non-judicial body is non-mandatory, and a party has the option of proceeding directly to Court.

The Court is fully aware of [Celanese's] contention that resort to the [PTO] in this case was not "voluntary" in the strictest sense, since the proceedings in that forum substituted for judicial proceedings. We do not believe that this compels payment of fees.... Furthermore, Celanese cannot demonstrate that [its] work before the [PTO] is "ordinarily necessary" in a case of this type.

PPG Indus., 658 F.Supp. at 561, 3 USPQ2d at 1686-87.

Due to the unique circumstances of this case, the district court erred in relying on Webb. The PTO permitted Celanese's participation in PPG's reissue applications only because of the now repealed "Dann amendments." Although proceedings before the PTO ordinarily are ex parte, in the late 1970's the regulations governing PTO reissue proceedings were amended by the so-called "Dann amendments" to allow inter partes protestor participation. See generally PIC, Inc. v. Prescon Corp., 485 F.Supp. 1302, 1303-05, 205 USPQ 228, 233-34 (D.Del.1980); see also 47 Fed.Reg. 21,749 (1982). The purpose of these amendments was to economize the time and expense for both the courts and the litigants. See Fisher Controls Co. v. Control Components, Inc., 443 F.Supp. 581, 582, 196 USPQ 817, 819 (S.D.Iowa 1977); see also New Patent Office Rules May Aid Patent Litigation, 9 The Third Branch 7, 7-8 (Sept. 1977). In practice, as clearly demonstrated by this case, the desired results were not achieved. After enactment of legislation providing for reexamination, the PTO repealed the "Dann amendments" in 1982, thus eliminating extensive inter partes protestor participation in reissue proceedings. 47 Fed.Reg. 21,746 (1982).

For Celanese, participation in PPG'S reissue application proceedings was not optional. The parties and the district court clearly intended to replace the district court litigation with the reissue proceedings. PPG forced Celanese to perform in the PTO precisely the same type of work Celanese would have performed had the case proceeded to trial. Indeed, PPG argued before the trial court that these reissue proceedings would permit both sides to present their positions for reconsideration by the PTO in an inter partes setting and...