Procter & Gamble Co. v. Paragon Trade Brands, Inc.

Decision Date30 December 1997
Docket NumberNo. Civ.A. 94-16 LON.,Civ.A. 94-16 LON.
Citation989 F.Supp. 547
CourtU.S. District Court — District of Delaware
PartiesThe PROCTER & GAMBLE COMPANY, Plaintiff and Counterclaim Defendant, v. PARAGON TRADE BRANDS, INC., Defendant and Counterclaimant.

Robert H. Richards, III of Richards, Layton & Finger, Wilmington, DE, of counsel, John F. Sweeney, James W. Gould, Richard C. Komson, Seth J. Atlas, Bruce D. DeRenzi, John T. Gallagher, Robert K. Goethals, Michael O. Cummings, of Morgan & Finnegan, New York City, Charles E. Buffon, Timothy C. Hester, and Salvatore G. Rotella, Jr. of Covington & Burling, Washington, DC, for Procter & Gamble Company.

James M. Mulligan, Jr. of Connolly Bove, Lodge & Hutz, Wilmington, DE, of counsel, Stephen B. Judlowe, Dennis J. Mondolino, Porter F. Fleming, Michael F. Hurley of Hopgood, Calimafde, Kalil & Judlowe, New York City, for Paragon Trade Brands, Inc.

OPINION

LONGOBARDI, Senior District Judge.

                I.  NATURE AND STAGE OF THE PROCEEDINGS ........................................... 560
                II.  THE LAWSON AND DRAGOO PATENTS ................................................. 561
                     A.  Technological Background .................................................. 561
                     B.  The Lawson Patent ......................................................... 563
                         1.  Claims at Issue ....................................................... 564
                         2.  Arguments of the parties .............................................. 565
                             a.  Infringement ...................................................... 565
                             b.  Invalidity ........................................................ 565
                     C.  The Dragoo Patent ......................................................... 565
                         1.  Claims at Issue ....................................................... 566
                         2.  Arguments of the Parties .............................................. 567
                             a.  Infringement ...................................................... 567
                             b.  Invalidity ........................................................ 568
                     D.  Infringement .............................................................. 568
                         1.  Legal Standard ........................................................ 568
                             a.  Claim Construction ................................................ 568
                             b.  Comparison of Claims with Accused Products ........................ 569
                         2.  Discussion-Lawson Infringement ........................................ 570
                             a.  Claim Construction ................................................ 570
                             b.  Literal Infringement .............................................. 571
                             c.  Doctrine of Equivalents ........................................... 576
                         3.  Discussion-Dragoo Infringement ........................................ 576
                             a.  Claim Construction ................................................ 577
                             b.  Literal Infringement .............................................. 579
                         4.  Conclusion-Infringement ............................................... 582
                     E.  Invalidity-The Lawson Patent .............................................. 582
                         1.  Legal Standard ........................................................ 582
                         2.  Anticipation .......................................................... 582
                             a.  Anticipation by Prior Patent ...................................... 583
                             b.  Anticipation by Prior Invention ................................... 584
                         3.  Obviousness ........................................................... 587
                             a.  The Graham Factors ................................................ 587
                             b.  Resolution of the Obviousness Issue ............................... 595
                         4.  Conclusion-Lawson Invalidity .......................................... 595
                     F.  Invalidity-The Dragoo Patent .............................................. 596
                         1.  The Lawson Patent ..................................................... 596
                
                         2.  The Japanese Utility Model ............................................ 597
                         3.  The Beckestrom Patent ................................................. 598
                         4.  "Routine Engineering" ................................................. 599
                         5.  Conclusion-Dragoo Invalidity .......................................... 599
                     G.  Damages ................................................................... 599
                         1.  Legal Standard ........................................................ 599
                         2.  Lost Profits .......................................................... 600
                             a.  Competition Between P & G and Paragon's Products .................. 600
                             b.  Application of the Panduit Factors ................................ 601
                             c.  Quantification of Lost Profits Damages ............................ 602
                             c.  Conclusion-Lost Profits ........................................... 606
                         3.  Reasonable Royalty .................................................... 606
                             a.  Legal Standard .................................................... 606
                             b.  Application of the Hypothetical Negotiation to the Facts of this
                                   Case ............................................................ 607
                         4.  Enhanced Damages-Willful Infringement ................................. 615
                             a.  Lawson Willfulness ................................................ 615
                             b.  Dragoo Willfulness ................................................ 616
                         5.  Prejudgment Interest .................................................. 618
                         6.  Conclusion ............................................................ 618
                III. THE PIENIAK PATENT ............................................................ 618
                     A.  Technological Background .................................................. 618
                     B.  The Pieniak Patent ........................................................ 619
                         1.  Claims at Issue ....................................................... 620
                         2.  Arguments of the Parties .............................................. 620
                             a.  Infringement ...................................................... 620
                             b.  Invalidity/Inequitable Conduct .................................... 621
                             C.  Infringement ...................................................... 621
                         1.  Claim Construction .................................................... 621
                             a.  "Absorbent Panel" ................................................. 621
                             b.  "No More Than About 0.6 Square Inches" ............................ 623
                         2.  Literal Infringement .................................................. 624
                         3.  Conclusion-Infringement ............................................... 624
                     D.  Invalidity/Unenforceability ............................................... 625
                         1.  Anticipation and Obviousness Over the Weisman Patent .................. 625
                             a.  Claims 1 and 10 ................................................... 625
                             b.  Claim 11 .......................................................... 630
                         2.  Inequitable Conduct ................................................... 632
                             a.  Materiality ....................................................... 632
                             b.  Knowledge ......................................................... 633
                             c.  Intent ............................................................ 634
                             d.  Conclusion-Inequitable Conduct .................................... 635
                         3.  Conclusion-Invalidity/Inequitable Conduct ............................. 635
                
I. NATURE AND STAGE OF THE PROCEEDINGS

This suit is an action for patent infringement between two giants in the infant disposable diaper industry. Plaintiff and counterclaim defendant The Procter & Gamble Company ("P & G"), is the largest disposable diaper manufacturer in the United States, selling its products under the brand names of "Pampers" and "Luvs." Defendant and counterclaim plaintiff Paragon Trade Brands, Inc. ("Paragon")1 is the largest manufacturer of "private label" disposable diapers in the country. Private label producers manufacture diapers which are sold under brand names selected by retailers, rather than under those of the manufacturers. Collectively, the products manufactured by these two companies comprise over 50% of the disposable diaper industry.

P & G commenced this action on January 20, 1994. It alleges that Paragon manufactures and sells products which infringe two P & G patents, Lawson U.S. Patent No. 4,695,278 (the "Lawson patent") and Dragoo U.S. Patent No. 4,795,454 (the "Dragoo patent"). These patents relate to advancements in the barrier leg cuff feature of disposable diapers which help prevent the leakage of waste material from the leg openings of the diapers. Through its answer and counterclaim, Paragon denies that its products infringe the Lawson and Dragoo patents and seeks a declaratory judgment that these patents are invalid, unenforceable and not infringed by its products.

Paragon also brings a counterclaim for infringement of Pieniak U.S. Patent No. 5,098,423 (the "Pieniak patent"). The Pieniak patent relates to advancements in the absorbent core of disposable diapers which enable manufacturers to reduce the bulk of the diapers for improved fit and comfort. P & G denies...

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