Rohm and Haas Co. v. Dawson Chemical Co.

• Decision Date: 13 May 1986
• Docket Number: Civ. A. No. 74-H-790.
• Citation: 635 F. Supp. 1211
• Parties: ROHM AND HAAS COMPANY v. DAWSON CHEMICAL COMPANY, INC., et al. ROHM AND HAAS COMPANY v. CUMBERLAND CHEMICAL COMPANY, et al. CUMBERLAND INTERNATIONAL CORPORATION v. ROHM AND HAAS COMPANY. ROHM AND HAAS COMPANY v. AMERICAN RICE GROWERS EXCHANGE.
• Court: U.S. District Court — Southern District of Texas

635 F. Supp. 1211

ROHM AND HAAS COMPANY v. DAWSON CHEMICAL COMPANY, INC., et al.

ROHM AND HAAS COMPANY v. CUMBERLAND CHEMICAL COMPANY, et al.

CUMBERLAND INTERNATIONAL CORPORATION v. ROHM AND HAAS COMPANY.

ROHM AND HAAS COMPANY v. AMERICAN RICE GROWERS EXCHANGE.

Civ. A. No. 74-H-790.

United States District Court, S.D. Texas, Houston Division.

May 13, 1986.

COPYRIGHT MATERIAL OMITTED

David E. Arnold, Winters, Thompson, Mathews, Dunn & Arnold, Houston, Tex., for plaintiff.

Ned L. Conley, Butler & Binion, Houston, Tex., for defendants.

MEMORANDUM AND ORDER

CARL O. BUE, Jr., District Judge.

I. Introduction

On October 27, 1982 this Court, sitting without a jury held claims 1-3, 6, and 8-12 of the U.S. Patent No. 3,816,092 (RH Patent or Wilson Patent), issued June 11, 1974, to Rohm and Haas Company as the assignee of the inventors, for "Herbicidal 3, 1-dichloroanilides," valid and infringed by Crystal Chemical Company and Joe C. Eller (collectively Crystal).¹ This Court ruled that misrepresentations and/or omissions by Rohm and Haas to the U.S. Patent and Trademark Office (PTO) during the prosecution of the Wilson Patent were effectively cured by Rohm and Haas prior to the issuance of the Wilson Patent.²

The Federal Circuit Court on December 7, 1983 reversed and remanded the instant action on the ground that Rohm and Haas intentionally made material misrepresentations to the PTO. The Federal Circuit decision concluded that Rohm and Haas committed fraud on the PTO, rendering the Wilson Patent invalid.³

A. The Dawson and Crystal Case

Civil Action No. 74-H-790 (the "Crystal case"), is a patent infringement suit filed by Rohm and Haas against Dawson Chemical Company, Crystal Chemical Company and Joe C. Eller, and others. Prior to the trial of the above referenced case in 1981, Civil Action No. H-80-2552, a suit for patent infringement filed by Rohm and Haas Company against the American Rice Growers Exchange, was consolidated with the Crystal case. Prior to trial and during trial, Helena Chemical Company and Vertac Chemical Company, defendants in Civil Action No. 74-H-790, entered into settlement agreements and consent decrees with Rohm and Haas.

The Crystal case was tried in this Court in late 1981 and early 1982, and appealed to the Court of Appeals for the Federal Circuit and remanded to this Court for further proceedings. The American Rice Growers Exchange dismissed its appeal and entered into a settlement agreement and consent decree in Civil Action No. H-82-1241.

B. The Cumberland Chemical Case

Civil Action No. H-82-1241, (the "Cumberland suit") is also a suit for patent infringement filed by Rohm and Haas against the successor company to Crystal Chemical Company (which filed for bankruptcy in 1981), and several of the same defendants in the Crystal suit, including the American Rice Growers Exchange and Joe Eller. The Cumberland suit was filed by Rohm and Haas after the Crystal suit had been tried to this Court, and while the case was awaiting decision by this Court. The Cumberland lawsuit involves the same patent in issue in the Crystal case. A preliminary injunction was granted in favor of Rohm and Haas in late 1982, in the Cumberland case. As stated above, Rohm and Haas settled with one of the defendants, the American Rice Growers Exchange, in early 1983, and a consent decree was entered.

C. The Cumberland International Case

Civil Action No. H-85-282 is an antitrust action filed by Cumberland International Corporation, a successor corporation to Crystal Chemical Company, against Rohm and Haas Company, (the "Cumberland International suit").

D. The American Rice Growers Exchange Case

Civil Action No. H-85-618 (the "ARGX suit") is a lawsuit filed by Rohm and Haas for a declaration of its rights under the settlement agreement and consent decree entered into with the American Rice Growers Exchange in the Cumberland suit.

Pending before the Court are the following motions: (1) Crystal Chemical Company and Joe C. Eller's (Crystal) Motion for Partial Summary Judgment in Civil Action No. 74-H-790, consolidated with 80-H-2552, styled Rohm and Haas Company v. Crystal Chemical Company, et al.; (2) Cumberland Chemical Company and Joe C. Eller's Motion for Partial Summary Judgment in Civil Action No. 74-H-790 consolidated with 80-H-2552, styled Rohm and Haas Company v. Cumberland Chemical Company; (3) Cross Motion for Summary Judgment of Rohm and Haas against all the above named defendants; (4) Rohm and Haas' Motion For A Declaration Of Its Rights, An Injunction, And Other Relief in Civil Action No. H-82-1241; (5) American Rice Growers Exchange Motion for Summary Judgment in Civil Action No. H-85-846 styled American Rice Growers Exchange v. Rohm and Haas; and (6) Rohm and Haas' Motion For Summary Judgment in Civil Action No. H-85-618, styled Rohm and Haas v. American Rice Growers Exchange.

At the close of the motion conference held in chambers before the Court on September 13, 1985, the Court directed counsel to file supplemental pleadings concerning matters discussed at the motion conference, including the effect of prior decisions in this case on the pending dispositive motions submitted by the parties.

After prudent consideration of the memoranda submitted by the parties including supplemental memoranda, the arguments of counsel, and the applicable law, the Court finds that the dispositive motions submitted in the action at bar are without merit for the reasons stated hereinbelow.

II. Contentions of the Parties

In the first cause of action, Civil Action No. 74-H-790, consolidated with H-80-2552 ("the Crystal case"), defendants Crystal and Eller have moved for partial summary judgment based on the Walker Process Doctrine. See Walker Process Equipment, Inc. v. Food Machinery and Chemical Corp., 382 U.S. 172, 179, 86 S.Ct. 347, 351, 15 L.Ed.2d 247 (1965). Rohm and Haas cross-claimed for summary judgment against all defendants in all suits on all counterclaims. In the second lawsuit, Eller and Crystal's immediate corporate successor, Cumberland Chemical Corporation ("Cumberland Chemical") filed an almost identical motion for partial summary judgment.

A. Crystal's Motion for Partial Summary Judgment

Defendant, Crystal alleges that Rohm and Haas, Plaintiff-Counterclaim Defendant, is liable for violations of Section 2 of the Sherman Act.⁴ Crystal further alleges that Walker Process only requires proof that a patent was obtained by knowingly and willfully misrepresenting facts to the Patent Office. Moreover, Crystal contends that the Federal Circuit's holding that Rohm and Haas intentionally made material misrepresentations to the United States Patent and Trademark Office, coupled with the holding of fraud in the procurement of the Wilson Patent, necessarily strips Rohm and Haas of the exemption from antitrust laws that a patent otherwise provides, and exposes Rohm and Haas to antitrust liability based on Walker Process. Crystal avers that each element of its Walker Process counterclaim has been established by prior proceedings in this case and the Federal Circuit's resolution of the matters of "knowing fraud," "specific intent," "materiality," and "unreasonable reliance." Crystal further avers that the Federal Circuit's opinion and mandate provide the essential element to a Walker Process claim found lacking by this Court.

B. Rohm and Haas Motion for Summary Judgment

Rohm and Haas contends that its curative efforts are a complete defense to Crystal's and Cumberland's Walker Process claims. Rohm and Haas further contends that the Federal Circuit left undisturbed the finding by this Court that the commencement and prosecution of this cause were based on good faith and the reasonable belief by Rohm and Haas that Crystal and the other defendants infringed a valid and enforceable patent. Rohm and Haas argues that the holding in Walker Process requires proof that a patentee enforced his patent with knowledge of the patent's invalidity. Therefore, Rohm and Haas argues that Walker Process necessarily requires bad faith enforcement of a patent or the knowing assertion of baseless claims. Rohm and Haas avers that the objective patentability of the Wilson invention renders Crystal's Walker Process claims deficient as a matter of law.

Rohm and Haas contends that Crystal failed to prove at trial in this Court the other elements necessary to a Section 2 Sherman Act case; (1) illegal and willful acquisition or maintenance of monopoly power in the relevant market, (2) specific intent, and (3) antitrust injury and causation within the meaning of the Sherman Act. Rohm and Haas further contends that Crystal's Walker Process counterclaim is barred by the First Amendment of the Federal Constitution and by the Noerr-Pennington Doctrine because Rohm and Haas acted like any other patentee seeking to protect presumptively valid patent rights.

Rohm and Haas avers that Crystal's tying allegations are meritless, since the Federal Circuit did not address the matter of Crystal's tying agreement. Accordingly, it is argued that this Court's prior rejection of Crystal's tying claims should be accorded res judicata effect.

Rohm and Haas alleges, in sum, that (1) it has not violated Sections 1 and 2 of the Sherman Act or Section 4 of the Clayton Act;⁵ (2) this case is not "exceptional" within the meaning of the patent laws (35 U.S.C. § 285);⁶ and (3) defendants are not entitled to recover their attorneys' fees.

With respect to Cumberland, Rohm and Haas alleges in its cross-motion for summary judgment and memorandum in support that Cumberland's antitrust counterclaim and claims for attorneys' fees should be dismissed because:

(1) Cumberland does not have an effective counterclaim on file with the Court;

(2) Various fact findings by this Court foreclose Cumberland from litigating its antitrust causes of action under the doctrines of res judicata, collateral estoppel, and stare decisis;

(3) Cumberland has not suffered a

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