Rohm and Haas Co. v. Brotech Corp.

• Decision Date: 09 August 1991
• Docket Number: Civ.A. No. 90-109-JRR.
• Citation: 770 F. Supp. 928
• Parties: ROHM AND HAAS COMPANY, Plaintiff, v. BROTECH CORPORATION, Defendant.
• Court: U.S. District Court — District of Delaware

770 F. Supp. 928

ROHM AND HAAS COMPANY, Plaintiff, v. BROTECH CORPORATION, Defendant.

Civ.A. No. 90-109-JRR.

United States District Court, D. Delaware.

August 9, 1991.

Rudolf E. Hutz, N. Richard Powers and Jeffrey B. Bove, Connolly, Bove, Lodge & Hutz, Wilmington, Del. (William E. Lambert, III, Rohm & Haas Company, Philadelphia, Pa., of counsel), for plaintiff.

Josy W. Ingersoll and Vincent J. X. Hedrick, II, Young, Conaway, Stargatt & Taylor, Wilmington, Del. (Herbert B. Keil and Gerald H. Bjorge, Keil & Weinkauf, Washington, D.C., Paul R. Rosen and Niels Korup, Spector Gadon & Rosen, P.C., Philadelphia, Pa., of counsel), for defendant.

OPINION

ROTH, Circuit Judge.^*

Rohm and Haas Company ("R & H") brought this action against Brotech Corporation ("Brotech") alleging that Brotech has willfully infringed four patents owned by R & H. While this Court has yet to confront the underlying patent issues involved in this case, since the time this suit was filed in March, 1990, every issue raised has been violently contested, and every step of this litigation has been marked by fierce controversy. Presently before us is the latest of the parties' battles over what will be litigated in this case, and when and where the litigation will occur. More specifically, we now decide on the merits R & H's motion for an injunction and Brotech's cross motion to dissolve the injunction.

I. PROCEDURAL HISTORY

The present action was filed in March, 1990, alleging that Brotech had willfully infringed four of R & H's patents for macroporous or macroreticular ion exchange resins, namely U.S. Patents 4,224,415 ('415), 4,382,124 ('124), 4,256,840 ('840), and 4,818,773 ('773). The first three of these four patents were all issued to Erich Meitzner and James Oline, and stem from the same parent application. These patents are referred to as the Meitzner-Oline or M/O patents.

In April, 1991, over one year after the present action was initiated, Brotech, along with Purolite International, Ltd. ("Purolite"), filed suit in the U.S. District Court for the Eastern District of Pennsylvania, Purolite International, Ltd., et al. v. Rohm and Haas Co., et al., Civil Action No. 91-CV-2740 (the "Pennsylvania action"), against R & H and six of its past and present subsidiaries and employees. The complaint in the Pennsylvania action alleges one antitrust count under the Sherman Act, 15 U.S.C. § 2, four counts asserting violations of RICO, 18 U.S.C. § 1962, and one count of common law fraud. All six counts arise out of an alleged pattern of fraud on the Patent and Trademark Office ("PTO") practiced by defendants in the prosecution and enforcement of ten patents. Four of these patents are the patents-in-suit in the present action.

More specifically, the defendants in the Pennsylvania action are R & H, Duolite International, S.A. ("Duolite"), and five individuals. Duolite is a now defunct French corporation which once was a subsidiary of R & H. The five individuals are all past or present employees of R & H or its subsidiaries. The majority of the factual allegations in the Pennsylvania complaint assert that these defendants obtained ten patents, including the four patents-in-suit in this action, by various methods of fraud on the PTO. The additional patents named in the Pennsylvania complaint are four other Meitzner/Oline patents which stem from the same parent application as the three M/O patents at issue here, a patent that was declared invalid in 1983, and U.S. Patent 4,002,564 ('564), which is alleged to be related to the '773 patent-in-suit here. The complaint also alleges acts of unfair competition concerning sales of factories for the manufacture of ion exchange resins.

After the Pennsylvania action had been instituted, R & H filed a motion for an injunction in this action, requesting that this Court order Brotech to dismiss the Pennsylvania action because the claims asserted by Brotech should have been raised as compulsory counterclaims in this action. R & H also argued that although Purolite is not a party to this action, it is a captive affiliate of Brotech, and that the requested injunction should cover Purolite. On June 5, 1991, we held a teleconference with the parties during which we heard argument for and against R & H's motion.

Following the argument, we found that R & H had made a sufficient preliminary showing on the compulsory counterclaim issue, and by Order of June 5, 1991, we entered a preliminary injunction enjoining the parties from participating in the Pennsylvania action until after R & H's motion for an injunction had been fully briefed, argued, and decided. Because Purolite has never been joined as a party to this action and we lacked sufficient information on the relationship between Brotech and Purolite, our preliminary injunction order did not name Purolite. The injunction did, however, extend to all those acting in concert with the parties, as well as the parties' attorneys, agents, servants, employees, and subsidiaries.

Our Order of June 5, 1991 also set forth a schedule for briefing on the motion for an injunction. On June 19, 1991, however, Brotech, together with Purolite by special appearance, filed a separate motion to dissolve the injunction, and requested an emergency hearing to prevent the loss of critical evidence. The stated grounds for emergency was the impending departure from this country of a key witness. On June 21, 1991, this Court held another teleconference regarding Brotech and Purolite's motion. By Order of June 21, 1991, we modified our injunction to permit the parties to take the deposition of the witness and thus grant the emergency relief sought. Having addressed the emergency nature of the motion, we then ordered that Brotech and Purolite's motion be treated as a cross motion governed by the previously established briefing schedule.

Brotech and Purolite filed a notice of appeal of our June 5th and June 21st orders. As set forth in detail in our Orders of July 1, 1991 and July 11, 1991, we nonetheless concluded that we still possess jurisdiction to consider on the merits both R & H's motion for an injunction and Brotech and Purolite's cross motion, because the appeal of an order granting a preliminary injunction does not deprive the district court of jurisdiction to decide whether to grant permanent injunctive relief. See, e.g., New York State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1350 (2d Cir. 1989), cert. denied, ___ U.S. ___, 110 S.Ct. 2206, 109 L.Ed.2d 532 (1990); United States v. Price, 688 F.2d 204, 215 (3d Cir. 1982).

We heard oral argument on these motions on July 19, 1991. By order of that date, we held that based on the information presented to us, we cannot at this time enter an injunction specifically naming Purolite. First, the evidence presented to us thus far on the structure of the corporate relationship between Brotech and Purolite is insufficient to prove that Purolite is covered by the terms of our preliminary injunction; second, this Court cannot currently exercise personal jurisdiction over Purolite; and third, this Court has not yet issued any order of finality on the merits of this action to be protected by an injunction against Purolite under the All Writs Act, 28 U.S.C. § 1651. See In re Baldwin-United Corp., 770 F.2d 328, 337-38 (2d Cir.1985). Because this Court has not yet decided the merits of this case, we did not reach the issue of whether Purolite is in privity with Brotech under the doctrines of res judicata and collateral estoppel.

In addition, we reserved decision on the question of whether a permanent injunction should issue against Brotech, in order to give R & H an opportunity to respond to a late supplemental filing by Brotech. Having received and reviewed R & H's response, we now address the compulsory counterclaim question as it pertains to Brotech.

II. WHETHER BROTECH'S CLAIMS IN THE PENNSYLVANIA ACTION SHOULD HAVE BEEN ASSERTED AS COMPULSORY COUNTERCLAIMS IN THE PRESENT ACTION

Pursuant to Fed.R.Civ.P. 13(a), a claim is a compulsory counterclaim "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." To determine whether a claim qualifies as a compulsory counterclaim, we must assess whether it bears a "logical relationship" to the opposing party's claims. Great Lakes Rubber Corp. v. Herbert Cooper Co., 286 F.2d 631, 634 (3d Cir.1961). A logical relationship is shown:

where separate trials on each of the parties' respective claims would involve a substantial duplication of effort and time by the parties and the courts. Where multiple claims involve many of the same factual issues, or the same factual and legal issues, or where they are offshoots of the same basic controversy between the parties, fairness and considerations of convenience and of economy require that the counterclaimant be permitted to maintain his cause of action. Indeed the doctrine of res judicata compels the counterclaimant to assert his claim in the same suit for it would be barred if asserted separately, subsequently.

Id.

Under Rule 13(a), several courts have found that antitrust and fraud claims similar to those asserted by Brotech in the Pennsylvania action are "logically related" to infringement claims in patent cases. For example, the court in USM Corp. v. SPS Technologies, Inc., 102 F.R.D. 167 (N.D.Ill.1984), confronted antitrust claims alleging that a patent had been procured by fraud on the PTO and should be declared invalid. Id. at 169. In an earlier patent infringement suit between the same parties, the parties had settled the issue by consent decree. Id. at 168. The USM court held that the antitrust claims should have been asserted as compulsory counterclaims in the earlier action, and that the failure to do so rendered the claims forever barred. As the court stated:

Since the

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