Rohm and Haas Co. v. Dawson Chemical Co., Inc.

Decision Date05 January 1983
Docket NumberC.A. No. 74-H-790.
Citation557 F. Supp. 739
PartiesROHM AND HAAS COMPANY v. DAWSON CHEMICAL COMPANY, INC., et al.
CourtU.S. District Court — Southern District of Texas
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Rudolf E. Hutz, Januar D. Bove, Jr., F.L. Peter Stone and Jeffrey B. Bove, Connolly, Bove & Lodge, Wilmington, Del., for plaintiff.

James C. Winters and David E. Arnold, Winters, Deaton & Briggs, Houston, Tex., for plaintiff.

Ned L. Conley, Butler, Binion, Rice, Cook & Knapp, Charles M. Cox, Pravel, Gambrell, Hewitt, Kirk & Kimball, Houston, Tex., for defendants.

NUNC PRO TUNC ORDER

On October 27, 1982, this Court entered its Findings of Fact and Conclusions of Law in the above-captioned cause. It has come to the attention of the Court that the Findings of Fact and Conclusions of Law entered on October 27, 1982, contained several typographical and non-substantive errors. Hence, to ensure the accuracy and completeness of the Findings of Fact and Conclusions of Law of October 27, 1982, the Court hereby directs that the attached corrected version of the Findings of Fact and Conclusions of Law be entered. This Order shall relate back to the time of entry of the Findings of Fact and Conclusions of Law of October 27, 1982.

                                   TABLE OF CONTENTS
                                                                        Page
                I.   Introduction                                       749
                II.  Findings of Fact                                   751
                     A. Parties Involved in this Suit                   751
                        The Patent in Suit                              752
                     B. Discovery of the Invention                      753
                     C. History of Patent in Suit                       759
                        1. Rohm and Haas' 1958 Application              759
                        2. Rohm and Haas' 1960 Application              765
                        3. Rohm and Haas' 1961 Application              767
                        4. Interference Proceeding                      769
                        5. Litigation Between Monsanto and
                             Rohm and Haas                              773
                        6. Renewed Prosecution of 1961 Application      774
                     D. Construction of Patent Claims                   783
                     E. Prior Art                                       785
                     F. Defendants' Propanil Activities                 788
                     G. Defendants' Affirmative Defenses                790
                     H. Antitrust Counterclaims                         793
                        1. Relevant Market                              793
                        2. Bayer-Rohm and Haas Agreements               793
                        3. Rohm and Haas Marketing and
                             Pricing Practices                          794
                III. Conclusions of Law                                 799
                     A. Jurisdiction and Venue                          799
                     B. Validity of Patent in Suit                      799
                     C. Fraud on the Patent Office                      810
                     D. Infringement                                    811
                     E. Should the Supreme Court's Decision Be
                          Applied Only Prospectively?                   815
                     F. Personal Liability of Joe Eller                 818
                     G. Laches and Estoppel                             819
                     H. Antitrust Counterclaims                         823
                        1. Statute of Limitations                       823
                        2. Defendants' Standing to Assert
                             Their Antitrust Counterclaims              827
                        3. The Bayer-Rohm and Haas Agreements
                             Subject Matter Jurisdiction                830
                        4. Act of State Doctrine                        831
                        5. Defendants' Section 1 Counterclaims          833
                        6. Defendants' Monopolization Counterclaims     837
                        7. Defendants' Section 14 Counterclaims         845
                     I. Injunctive and Legal Relief, Attorney's
                          Fees                                          845
                        Interest                                        850
                IV. Conclusion                                          850
                
FINDINGS OF FACT AND CONCLUSIONS OF LAW

CARL O. BUE, Jr., District Judge.

A brief recapitulation of the procedural history of this litigation may be helpful in placing the multitudinous and complex issues under consideration into proper perspective.

I. Introduction

On the day of the issuance of United States Patent 3,816,092, June 11, 1974, plaintiff Rohm and Haas Company (hereinafter Rohm and Haas), commenced this action against the Helena Chemical Company (unless indicated otherwise, hereinafter Helena), Crystal Chemical Company, Dawson Chemical Company, and Crystal Manufacturing Corporation (unless indicated otherwise, hereinafter Crystal), alleging that defendants contributorily infringed and actively induced others to infringe United States Patent 3,816,092.

The defendants filed answers denying infringement and contending also that Rohm and Haas' patent was invalid and unenforceable. Defendants Crystal and Helena filed also a counterclaim alleging that Rohm and Haas had violated various sections of the antitrust laws. Specifically, defendants alleged that Rohm and Haas had violated sections 1, 2 of the Sherman Act, and section 3 of the Clayton Act, 15 U.S.C. §§ 1, 2, 14 (1973 & Supp.1982). In addition, Helena counterclaimed for a declaratory judgment that plaintiff's patent was invalid, unenforceable and not infringed.1

Shortly, after the commencement of this cause, the defendants took the position that the Rohm and Haas patent was unenforceable as a result of Rohm and Haas' alleged misuse of its patent. Subsequently, the parties entered into a stipulation of facts which was filed in this cause on October 31, 1974, see Plaintiff's Exhibit 21, and thereafter filed cross-motions for partial summary judgment seeking to resolve the threshold issue of patent misuse.

On August 10, 1976, this Court entered its Memorandum and Opinion granting defendants' motions for partial summary judgment "only insofar as they seek adjudication of the legality of plaintiff's monopolization of the sale of propanil, but denying defendants' motions to the extent that they seek dismissal of plaintiff's complaint." See Rohm and Haas Co. v. Dawson Chemical Co., Inc., 191 U.S.P.Q. 691, 695 (S.D.Tex.1976). Shortly thereafter, defendants moved the Court to reconsider its decision not to dismiss Rohm and Haas' complaint. On November 23, 1976, the Court granted defendants' motions and dismissed this cause "without prejudice to plaintiff's right to re-file upon sufficient showing that it has purged its misuse."

Thereafter, Rohm and Haas appealed the various rulings of this Court and on July 30, 1979, the United States Court of Appeals for the Fifth Circuit reversed this Court's decision and remanded this case to this Court for further proceedings. See Rohm and Haas Co. v. Dawson Chemical Co., 599 F.2d 685 (5th Cir.1979). On June 27, 1980, the United States Supreme Court affirmed the Fifth Circuit's decision. See Dawson Chemical Co. v. Rohm and Haas Co., 448 U.S. 176, 100 S.Ct. 2601, 65 L.Ed.2d 696 (1980).

On September 18, 1980, Rohm and Haas filed suit against Vertac Chemical Company (hereinafter Vertac) in the United States District Court for the District of Delaware alleging that Vertac contributorily infringed and actively induced others to infringe United States Patent 3,816,092. Plaintiff's Exhibit 26.

On November 3, 1980, Rohm and Haas was permitted to amend its complaint in the case sub judice to add Joe C. Eller (hereinafter Eller) and Wilton W. Vardeman (hereinafter Vardeman) as individual party defendants. Rohm and Haas alleged that Eller and Vardeman were contributorily infringing and actively inducing others to infringe its patent. Additionally, in its amended complaint Rohm and Haas particularized its claim for damages. Plaintiff's Exhibit 22. In addition to filing an answer denying the claims asserted against them, Eller and Vardeman filed counterclaims alleging that Rohm and Haas had violated Sections 1, 2 of the Sherman Act, and section 3 of the Clayton Act, 15 U.S.C. §§ 1, 2, 14 (1973 & Supp.1982). Plaintiff's Exhibit 22.

While the Delaware action against Vertac was pending, Helena filed a third-party complaint against Vertac in the instant cause. Subsequently, on February 10, 1981, Rohm and Haas filed a complaint against Vertac raising essentially the same allegations it had advanced in the Delaware action. Plaintiff's Exhibit 22. Vertac then filed its answer and asserted counterclaims and defenses similar to those asserted by Crystal.

On November 12, 1980, plaintiff filed a separate suit in this Court against American Rice Growers Exchange (hereinafter ARGE), alleging that ARGE contributorily infringed and actively induced infringement of its patent. ARGE thereafter filed its answer and also advanced counterclaims asserting violations of various sections of the Sherman Act. Plaintiff's Exhibit 22. On January 14, 1981, this Court, at the request of all parties to this cause, consolidated the instant case with the separately filed suit against ARGE for both discovery and trial pursuant to Rule 42(a), Fed.R. Civ.P.

On September 1, 1981 the parties filed and this Court approved a stipulation wherein all claims brought by Rohm and Haas against Vardeman were dismissed with prejudice. Pursuant also to the stipulation, Vardeman's counterclaims against Rohm and Haas were dismissed with prejudice.

On September 24, 1981, Crystal filed a Voluntary Petition in Bankruptcy under Chapter 7, Title 11 of the United States Code, 11 U.S.C. § 701 et seq. (1979), and at the time of trial the bankruptcy action was still pending before the United States Bankruptcy Court for the Southern District of Texas, Houston Division. Pursuant to an Order entered by the Bankruptcy Court, the automatic stay provision of 11 U.S.C. § 362 (1979)...

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