Total Containment, Inc. v. Environ Products, Inc., Civ. A. No. 91-7911.
| Citation | 921 F. Supp. 1355 |
| Decision Date | 03 November 1995 |
| Docket Number | Civ. A. No. 91-7911. |
| Parties | TOTAL CONTAINMENT, INC., Plaintiff, v. ENVIRON PRODUCTS, INC. and Michael C. Webb, Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
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George A. Arkwright, Shlesinger, Arkwright & Garvey, Arlington, VA, Charles J. Bloom, Stevens & Lee, P.C., Wayne, PA, David H. Voorhees, James J. Merek, Merek & Voorhees, Alexandria, VA, for Total Containment, Inc.
Arthur H. Seidel, Joseph R. Del Master, Jr., Seidel, Gonda, Lavorgna & Monaco, P.C., Philadelphia, PA, Alan H. Bernstein, Caesar, Rivise, Bernstein, Cohen & Pokotilow, Ltd., Philadelphia, PA, Stanley H. Cohen, Caesar, Rivise, Bernstein, Cohen & Pokotilow, Ltd., Philadelphia, PA, Jeremy T. Ross, Schiffman & Ross, Philadelphia, PA, for Aveda Manufacturing Corp. and Michael C. Webb.
Plaintiff, Total Containment, Inc. ("TCI"), filed this action on December 24, 1991, against defendants, Michael C. Webb and Environ Products, Inc. ("EPI") ("defendant" or "defendants"), for allegedly infringing U.S. Patent 5,040,408 (the '408 patent); U.S. Patent 5,060,509 (the '509 patent); and U.S. Design Patent 322,970 under 35 U.S.C. § 271(a)-(c) by manufacturing, selling, and/or using underground containment sumps. TCI has asserted that the defendants' infringement is willful, thus making this case exceptional within the meaning of 35 U.S.C. § 285, entitling TCI to treble damages and attorneys' fees. TCI has also alleged that Environ's corporate name infringes upon its federally registered trademark "ENVIROFLEX."
The defendants have raised several defenses and asserted several counterclaims. The defendants have alleged that the patents are invalid, void, unenforceable, and not infringed. Mr. Webb has counterclaimed for monetary damages for breach of contract. Environ has also contended that its corporate name does not infringe upon the plaintiff's registered trademark "ENVIROFLEX" because there is no likelihood of confusion.
A sixteen-day bench trial was held. Defendants dismissed with prejudice their counterclaim that the '408 and '509 patents are unenforceable, based on TCI's alleged fraudulent revival of United States Patent Application 07/245,021 after abandonment. Plaintiff TCI, in turn, dismissed with prejudice its claim of infringement of the design patent. Numerous issues were raised at trial, including assignor estoppel, five reexamination requests, one claim canceled on reexamination, numerous claims added on reexamination, assertion of twenty claims against eight allegedly infringing embodiments, and mutual accusations of misconduct before the Patent Office. I shall undertake to treat them in turn.
Plaintiff, TCI, is a Delaware corporation with its principal place of business in Oaks, Montgomery County, Pennsylvania. Defendant, EPI, is a Delaware corporation with its principal place of business in Lionville, Chester County, Pennsylvania. Defendant Webb, the sole inventor of the '408 and '509 patents, was employed by TCI as President and General Manager from the early part of 1985 until January 15, 1990. He is now the President and a major stockholder in EPI.
Subterranean piping systems, such as those found at gasoline service stations, are installed and connected to fuel dispensing pumps. These systems pump fuel from storage tanks, generally below ground, to fuel dispensers ("gas pumps"), typically above ground. Leakage from these systems causes environmental pollution of the surrounding soil. Ground-water pollution, fires, and explosions can also be caused by leaking systems.
Both TCI and EPI are manufacturers of secondary containment systems for underground piping systems. Because federal and state environmental laws require retail gasoline stations to have secondary containment systems, this is a highly lucrative and competitive market. Environmental Protection Agency ("EPA") regulations will require all gasoline service stations to upgrade their underground containment systems by 1998. In 1988, the EPA estimated that the cost of complying with the regulations over the 30-year period ending in 2018 will be about $69 billion, including about $32 billion for component repair, replacements, and upgrades. By one estimate, about 700,000 of the approximately 1.6 million underground petroleum storage tanks and related piping systems subject to these regulations have yet to be upgraded. NT:6:175:5-12.
Underground secondary containment systems include a sealed secondary pipe system, which is installed around the primary pipelines, and a polyethylene containment sump.
The sump, which typically surrounds the dispensing pump, is an important part of the secondary containment system. It collects leaking product, provides access for servicing the pump and fittings, and acts as a riser to keep backfill away from the submersible pump and fittings. It is installed at a low point in the dispensing system so that any product that leaks from the system will flow through the secondary piping system and collect in the sump. The sump is sealed to prevent the entry of ground water and to prevent the escape of hazardous fluids and vapors.
On October 1, 1987, Webb filed United States Patent Application 07/103,206, entitled "Secondary Containment System." On October 6, 1988, Webb filed United States Patent Application Number 07/245,021, entitled "Secondary Containment System." This application was a continuation-in-part of United States Patent Application 07/103,206.
In May, 1989, Rodney Brancher resigned from Remcom Plastics, a manufacturer of sumps for TCI through the process of rotational molding, and created Aveda Corporation. Because Brancher lacked the resources to obtain bank financing to purchase the equipment required for rotational molding, TCI established a $100,000 line of credit for Aveda. Aveda and Brancher were required to execute various security agreements and guaranties in TCI's favor. Aveda began operations in July, 1989.
On May 8, 1989, Webb filed United States Patent Application 07/348,396 as a divisional application of United States Patent Application 07/254,021.
On July 1, 1989, a one-year employment agreement between Webb and TCI became effective. On January 15, 1990, Webb and Anthony Paladinetti, Jr., Vice President of Operations, left TCI. About January 31, 1990, TCI tendered Webb a proposed settlement agreement. On March 9, 1990, Webb entered into the post-termination settlement agreement (the "Settlement Agreement"). Webb assigned all rights in United States Patent Application 07/254,021 to TCI.
On April 16, 1990, at the request of Brancher, Webb loaned Aveda $60,000. The line of credit established for Aveda by TCI in 1989 was retired.
About May 20, 1990, TCI terminated its business relationship with Aveda. In May of 1990 TCI terminated Michael S. Gurnicz, its Vice-President of Marketing. On June 29, 1990, Brancher, Gurnicz, and Paladinetti advised TCI, though counsel, of the formation of Environ Products, Inc., which was to manufacture and sell tank sumps.
On July 24, 1990, TCI brought suit against Aveda, Environ, Brancher, Gurnicz, Paladinetti, and Webb in the United States District Court for the Eastern District of Pennsylvania (Civil Action 90-4788) alleging, among other things, breach of contract, theft of trade secrets, infringement of the '970 patent, and numerous RICO violations. Rescission of the settlement agreement with Webb was requested.
On July 25, 1990, Webb advised TCI, through counsel, that the action constituted a breach of the mutual release provisions contained in the settlement agreement, excusing Webb of any further obligation under the agreement.
On October 1, 1990, TCI brought suit against Aveda, Environ, Brancher, Gurnicz, Paladinetti, and Webb in the Chester County, Pennsylvania, Court of Common Pleas (Civil Action 90-08520) alleging, among other things, fraud and breach of contract. Rescission of the settlement agreement with Webb was sought.
On November 13, 1990, TCI filed United States Patent Application 07/611,435 as a divisional application of United States Patent Application 07/254,021.
On January 15, 1991, the Patent and Trademark Office ("PTO") granted TCI Trademark Registration 1,631,610, for "ENVIROFLEX," as a trademark for "plastic and rubber pipes for conveying gasoline, diesel fuel and chemicals."
On May 1, 1991, the federal action was dismissed without prejudice, conditioned upon TCI's paying the defendants' attorneys' fees. Total Containment, Inc. v. Aveda Manufacturing Corp., 1991 WL 75192 (E.D.Pa.1991).
On August 20, 1991, United States Patent Application 07/348,396 issued as United States Patent 5,040,408 (the '408 Patent). On October 29, 1991, United States Patent Application 07/611,435 issued as United States Patent 5,060,509 (the '509 patent). The '509 patent bears a terminal disclaimer disclaiming the portion of the patent term after August 20, 2008, the expiration date of the '408 patent. Except for the initial paragraph, which cross-references related applications, and the claims, the two patents are identical.
On December 24, 1991, this action was filed. On May 15, 1992, this court granted plaintiff's request for a preliminary injunction against the defendants. Total Containment Inc. v. Environ Products Inc., 23 U.S.P.Q.2d 1305, 1992 WL 111364 (E.D.Pa. 1992).
On April 14, 1993, EPI filed reexamination requests 90/003,029 and 90/003,030 for reexamination of the '408 and '509 patents, respectively. On June 7, 1993, the PTO granted the requests for reexamination of the '408 and '509 patents.
On July 15, 1993, EPI filed reexamination...
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