Ultimax Cement Mfg. Corp. v. Cts Cement Mfg. Corp.

• Decision Date: 03 December 2009
• Docket Number: No. 2008-1439.,No. 2008-1218.,2008-1218.,2008-1439.
• Citation: 587 F.3d 1339
• Parties: ULTIMAX CEMENT MANUFACTURING CORPORATION, Hassan Kunbargi, and KA Group, Plaintiffs/Counterclaim Defendants-Appellants, and Heartland Cement Sales Company, Plaintiff/Counterclaim Defendant-Appellee, and RC Cement Holding Company, Signal Mountain Cement Company, River Cement Company, Hercules Cement Company, and RC Cement Company, Counterclaim Defendants, v. CTS CEMENT MANUFACTURING CORPORATION (doing business as CTS Cement Manufacturing Company), Edward K. Rice, Rapid-Set Products Co. (doing business as RSC, Inc.), CTS Bulk Terminals Co., Chem-Comp Systems, Inc., Jack V. Goodman, Paragon Building Products, Inc., Lawrence B. Collins, Blue Daisy Cement Products, Inc., Kurt Caillier, A & A Ready Mixed Concrete, Inc., Ryan Vanderhook, Sr., Short Load Concrete, Inc., Sir-Mix Concrete Products, White Cap Industries, Inc., The Quikrete Companies, and Grupo Cementos De Chihuahua, Defendants/Counterclaimants-Cross Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

587 F.3d 1339

ULTIMAX CEMENT MANUFACTURING CORPORATION, Hassan Kunbargi, and KA Group, Plaintiffs/Counterclaim Defendants-Appellants, and Heartland Cement Sales Company, Plaintiff/Counterclaim Defendant-Appellee, and RC Cement Holding Company, Signal Mountain Cement Company, River Cement Company, Hercules Cement Company, and RC Cement Company, Counterclaim Defendants, v. CTS CEMENT MANUFACTURING CORPORATION (doing business as CTS Cement Manufacturing Company), Edward K. Rice, Rapid-Set Products Co. (doing business as RSC, Inc.), CTS Bulk Terminals Co., Chem-Comp Systems, Inc., Jack V. Goodman, Paragon Building Products, Inc., Lawrence B. Collins, Blue Daisy Cement Products, Inc., Kurt Caillier, A & A Ready Mixed Concrete, Inc., Ryan Vanderhook, Sr., Short Load Concrete, Inc., Sir-Mix Concrete Products, White Cap Industries, Inc., The Quikrete Companies, and Grupo Cementos De Chihuahua, Defendants/Counterclaimants-Cross Appellants.

No. 2008-1218.

No. 2008-1439.

United States Court of Appeals, Federal Circuit.

December 3, 2009.

Saied Kashani, Saied Kashani Law Offices, of Los Angeles, CA, argued for plaintiffs/counterclaim defendants-appellants.

Michael R. Annis, Husch Blackwell Sanders LLP, of St. Louis, MO, argued for plaintiff/counterclaim defendant-appellee.

James W. Geriak, Orrick, Herrington & Sutcliffe LLP, of Irvine, CA, argued for defendants/counterclaimants-cross appellants. With him on the brief were Kurt T. Mulville and Thomas J. Gray.

William J. Robinson, Foley & Lardner LLP, of Los Angeles, CA, for amicus curiae Foley & Lardner LLP.

Before LOURIE, DYK, and PROST, Circuit Judges.

LOURIE, Circuit Judge.

Ultimax Cement Manufacturing Corporation, Hassan Kunbargi, and KA Group (collectively "Ultimax") appeal from the judgment of the United States District Court for the Central District of California granting summary judgment of noninfringement, invalidity, laches, and indefiniteness relating to certain claims of U.S. Patents 4,957,556 ("the '556 patent"); 6,113,684 ("the '684 patent"); and 6,406,534 ("the '534 patent"),¹ as well as the court's grant of summary judgment that no trade secret was violated,² its failure to disqualify the law firm representing CTS Cement Manufacturing Corporation (doing business as CTS Cement Manufacturing Company) and its codefendants³ (collectively "CTS"),⁴ and its denial of leave to amend the complaint.⁵ CTS cross-appeals from the court's denial of its motion to make the case exceptional and to award attorney fees and sanctions.⁶ Heartland Cement Sales Company ("Heartland") supports Ultimax in opposing CTS's cross-appeal. We affirm in part, dismiss in part, vacate in part, reverse in part, and remand.

BACKGROUND

Ultimax and CTS both produce rapid-hardening, high-strength cement. Hassan Kunbargi, the owner of Ultimax Cement, and Edward K. Rice, the owner of CTS, have a long history together. In 1984, as Kunbargi began experimenting with cement chemistry as a graduate student at the University of California, Los Angeles ("UCLA"), Rice became Kunbargi's mentor and sought an adjunct faculty position at UCLA so that he could serve as Kunbargi's advisor. In late 1985, Kunbargi began to work for Rice's company, CTS, and together they worked as independent contractors for another company, Fibermesh, Inc. In 1989, after demonstrating the invention disclosed in the '556 patent to Rice, Kunbargi ceased working for Rice, and in September 1990, he received the '556 patent, entitled "Very Early Setting High Strength Early Cement." Years later, Kunbargi filed patent applications that issued as the '684 patent in September 2000 and the '534 patent in June 2002. Ultimax now owns the three patents in suit, which all relate to rapid-hardening, high-strength cement.

In June 2002, Ultimax and Heartland (collectively "Plaintiffs") sued CTS for infringement of the '684 and '534 patents, misappropriation of trade secrets, and several business torts. After amending their complaint twice, Plaintiffs alleged infringement of claims 9-11 of a third patent, the '556 patent; claim 17 of the '684 patent; and claims 10 and 11 of the '534 patent. See '684 Indefiniteness and '556 Noninfringement and Laches Opinion, 2004 U.S. Dist. Lexis 29580, at *16. All of the asserted claims of the '556 patent recite "soluble CaSO₄ anhydride," also known as "soluble calcium sulfate anhydride." Claim 9 of the '556 patent, which is representative of the asserted claims of that patent, reads as follows:

9. A very early setting, ultra high strength cement consisting essentially of 10% to 30% by weight C₄A₃S, 5% to 25% by weight soluble CaSO₄ anhydride and 45% to 85% by weight hydraulic cement and having a compressive strength on the order of 3000 psi within approximately one hour following hydration.

'556 patent col.12 ll.5-10. The specification redefines common chemical symbols by, for example, stating that "C" represents CaO, "A" represents Al₂O₃, and "S" represents SO₃. Id. at Abstract, col.1 ll.38-46.

Claim 17 of the '684 patent, the only claim on appeal from that patent, depends from claim 14. Claims 14 and 17 of the '684 patent were corrected after the patent issued. Those claims, after the Certificates of Correction were issued, read as follows:

14. A very early setting, ultra high strength cement comprising:

a hydraulic cement containing CaO, {(C,K,N,M)₄(A,F,Mn,P,T,S)₃(cl,S)} and a member selected from the group consisting of {(C₉S₃S₃Ca(f cl))₂}, C₅S₂S and mixtures thereof.

17. The very early setting, ultra high strength cement of claim 14 and having a compressive strength greater than 3000 psi within approximately one hour following hydration.

'684 patent col.16 l.62-col.17 l.7, Certificates of Correction. Like the '556 patent specification, the '684 patent specification redefines common chemical symbols by, for example, stating that "C" represents CaO, "K" represents K₂O, and so on for many of the letters used in claimed compounds. Id. at col.1 l.59-col.2 l.5. Furthermore, the specification states that "f" represents fluorine, normally denoted "F," and that "cl" represents chlorine, normally denoted "Cl." Id. In the specification and throughout the parties' briefs, the compound (C,K,N,M)₄(A,F,Mn,P,T,S)₃(cl,S) is referred to as "crystal X," and the compound C₁₀S₃S₃(f,cl), which is different from the claimed compound C₉S₃S₃Ca(f cl)₂, is referred to as "crystal Y." Id. at col.5 ll.29-32. Crystal Y is not a claimed term and need not be further referred to as such.

Once Plaintiffs filed suit, the district court issued a scheduling order setting a cutoff date in January 2003 for motions to amend the pleadings. In August 2004, Plaintiffs moved for leave to file a third amended complaint, which the court denied, based on Plaintiffs' delay. See Opinion Denying Leave to Amend, No. SA CV 02-578. In December 2004, the court granted CTS's motion for summary judgment dismissing Plaintiffs' claim for misappropriation of trade secrets, reasoning that the alleged secret had been publicly disclosed in a Japanese patent. See Trade Secret Opinion, No. SA CV 02-578. At the same time, the court granted summary judgment on several patent validity and enforceability issues, including that the claims of the '684 patent were indefinite because crystal X encompassed over 5000 possible compounds and because another claimed compound lacked a comma between "f" and "cl," that CTS did not infringe the asserted claims of the '556 patent based on a construction of the word "anhydride," and that the '556 patent was unenforceable due to laches. See '684 Indefiniteness and '556 Noninfringement and Laches Opinion, 2004 U.S. Dist. Lexis 29580. Plaintiffs moved for reconsideration, focusing on the summary judgment of noninfringement of the '556 patent, which the court denied in May 2006. See Order Denying Reconsideration of '556 Noninfringement, No. SA CV 02-578.

In May 2007, the district court denied Plaintiffs' motion to disqualify CTS's counsel, who had been listed on a power of attorney as entitled to prosecute a patent application on an invention by Rice and Kunbargi when they had both worked for Fibermesh. See Disqualification Opinion, 2007 U.S. Dist. Lexis 44096. In January 2008, after allowing the parties to submit further summary judgment motions, the court granted CTS's motions for summary judgment that the '534 patent was invalid as anticipated, obvious, and lacking written description support, and that it was not infringed. See '534 Anticipation and Obviousness Opinion, No. SA CV 02-578; '534 Written Description Opinion, No. SA CV 02-578; '534 Noninfringement Opinion, No. SA CV 02-578. Finally, in May 2008, having disposed of the merits of the case, the court denied CTS's motion to make the case exceptional and for attorney fees. See Exceptional Case Opinion, No. SA CV 02-578.

Ultimax timely appealed the district court's decisions relating to the patents and trade secret, its failure to disqualify CTS's law firm, and its denial of leave to amend the complaint. CTS cross-appealed the court's denial of its motion to make the case exceptional and to award attorney fees and sanctions. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

A. Patent-Related Issues

1. Infringement of the '556 Patent

In finding the '556 patent not infringed, the district court first construed the claim term "soluble CaSO₄ anhydride." The court defined "anhydride," primarily using a dictionary, as "a compound formed from an acid by removal of water." '684 Indefiniteness and '556 Noninfringement and Laches Opinion, 2004 U.S. Dist. Lexis 29580, at *41. The court reasoned that, if the claim drafter had intended to refer to calcium sulfate from which water has been removed, which was Ultimax's interpretation, it would have used the term "anhydrous CaSO₄" or "anhydrite," which is a specific term for anhydrous calcium sulfate. Id. The court acknowledged the observation of the neutral court-appointed expert, Dr. Seible, "that...