Victus, Ltd. v. Collezione Europa U.S.A., Inc.

• Decision Date: 26 October 1998
• Docket Number: No. 2:97CV00138.,2:97CV00138.
• Citation: 26 F.Supp.2d 772
• Court: U.S. District Court — Middle District of North Carolina
• Parties: VICTUS, LTD., d/b/a Master Design Furniture, Plaintiff, v. COLLEZIONE EUROPA U.S.A., INC., Defendant.

26 F.Supp.2d 772

VICTUS, LTD., d/b/a Master Design Furniture, Plaintiff, v. COLLEZIONE EUROPA U.S.A., INC., Defendant.

No. 2:97CV00138.

United States District Court, M.D. North Carolina.

October 26, 1998.

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Gilbert J. Andia, Jr., Howard A. MacCord, Jr., Greensboro, NC, for Plaintiff.

Peter J. Juran, Winston-Salem, NC, Nicholas Mesiti, Albany, NY, for Defendant.

MEMORANDUM OPINION

TILLEY, District Judge.

For the reasons stated below, summary judgment in favor of the Plaintiff on the Defendant's antitrust counterclaim is GRANTED, sua sponte. Moreover, Defendant's Motion for Attorneys' Fees and Expenses pursuant to 35 U.S.C. § 285 is DENIED. Given that no claims or counterclaims remain, this case will be DISMISSED.

I.

Plaintiff Victus, Ltd., d/b/a Master Design Furniture ("Master Design") is a corporation that produces furniture and sells it, among other places, at its place of business in Greensboro, North Carolina. Defendant, Collezione Europa U.S.A., Inc. ("Europa"), is a corporation that produces furniture and sells it, among other places, at its place of business in High Point, North Carolina.

Master Design is the assignee of United States Design Patent No. 369,045 ("the '045 patent"), issued on April 23, 1996, and titled "Table." In applying for a patent, Master Design attempted to include versions of the table with wooden parquet tops, with glass tops, and with glass tops and wooden parquet shelves beneath. The patent examiner rejected the attempt to include more than one type top in the patent. The final drawings consequently depict several variations of a table, all with the same grooved leg and apron design and all with similar wooden parquet tops.¹

Europa sells a group of tables, known as T1195 tables, which have the same or a very similar grooved leg and apron design as that found in Master Design's Design Patent No. 369,045, but which have glass tops. Master Design filed suit in this Court on February 17, 1997, alleging that Europa's tables infringe its patent. Europa counterclaimed, alleging that Plaintiff's infringement suit constituted an attempt to monopolize, in violation of the antitrust laws, specifically the Sherman Act, 15 U.S.C. § 2. The patent-infringement suit was dismissed on August 3, 1998 by the granting of Partial Summary Judgment in favor of Europa. (Mem. Op.[Doc.#58].) Now, the Court, sua sponte, considers whether summary judgment should issue concerning Europa's antitrust counterclaim.

The Court has jurisdiction over this case pursuant to 28 U.S.C. §§ 1338(a) and 1338(b). Venue is proper pursuant to 28 U.S.C. § 1400.

II.

Fed.R.Civ.P. 56 does not expressly provide that district courts may enter summary judgments sua sponte; however, "there can be little doubt that district courts inherently possess that power." United States Dev. Corp. v. Peoples Fed. Sav. & Loan Ass'n., 873 F.2d 731, 735 (4th Cir.1989). Before such power is exercised, the losing party must be given notice that it will have the opportunity to defend its claim. Id. An evidentiary hearing is not always required, see Pension Benefit Guar. Corp. v. Mize Co., 987 F.2d 1059, 1061 (4th Cir.1993), but the party against whom judgment is entered must have "had a full and fair opportunity to develop and present facts and legal arguments in support of its position," Portsmouth Square, Inc. v. Shareholders Protective Comm., 770 F.2d 866, 869 (9th Cir.1985).

In order for the Europa antitrust claim to survive, Europa must succeed on several essential issues; however, two primary issues are the focus of this Opinion. First, Europa is required to show that Master Design's original patent infringement suit was "objectively baseless." See discussion infra Part IV. Second, Europa must show that a "relevant antitrust market" existed. See discussion infra Part V. This summary judgment is based on Europa's inability to demonstrate either criterion as a matter of law. However, before delving into the analysis of these issues, some discussion is required in order to demonstrate that a sua sponte summary judgment is appropriate in this case because Europa had ample notice and opportunity to present its arguments regarding these topics.

On September 17, 1998, the Court issued an order requiring the parties to appear at a hearing on September 25, 1998, in order (1) to be heard on the issue of whether the original infringement case was "objectively baseless," and (2) to give the Defendant the opportunity to forecast the evidence upon which it would rely at trial to establish a "relevant market."² (Order [Doc. #76], at 1.) Europa was required to authenticate the evidence it intended to forecast according to Fed.R.Civ.P. 56. (Id.) At the hearing, the Court reiterated the fact that if Europa did not make a sufficient showing of evidence on these two issues, the antitrust claim would not proceed to trial. Europa arrived prepared: it presented the Court with a threering binder of additional evidence to support its claim, including affidavits, deposition transcripts, copies of letters, and copies of Master Design's marketing materials. Both of the issues mentioned above were discussed by the parties and the Court at length, with opportunities for argument and rebuttal.

Regarding a sua sponte summary judgment, the Fourth Circuit has stated that, "[w]hile notice [to the losing party that it must come forward and defend its claim] need not necessarily be a formal document, ... it should provide the full ten days called for by Fed.R.Civ.P. 56(c)." United States Dev. Corp., 873 F.2d at 735 (citations omitted). As is obvious from the dates recited above, ten days were not provided to the parties between official court notice of the hearing and the hearing itself. However, the Fourth Circuit also has stated that "extraordinary circumstances may justify departures from the ten-day notice requirement." Id. at 735 n. 3 (citing Portsmouth Square, 770 F.2d at 868-69). In Portsmouth Square, Inc., the Ninth Circuit upheld a sua sponte summary judgment decision made after a pretrial conference in which the parties argued the merits of the claims. Portsmouth Square, 770 F.2d at 869. The losing party in that case had no advance warning that the court intended to raise a dispositive issue at the pretrial conference, and the party was denied the opportunity to respond with affidavits and other evidence in support of its claim. Id. at 868-69. However, citing efficiency, the conservation of judicial resources, and the fact that discovery for the case had been closed, the Ninth Circuit determined that the losing party had "adequate time to develop the facts on which [it] would depend to oppose summary judgment," and "was afforded a full and fair opportunity to make its case." Id. at 869.

The instant case presents a much easier scenario than Portsmouth Square for concluding that due process was satisfied. While Europa did not have ten days to prepare specifically for the hearing on September 25, 1998, it had substantial notice to prepare for these dispositive issues in contention at the hearing. First, the discovery period ended on December 15, 1997, and the trial in this matter was originally scheduled for July 13, 1998. Pursuant to that trial date, Europa discussed both of these issues in its first Trial Brief, submitted on June 23, 1998. (See Def. Trial Br. [Doc. # 51], at 26, 27.) On July 9, 1998, the parties were informed that the trial would be delayed two weeks, and on July 23, 1998, the trial was formally reset for October 5, 1998. Therefore, Europa should have been prepared to argue both of these issues in early July.

Additionally, after the trial's postponement, Europa discussed these issues in its Revised Trial Brief, submitted on September 15, 1998. (See Def. Rev. Trial Br. [Doc. # 68], at 10, 12-13, 14-16.) Moreover, the "relevant market" issue was the subject of a Motion in Limine by Master Design, (see Mot. in Limine [Doc. # 56]), to which the Defendant responded on July 27, 1998 with a brief addressing this issue. (See Def. Br. Resp. Pl.'s Mot. Limine [Doc. # 57], at 4-6.) The Order denying the Plaintiff's Motion in Limine, issued on September 16, 1998, clearly stated that "at a hearing prior to trial, the Defendant must prepare a forecast of the evidence it will rely upon to establish that a relevant market existed. If the Defendant is unable to present evidence sufficient to support a verdict on this issue, then the Defendant's antitrust claim must be dismissed." (Mem. Order [Doc. # 75], at 5.) Finally, the next day, the Court issued its Order formally setting the date of the hearing and requiring that the Defendant forecast its evidence in accordance with Fed.R.Civ.P. 56. (Order [Doc. # 76], at 1.) The hearing was held as scheduled, with neither party requesting additional time to prepare. At the hearing, the Court repeatedly emphasized that if Europa did not make a sufficient showing on these issues, then the case would be dismissed.

In sum, blind adherence to the "ten-day rule" is not necessary in this case in order to provide Europa with proper due process. Given that the trial was originally scheduled for July 13, 1998, the essential facts needed by Europa to argue its case were developed well before the notice of the hearing was provided on September 17, 1998. Europa was fully prepared to argue its perspective on the issues of whether the infringement suit was "objectively baseless," and whether a "relevant market" existed. Under these circumstances, the issuance of a sua sponte summary judgment is proper.

III.

Summary judgment, whether sua sponte or on motion from a party, is appropriate only if there is no genuine issue as to any material fact. Fed.R.Civ.P. 56(c). The party opposing summary judgment may not rest on its pleadings, but must provide evidence or point to evidence already in the record, properly authenticated pursuant to Rule 56(e), that would be sufficient to...