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Recent Cases
United States
Court of Appeals for the Federal Circuit
03-1176
POLYMER INDUSTRIAL
PRODUCTS COMPANY
and
POLYMER ENTERPRISES CORPORATION,
Plaintiffs-Appellants,
v.
BRIDGESTONE/FIRESTONE,
INC.,
Defendant-Appellee.
Joseph
Decker, Gefsky & Lehman, P.C., of Pittsburgh, Pennsylvania, argued
for plaintiffs-appellants.
Regan
J. Fay, Jones, Day, Reavis & Pogue, of Cleveland, Ohio, argued
for defendant-appellee. With him on the brief was Jenny L. Sheaffer;
and Gregory A. Castanias, Jones, Day, Reavis, & Pogue, of Washington, DC.
Appealed
from: United
States District Court for the
Northern District of Ohio
Senior
Judge David D. Dowd, Jr.
United States Court of Appeals for the Federal
Circuit
03-1176
POLYMER
INDUSTRIAL PRODUCTS COMPANY
and
POLYMER ENTERPRISES CORPORATION,
v.
BRIDGESTONE/FIRESTONE,
INC.,
Defendant-Appellee.
___________________________
DECIDED: October
20, 2003
___________________________
Before
NEWMAN, MICHEL, and RADER, Circuit Judges.
RADER, Circuit
Judge.
The United States District Court
for the Northern District of Ohio dismissed the infringement suit brought
by Polymer Industrial Products Company and Polymer Enterprises Corporation
(collectively PIPCO). Polymer
Indus. Prods. Co. v.
Bridgestone/Firestone, Inc., 211 F.R.D. 312 (N.D. Ohio
2002). Because PIPCO’s
infringement claim was a compulsory counterclaim under Fed. R. Civ. P.
13(a) in prior litigation and PIPCO waived the claim by not asserting it in
the prior action, this court affirms.
I.
PIPCO
is the owner of United States Patent No. 4,381,331, which claims
improvements in turn-over bladders.
These bladders are important for the manufacture of pneumatic
vehicle tires. In January 1995, PIPCO filed an
action against Bridgestone/Firestone, Inc. (Bridgestone) in the Northern
District of Ohio alleging that Bridgestone’s Skim-1 turn-over bladder
infringed the ’331 patent.
After that complaint was filed, Bridgestone began to make and use a
new turn-over bladder -- Skim-2.
In 1997, Bridgestone amended its answer, with leave of the court, to
include a counterclaim for declaratory judgment that the Skim-2 bladders
did not infringe the ’331 patent. PIPCO, in turn, denied the
allegations of Bridgestone’s counterclaim but did not amend its
complaint to assert an affirmative claim that the Skim-2 product infringed
the ’331 patent.
Following
trial, the jury considered the Skim-1 and Skim-2 products and found that
both infringed the ’331 patent.
The jury awarded damages based on the infringement and found willful
infringement. The parties now
dispute whether the jury awarded damages based on the Skim-1 product, the
Skim-2 product, or both.
Because this appeal arises under Fed. R. Civ. P. 12(b)(6), this
court must construe the complaint in the light most favorable to the
plaintiff-appellant and accept its factual allegations as true. See Advanced
Cardiovascular Sys., Inc. v. SciMed Life
Sys., Inc., 988 F.2d 1157, 1160 (Fed. Cir. 1993). Accordingly, this court assumes that
damages were not awarded for the Skim-2 product in the prior
litigation. After the jury
reached its damages figure, the district court doubled that amount based on
the finding of willfulness and issued a final judgment. This court affirmed that judgment in
all respects in Polymer Industrial Products Co. v.
Bridgestone/Firestone, Inc., 10 Fed. Appx. 812 (Fed. Cir. 2001)
(nonprecedential opinion).
Later
PIPCO filed this action seeking damages for Bridgestone’s
infringement of the ’331 patent by its
manufacture, use, and sale of the Skim-2 product, claiming that the
earlier litigation established Bridgestone’s liability for Skim-2
infringement. Thus, the only
unresolved issue, according to PIPCO, is the quantum of damages. In response, Bridgestone filed a
motion to dismiss for failure to state a claim under Fed. R. Civ. P.
12(b)(6), alleging that PIPCO waived its right to damages with respect to
the Skim-2 product by failing to assert an associated claim of infringement
in the prior litigation. The
district court granted Bridgestone’s motion, finding that
PIPCO’s claim was barred by either of two alternative and independent
legal theories: Fed. R. Civ. P. 13(a) and res judicata. Because Rule 13(a) is sufficient to
resolve this case, this court does not discuss res judicata.
This court has jurisdiction to hear
this appeal, because it is from a final decision of a district court in an
action where jurisdiction was based on 28 U.S.C. § 1338. See 28 U.S.C.
§ 1295(a)(1) (2000).
II.
PIPCO
challenges the district court’s dismissal of its claim under Fed. R.
Civ. P. 12(b)(6), arguing that the Declaratory Judgment Act’s
“further relief” section, 28 U.S.C. § 2202, allows
PIPCO to now seek further relief of damages based on the declaratory
judgment of infringement in the previous litigation.
Application of Rule 12(b)(6) is a
procedural question not pertaining to patent law. Therefore, this court applies the
rule of the regional circuit, in this case the United States Court of
Appeals for the Sixth Circuit. C&F
Packing Co. v. IBP, Inc., 224 F.3d 1296, 1306 (Fed. Cir. 2000) (citing Midwest
Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir.
1999) (en banc in relevant part)). In the Sixth Circuit, a dismissal
under Fed. R. Civ. P. 12(b)(6) raises a question of law that is subject to de
novo review. Boyce v.
Coopers & Lybrand C.P.A., 272 F.3d 356, 360 (6th Cir. 2001); In
re Sofamor Danek Group, Inc., 123 F.3d 394, 400 (6th Cir. 1997). The court must construe the
complaint in the light most favorable to the plaintiff, accept its factual
allegations as true, and determine whether the plaintiff can prove a set of
facts in support of its claims that would entitle it to relief. Mayer v. Mylod, 988 F.2d 635,
637-38 (6th Cir. 1993).
Compulsory Counterclaim
The district court held that
PIPCO’s present infringement claim was a compulsory counterclaim to
Bridgestone’s declaratory judgment claim of noninfringement in the
prior litigation. Consequently,
having failed to bring it then, PIPCO is forever barred from revisiting the
issue. In arriving at this conclusion, the district court relied on Fed. R.
Civ. P. 13(a). Although finding
this authority sufficient, the district court garnered further support for
its conclusion from this court’s decision in Vivid Technologies,
Inc. v. American Science & Engineering, Inc., 200 F.3d 795 (Fed.
Cir. 1999). Particularly, the
district court relied on the following language from Vivid Technologies:
“[W]hen the same patent is at issue in an action for declaration of
noninfringement, a counterclaim for patent infringement is compulsory and
if not made is deemed waived.”
Id. at 802.
PIPCO’s claim of infringement
against the Skim-2 product satisfies the requirements for a compulsory
counterclaim under Fed. R. Civ. P. 13(a). Rule 13(a) states:
Compulsory Counterclaims. A pleading shall state as a
counterclaim any claim which at the time of serving the pleading the
pleader has against any opposing party, 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.
In
the prior litigation, Bridgestone brought a declaratory judgment claim of
noninfringement of the ’331 patent for their Skim-2
product. PIPCO’s
affirmative claim of infringement involving the same patent and the same
product: (1) raises the same issues of law and fact as did the declaratory
judgment claim of noninfringement; (2) requires the examination of the same
evidence analyzed in the declaratory judgment claim of noninfringement; and
(3) involves a logical relationship to the declaratory judgment claim of
noninfringement. See id.
at 801 (citing 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice and Procedure § 1410 (2d ed. 1990)). Thus, PIPCO’s affirmative
claim of patent infringement in the prior litigation involving the same
patent and the same accused product was compulsory.
In Vivid Technologies, the
manufacturer, Vivid Technologies (Vivid), brought a declaratory judgment
action seeking a declaration that its x-ray security device did not
infringe a patent owned by American Science & Engineering, Inc. (AS
& E) or that the AS & E patent was invalid. The district court denied AS &
E’s motion for leave to file a counterclaim. Finding an abuse of discretion, this
court reversed and required entry of the counterclaim on remand. This court based its ruling on the
compulsory nature of AS & E’s claim. Beginning with Fed. R. Civ. P.
13(a), this court noted that “[a] counterclaim for patent
infringement, in an action for declaration of noninfringement of the same
patent, readily meets all [of the] four [tests]” identified by
Professor Wright and used by the various circuit courts, any one of which renders
a counterclaim compulsory. Vivid
Techs., 200 F.3d at 801 (citing 6 Charles Alan Wright, Arthur R. Miller
& Mary Kay Kane, Federal Practice and Procedure § 1410 (2d
ed. 1990)).
Additionally, this court noted
that, of the authorities examined at the time, “every court that has
discussed the issue has recognized that an infringement counterclaim is
compulsory in an action for declaration of noninfringement.” Vivid Techs., 200 F.3d at
801-02 (citing cases). After
this analysis and conclusion, this court stated the implications of a
compulsory counterclaim: “[I]t is generally recognized that when the
same patent is at issue in an action for declaration of noninfringement, a
counterclaim for patent infringement is compulsory and if not made is deemed
waived.” Id. at
802.
In sum, Rule 13(a) makes an
infringement counterclaim to a declaratory judgment action for
noninfringement compulsory. In
addition, this court finds that the compulsory nature of an infringement
claim in response to a declaratory judgment action for patent
noninfringement and the resulting waiver and bar that occurs if not
exercised warrant a uniform national rule. See Biodex Corp. v.
Loredan Biomedical, Inc., 946 F.2d 850, 858-59, (Fed. Cir. 1991)
(committing the resolution of a procedural issue to this court’s
jurisprudence where there is an essential relationship between this
court’s exclusive statutory mandate and procedural issue). Accordingly, this court reiterates
that a claim for a declaration of noninfringement makes a counterclaim for
patent infringement compulsory.
Although not explicit in the text
of Rule 13(a), a party that does not assert its compulsory counterclaim in
the first proceeding has waived its right to bring the counterclaim and is
forever barred from asserting that claim in future litigation. See Vivid Techs., 200
F.3d at 801-02 (citing 6 Charles Alan Wright et al.,
Federal Practice and Procedure § 1417, at 129 (2d ed. 1990)
("failure to plead a compulsory counterclaim bars a party from
bringing a later independent action on that claim")); see also Kane v.
Magna Mixer Co., 71 F.3d 555, 562-63 (6th Cir. 1995) (finding the
doctrine of waiver applicable to a failure to assert a compulsory
counterclaim under Rule 13(a)).
The language of Rule 13(a) (i.e. the terms “compulsory”
and “shall state as a counterclaim”) carry the inference that a
failure to assert a compulsory counterclaim constitutes a waiver of that
claim. The Supreme Court
explained:
The requirement
that counterclaims arising out of the same transaction or occurrence as the
opposing party's claim "shall" be stated in the pleadings was
designed to prevent multiplicity of actions and to achieve resolution in a
single lawsuit of all disputes arising out of common matters. The Rule was
particularly directed against one who failed to assert a counterclaim in
one action and then instituted a second action in which that counterclaim
became the basis of the complaint.
S.
Constr. Co., Inc. v. Pickard, 371 U.S. 57, 60 (1962). This case presents precisely that
situation. PIPCO did not assert
a compulsory counterclaim in the first action and subsequently instituted
this new action based on that counterclaim.
Because PIPCO’s claim in this
case was a compulsory counterclaim in the previous litigation, PIPCO is
barred from asserting it again.
PIPCO, however, asserts that an exception to the waiver rule
authorizes this claim. Accordingly,
the sole remaining issue in this appeal is whether, in these circumstances,
§ 2202 of the Declaratory Judgment Act constitutes an exception
to Fed. R. Civ. P. 13(a).
§ 2202 of the Declaratory
Judgment Act
PIPCO asserts that the Declaratory
Judgment Act’s “further relief” section, 28 U.S.C.
§ 2202, creates a statutory exception to the bar in Fed. R. Civ.
P. 13(a). This section, PIPCO
argues, permits it to seek, in a separate and subsequent action, the
further relief of damages based on the declaratory judgment of infringement
from the prior litigation. This
section provides:
§ 2202. Further relief
Further
necessary or proper relief based on a declaratory judgment or decree may be
granted, after reasonable notice and hearing, against any adverse party
whose rights have been determined by such judgment.
28
U.S.C. § 2202 (2000).
This court addressed the
Declaratory Judgment Act in B. Braun Medical, Inc.
v. Abbott Laboratories, 124 F.3d 1419 (Fed. Cir.
1997). In particular, this
court noted:
[T]he
[Declaratory Judgment] Act is a procedural device that provides a new, noncoercive remedy (a
declaratory judgment) in cases involving an actual controversy that has not
reached the stage at which either party may seek a coercive remedy (such as
an injunction or damages award) and in cases in which a party who could sue
for coercive relief has not yet done so.
Id. at
1428. PIPCO relies on this
statement to support the proposition that § 2202 serves as an
exception to the compulsory counterclaim doctrine of Rule 13(a).
To the contrary, the language in Braun
simply explains that a declaratory judgment is appropriate in cases in
which a party who could sue for coercive relief has not yet done so. That proposition has no bearing on
the application of Rule 13(a) after a declaratory judgment action. Under Rule 13(a), a party who has
waived a compulsory counterclaim has no right to sue for relief in a
separate and later case. Braun
simply does not address the effect of a compulsory counterclaim. Finally, in Braun, unlike the
case at bar, the court authorized further relief in a separate trial
conducted in the same case. Id. Braun did not deal with
further relief in a case brought after final judgment in the initial
declaratory judgment case.
In
Braun, Braun sued Abbott for patent infringement; Abbott filed a
declaratory judgment counterclaim for, inter alia,
noninfringement. The jury
returned a verdict in favor of Abbott, finding no infringement and further
concluding that Braun had misused the patent. After this verdict, the district
court held a separate eight-day trial to determine whether Braun’s
patent misuse had caused any damages to Abbott. The district court based this trial
on § 2202 of the Declaratory Judgment Act.
PIPCO
does not cite a case from any circuit that has applied § 2202 of
the Declaratory Judgment Act to allow a claim for patent infringement
damages in a new action based upon a declaratory judgment ruling in a
previous action. In sum, this
court discerns no authority for the notion that § 2202 operates
as an exception to Rule 13(a).
Indeed, § 2202 merely states that further relief based on
a declaratory judgment “may be granted.” 28 U.S.C. § 2202
(2000). This section creates no
statutory right to relief. If
Rule 13(a) does not operate as a bar, § 2202 may acknowledge that
a party may obtain further relief in a subsequent and separate action. See, e.g., Horn &
Hardart Co. v. Nat’l Rail Passenger Corp., 843 F.2d
546, 549 (D.C. Cir. 1988) (A separate action for further relief under
§ 2202 was not barred where “Rule 13(a)’s compulsory
counterclaim requirement never became relevant.”). In this case, however, PIPCO could
have requested the further relief it now seeks in the previous action
following the jury verdict.
PIPCO admits that it chose not to do so. PIPCO’s choice has
consequences, one of which flows from Rule 13(a). Nothing in § 2202
authorizes a party to seek further relief based on a declaratory judgment
without regard for other established rules of procedure.
Accordingly,
this court holds that § 2202 of the Declaratory Judgment Act does not
permit a party to assert an infringement claim, which was a compulsory
counterclaim to a declaratory judgment action in a prior litigation. The district court’s judgment
of dismissal is, therefore, affirmed.
COSTS
Each
party shall bear its own costs.
AFFIRMED
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