Sanctions Result in Summary Judgment of No Invalidity; No Liability for Letters Sent to Defendants' Customers

Posted on February 8, 2008 by Brian Wm. Higgins

     A year ago, West Chester, OH-based Contech Stormwater Solutions sued Mount Airy, MD-based BaySaver Technologies, Inc. and AccuBid Excavation, Inc., for allegedly infringing its U.S. Patents Nos. 5,707,527 and 6,027,639 (see related post here). After finding in favor of defendants on the question of liability, the U.S. District Court for the District of Maryland considered defendants’ business tort, and patent invalidity and unenforceability counterclaims in connection with the parties’ summary judgment motions.

Rule 37(c)(1) Sanctions

     At the outset, the court limited defendants’ use of certain evidence as a sanction under Rule 37(c)(1), “because [defendants] failed timely to disclose prior art or the underlying basis for their invalidity claims, and because they failed to demonstrate causation and damages on their business tort claims.” In particular, the court found that,

"[Defendants] did not provide a claim chart or any reasoned analysis showing where in the prior art each element of each allegedly invalid claim is located. Defendants merely attached alleged prior art references to their Opposition without any explanation of why any claim of the asserted patents is invalid over the referenced prior art. Without more, [defendants] have quite simply failed to produce specific facts showing that there is a genuine issue for trial, especially under a clear and convincing standard."

     Without evidence to support the counterclaims, the court granted plaintiff’s summary judgment motion.

Inequitable Conduct

     The sole basis of defendants’ inequitable conduct counterclaim, the court found, was a "brief segment of testimony taken from a deposition that, as offered by the defendants, allegedly raised a disclosure issue concerning U.S. Patent No. 4,643,836 (“the ‘836 patent’”)," which was never disclosed to the PTO. The testimony, the court concluded, “revealed nothing about the materiality of the ‘836 patent and fails to raise even an inference of an intent to deceive or relevance or mislead the USPTO.” The court found that the ‘836 patent had in fact been indirectly disclosed on a brochure cited to the PTO. Moreover, the court found that defendants “made no showing that the ‘836 patent was even material to the prosecution of the ‘527 and ‘639 patents.” Accordingly, Plaintiff’s summary judgment motion on the inequitable conduct counterclaim was granted.

Letters to Defendants’ Customers and Regulators

    Defendants’ state law counterclaims, which included allegations of defamation, were based on a letter sent by Contech in February 2007 to a select group of potential customers and regulators notifying them of Contech’s infringement claim against the accused BaySaver product. The court noted that Defendants’ allegations were based on a belief that “the letter was not intended to be informative, but rather was filed for the sole purpose of harassing the defendants and disrupting their business dealings.” In its memorandum, the court wrote,

"[F]ollowing discovery, there is some evidence that Contech sent its letters in a targeted manner to BaySaver’s prospective clients with the intent of disrupting potential business dealings. While some of this conduct may cross the line between fair competition and subjective bad faith, Contech is still entitled to summary judgment on the tort counterclaims for two reasons: (1) [Defendants] have failed to provide evidence that Contech’s underlying suit was objectively baseless, and (2) [Defendants] failed to provide sufficient evidence of causation and damages, at least until well after the close of discovery."

     The court found that the underlying content of Contech’s February letter did not appear to be untruthful or as inflammatory or threatening as other infringement notice letters held to be protected under federal law. “Communication of accurate information about patent rights, whether by direct notice to potential infringers or by publicity release, does not support a finding of bad faith,” the court found (citing cases).

Comments/Notes:

  • Citation: Contech Stormwater Solutions, Inc. v. BaySaver Technologies, Inc. and AccuBid Excavation, Inc., No. 07 Civ. 358 (D. Md. Jan. 15. 2008)

  • It is not clear if the outcome of this case would have been different had the late evidence offered by defendants not been excluded by the Judge as a sanction. Unfortunately for defendants, a decision to exclude is within the discretion of the court, and will be overturned only if there is a finding of an abuse of discretion.

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Opinion Issued as "Not Available for Publication" Adds Uncertainty to Status of Environmental Technology Patent

Posted on October 8, 2007 by Brian Wm. Higgins

Summary: A judicial opinion involving environmental-related patents that was issued as “not available for publication” limits what could be an important decision by the Federal District Court for the District of Maryland


     I have to admit that I was eager to post a summary of Judge Catherine Blake’s memorandum opinion in the matter of Contech Stormwater Solutions, Inc. v. BaySaver Technologies, Inc. and AccuBid Excavation, Inc., No. 07 Civ. 358 (D. Md. Sep. 26, 2007). After all, the opinion is at the crossroads of patent law and environmental technologies, two of my favorite topics (check out my bio, and you’ll understand).

     After summarizing the case, however, it became apparent that the Contech opinion concerns an issue of importance beyond just the merits of the two environmental-related patents-at-suit: the opinion was issued as “not available for publication,” meaning it has limited authority in the District Court for the District of Maryland where it originated, as well as in other Fourth Circuit courts (and possibly in the Federal Circuit), despite Rule 32.1 of the Federal Rules of Appellate Procedure which says:

“ A court may not prohibit or restrict the citation of federal judicial opinions, orders, judgments, or other written dispositions that have been: (i) designated as “unpublished,” “not for publication,” “non-precedential,” “not precedent,” or the like; and (ii) issued on or after January 1, 2007.”

     Paul Mark Sandler opined earlier this year in Raising the Bar: "Citing Unpublished Opinions,” The Daily Record, May 4, 2007, that:

“The new rule [32.1] will bring a measure of uniformity to the federal courts of appeals. Although federal circuit courts will still be able to give varying precedential weight to unpublished opinions, they can no longer prohibit lawyers from citing them. Thus, Rule 32.1 will effectively overturn local appellate rules in the Second, Seventh, Ninth, and Federal Circuits, where the citation of unpublished opinions is currently banned outright.”

     Paul’s comment is correct: courts will give varying precedential weight to unpublished opinions, even though under Rule 32.1 they won’t be able to outright ban them in, for example, the Fourth Circuit and Federal Circuit (which handles all patent appeals). Thus, while Rule 32.1 apparently removes the bar to citation to unpublished opinions, it does nothing to lessen what amounts to a stigma associated with those opinions, especially in the court that issued the opinions. The result of the "not available for publication" designation in this case is that lawyers will be reluctant to cite to the memorandum opinion to support their arguments in other cases.

     Issuing the Contech opinion as “not approved for publication” does not make sense. The opinion contains a detailed claim construction that, in one instance, is diametrically opposed to another district court’s claim construction (i.e., the District Court for the District of Oregon) regarding the term “siphoning,” which leaves one of the two patents-in-suit in the Contech case in a state of flux. That patent, described below, was issued in 1998 and has already seen litigation twice. It’s possible that it will see the inside of more courtrooms before the patent expires, so providing a precedential opinion today, which others can rely upon without hesitation, just makes sense.

The Lawsuit

     The lawsuit began in February 2007 when West Chester, OH-based Contech Stormwater Solutions sued Mount Airy, MD-based BaySaver Technologies, Inc. and AccuBid Excavation, Inc. for allegedly infringing its U.S. Patents Nos. 5,707,527 and 6,027,639, which are directed to an “Apparatus and Method for Treating Stormwater” and a “Self-Cleaning Siphon-Actuated Radial Flow Filter Basket,” respectively. At the summary judgment stage, the Maryland District Court granted defendants’ motion for summary judgment, finding that BaySaver Technologies’ BaySaver™ stormwater filtration units do not infringe the two patents. In doing so, the court refused to adopt the Oregon District Court’s construction of the term “siphoning,” choosing instead to adopt its own construction of the term.  

     In particular, the court construed the term “siphoning” in the clause “siphoning treated water from the drainage space under gravity into the treated water outlet conduit” according to the patentee’s chosen definition:  “[the specification] makes it clear that the patentee is defining ‘siphoning’ to describe a process by which water is emptied from a drainage space by traveling through a tube or pipe running from the liquid in the drainage space to a lower level outside the vessel so that atmospheric pressure forces the liquid through the tube.” That interpretation of the disclosure is contrary to the ordinary meaning of the term as understood by one skilled in the art, the court acknowledged, since it excludes the flow of water over an intermediate elevation. The BaySaver device, the court found, “does create a true siphon effect as the term is ordinarily understood by those skilled in the art.”

     The Oregon court had come to a different construction in Stormwater Management, Inc v. Cds Technologies, Inc., No. 3:04 Civ 414 (D. Ore. 2004):

“[O]ne of ordinary skill in the art of hydraulics would understand ‘siphoning’ to mean ‘a closed conduit that rises above the hydraulic grade line and in which the pressure at some point is below atmospheric.’ Standard Handbook for Civil Engineers (3d ed.). The ['527] patent does not expressly redefine the term "siphoning," nor does the patent redefine that term by implication by using the term 'throughout the entire patent specification, in a manner consistent with only a single meaning.' Bell Atl. Network Servs., Inc. v. Covad Communications Group, Inc., 262 F.3d 1258, 1271 (Fed. Cir. 2001). Rather, the patent's use of the term 'siphoning' is consistent with that term's ordinary meaning as understood by one of ordinary skill in the art. Accordingly, the court finds 'siphoning,' as used in the '527 patent, means: 'a closed conduit that rises above the hydraulic grade line and in which the pressure at some point is below atmospheric.' Ordered by Judge Michael W. Mosman. (dls, ) (Entered: 05/11/2005).”

     In reviewing the Oregon District Court opinion, the Maryland District Court stated “because the ‘527 patent specification and preferred embodiment do not teach of an induced hydraulic flow over an intermediate elevation, and would thus be excluded by such a definition, it would be improper to adopt this construction of the term ‘siphoning.’”

Comments:

  • The other patent-at-issue was also found not to be infringed by the BaySaver device

  • The Oregon case settled after summary judgment briefs were filed and served, so the Oregon court's claim construction was apparently never appealed to the Federal Circuit

  • In a statement on its website, Baysaver’s President stated confidently, “This is a real victory for the environment, our customers and everyone else in this industry because BayFilter offers superior performance and a better value. Our customers now have a choice – they don’t have to buy filters from Contech”.
  • Patent cases are of course regularly appealed to the Federal Circuit, which reviews claim construction opinions at summary judgment without deference (or plenary review) and, therefore, would not necessarily care whether a district court’s claim construction is "published" or not; however, if this case is not appealed, other cases (and other lawyers) could be reluctant to rely on the Contech opinion given its current unpublished status.

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