United States District Court, D. New Jersey
[Copyrighted Material Omitted]
For ALFRED M. WOLIN, Special Master: ALFRED M. WOLIN, SAIBER, LLC, FLORHAM PARK, NJ.
For TRANSWEB, LLC, Plaintiff, Counter Defendant: CHRISTINE INTROMASSO GANNON, JESSICA L. PALMER, LIZA M. WALSH, CONNELL FOLEY, LLP, ROSELAND, NJ.
For 3M INNOVATIVE PROPERTIES COMPANY, 3M COMPANY, Defendants: DAMIAN P. CONFORTI, GREGORY D. MILLER, LEAD ATTORNEYS, PODVEY, MEANOR, CATENACCI, HILDNER COCOZIELLO & CHATTMAN, PC, NEWARK, NJ; MURRAY J. LAULICHT, DAY PITNEY LLP, MORRISTOWN, NJ.
For 3M COMPANY, 3M INNOVATIVE PROPERTIES COMPANY, Counter Claimants: DAMIAN P. CONFORTI, GREGORY D. MILLER, LEAD ATTORNEYS, PODVEY, MEANOR, CATENACCI, HILDNER COCOZIELLO & CHATTMAN, PC, NEWARK, NJ.
For TRANSWEB, LLC, Counter Defendant: CHRISTINE INTROMASSO GANNON, LIZA M. WALSH, CONNELL FOLEY, LLP, ROSELAND, NJ.
Hon. Faith S. Hochberg, United States District Judge.
Just breathing in a dirty or contaminated area can cause serious injury. Industrial respirators are designed to protect workers in these environments. This dispute revolves around the filtration membrane used in industrial respirators. OSHA (Occupational Safety and Health Administration) regulations govern the type and quality of these respirators, which are rated and approved by NIOSH (the National Institute for Occupational Safety and Health, a division of the Centers for Disease Control).
Both 3M and a small, new company called TransWeb LLC (" TransWeb" ) independently developed filtration web for use in these NIOSH-approved respirators. At issue in this case is whether 3M's patents on the filtration media are valid and infringed
by TransWeb, and whether 3M violated the antitrust laws. 3M sought solely to enjoin TransWeb, and TransWeb sought damages (primarily in the amount of its attorneys' fees) and to invalidate the 3M patents.
A. Procedural History
TransWeb filed this action on August 27, 2010, against 3M Company and 3M Innovating Properties Company (collectively, " 3M" ), seeking a declaratory judgment of invalidity as to claims in the family of 3M patents, unenforceability of those patents due to inequitable conduct in the prosecution of those patents, and non-infringement by TransWeb. 3M counterclaimed for patent infringement. 3M is the assignee of the two patents-in-suit: U.S. Patent Nos. 6,397,458 (" the '458 patent" ) and 6,808,551 (" the '551 patent" ). The inventors on those patents are 3M employees, and a 3M in-house lawyer prosecuted the patents.
TransWeb filed an amended complaint stating antitrust claims of Walker Process fraud and sham litigation. (It had also claimed that 3M infringed a TransWeb patent, but TransWeb voluntarily dismissed its claims of infringement of its patent, and 3M voluntarily dismissed its counterclaims pertaining to those patents.).
Two days before the jury trial, 3M voluntarily dismissed fifty-six of its fifty-eight patent infringement claims of the '458 patent and all patent infringement claims of the '551 patent. Only two of 3M's claims in a single patent--the '458 patent--were litigated to a jury, together with TransWeb's antitrust and patent claims. 3M contended that TransWeb willfully infringed those claims.
B. The Product and Method
At issue in this case is the method for making filtration media--specifically, plasma fluorinated, nonwoven meltblown polypropylene electret web. That material can be used in numerous filtration applications, but for the purposes of this case, the most important use of a fluorinated electret was for respirators that workers must wear in oily environments.
In 1995, NIOSH began developing new regulations for oil-proof and oil-resistant respirators. (11/16/2012 Tr. at 4.17:5-18:6, 4.102:4-103:15; 11/14/2012 Tr. at 2A.77:15-21.) 3M first responded with a technology for making filter material using a fluorochemical melt-additive called PFOS, ( id. ), meaning that fluorine atoms were actually integrated into the melted material ( see PTX-28.6.). 3M received a patent on this process in 1995, and its employees Marvin Jones and Alan Rousseau were the inventors. (11/16/2012 Tr. at 4.17:8-12, 4.19:2-11; PTX-379.) But in 1998, 3M informed the EPA that there was an environmental problem with PFOS, and in 2000, 3M abandoned PFOS in its products. It was replaced with the melt-additive filtration process, the process that is the subject of this dispute. ( See 11/16/2012 Tr. at 4.102:8-103:18.)
According to 3M, Jones had successfully " hydrocharged" plasma fluorinated meltblown polypropylene for the first time in August 1995. (11/19/2012 Tr. at 5A.125:19-23; PTX-1143.238-39.) " Hydrocharging" was a 3M patented process invented by Hassan Angadjivand and claimed in U.S. Patent No. 5,496,507 that issued on March 5, 1996 (the " Angadjivand patent" ). (DTX-672.) The Angadjivand patent teaches, inter alia, " impinging jets of water or a stream of water droplets
onto the web at a pressure sufficient to provide the filtration-enhancing electret charge." ( Id. ; see also Markman Order at 2, ECF No. 215 (" 'hydrocharging' means 'contacting an article with water in a manner sufficient to impart a charge to the article, followed by drying the article'" ).) Jones and his colleague, Christopher Lyons, continued to experiment with the hydrocharging process, and eventually achieved a significant increase in the " quality factor"  of the material. However, 3M did not initially apply for a patent on the Jones process, to Jones's " chagrin." (11/16/2012 Tr. at 4.12:10-20.)
Eventually, 3M did apply for the patents-in-suit, but not until 1998. (The surrounding saga is told below.) The patents-in-suit claim the method of making an electret article by transferring fluorine to the article from a gaseous phase (the '458 patent), and the method of using fluorinated electrets (the '551 patent). The filtration material--nonwoven, meltblown polypropylene--is made by melting polypropylene  pellets in an extruder and blowing the molten polymer through a die, which creates a nonwoven web. (PTX-28.7; 11/14/2012 Tr. at 2A.63:19-64:5.) That material is then charged to create an electret, which improves filtration capacity. (PTX-28.7.) Fluorine atoms are applied to the surface of the web, allowing the filter material to retain its electret in oily environments. ( Id. )
C. TransWeb's Formation and Patent Applications
In this case, TransWeb asserted that it produced products for public sale using this process over a year before 3M applied for its patents. In 1996, TransWeb was formed to create specialty products for the air filtration market, including fluorinated polymeric nonwoven web. (11/14/2012 Tr. at 2A.40:16-41:5.) On April 30, 1997, Kumar Ogale, a founder of TransWeb, filed a patent application (the '348 application) for an " improved electrostatic filter medium including a web of electret fibers which have been treated with fluorine-containing plasma prior to being electrically charged" and " a method of producing non-woven webs which have been treated with fluorine-containing plasma prior to electrostatically charging the web." (PTX-96.6.) That application was rejected in 1998 on the ground that prior art references in the application were already well known to the public, and therefore it would be obvious to a person of ordinary skill in the art to apply fluorine to the filter by plasma treatment. ( See, e.g., 11/14/2012 Tr. at 2A.74:8-25.) Ogale and his attorney submitted amendments to the application to the Patent Office, but the examiner issued a Final Rejection on July 9, 1998, because the claims were " unpatentable [under 35 U.S.C. § 103(a)] over the prior art . . . ." (PTX-96.66.) Ogale subsequently abandoned that application. (11/14/2012 Tr. at 2A.74:8-25.)
Ogale later discovered that if he rinsed the fluorinated meltblown polypropylene, it would improve and/or stabilize the electret of the filter material. (PTX-101.) He again applied for a patent, on May 25, 2000, and this time was successful: U.S. Patent No. 6,419,871
(the " '871 patent" ) issued on July 16, 2002. ( Id. )
Trial commenced on November 13, 2012, on TransWeb's antitrust and patent declaratory judgment claims, and 3M's patent infringement counterclaims. At the close of TransWeb's case, 3M moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50 on the claims of invalidity, infringement and willfulness, inequitable conduct, and antitrust violations. The Court reserved on those motions.
At the conclusion of the trial, the jury returned a verdict in TransWeb's favor on all but one count, finding that the 3M patent claims asserted were invalid as obvious; that 3M engaged in Walker Process fraud in securing and asserting its patents; and that TransWeb did not infringe 3M's patent. Additionally, the jury found that 3M did not commit an antitrust violation by engaging in sham litigation in pursuing its claims against TransWeb. The jury also returned a unanimous advisory verdict of inequitable conduct by 3M, although the Court had instructed the jury that it would accept a non-unanimous verdict on that count. The jury found that TransWeb was entitled to damages in the amount of $34,412 in lost profits plus its attorneys' fees in defending the patent infringement claims, which the jury found were damages attributable to 3M's antitrust violations.
3M then renewed its motions for judgment as a matter of law, and the Court instructed the parties to brief those issues, as well as the inequitable conduct claim, which is for this Court to decide. The Court held a post-trial hearing on January 10, 2013. Issues relating to the damages calculation were submitted to a Special Master, who held extensive hearings during 2013. The Special Master submitted a report and recommendation to this Court on September 24, 2013. This Court then scheduled briefing on objections to the report and recommendation. This Opinion resolves the outstanding post-trial motions; sets forth the Court's findings of facts and conclusions of law with respect to the claim of inequitable conduct; and resolves the objections to the report of the Special Master on damages.
II. STANDARD ON A MOTION FOR JUDGMENT AS A MATTER OF LAW
A motion for judgment as a matter of law under Fed.R.Civ.P. 50(b) " should be granted only if, viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference, there is insufficient evidence from which a jury reasonably could find" for the nonmovant. Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993); Mandile v. Clark Material Handling Co., 131 F.App'x 836, 838 (3d Cir. 2005).
In making this determination, " the court may not weigh the evidence, determine the
credibility of the witnesses, or substitute its version of the facts for the jury's version." Lightning Lube, 4 F.3d at 1166 (citing Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 190 (3d Cir. 1992)).
" The question is not whether there is literally no evidence supporting the party against whom the motion is directed but whether there is evidence upon which the jury could properly find a verdict for that party." Lightning Lube, 4 F.3d at 1166 (quoting Patzig v. O'Neil, 577 F.2d 841, 846 (3d Cir. 1978)).
III. JUDGMENT AS A MATTER OF LAW AS TO INVALIDITY-OBVIOUSNESS
3M contends that TransWeb produced insufficient evidence upon which a reasonable jury could find that claims 31 and 57 of the '458 patent were invalid as obvious. The invalidity contention that was submitted to the jury was whether the '458 claims were obvious in light of the purported Ogale prior art product in combination with the Angadjivand patent. The Court will consider 3M's arguments on that issue first, because it bears on a materiality prong of the inequitable conduct allegations.
As the Court instructed the jury, TransWeb had the burden of proving invalidity of the '458 patent by clear and convincing evidence. (Final Jury Instructions at F-7.) See also 35 U.S.C. § 282; Microsoft Corp. v. i4i Limited P'ship, 131 S.Ct. 2238, 2243, 180 L.Ed.2d 131 (2011). 3M argues that there was insufficient evidence from which a reasonable jury could conclude that the TransWeb product samples were prior art or that the subject matter of the '458 claims would have been obvious at the time of invention to a person of ordinary skill in the art. See 35 U.S.C. § § 102, 103.
The primary claimed prior art in this case consists of samples of a TransWeb product called T-Melt P, which Ogale testified that he distributed at the 1997 American Filtration & Separations Society Annual Technical Conference and Expo in Minneapolis (the " Minneapolis Expo" ). The Expo took place from April 29 to May 2, 1997. (PTX-341; PTX-460.) 3M was a major participant in the Expo, which took place in its hometown, and many 3M employees attended it. ( See PTX-461.22; 11/16/2012 Tr. at 4.34:25-4.35:7.) Ogale testified that he handed out samples of the oil-resistant product and data sheets explaining the filtration properties of the product, including the amount of penetration of the particles and the pressure drop, to visitors to the TransWeb booth at the Minneapolis Expo. (11/14/2012 Tr. at 2A.80:3-88:8.)
A. Public Use
To qualify as prior art pursuant to 35 U.S.C. § 102(b), TransWeb had the burden to prove by clear and convincing evidence that the invention was " in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States." In this case, the '458 patent has an effective filing date of July 2, 1998. (PTX-1314.3.) Therefore, if the jury could conclude that Ogale distributed the T-Melt P samples at the Minneapolis Expo, and/or that he offered
them for sale before July 2, 1997, then TransWeb's product would be prior art and the jury's verdict of invalidity rested on ample evidence.
3M contends first that the only evidence that TransWeb displayed and distributed the samples at the Expo is Ogale's testimony. A party must offer more than uncorroborated testimony to carry its burden in invalidating a patent. See, e.g., Finnigan Corp. v. Int'l Trade Comm'n, 180 F.3d 1354, 1366-67 (Fed. Cir. 1999) (holding that a witness's testimony of an invalidating public use must be corroborated to satisfy the interested party's burden of proving invalidity by clear and convincing evidence). At oral argument on the issue, 3M further contended that TransWeb was obligated to introduce at trial corroborating evidence in the form of corroborating witness testimony, and that corroborating documentary evidence was insufficient as a matter of law. Thus, 3M argues, TransWeb was required to put another person on the stand who remembered seeing Ogale distributing those samples at the Expo over 15 years after the Expo ended.
3M controlled the passage of time, and the corresponding diminution of percipient-witness memories by waiting many years before initiating suit. Moreover, the Court finds no support in the law for a requirement that the corroborating evidence be solely a percipient eyewitness rather than another equally valid form of documentary evidence. Notably, 3M provided no cases to support this proposition of law.
Either direct or circumstantial evidence corroborating public use may be sufficient for a party to meet its burden of proof. See Sandt Tech., Ltd. v. Resco Metal & Plastics Corp., 264 F.3d 1344, 1350-51 (Fed. Cir. 2001). The role of circumstantial evidence is particularly important where so much time has elapsed between the key events and the suit. Oral testimony is " more suspect" than contemporaneous documentary evidence, " as there is more of a risk that the witness may have a litigation-inspired motive to corroborate the inventor's testimony, and that the testimony may be inaccurate." Id. at 1351. Instead, " each ...