Dethmers Mfg. Co. v. Automatic Equip. Mfg. Co., C 96-4061-MWB.

23 F.Supp.2d 974

DETHMERS MANUFACTURING COMPANY, INC., Plaintiff, v. AUTOMATIC EQUIPMENT MFG. CO., Defendant.

No. C 96-4061-MWB.

United States District Court, N.D. Iowa, Western Division.

September 29, 1998.

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David Tank, Davis, Brown, Koehn, Shors & Roberts, P.C., Brian J. Laurenzo, Michael Gilchrist, Dorsey & Whitney, LLP, Des Moines, IA, for Dethmers Manufacturing Co., Inc.

Warren M. Haines II, Donald R. Schoonover, Lathrop & Gage, L.C., Kansas City, MO, Tim Engler, Harding, Shultz & Downs, Lincoln, NE, for Automatic Equipment Manufacturing Co.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT'S MOTION TO DISMISS OR IN THE ALTERNATIVE FOR PARTIAL SUMMARY JUDGMENT, FOR MORE DEFINITE STATEMENT, AND TO STRIKE; DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OF PATENT INVALIDITY; AND PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE FOR PARTIAL SUMMARY JUDGMENT

BENNETT, District Judge.

I. INTRODUCTION .....................................................................  981
    A.  Procedural Background ........................................................  981
    B.  Factual Background ...........................................................  983
       1.  The '166 patent ...........................................................  984
       2.  The Re482 patent ..........................................................  988
          a.  The '240 patent ........................................................  988
          b.  The reissue patent .....................................................  991
       3.  The "Parent Invention" ....................................................  993
       4.  The Dethmers tow bar ......................................................  994
       5.  Other products and allegations of infringement ............................  997
II.  LEGAL ANALYSIS ..................................................................  998
    A.  Which Circuit's Law? .........................................................  998
    B.  Automatic's Motion To Dismiss ................................................  999
       1.  Punitive damages on state-law claims ...................................... 1000
          a.  Rule 12(b)(6) or Rule 56 standards? .................................... 1000
          b.  Conflict-of-laws rules ................................................. 1001
          c.  Application of the rules ............................................... 1002
              i.   Contract and quasi-contract claims ................................. 1002
              ii.  Tort claims ....................................................... 1004
       2.  Conversion of intangible ideas ............................................ 1005
          a.  Applicable standards ................................................... 1005
          b.  Conversion of "intangible ideas" ....................................... 1006
       3.  The "statutory" misappropriation claim .................................... 1007
       4.  The "misappropriation of intellectual property" claim...................... 1008
          a.  Standards for a motion to strike ....................................... 1008
          b.  Redundancy ............................................................. 1009
          c.  Recognition of the cause of action ..................................... 1010
       5.  Summary ................................................................... 1011

C. Standards For Summary Judgment In Patent Cases ............................... 1011
    D. Automatic's Motion For Summary Judgment Of Patent Invalidity ................. 1014
       1.  Adequacy of the "error" in the original patent ............................ 1014
          a.  Standards for reissue patents .......................................... 1015
          b.  Application of the standards ........................................... 1017
       2.  The same invention ........................................................ 1019
          a.  The appropriate test ................................................... 1019
          b.  Application of the test ................................................ 1020
       3.  Defective declaration ..................................................... 1020
          a.  Requirements of the declaration ........................................ 1021
          b.  Sufficiency of the declaration ......................................... 1022
       4.  Summary ................................................................... 1026
    E.  Dethmers's Motion For Summary Judgment Of Patent Invalidity, Unenforceability
         And Non-Infringement ............................................................ 1026
       1.  Invalidity of the '166 patent ............................................. 1027
          a.  Anticipation of claims 1 through 4 of the '166 patent .................. 1027
          b.  Obviousness of claim 5 of the '166 patent .............................. 1028
       2.  Unenforceability owing to inequitable conduct ............................. 1030
          a.  Materiality ............................................................ 1031
          b.  Intent to deceive ...................................................... 1031
       3. Non-infringement ........................................................... 1032
          a.  Literal and "doctrine of equivalents" infringement ..................... 1032
              i. Rules of claim construction ......................................... 1033
              ii. Literal infringement ............................................... 1033
              iii. Doctrine of equivalents infringement .............................. 1034
          b.  The groove ............................................................. 1036
              i. Claim interpretation and literal infringement ....................... 1037
              ii. "Equivalents" infringement and estoppel ............................ 1038
          c.  The spring location .................................................... 1038
              i. Claim interpretation and literal infringement ....................... 1039
              ii. "Equivalents" infringement and estoppel ............................ 1039
          d.  The cover .............................................................. 1040
              i. Claim interpretation ................................................ 1041
              ii. "Equivalents" infringement and vitiation of claim limitations ...... 1041
       4. Summary .................................................................... 1043
 III. CONCLUSION ..................................................................... 1044

The adage "the devil is in the details" perhaps applies with greater felicitousness to patent law than to any of the other arcane and abstruse areas of the law that might keep a federal judge awake at night. However, in addition to uniquely patent issues, this case also involves a number of peculiar questions of state law, including which state's law is applicable, whether under that state's law punitive damages are available on contract and tort claims, and what is the scope of state-law protection for unpatented ideas or inventions. The court must face these "devils" and, recognizing the details, render its best conclusions.

I. INTRODUCTION

A. Procedural Background

Plaintiff Dethmers Manufacturing Company, Inc., filed this action on June 26, 1996, seeking primarily a declaratory judgment, pursuant to 28 U.S.C. §§ 2201 and 2202, of non-infringement of a patent owned by defendant Automatic Equipment Manufacturing Company and declaratory, injunctive, and damages relief for Automatic's alleged infringement of one of Dethmers's patents. The patents in suit involve tow bars for towing an automobile behind a recreational vehicle and the parties make such tow bars based on their respective patents. Dethmers is an Iowa corporation with its principal place of business in Boyden, Iowa. Automatic is a Nebraska corporation with its principal place of business in Pender, Nebraska.

Dethmers was granted leave to file an amended complaint on April 24, 1997, and leave to file a second supplemental amended complaint on November 20, 1997. Count I of the second supplemental amended complaint seeks declaratory judgment that the products Dethmers manufactures do not infringe one of Automatic's patents, specifically United States Patent No. 5,356,166 (the '166 patent or the Automatic patent), that the '166 patent is invalid and unenforceable, and that Automatic is without right or authority to threaten or to maintain suit against Dethmers for alleged infringement of the '166 patent. Count II seeks damages for, as well as injunctive and declaratory relief from, infringement by Automatic of Dethmers's own patent, United States Patent No. Re32,482 (the Re482 patent or the Dethmers reissue patent), which is a reissue of United States Patent No. 5,232,240 (the '240 patent or the Johnson patent), a patent Dethmers alleges it acquired from the successors in interest to the inventor, Andrew B. Johnson of Barton, North Dakota. Count III seeks compensatory and punitive damages and injunctive relief for Automatic's alleged breach of a contract with Dethmers, as the assignee of Richard A. Parent, not to produce products incorporating the "Parent Invention" without permission or payment of consideration. Count IV seeks compensatory and punitive damages and injunctive relief for "statutory" misappropriation by Automatic of a trade secret, the "Parent Invention." Count V is a comparable "common-law" claim of misappropriation of a trade secret, also seeking compensatory and punitive damages and injunctive relief. Count VI alleges conversion of the ...