National Research Laboratories v. Eppert Oil Co.

104 F.Supp.2d 851

NATIONAL RESEARCH LABORATORIES, Plaintiff, v. EPPERT OIL COMPANY, INC., Defendant.

No. C-3-94-465.

United States District Court, S.D. Ohio, Western Division.

March 27, 2000.

Charles H. Walker, Columbus, OH, Frederick J. McGavran, Frost & Jacob, Cincinnati, OH, for Plaintiff.

Alfred L. Patmore, Jr., West Columbia, SC, for Defendant.

DECISION AND ENTRY SUSTAINING IN PART AND OVERRULING IN PART DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON DAMAGES (DOC. # 88)

RICE, Chief Judge.

This litigation was filed on November 8, 1994, by National Research Laboratories ("NRL") and Coolant Control, Inc. ("CCI"), alleging infringement of a number of patents held by Plaintiffs (Doc. # 1).¹ A detailed summary of the procedural history of this lawsuit was set forth in this Court's Decision of September 28, 1998 (Doc. # 76)(granting Defendant's motion for attorney fees and costs), and the Court will assume the parties' knowledge of that history. Pending before the Court is Defendant's Motion for Partial Summary Judgment on Damages (Doc. # 88). For the reasons assigned, Defendant's Motion is SUSTAINED IN PART AND OVERRULED IN PART. Before turning to Defendant's specific arguments, the Court will first set forth the factual circumstances leading to this litigation, and the standards governing all motions for summary judgment.

I. Factual Background

Plaintiff NRL, an Ohio corporation, is engaged in the business of developing, inventing, marketing, selling and licensing of certain chemical research and methodology.² Between 1977 and 1979, NRL was issued three United States patents for compositions and methodology (4,055,655; 4,126,509; 4,180,473), involving metalworking fluids.³ The claims of all three patents are involved in this litigation (A.Compl., Doc. # 32). All three NRL patents were exclusively licensed to CCI.

Dr. Gerald Maurer started CCI to market and develop products using NRL's patents.⁴ In 1975, NRL and CCI entered into a exclusive license agreement, whereby CCI was authorized to use its patents in the development and marketing of products for sale to the metalworking industry. The agreement provided that NRL would receive a royalty in the amount of 75% of CCI's net income.⁵ In 1990, the shareholders of CCI were bought out by an acquisition corporation, which transferred those shares to Mr. Jorge Costa and NRL. A new corporation was formed under the CCI name. To finance the buy-out of the "old" CCI and form the "new" CCI, NRL borrowed approximately 1.3 million dollars. During the same year, NRL entered into a license agreement with CCI, whereby CCI was granted a new exclusive license to use NRL's patents in the development and marketing of products for sale to the metalworking industry. The royalty rate for that license was 99% of CCI's net income on all products sold by CCI using NRL's patents. The agreed upon royalty rate was designed to assist NRL in securing a bank loan and to allow that company to avail itself of the benefits of certain provisions and sections of the United States tax code.

Pursuant to the license agreement, CCI manufactured and sold a line of products, known as OXCEDOT, which were used as additives to metalworking fluids. OXCEDOT is a trade name for the chemical complex, monocopper citrate ("MCC"). CCI also used NRL's patents to manufacture, sell and provide metalworking fluid treatment services, known under the service mark OXCEDOT TREATMENT SYSTEM, which used OXCEDOT. The service included an initial sample analysis of a customer's coolant, a process which involved between ten and fifteen tests. Treatment of the metalworking fluid might include adding active and ancillary ingredients, filtration, skimming out contaminants and pH adjustments. Between 1989 and 1994, CCI routinely sold its OXCEDOT TREATMENT SYSTEM in conjunction with NRL's patented monocopper citrate process and method. However, CCI offers its maintenance service and OXCEDOT product as separate items to its customers.

Defendant Eppert is a chemical blender, formulator, and compounder of chemical products located in the state of Michigan. Among Eppert's more successful products is a manufacturing cutting fluid emulsifier sold under the trade name "T-Cool." Unlike OXCEDOT, T-Cool is not a fluid additive; rather, it is the actual cutting fluid, which is used to cool and lubricate metal parts as they are being cut in metal cutting machines. Between 1989 and 1995, Eppert manufactured, sold and distributed a total of 4,045 gallons of a product known as KMMO. Eppert distributed KMMO as an anti-odor agent. Defendant has not manufactured or distributed KMMO since 1995. NRL contends that Eppert manufactured, sold and distributed KMMO as a clone or knock-off of OXCEDOT, which violates one or more claims of NRL's patents involving that product.

II. Standards Governing Motions for Summary Judgment

Summary judgment must be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Of course, the moving party:

always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Id. at 323, 106 S.Ct. 2548; see also Boretti v. Wiscomb, 930 F.2d 1150, 1156 (6th Cir. 1991)(The moving party has the "burden of showing that the pleadings, depositions, answers to interrogatories, admissions and affidavits in the record, construed favorably to the nonmoving party, do not raise a genuine issue of material fact for trial.") (quoting Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir.1987)). The burden then shifts to the nonmoving party who "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)(quoting Fed.R.Civ.P. 56(e)). Thus, "[o]nce the moving party has met its initial burden, the nonmoving party must present evidence that creates a genuine issue of material fact making it necessary to resolve the difference at trial." Talley v. Bravo Pitino Restaurant, Ltd., 61 F.3d 1241, 1245 (6th Cir.1995). Read together, Liberty Lobby and Celotex stand for the proposition that a party may move for summary judgment by demonstrating that the opposing party will not be able to produce sufficient evidence at trial to withstand a directed verdict motion (now known as a motion for judgment as a matter of law, Fed.R.Civ.P. 50). Street v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir.1989).

Once the burden of production has so shifted, the party opposing summary judgment cannot rest on its pleadings or merely reassert its previous allegations. It is not sufficient to "simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 486, 106 S.Ct. 1348 (1986); see also Michigan Protection and Advocacy Serv., Inc. v. Babin, 18 F.3d 337, 341 (6th Cir. 1994)("The plaintiff must present more than a scintilla of evidence in support of his position; the evidence must be such that a jury could reasonably find for the plaintiff."). Rather, Rule 56(e) "requires the nonmoving party to go beyond the [unverified] pleadings" and present some type of evidentiary material in support of its position. Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548. Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment shall be denied "[i]f there are ... `genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.'" Hancock v. Dodson, 958 F.2d 1367, 1374 (6th Cir.1992) (citation omitted). Of course, in determining whether a genuine issue of material fact exists, a court must assume as true the evidence of the nonmoving party and draw all reasonable inferences in favor of that party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505 (emphasis added). If the parties present conflicting evidence, a court may not decide which evidence to believe, by determining which parties' affiants are more credible; rather, credibility determinations must be left to the fact-finder. 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure, § 2726. In ruling on a motion for summary judgment (in other words, in determining whether there is a genuine issue of material fact), "[a] district court is not ... obligated to wade through and search the entire record for some specific facts that might support the nonmoving party's claim." InterRoyal Corp. v. Sponseller, 889 F.2d 108, 111 (6th Cir.1989), cert. denied, 494 U.S. 1091, 110 S.Ct. 1839, 108 L.Ed.2d 967 (1990); see also L.S. Heath & Son, Inc. v. AT & T Information Sys., Inc., 9 F.3d 561 (7th Cir. 1993); Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915 n. 7 (5th Cir.), cert. denied, 506 U.S. 832, 113 S.Ct. 98, 121 L.Ed.2d 59 (1992)("Rule 56 does not impose upon the district court a duty to sift through the record in search of evidence to support a party's opposition to summary judgment....") Thus, a court is entitled to rely, in determining whether a genuine issue of material fact exists on a particular issue, only upon those portions of the verified pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits submitted, specifically called to...