Worldwide Home Prods., Inc. v. Bed, Bath & Beyond, Inc.

74 F.Supp.3d 626

WORLDWIDE HOME PRODUCTS, INC., Plaintiff

v.BED, BATH AND BEYOND, INC. et al., Defendant.

No. 11CV3633–LTS–MHD.

United States District Court, S.D. New York.

Signed Feb. 11, 2015.

Gail Ellen Podolsky, Carlton Fields, P.A., Atlanta, GA, Vitaly David Rivkin, Carlton Fields Jorden Burt, P.A., New York, NY, for Plaintiff.

Edward F. O'Connor, Avyno Law, P.C., Encino, CA, Lewis Emery Hudnell, III, Colvin Hudnell LLP, New York, NY, Uleses Columbus Henderson, Jr., One LLP, Beverly Hills, CA, for Defendants.

Memorandum Opinion and Order

LAURA TAYLOR SWAIN, District Judge.

Plaintiff, Worldwide Home Products, Inc. (“Plaintiff”), moves pursuant to Federal Rule of Civil Procedure 59(e) to alter, amend, vacate, or set aside the September 30, 2013, Memorandum Opinion and Order (the “Order”) and Clerk's Judgment entered by the Court in favor of Defendants, Bed, Bath & Beyond, Inc. and Cohesion Products Inc. (collectively, “Defendants”). In the Order, the Court granted summary judgment in Defendants' favor on Plaintiff's patent infringement claims and found that Plaintiff's patent, U.S. Patent Number 7,938,300 (the “'300 Patent”), was unenforceable due to inequitable conduct. Plaintiff argues that the Order was based on an incorrect understanding of material facts and resulted in injustice.

Decision on Motion for Reconsideration

It appears that both the parties and the Court mistakenly believed that the serial numbers of certain physical embodiments of hangers made by the Merrick Engineering [Company] (“Merrick”) and provided to Plaintiff's attorney by Defendant's counsel were the same as those of a Merrick hanger product depicted in a brochure that was prior art in relation to Plaintiff's claimed invention. The evidence submitted in support of Plaintiff's Rule 59(e) motion for reconsideration includes side-by-side photographs of the physical hangers associated with the two different serial numbers—C90601 (the model number depicted in the prior art brochure) and C90610 (the model number that was the subject of communications and high-resolution photographs sent to Plaintiff by Defendants' counsel)—and testimony of Merrick representatives and of Plaintiff's former attorney Jeffery Sonnabend. The Court has considered thoroughly all of the original motion submissions as well as all of the additional material submitted in support of and in opposition to the motion for reconsideration.

In light of the mistake, the Court grants Plaintiff's motion for reconsideration. Upon reconsideration, and for the reasons set forth below, the Court grants summary judgment of invalidity in favor of Defendants, denies Plaintiff's motion to strike the inequitable conduct defense and an expert report that had been proffered in support f Defendants' motion, and denies Plaintiff's motion for summary judgment.

Decision on Cross–Motions for Summary Judgment and Motion to Strike

The remainder of this Memorandum Opinion and Order supersedes, nunc pro tunc, the Court's September 13, 2013, Order.

Plaintiff, Worldwide Home Products, Inc. (“Plaintiff”), brings this suit against Defendants Bed, Bath and Beyond, Inc., and Cohesion Products Inc. (“Defendants”), for patent infringement, claiming that the “Real Simple Slimline Hanger” (the “Slimline Hanger”) infringes upon U.S. Patent No. 7,938,300 (the “'300 Patent”). Defendants move pursuant to Federal Rule of Civil Procedure 56 for summary judgment, asserting that the '300 Patent is invalid because its allowance was procured through inequitable conduct. Plaintiff moves for summary judgment dismissing Defendants' inequitable conduct defense, asserting that Defendants' evidence is insufficient to establish invalidity based on inequitable conduct. Plaintiff also moves to strike the Report of William Poms (the “Poms Report”), which Defendants have proffered in support of their summary judgment motion, and for preclusion of any testimony by Mr. Poms.

For the following reasons, the Court denies Plaintiff's motion to strike the Poms Report and preclude Mr. Poms' testimony, denies Plaintiff's summary judgment motion, grants Defendants' motion for summary judgment declaring the ' 300 Patent invalid as the product of inequitable conduct and, accordingly, dismisses Plaintiff's infringement claims and directs entry of judgment in Defendants' favor.

Background¹

The '300 Patent is directed to a clothing hanger having “supporting means in the form of a cascade hook for supporting additional hangers therefrom.” ('300 Patent at 1:52–54.) Multiple units of the hanger can be arranged in two configurations. In the first configuration, the hangers are “nested” by placing one hanger in front of another and inserting the back hanger's “cascade hook” through a hole in the body of the front hanger. In the second configuration, one hanger dangles by its hook member from the other hanger's cascade hook member.

Defendants allege that Plaintiff engaged in inequitable conduct to procure the '300 Patent in that, during the prosecution of the patent, Plaintiff's counsel, Jeffrey Sonnabend, Esq., knowingly provided false information to the United States Patent and Trademark Office (the “PTO”) examiner concerning the hangers depicted in a product brochure that constituted prior art.

Mr. Sonnabend prosecuted U.S. Application Serial No. 12/182,351 (the “Application”), which resulted in the issuance of the '300 Patent, beginning in July 2008. On February 4, 2010, while the Application was still pending, Plaintiff sent Defendant Bed Bath and Beyond a cease and desist letter asserting that the Slimline Hangers “will be deemed an infringing product” because Plaintiff “fully expect[ed] the patent to issue in the coming months.” (Docket entry no. 142 (the “O'Connor Decl.”), Exs. E and A–1–12.) On April 27, 2010, Mr. Sonnabend filed with the PTO an information disclosure statement (the “IDS”) related to the Application. (Id. Ex. 2A.) In the IDS, Sonnabend disclosed a website image of a printed product brochure offering for sale certain Merrick hangers, product number C90601–A (the “Merrick Reference”), showing hangers that had apparent similarities to the hanger that was the subject of the Application; the brochure was undated. (Id. Exs. A–2, A–3, and A–4.) Plaintiff's IDS identified the Merrick Reference as a Non–Patent Literature Document, describing it as a “Product Brochure for MERRICK Hanger products (date unknown).” The Merrick Reference included low-resolution “thumbnail” images of six hangers that were nested together, labeled with product identification number C90601–A. Mr. Sonnabend was also in possession of a physical version of the Merrick nesting hangers but did not provide any physical Merrick hangers to the examiner.

On October 5, 2010, the PTO examiner rejected certain claims in the Application, citing the Merrick Reference, which the examiner had dated to August 10, 2006, by using an internet archive service. (Id. Exs. A–6 and A–7.) Among the claims rejected were claims 1, 2, 14, and 15. In the notice of rejection, the examiner noted that the Merrick Reference teaches a group of six identical hangers that are nested together. (Id. Ex. A–5 at 5.) Specifically, regarding the Application's claims that the '300 Patent hangers abut one another for “easy storage and transportation of hangers while also providing grouping of hangers for purchase,” the PTO examiner observed that “MERRICK teaches a group ... of identical garment hangers (C90601–A12 or C90601–A) ... being nested together ... so that the front surface of one hanger abuts against a rear surface of another hanger wherein the top and bottom of both hanger are affixed in a common horizontal plane ... Accordingly, it would have been obvious to a person of ordinary skill in the art to have provided ... at least one second hanger where the front surface of the first hanger abuts against a rear surface of the second hanger with the top and bottom portion of each of the first and second hangers being nested and affixed in a common horizontal plane relative to one another....” (O'Connor Decl., Ex. A–5, at 6). The PTO examiner further noted that “MERRICK teaches such structure as shown in the blow up view of either C90601–A12 or C90601–A; however, regardless, the claim language of claims 5 and 10–13 is still in functional form wherein [a third-party patent] in view of MERRICK is completely capable of such function.” (Id. Ex. A–5 at 5–6.)

On October 12, 2010, Mr. Sonnabend discussed Application Claims 1, 2, 14, and 15 and the Merrick Reference in a telephone interview with the PTO examiner. (Id. Ex. A–9 at 2.) Mr. Sonnabend had physical Merrick hangers in his possession at the time of the telephone interview. Following the interview, Mr. Sonnabend filed, with the PTO examiner, a document captioned “Amendment After Final,” dated the same date as the interview (the “Amended Application”), that amended the Application's Claims 1 and 14, among others. (Id. Ex. A–10 at 2, 6.) Mr. Sonnabend asserted in the Amended Application that

Claim 1 and 14 have been amended to claim a cascade hook member having a top surface and a bottom surface, said cascade hook member extending from said front surface and the bottom surface of the cascade hook member of said first hanger abutting the top surface of the cascade hook member of said second hanger. This distinguishes the claims from Arnold in view of Merrick.

(Id. Ex. A–10 at 8 (emphasis supplied).) Fewer than two years later, on August 10, 2012, Mr. Sonnabend testified at his deposition taken in this litigation that he did not remember anything that was said during the October 12, 2010, telephone interview with the PTO examiner. (Id. Ex. B at 22.) Mr. Sonnabend never disclosed any further information about the physical features of the Merrick hangers to the PTO examiner. (Id. Ex. B at 45–46.) There is nothing in the prosecution history or elsewhere in the evidentiary record on this motion practice to indicate that the examiner ever had access to any physical...