MEMORANDUM-DECISION AND ORDER
This is a patent infringement action pursuant to 35 U.S.C. § 271. Plaintiff LRC Electronics Inc. ("LRC") is a New York corporation which designs and sells, among other products, patented coaxial cable connectors, including the patent at issue in this case, United States Patent No. 4,902,246 ("the '246 patent").
Defendant John Mezzalingua Associates, Inc. ("JMA") is a New York corporation whose division, Production Products Corporation ("PPC"), manufactures and sells allegedly infringing coaxial cable connectors known as "CMP" connectors.
Plaintiff seeks a judgment declaring that the Defendant has willfully infringed Plaintiff's '246 patent. Plaintiff also seeks a permanent injunction enjoining the Defendant from making or selling products that infringe Plaintiff's '246 patent, lost profits, an increase in damages for wilful infringement pursuant to 35 U.S.C. § 284, interest, attorneys' fees, and costs. In its amended answer, the Defendant asserts two counterclaims for judgment declaring Plaintiff's '246 patent invalid under the statutory doctrines of anticipation and obviousness. Defendant also seeks judgment declaring that Defendant's original and redesigned CMP connectors do not infringe Plaintiff's '246 patent.
Presently before the Court are Plaintiff's motions for leave to amend the complaint and for a preliminary injunction, and Defendant's motions for an order of production, a pre-trial Markman hearing, and summary judgment on its counterclaims.
Plaintiff filed its complaint on November 22, 1995.
On December 12, 1995, Defendant filed an answer with one counterclaim. On April 9, 1996, Defendant filed a motion for summary judgment on its original counterclaim. By letter dated July 12, 1996, Defendant also moved for an order compelling Plaintiff to produce Documents 17-48 listed in Plaintiff's privileged document list, and for an order compelling Plaintiff to produce attorney Stanley M. Schurgin for deposition.
On August 15, 1996, Defendant filed a second motion for summary judgment on its second counterclaim.
Shortly thereafter, on September 6, 1996, Defendant moved for leave to file an amended answer. Defendant sought leave to add the affirmative defense of "inequitable conduct" and a second counterclaim. On that same date, the Defendant also filed a motion for a pre-trial Markman hearing at which time the Court would receive expert testimony regarding the construction of certain terms in Plaintiff's '246 patent.
At a hearing held on October 10, 1996, Plaintiff consented to Defendant's motion insofar as Defendant sought leave to amend its answer to add a second counterclaim concerning invalidity and non-infringement. However, Plaintiff opposed Defendant's motion for a Markman hearing and Defendant's request for leave to add the inequitable conduct defense. Following oral argument, the Court granted the Defendant leave to file an amended answer asserting both the second counterclaim and the inequitable conduct defense. The Court reserved decision on Defendant's motions for a Markman hearing, for production of documents, and for summary judgment on its second counterclaim.
On November 27, 1996, Plaintiff filed a motion for leave to file an amended complaint asserting unfair competition and trade secret misappropriation claims arising out of allegations that the Defendant has previously contacted, and is currently contacting, Plaintiff's key employees in an attempt to hire them away and to obtain confidential information and trade secrets regarding Plaintiff's Snap-N-Seal connectors. At the same time, Plaintiff also filed a motion for a temporary restraining order and preliminary injunction.
As stated, presently before the Court are Plaintiff's motions for leave to amend the complaint and for a preliminary injunction, and Defendant's motions for an order of production, a pre-trial Markman hearing, and summary judgment on its counterclaims. The Court will address these motions seriatim.
I. Motion for Leave to Amend the Complaint
Plaintiff moves for leave to amend its complaint to assert a common law unfair competition claim pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. Plaintiff seeks leave to file an amended complaint which will allege that the Defendant has recently embarked on a campaign to hire away Plaintiff's key employees and place them in positions in which they cannot avoid using and/or revealing confidential business and technical information they obtained while in Plaintiff's employ. Plaintiff alleges that the Defendant has already hired away two key engineers and a production specialist, and has attempted to recruit at least two other employees. Plaintiff further alleges, on information and belief, that the Defendant has misappropriated trade secrets of the Plaintiff, including confidential business and technical information.
Defendant argues that the Court lacks subject matter jurisdiction over Plaintiff's proposed claim, and in the alternative, that Plaintiff has failed to state claims upon which relief can be granted.
Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a complaint "shall be freely given when justice so requires." Motions for leave to amend are committed to the sound discretion of the district courts. Zahra v. Town of Southold, 48 F.3d 674, 685 (2d Cir. 1995). "Undue delay and futility of the amendment, among other factors, are reasons to deny leave." John Hancock Mut. Life Ins. Co. v. Amerford Int'l Corp., 22 F.3d 458, 462 (2d Cir. 1994).
As stated, the Defendant's first argument is that the Court lacks subject matter jurisdiction over Plaintiff's proposed unfair competition claims.
In considering this jurisdictional issue, the Court is guided by the "fundamental precept that federal courts are courts of limited jurisdiction." Mars Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1372 (Fed. Cir. 1994). "A party seeking the exercise of jurisdiction in its favor bears the burden of establishing that such jurisdiction exists." Id. (quoting Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374, 57 L. Ed. 2d 274, 98 S. Ct. 2396 (1978).
In this case, Plaintiff asserts that the Court has both original and supplemental jurisdiction over its proposed unfair competition and trade secret misappropriation claims pursuant to 28 U.S.C. §§ 1338(b) and 1367. Section 1338(b) provides, in relevant part, that "the district courts shall have original jurisdiction of any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the . . . patent . . . laws." 28 U.S.C. § 1338(b). This section was enacted to "avoid piecemeal litigation to enforce common-law and statutory copyright, patent and trade-mark rights by specially permitting such enforcement in a single civil action in the district court." See 28 U.S.C. § 1338(b) Advisory Committee's Note. Section 1338(b) is essentially a codification of the doctrine of pendent jurisdiction as it applies to patent, trademark, and copyright cases. Conopco Inc. v. May Dep't Stores Co., 46 F.3d 1556, 1571 n.14 (Fed. Cir. 1994) (affirming district court's dismissal of the plaintiff's pendent state law claims).
The doctrine of pendent jurisdiction provides district courts with jurisdiction over non-federal claims when the claims derive from a "common nucleus of operative facts." Mars Inc. 24 F.3d at 1374 (citing United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966)). If the claims are such that one would ordinarily expect to try them all in one judicial proceeding, assuming substantiality of the federal issues, a federal court has the power to hear them all. United Mine Workers, 383 U.S. at 725. In fact, exercise of pendent jurisdiction over a plaintiff's state law claims, while not automatic, is generally a favored and normal course of action in the federal courts. Promisel v. First American Artificial Flowers, Inc., 943 F.2d 251, 254 (2d Cir. 1991). However, the exercise of pendent jurisdiction is, at its core, a matter left to the sound discretion of the district court. Conopco, 46 F.3d at 1571.
In considering whether to exercise pendent jurisdiction over state law claims, courts consider a number of factors including: (1) the degree of overlap between the factual basis of the state and federal claims, (2) whether the state issue substantially predominates over the federal issue in terms of proof, the scope of the issues raised, or the comprehensiveness of the remedy sought, (3) whether the state claim would require substantial additional evidence at trial, (4) whether there is a likelihood of jury confusion, (5) whether the state law claim was asserted as a means of prejudicing the jury against the other party, (6) judicial economy, and (7) convenience and fairness to the litigants. Verdegaal Bros., Inc. v. Union Oil of California, 750 F.2d 947, 952 (Fed. Cir. 1984); see also Conopco, 46 F.3d at 1571.
Overlap in Factual Bases
Plaintiff argues that the evidence it intends to introduce on its unfair competition claims is also relevant to the patent issues of wilfulness of infringement, invalidity, and damages.
With respect to the issue of infringement, Plaintiff alleges that the three employees hired away by the Defendant, and the trade secrets allegedly misappropriated, were all associated with Plaintiff's "Snap-N-Seal" line of connectors (the connectors described in Plaintiff's allegedly infringed '246 patent). However, the Court finds that all of the new allegations in the amended complaint would be either irrelevant, or only minimally relevant, to Plaintiff's patent infringement claims. For example, the conduct alleged in Plaintiff's proposed amended complaint occurred many months, and even years, after the Defendant's decisions to manufacture and sell the original and redesigned CMP connectors. Moreover, evidence of the Defendant's recent hiring practices would be wholly irrelevant to whether the Defendant wilfully infringed Plaintiff's '246 patent by selling the original CMP connectors, and only minimally relevant, if at all, to whether the Defendant wilfully infringed Plaintiff's '246 patent by selling the redesigned CMP connectors because of the time frames involved.
With respect to the issue of patent invalidity, Plaintiff cites to Panduit Corp. v. Dennison Mfg. Co., 774 F.2d 1082, 1099 (Fed. Cir. 1985), and argues that evidence of copying (which the Plaintiff alleges in its proposed unfair competition claims) is relevant to whether the Plaintiff's patent is invalid under the doctrine of obviousness. See 35 U.S.C. § 103. However, obviousness is a multi-faceted concept involving a number of additional factual considerations such as (1) the scope and content of the prior art, (2) the differences between the art and the claims at issue, and (3) the level of ordinary skill in the art. Graham v. John Deere Co., 383 U.S. 1, 17-18, 15 L. Ed. 2d 545, 86 S. Ct. 684 (1966). Moreover, unlike the present case where the issue of copying is disputed, the Defendant in Panduit admitted that it copied Plaintiff's patent; giving the evidence much greater value and relevance to the issue of obviousness. Panduit Corp., 774 F.2d 1082, 1086.
Finally, with respect to the issue of damages, the Court does not find that evidence of the Defendant's allegedly improper hiring practices would not be relevant to the issue of whether to award Plaintiff a reasonable royalty or lost profits in the event the Plaintiff prevails on its infringement claims. See Minco, Inc. v. Combustion Engineering, Inc., 95 F.3d 1109, 1118-19 (Fed. Cir. 1996).
After carefully considering the parties' arguments, the Court finds only minimal overlap between the factual bases of Plaintiff's unfair competition and patent infringement claims, and this factor weighs against exercising jurisdiction over Plaintiff's proposed unfair competition claims.
Predominance and Proof of State Law Issues
Turning to the second and third factors, the Court finds that while the issues underlying Plaintiff's proposed unfair competition claims would not substantially predominate over the federal issues of patent infringement and invalidity, substantial additional evidence regarding Plaintiff's unfair competition and trade secret claims would have to be offered at trial. For example, the witnesses relevant to Plaintiff's unfair competition claims are not, for the most part, the witnesses relevant for Plaintiff's patent infringement clams. Thus, the Court finds that these two factors, taken together, also weigh against exercising jurisdiction over Plaintiff's proposed unfair competition claim.
Turning to the fourth and possibly most important factor, the Court finds that the addition of these unfair competition claims into this case could cause a great deal of jury confusion. For example, Plaintiff seeks to allege that the employees hired away by the Defendant are revealing, or are very likely to reveal, confidential information regarding a new Snap-N-Seal connector currently under development. The introduction of additional technical information to the technical materials already at issue in the case unnecessarily complicates an already complicated case.
Thus, the Court finds that this factor also weighs against exercising jurisdiction over Plaintiff's unfair competition claims.
Prejudice and Judicial Economy
Finally, under the fifth and sixth factors, although Plaintiff denies that it is attempting to assert these unfair competition claims as a means of prejudicing the jury against the Defendant, the danger of such prejudice exists. Furthermore, the interests of judicial economy and fairness to the litigants in this case actually militate against exercising jurisdiction over Plaintiff's unfair competition claims because the patent claims have been pending for some time and the parties are ready for trial.
Thus, the Court finds that these factors also weigh against exercising jurisdiction over Plaintiff's proposed unfair competition claims.
In summary, the Court finds that exercising jurisdiction over Plaintiff's competition claims would result in a trial within a trial. See Mars Inc., 24 F.3d at 1375. Although there is some overlap in the proof, this small efficiency gain is more than offset by-the danger of jury confusion arising from the additional evidence that would have to be submitted to the jury on Plaintiff's unfair competition claims.
Therefore, after carefully reviewing the papers submitted and the applicable law, the Court finds that Plaintiff's motion for leave to amend the complaint must be denied. Consequently, Plaintiff's motion for a preliminary injunction, which is premised on Plaintiff's unfair competition claims, must also be denied as moot, and the temporary restraining order filed November 27, 1996, as amended by the Court's Order dated January 21, 1997, is hereby vacated.
II. Defendant's Motion for Production of Documents
The Court will now briefly address Defendant's motion for an order directing Plaintiff to produce documents. As stated, Defendant moves for an order directing Plaintiff to produce Documents 17 - 48 listed in Plaintiff's privileged document list pursuant to Rule 37(a) of the Federal Rules of Civil Procedure. The documents consist primarily of correspondence between LRC officials and LRC counsel regarding patent applications and invention records.
Defendant argues that these documents are discoverable by virtue of the "crime-fraud" exception to the attorney-client privilege and work product doctrines. Specifically, Defendant maintains that the documents are relevant to its inequitable conduct defense, which asserts that the Plaintiff knew of and failed to disclose relevant prior art (specifically, the '811 patent and "EZF" connector) to the patent examiner reviewing Plaintiff's '246 application.
Plaintiff argues that the documents involve communications concerning patent applications and invention records and, as such, are privileged. Plaintiff also argues that the documents are irrelevant to Defendant's inequitable conduct defense because they do not mention the EZF connector or '811 patent.
It is undisputed that the attorney-client privilege protects the documents at issue. See Minnesota Mining & Mfg. v. Ampad Corp., 1987 U.S. Dist. LEXIS 14437, 7 U.S.P.Q.2D (BNA) 1589, 1590-91 (D. Mass. 1987). The dispute in this case turns on the applicability of the "crime-fraud" exception in this case. The crime-fraud exception to the attorney-client privilege and work product doctrine is applicable in patent cases. TRW Financial Services, Inc. v. Unisys Corp., 31 U.S.P.Q.2D (BNA) 1065, 1069 (1992). It applies both in the context of allegations that a patent has been fraudulently procured or that the patent itself is invalid. Id.
At oral argument, Plaintiff offered to produce the disputed documents for an in camera inspection to confirm Plaintiff's representations that the documents do not mention the '811 patent or the "EZF" connector. After carefully reviewing the documents, the Court finds that in fact they do not mention the '811 patent or the "EZF" connector. As a result, the Court finds that the documents are irrelevant to Defendant's inequitable conduct defense. Thus, the documents do not fall within the crime-fraud exception to the attorney-client privilege and work product doctrines, and Defendant's motion is denied.
III. Defendant's Motion for a Markman Hearing
The Court now turns to Defendant's motion for a Markman hearing. In Markman v. Westview Instruments, Inc., 517 U.S. 370, 134 L. Ed. 2d 577, 116 S. Ct. 1384 (1996), the United States Supreme Court held that the construction of a patent, including the interpretation of both ordinary and technical terms, is a matter of law reserved exclusively for the court rather than the jury.
In this case, the Defendant argues that the Court should receive expert testimony regarding the definition of the terms "compression sleeve means" and "snap" in Plaintiff's '246 patent. The Defendant urges the Court to hold this hearing prior to ruling on Defendant's motion for summary judgment in order to narrow the issues and possibly prompt settlement.
Plaintiff, on the other hand, argues that the Court should wait and construe these terms after all the proof is received at trial. Plaintiff maintains that construing these terms at this time would not serve the interest of judicial economy, and that defining the phrase "compression sleeve means" at this time would be improper because this is "means-plus-function" language, which requires findings of fact reserved for the jury.
Compression sleeve means
The phrase "compression sleeve means" is written using means-plus-function language authorized by 35 U.S.C. § 112. Section 112 provides:
An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.
35 U.S.C. § 112, P 6. This section permits an element of a patent claim to be expressed as a means or step for performing a specified function. Symbol Technologies, Inc. v. Opticon, Inc., 935 F.2d 1569 (Fed. Cir. 1991). "However, the scope of a means-plus-function claim is not limitless, but is confined to structures expressly disclosed in the specification and corresponding equivalents." Id.; see also Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 137 L. Ed. 2d 146, 117 S. Ct. 1040, 1048 (1997) ("application of the broad literal language of such claims must be limited to only those means that are 'equivalent' to the actual means shown in the patent specification").
In this case, Plaintiff argues that means-plus-function language cannot be fully defined by the court prior to trial because doing so requires factual findings by the jury regarding "equivalent" structures. Plaintiff also notes that Markman did not involve means-plus-function language.
Determining the scope of equivalent structures when evaluating a means-plus-function claim is an issue reserved for the finder of fact. See Motorola Inc. v. Interdigital Technology Corp., 930 F. Supp. 952, 964 (D.Del. 1996) ("construction of terms found in the claims or the specification is a legal inquiry, but evaluation of the function and structural equivalence of an allegedly infringing product is a factual inquiry). As such, to the extent Defendant asks the Court to define "compression sleeve means" by listing equivalent structures in the hopes that the Defendant's particular structure is absent from the list, the Court finds that such a ruling would completely usurp the function of the jury and is improper. Therefore, to the extent the Defendant seeks a Markman hearing to define the means-plus-function element "compression sleeve means" in Plaintiff's '246 patent, the Defendant's motion must be denied.
The Defendant also seeks a hearing to offer expert testimony regarding the meaning of the term "snap." As an initial matter, the Court notes that nowhere in the Markman decision does the Supreme Court state that courts must hold a pre-trial, or pre-summary judgment, hearing on the issue of claim construction. However, since the Markman decision was handed down, a number of district courts faced with claim construction disputes have held some sort of hearing. See Comark Communications, Inc. v. Harris Corp., 1997 U.S. Dist. LEXIS 2067, 1997 WL 87260 (E.D.Pa., Feb. 24, 1997); Revlon Consumer Prods. Corp. v. L'Oreal S.A., 170 F.R.D. 391 (D.Del., Feb. 12, 1997); Lee's Aquarium and Pet Prods., Inc. v. Snap Edge Corp., 951 F. Supp. 1469 (S.D.Cal. 1997); P.A.T., Co. v. Ultrak, Inc., 948 F. Supp. 1506 (D. Kan. 1996).
A Markman hearing to define the term "snap" would only be necessary if the Court needed expert testimony to interpret the term. Absent a special definition set forth in the patent, terms in a patent are generally interpreted as having their ordinary and customary meaning to persons experienced in the field of invention. Hoechst Celanese Corp. v. BP Chemicals, Ltd., 78 F.3d 1575, 1578 (Fed. Cir.), cert. denied, 136 L. Ed. 2d 198, 117 S. Ct. 275 (1996). When construing terms of a patent, courts must first look to "intrinsic" evidence, which includes the claim itself, the specification, and the prosecution history. Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1583 (Fed. Cir. 1996). If the meaning of a term remains ambiguous after considering the intrinsic evidence in the case then, and only then, the court may consider extrinsic evidence of meaning, such as prior art documents, dictionaries, and expert testimony. Id.
As stated, the parties in this case dispute the meaning of the term "snap" in Plaintiff's '246 patent. Claim one of Plaintiff's '246 patent provides, in its entirety:
What is claimed is:
1. A snap -n-seal connector for mechanically and electrically interconnecting a coaxial cable to an electronic device having a threaded interface connector, the coaxial cable including a center conductor, a dielectric insulator encasing the center conductor, at least one braided shield disposed about the dielectric insulator and a jacket covering the at least one braided shield, comprising: