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JOHNSON ELECTRIC NORTH AMERICA v. MABUCHI MOTOR

May 31, 2000

JOHNSON ELECTRIC NORTH AMERICA INC. AND JOHNSON ELECTRIC INDUSTRIAL MANUFACTORY, LTD., PLAINTIFFS,
V.
MABUCHI MOTOR AMERICA CORP. AND MABUCHI MOTOR CO., LTD., DEFENDANTS. MABUCHI MOTOR AMERICA CORP. AND MABUCHI MOTOR CO., LTD., COUNTERCLAIM-PLAINTIFFS, V. JOHNSON ELECTRIC NORTH AMERICA INC., JOHNSON ELECTRIC INDUSTRIAL MANUFACTORY, LTD. AND TRANS-HUDSON MOTOR CORPORATION, COUNTERCLAIM-DEFENDANTS.



The opinion of the court was delivered by: William C. Conner, Senior District Judge.

OPINION AND ORDER

Plaintiffs, Johnson Electric North America, Inc. ("JENA") and Johnson Electric Industrial Manufactory, Ltd. ("JEI") (collectively, "Johnson"), commenced this action to obtain a declaration that defendants' patents are invalid and that plaintiffs did not infringe the patents. Defendants, Mabuchi North America Corp. ("Mabuchi America") and Mabuchi Motor Co., Ltd. ("MMC") (collectively, "Mabuchi"), brought counterclaims for patent infringement and civil RICO violations. Presently before this Court is plaintiffs' motion for summary judgment on defendants' RICO claims. For the reasons stated below, that motion is granted.

BACKGROUND

I. The '933 Patent Litigation

In 1985, Mabuchi discovered Johnson motor No. HC315G, and believed that this motor was a direct infringement of Mabuchi U.S.Patent No. 4,431,933 ("the '933 patent"). Mabuchi sent one of Johnson's customers a letter informing the customer of the alleged patent infringement. In response, Johnson filed a lawsuit in the Southern District of New York alleging that Mabuchi was interfering with its contractual relations and seeking a declaration of the invalidity of the '933 patent. Mabuchi counterclaimed for patent infringement and filed a lawsuit against another one of Johnson's customers in the United States District Court for the District of Delaware. Mr. Roger Baines, Director of Research and Development for Johnson, admitted in his deposition that the drawings of Johnson's motor No. HC315G and the drawings of the '933 patent were substantially similar. (Baines Dep. at 91.)

In 1987, Johnson and Mabuchi resolved the '933 patent litigation in a written settlement agreement. Article 04.00 of the Settlement Agreement governs the resolution of future disputes between the parties. The agreement provides that if either party believes that the other is infringing its patent rights, the aggrieved party should provide written notice to the alleged infringer. (Settlement Agreement, Art. 04.01.) Further, the parties should use "their best efforts to reach a mutually satisfactory settlement of the dispute" within 90 days of the written notice. (Id. at Art. 04.02.) If no resolution is reached within 90 days, the aggrieved party is entitled to commence litigation. (Id. at Art. 01.01 and 04.03.) In addition, the alleged infringer has the right to prevent the aggrieved party from contacting its customers if it "provided a means to undertake to assure the aggrieved party the legal and/or injunctive relief that would be available were it successful" in the infringement dispute. (Id.)

II. The '215 Patent Litigation

Mabuchi's U.S.Patent No. 4,574,215 ("the '215 patent") issued on March 4, 1986. (Johnson Rule 56.1 Stmt. ¶ 1.) The invention contained in the '215 patent addressed a problem occurring in one of Mabuchi's motors that was used in automobile accessories, including power door locks and mirrors. Prior to the invention disclosed in the '215 patent, the motors contained a one-piece brushgear mechanism. The one-piece brushgear consisted of a terminal strip of rigid metal and a carbon brush attached at the end. The terminal strip's rigidity created problems, as the terminals often broke under mechanical pressure.

Mabuchi directed the efforts of its research and development department to address this mechanical problem. Mr. Takachi Mabuchi, the president of MMC and Mabuchi America, personally participated in the design process and produced the invention claimed in the '215 patent.

The '215 patent teaches the use of a two-piece brushgear composed of a terminal strip and a separate commutator strip upon which the carbon brush is mounted. The terminal and commutator contactor strips are joined together by means of lateral projections on the terminal strip. The projections are bent and crimped onto the edges of the commutator contractor strip to secure the two pieces together. The brushgear is bent into an L-shape at the joint which fits into a corresponding L-shaped slot in the brush holder on the case cover. With the brushgear attached to the brush holder, its terminal strip extends laterally through the motor case. On or about March 18, 1983, Johnson learned of the existence of Mabuchi's motor with the two-piece brushgear from JEI's distributor and agent D. Rögelein GmbH, a German corporation. Dieter Rögelein, Rögelein's employee, sent a letter dated March 17, 1983 via facsimile to Patrick Wang, JEI's officer, director and employee, which provided information about the Mabuchi motor and stated that Mabuchi "has taken the chance to get a good reference in the automotive market . . ." and Johnson "would like to kick them out as soon as possible." (Mabuchi Am. Answer ¶ 106.)

Along with the letter, Rögelein sent one of the Mabuchi motors to Johnson in Hong Kong and requested that Johnson manufacture a comparable motor. (Pl.Rule 56.1 Stmt. ¶ 3.) David Lam, a Johnson employee, was assigned the task of completing the design. In or about November 1984, Patrick Wang directed Lam to abandon his unsuccessful design efforts and simply copy the Mabuchi two-piece design. (Id. at ¶ 4; Mabuchi Am. Answer ¶ 107.) Lam made a copy of the Mabuchi motor sometime in November 1984. (Pl.Rule 56.1 Stmt. ¶ 5.)

In late 1986, Johnson altered its original brush gear structure which it had copied from Mabuchi. Mabuchi alleges that the second design included only minor revisions. (Mabuchi Am. Answer ¶ 109.)

Although Mabuchi filed an application for a United States patent in August 1983, it did not receive the '215 patent until March 1986. Baines, Johnson's Director of Research and Development, testified that he was aware of the United States '215 patent essentially upon its issuance in March 1986. (Baines Dep. at 151-52.)

It was not until July 15, 1988 that Mabuchi sent a notice of infringement letter to Johnson with respect to the '215 patent. Johnson then commenced the instant lawsuit in the Southern District of New York, securing an ex parte order to show cause why Mabuchi should not be enjoined from contacting Johnson's customers. Judge Sprizzo denied Johnson's application for a preliminary injunction. (Mabuchi App., Ex. 11.) However, Mabuchi has not sued any of Johnson's customers for use, sale, or manufacture of the Johnson motor that copied the Mabuchi '215 patent design.

Although the '215 patent issued in 1986, Judge Sprizzo, upon Johnson's motion, ruled that no damages could be awarded for infringement of the '215 patent prior to July 15, 1988 because Mabuchi failed to comply with the patent marking statute, 35 U.S.C. § 287, until that date. (See Order of Sprizzo, J., July 7, 1994.) Although Judge Sprizzo certified the order granting Johnson's motion for immediate appeal pursuant to 28 U.S.C. § 1292(b), the Federal Circuit denied permission for leave to appeal. See Johnson Electric North Am., et al. v. Mabuchi Motor Am. Corp., et al., Misc. Docket No. 405, 1997 WL 173208, 1997 U.S.App. LEXIS 7687, at *1-2 (Fed. Cir. March 20, 1997).

In its answer in the instant lawsuit, Mabuchi brought a civil RICO counterclaim alleging that Johnson's conduct:

was undertaken as part of a fraudulent scheme and plan to enrich Johnson at the expense of Mabuchi. The purpose of the scheme and plan, and the specific intent of counterclaim-defendants, was to defraud Mabuchi, including proprietary rights in its inventions and designs, and patent rights therein, to enable Johnson to manufacture, use and sell competing motors without disclosing that the motors were copied and imitated from Mabuchi's patented and otherwise proprietary designs and without making the substantial intellectual and financial [research and development] effort undertaken by Mabuchi.

(Mabuchi Am. Answer at ¶ 111.)

(a) A purchase order dated February 18, 1988 sent by U.S. mail and/or facsimile by the purchaser of the 9,600 motors discussed above in Wisconsin to Johnson, care of its agent, Kaufman & Associates, in Glenview, Illinois. Johnson knew or reasonably foresaw that this purchase order would be placed;
(b) An order acknowledgment dated April 6, 1988 sent by U.S. mail and/or by facsimile by Johnson Electric North America, Inc. in Connecticut to the purchaser of the 9,600 motors discussed above in Wisconsin;
(c) A purchase order dated May 3, 1988 sent by U.S. mail and/or by facsimile by Johnson Electric North America, Inc. in Connecticut to Johnson Electric Industrial Manufactory, Ltd. in Hong Kong for the 9,600 motors discussed above;
(d) An invoice dated June 6, 1988 sent by U.S. mail and/or facsimile by Johnson Electric Industrial Manufactory, Ltd. in Hong Kong to Johnson Electric North America, Inc. in Connecticut for the 9,600 motors discussed above;
(e) A shipment advice dated June 24, 1988 sent by U.S. mail and/or by facsimile by Johnson & Associates Ltd., upon information and belief an affiliate of Johnson Electric Industrial Manufactory, Ltd., to Johnson Electric North America, Inc. in Connecticut for the 9,600 motors discussed above. Johnson caused this shipment advice to be sent or knew or reasonably foresaw that this shipment advice would be sent; and
(f) A shipment advice dated July 2, 1988 sent by U.S. mail and/or by facsimile by Johnson & Associates to Johnson Electric North America, Inc. in Connecticut for the 9,600 motors discussed above. Johnson caused this shipment advice would be sent or knew or reasonably foresaw that this shipment advice would be sent.
(g) An additional shipment of 400 motors during or around the week of July 15, 1988, reaching Kaufman & Associates' customer on or after July 20, 1988, to ...

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