United States District Court, S.D. New York
February 25, 2004.
A&E PRODUCTS GROUP, L.P., Plaintiff, -against- MAINETTI USA INC., et al., Defendants
The opinion of the court was delivered by: ROBERT PATTERSON, Senior District Judge Page 2
REVISED OPINION AND ORDER
Defendants Mainetti USA Inc., Mainetti S.p.A. and Mainetti (HK) Ltd.
(collectively, "Mainetti") move pursuant to Rule 56 of the Federal Rules
of Civil Procedure for an order declaring that certain patents for
clothes hangers with side sizer tabs owned by plaintiff A&E Products
Group, L.P. ("A&E") are unenforceable due to prosecution laches.
Plaintiff cross moves for an order barring the defense of prosecution
The patents at issue are United States Patent Nos. 5,613,629 ("`629
patent"), 5,819,995 ("`995 patent"), and 6,145,713 (`"713 patent"). The
`629, `995 and `713 patents were issued to Andrew Zuckerman as divisional
or continuation applications relating to earlier patent applications for
clothes hangers with side sizer tabs filed by Mr. Zuckerman beginning on
October 9, 1990. (Defs. Mem. of Law, dated April 14, 2003 ("Defs. Mem"),
On October 9, 1990, Mr. Zuckerman filed an application for a patent in
the United States Patent and Trademark Office ("PTO") entitled, "Hanger
with Irremovable Information Tab." (Id see also Decl. of Francis C.
Hand, dated March 11, 2003 ("Hand Decl. I"), Ex. 4.)
On November 22, 1991 applicant filed a continuation application pursuant
to 35 U.S.C. § 120 which resulted in the issuance on April 6, 1993 of
U.S. Patent 5,199,608 (`"608 patent"). (Defs. Mem. at 2.)
One day prior to the issue date of the `608 patent, applicant filed a
divisional application on April 5, 1993 (treated as a continuation
application by the Patent Trade Office ("PTO")) that resulted in the
issuance of U.S. Patent 5,383,583 (`"583 patent") on January 24, 1995.
On the issue date of the `583 patent, applicant filed a divisional
application on January 24, 1995 that resulted in the issuance of the `943
patent on January 23, 1996. (Id)
One day prior to the issue date of the `943 patent, applicant filed a
division application on January 22, 1996, an amendment of which filed on
March 13, 1996 (Decl. of Francis C. Hand, dated April 24, 2003 ("Hand
Decl. IT), Ex. 10) resulted in the issuance of the `629 patent on March
25, 1997. (Defs. Mem. at 2, 9.)
Prior to the issue date of the `629 patent, applicant filed a
continuation application on February 26, 1997, an amendment of which
filed on March 20, 1998 (Hand Decl. H, Ex. 9) resulted in the issuance of
the `995 patent on October 13, 1998. (Defs. Mem. at 2, 8.)
On the issue date of the `995 patent, applicant filed a continuation
application on October 13, 1998, an amendment of which filed on September
21, 1999 (Hand Decl. II, Ex. 8) resulted in the `713 patent on November
14, 2000. (Defs. Mem. at 2.)
In accordance with the provisions of Title 35 U.S.C. § 120 of the
United States Code and the Rules of the PTO, no changes were made in the
original specification in any of the divisional or continuation patent
applications. (Id.) The only difference in each of the patents is in the
language used in the claims. A&E Prods. Group. L.P. v. Mainetti
United States, 2002 U.S. Dist. LEXIS 24280, at *4 (S.D.N.Y. Dec. 18,
II. DISCUSSION OF PROSECUTION LACHES
A. Defendants' Motion
Defendants' memorandum of law in support of its motion dated April 14,
2003 relies principally on Webster Electric Co. v. Splitdorf Electrical
Co., 264 U.S. 463 (1924), which held that prosecution laches was a
defense to an infringement action involving new claims issuing
from divisional and continuing applications that prejudice intervening
adverse public rights. Webster, 264 U.S. at 471: see also Woodbridge v.
United States, 263 U.S. 50 (1923). Defendants argue that the delay by
plaintiff of over six years from the date of the issuance of the `608
patent before the filing of the amendment containing the claims for the
`713 patent, of almost five years before filing the amendment containing
the claims for the `995 patent, and of almost three years before filing
the amendment containing the claims for the `629 patent constitutes
prosecution laches.*fn1 (Defs. Mem. at 6, 8-9.)
In Symbol Technologies. Inc. v. Lemelson Medical the Federal Circuit
reexamined the equitable doctrine of laches and held that the doctrine
may be applied to bar enforcement of patent claims that issued after an
unreasonable and unexplained delay in prosecution, even though the
applicant had complied with pertinent statutes and the rules of the PTO.
277 F.3d 1361, 1368 (Fed. Cir. 2002); accord In re Bogese, 303 F.3d 1362
(Fed. Cir. 2002). The Federal Circuit noted that the Supreme Court in
Crown Cork & Seal Co. v. Ferdinand Gutman Co., 304 U.S. 159 (1938),
"ratified prosecution laches as a defense to an infringement action
involving new claims issuing from divisional and continuing applications
that prejudice intervening public rights." Symbol Technologies, 277 F.3d
at 1364. Traditionally, a laches defense requires proof that (a)
"plaintiff delayed for an unreasonable and inexcusable length of time, and
(b) "the delay operated to the prejudice or injury of the defendant."
A.C. Aukerman v. R.L. Chaides Construction Co., 960 F.2d 1020, 1033
(Fed. Cir. 1992) (citing Costello v. United States, 365 U.S. 265, 282
Defendants assert that they hold intervening rights because: (1) in the
summer/fall of 1994. Red Wing Products, Inc. ("Red Wing"), a predecessor
in interest of defendants, retained Montalbano Product Development to
design a side sizer for a plastic hanger, and on November 9, 1995. Red
Wing filed a patent application for such a hanger that resulted in the
issuance on November 18, 1997 of U.S. patent 5,687,887 (`"887 patent"),
now owned by defendants, and (2) defendants actually started selling
hangers with side sizing systems in 1997. (Defs. Mem. at 3.) Accordingly,
the defendants claim intervening rights based on prosecution laches as to
those Zuckerman patents whose application was filed after November 9,
1995, the date Red Wing's patent application was filed, i.e., as to the
`629,'995 and `713 patents. (Id at 7, 9.)
B. Plaintiffs Answering Papers
A&E argues: (1) its delay in prosecuting its divisional and
continuation applications was not "unreasonable and unexplained," Symbol
Technologies, 277 F.3d at 1364, and (2) there has been no injury to
plaintiff because the applications did not extend the length of its patent
monopoly beyond the term of the `608 patent. (Pl. Mem. of Law in Opp'n,
dated May 23, 2003 ("Pl. Mem."), at 2, 4.)
A&E states that for prosecution laches to apply defendants must prove
by clear and convincing evidence that plaintiff "delay[ed] deliberately,
unreasonably and without excuse the issuance of his patent so as to
prejudice the intervening rights of another party."*fn2 (PL Mem. at 4-5
(citing Gen-Probe, Inc. v. Vysis, Inc., 2002 U.S. Dist. Lexis 25020, at
*119 (S.D. Cal. Aug. 2, 2002) (finding, after review of prosecution
history and receipt of a jury advisory verdict, that prosecution of
patent lasted eleven years after first related application was not a
bar)).) A&E argues that its delay of three years from the issuance of
the `608 patent in filing the original application for the `629 patent
was not unreasonable as it was prosecuting two other applications during
that time period. (Id. at 5.) Similarly, A&E asserts that prior to
filing its original application for the `995 patent, A&E was prosecuting
the `629 patent and, prior to its filing for the `713 patent, it was
prosecuting the `995 patent. (Id.) Under these circumstances, plaintiff
argues that the delays in filing continuation applications were not
unreasonable. (Id. (citing Stambler v. RSA Sec., Inc., 243 F. Supp.2d 74,
76 (D. Del. 2003) (finding that three year delay in filing division
applications "not unreasonable" because during that period, patentee was
prosecuting "two other patent applications based on the original
application, which ultimately issued")).) In Stambler, however, the Patent
Office also issued a restriction requirement forcing plaintiff to file
several divisional applications. Stambler, 243 F. Supp.2d at 76.
Nonetheless, at least one court has concluded that "prosecution laches is
an equitable tool which has been applied sparingly in only the most
egregious cases." Intuitive Surgical Inc. v. Computer Motion, Inc. 2002
WL 31833867, at *3 (D. Del., Dec. 10, 2002).
A&E points out that the presence of terminal disclaimers makes delay
more reasonable, citing Digital Control, Inc. v. McLaughlin Mfg. Co.
Inc. 248 F. Supp.2d 1015 (W.D. Wash. 2003) (dismissing defense of
prosecution laches where patentee filed for eight continuations and
continuations-in-part over an eight year period but did not extend the
life of the patents). (Pl. Mem. at 6-7.) A&E also contrasts its activity
of constantly pursuing additional claims from the lack of such activity
in Webster and Woodbridge. id, at 10.) At least one court, however, has
stated that "a bright line rule that the prosecution laches defense never
applies when a terminal disclaimer has been filed would run contrary to
the principle that `with its origin in equity, a determination of laches
is not made upon the application of mechanical rules.'" Chiron Corp. v.
Genentech, Inc., 268 F. Supp.2d 1139, 1143 (E.D. Cal. 2002) (citing A.C.
Aukerman, 960 F.2d at 1032).
To explain its delay, A&E points to the supporting declaration of
Mr. Zuckerman in which he states "during the prosecution of the Zuckerman
Patents, [A&E] would survey the market in order to determine whether
our competitors were copying our hangers." (Pl. Mem. at 11; Decl. of
Andrew Zuckerman, dated May 22, 2002 ("Zuckerman Decl. I"), ¶ 6.)
After learning from the Patent Trade Office ("PTO"):
that the claims of any pending application were
allowable, [Zuckerman] would instruct A&E's lawyers
to prepare and file an additional divisional or
continual application. The new application would
include claims that were different from those of the
prior Zuckerman patents and . . . would cover
competitors' products that copied the elements of
[the] invention which had not yet been patented.
(Zuckerman Decl. 1 ¶ 7.)
A&E argues that capturing the technology of a competitor in divisional
or continuation applications has been consistently held lawful by the
courts. (Pl. Mem. at 12 (citing Kingsdown Medical Consultants, Ltd. v.
Hollister, Inc. 863 F.2d 867, 874 (Fed. Cir. 1988); Digital Control, 248
F. Supp.2d at 1019).) In Chiron, however, the court points out that
"Kingsdown did not address the question of how a long period of delay
affects the equities of the situation, particularly
where the patentee could have earlier asserted broad claims that would
have covered the competitor's product," and states that "Kingsdown . . .
does not preclude an alleged infringer from asserting these kind of
circumstances as grounds for a prosecution laches defense." Chiron. 268
F. Supp.2d at 1143.
C. Defendants' Reply
In its reply memorandum, Mainetti pointed out that Mr. Zuckerman's
declaration had failed to set forth any facts demonstrating why plaintiff
had filed the additional continuation or divisional applications. (Defs.
Reply Mem. of Law, dated June 13, 2003 ("Defs. Reply"), at 2.)
Accordingly, after oral argument, the Court ordered Mr. Zuckerman to
provide an affidavit identifying "(0 the competitive products which
plaintiff intended to foreclose by filing each division or continuation of
the `608 patent, and (ii) the date upon which that product came to its
attention." (Order dated Dec. 16, 2003.) Mr. Zuckerman complied with this
order on December 22, 2003 by filing a declaration on that date which
named competitive products that had come to its attention throughout the
six-year period of delay of which defendants complain. (Zuckerman Decl.
With these specifications of its reasons for filing the continuation
and divisional application, plaintiff raised a genuine issue of material
fact as to whether the delays complained of by defendants were
unreasonable and unexplained. Accordingly, defendants' motion for summary
judgment based on prosecution laches is denied.
III. IMPACT OF RULE 30(b)(6) TESTIMONY
Additionally, in its reply memorandum, Mainetti complains that Mr.
Zuckerman's claims in the May 22, 2003 Declaration, setting forth for the
first time reasons for the delay in filing of
the divisional and continuation applications, were inconsistent with
plaintiffs previous position in this litigation. (Defs. Reply at 14.)
It points out that Kenneth George, Esq., patent counsel for A&E's
predecessor in interest, testified that he did not know why the
applications for the `583 patent, the `943 patent, the `629 patent, or for
the `995 patent were filed (Defs. Reply at 15 (citing (Supp. Decl. of
Francis C. Hand, dated June 13, 2003 ("Hand Supp. Decl."), Ex. 13
("George Dep.") at 35-36, 56-58, 60-63)), and that his co-counsel, Neal
Rosenberg, Esq., really did all the work on the case and conducted the
prosecution of the divisional and continuation applications in the case.
(Id. (citing George Dep. at 28, 30).)
Most significantly, defendants point to testimony by Neal Rosenberg,
Esq., plaintiffs designated Rule 30(b)(6) witness, that he had no
recollection of consulting with Mr. Zuckerman on the patent application
for the `583 patent, the `943 patent, the `995 patent, and the `713
patent (id. (citing Hand Supp. Decl., Ex. 14 ("Rosenberg Dep.") at 43,
67-68,*fn3 81-82, 90, 97-98)), and that, instead of giving testimony
that tends to support Mr. Zuckerman's Declarations of May 22, 2003 and
December 22, 2003, Neal Rosenberg gave the following testimony which is
inconsistent with the Zuckerman declarations:
Q. Who gave you instructions to file such claims?
A. I don't know that I received instructions.
Q. You did it on your own?
A. This was a significant case, application, and we
were attempting to make sure our scope of our
claims was not limited by any unnecessary
structural limitations or functional limitations,
and we I would say pretty continually reviewed the
language of the claims, and when we found that
there was some undue structural or functional
limitation, proposed and introduced into the
claims which did not have such a limitation; for example, changing
it from both sides of the tab having a rib to at least one side of the
tab having a rib. So I did not necessarily receive instructions from
Q. Who told you this was an important case?
A. We've gone through a few separate applications
directed to the general subject matter. Obviously
it was something that we were interested in, and
the client was interested enough to be willing to
pay the bills involved for a good job.
(Rosenberg Dep. at 53-54.)
Q. You mentioned before you continually review
language of the claims. Why do you do that?
A. In any case, and especially in any important
case, you try to make sure that the claims that
are going to issue in the patent cover the
product that's described, reasonable variations
thereof that competitors may come up with, and
in general are just broad enough in scope to be
Q. Did you at any time receive samples of a
A. In the time frame of the submissions on the
Combinations hanger, no. Whether I received it
later, the Combinations hanger later, I don't
Q. Did you ever receive samples of-A. But anything
from a competitor? Q. Yes.
A. I do not specifically recall, but it would not
surprise me. Q. If you did receive samples,
would they be in the files? A. Possibly.
Mr. MARK ROSENBERG:*fn4
They were not in the files.
(Rosenberg Dep. at 57-58.)
Q. Who gave instructions to you to file this
A. Assuming that someone gave me directions, that
would have been Ken George, but I may have just
done it on my own, too.
Q. I ask you again, who gave you instructions to file?
I don't want assumptions. I want a positive
A. I can't you're making an assumption in your
question. Do you want me to say no one?
Q. I want you to say if you don't know, you don't
A. The question has an assumption in it.
Q. There is no assumption.
A. Yes, there is, that somebody gave me instructions.
MR. HAND: Can we go off the record? (There is a
discussion off the record.) MR. HAND: Let's go on
Q. Did anyone give you instructions to file this
A. I don't know.
Q. Do you recall?
Q. Could Ken George have given instructions?
Q. Could Andrew Zuckerman have given instructions?
Q. Why would you file an application on your own?
A. If I thought it could be proved and the case
warranted it and the client was willing to pay
(Rosenberg Dep. at 98-99.)
EXAMINATION BY MR. MARK ROSENBERG:
Q. Mr. Rosenberg, earlier you were testifying with
respect to the Zuckerman patents and the
applications. Do you recall that?
Q. Before you filed any of the continuation or
divisional applications, did you receive
instructions to do so from a partner of this firm?
MR. MARK ROSENBERG: No further questions. EXAMINATION BY MR. HAND:
Q. On cross-examination, who was that partner?
A. Ken George.
Q. Now, my recollection is that you did not so
testify earlier. Is that correct?
A. I do not know what your recollection is. I did
not check with the clients directly.
(Rosenberg Dep. at 107.)
Neal Rosenberg's Rule 30(b)(6) testimony that the continuation and
divisional applications resulted from Mr. Rosenberg's concepts of
"reasonable variations" and "just broad enough in scope to be useful"
suggest, in light of a record which shows each continuation or divisional
application was filed by plaintiff on the very last day before issuance of
its predecessor patent (or on one occasion after) notice of acceptance,
that the applications for the `629, `995 and `713 patents could have been
prepared before or soon after the issuance of the `608 patent, and may
have been deliberately held in abeyance and filed seriatim to affect
In any event, Neal Rosenberg's testimony suggests that he invented
these patents himself. Moreover, it is inconsistent with Mr. Zuckerman's
statement in his Declarations of May 22, 2003 and December 22, 2003, and
with plaintiffs position on this motion that these patents were designed
to capture the technology of competitors. (Zuckerman Decl. I at 3;
Zuckerman Decl. II; Pl. Mem. at 11-12.)
Rule 30(b)(6) provides that when a party notices a corporation for
deposition, the latter "shall designate one or more officers, directors,
or managing agents, or other persons who consent to testify on its
behalf, and may set forth, for each person designated, the matters on
which the person will testify." Fed.R.Civ.P. 30(b)(6). A party has an
obligation to properly prepare its designee to provide testimony on its
behalf. See, e.g., Reilly v. Natwest Mkts. Group, Inc., 181 F.3d 253 (2d
Cir. 1999) ("To satisfy Rule 30(b)(6), the corporate deponent has . . .
to make available . . . persons as will' be able `to give complete,
knowledgeable and binding answers' on its behalf.") (citations omitted);
Twentieth Century Fox Film Corp. v. Marvel Enters., 2002 U.S. Dist. LEXIS
14682, at *7 (S.D.N.Y. Aug. 8, 2002) ("If the persons designated by the
do not possess personal knowledge of the matters set out in the
deposition notice, the corporation is obligated to prepare the designees
so that they may give knowledgeable and binding answers for the
corporation.") (citing United States v. Taylor, 166 F.R.D. 356, 361-62
(M.D.N.C. 1996)); Paul Revere Life Ins. Co. v. Jafari, 206 F.R.D. 126,
127-28 (D. Md. 2002) ("Rule 30(b)(6) . . . implicitly requires
[designees] to review all matters known or reasonably available to it in
preparation for the Rule 30(b)(6) deposition."). Testimony of a Rule
30(b)(6) witness is then binding on the party that designated the
witness. 8A Charles A. Wright, Arthur R. Miller and Richard L. Marcus,
Federal Practice and Procedure § 2103 (2nd ed. 1984); Fed. R. Civ. P. 30
advisory committee's note; see also Sabre v. First Dominion Capital LLC.
2001 U.S. Dist. LEXIS 20637, at *2 (S.D.N.Y. Dec. 12, 2001) ("A 30(b)(6)
witness testifies as a representative of the entity, his answers bind the
entity and he is responsible for providing all the relevant information
known or reasonably available to the entity.").
However, while Rule 30(b)(6) testimony is binding, some authority holds
that it does not constitute a judicial admission that ultimately decides
on issues and cannot be contradicted or used for impeachment purposes.
W.R. Grace & Co. v. Viskase Corp., 1991 WL 211647, at *2 (N.D. Ill.,
Oct. 15, 1991) (allowing corporate party to offer evidence at trial
contrary to statements made by its corporate representative in a Rule
30(b)(6) deposition); Industrial Hard Chrome, Ltd. v. Hetran, Inc.
92 F. Supp.2d 786, 791 (E.D. Ill., 2000) (""[Rule 30(b)(6)] testimony is
not a judicial admission that ultimately decides an issue. The testimony
given at a Rule 30(b)(6) deposition is evidence which, like any other
deposition testimony, can be contradicted and used for impeachment
purposes."); see also Hyde v. Stanley Tools, 107 F. Supp.2d 992, 992-93
(E.D. La. 2000) ("[While] court may disregard affidavit which directly
contradicts an earlier
30(b)(6)deposition . . . [c]ourts have allowed a contradictory or
inconsistent affidavit to nonetheless be admitted if it is accompanied by
a reasonable explanation.") But cf. Ierardi v. Lorillard, Inc., 1991
U.S. Dist. LEXIS 11320 (E.D. Pa., Aug. 13, 1991) (holding that party
cannot introduce evidence during trial contradicting previous statements
by Rule 30(b)(6) designee); Tavlon 166 F.R.D. at 362 (finding that a
statement by a Rule 30(b)(6) designee is not a judicial admission, but
can be binding on the corporation as admission against interest under
Fed.R.Evid. 804(b)(3)). As the court in W.R. Grace & Co. explained the
It is true that a corporation is "bound" by its Rule
30(b)(6) testimony, in the same sense that any
individual deposed under Rule 30(b)(1) would be
"bound" by his or her testimony. All this means is
that the witness has committed to a position at a
particular point in time. It does not mean that the
witness has made a judicial admission that formally
and finally decides an issue. . . . Evidence may be
explained or contradicted. Judicial admissions, on the
other hand, may not be contradicted.
1991 WL 211647 at *2 (allowing corporate party to offer evidence at
trial contrary to statements made by its corporate representative in a
Rule 30(b)(6) deposition).
Accordingly, while the court is not bound in its decision by the
30(b)(6) evidence offered, credibility issues have been raised as to
whether Mr. Zuckerman's Declarations or Neal Rosenberg's Rule 30(b)(6)
testimony reflects the reason for the filing of the divisional and
continuation applications for the `629, `995 and `713 patents.
Furthermore, by letter dated December 30, 2003, defendants point out
that Mr. Zuckerman's Declaration of December 22, 2003 did not provide
identification of the construction of the product so that plaintiff did
not correlate the products listed to each divisional or continuation
application of the `608 patent. In view of the credibility issues raised
and plaintiffs failure to demonstrate that the `629, `995 and `713 patent
applications correlate to competitor's
products on the market, Defendants have raised genuine issues of material
fact which prevent the Court from granting plaintiffs cross motion to bar
the defense of prosecution laches.
Defendant's motion for summary judgment based on prosecution laches is
denied. Plaintiffs cross-motion to bar that defense is denied.
Furthermore, Mr. Zuckerman is ordered to provide the Court by March 3,
2004 with an affidavit correlating the features of the patents identified
in his Declaration of December 22, 2003 with the divisional or
continuation papers of the `608 patent at issue in this case.
IT IS SO ORDERED.
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