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Krausz Industries, Ltd. v. Romac Industries

June 30, 2010

KRAUSZ INDUSTRIES, LTD., FORMERLY KNOWN AS KRAUSZ METAL INDUSTRIES, LTD., PLAINTIFF,
v.
ROMAC INDUSTRIES, INC., EVERETT J. PRESCOTT, INC., DEFENDANTS.



The opinion of the court was delivered by: David G. Larimer United States District Judge

DECISION AND ORDER

Plaintiff Krausz Industries, Ltd. ("Krausz") brings this action against defendant Romac Industries, Ltd. ("Romac"), and Everett J. Prescott, Inc. ("Prescott"), a distributor of both Krausz and Romac products, pursuant to the Patent Act, 35 U.S.C. §1 et seq. Krausz claims that the "Macro" coupling, a pipe coupling device marketed and sold by the defendants, infringes on two of its patents.

FACTUAL BACKGROUND

Krausz, an Israeli company based in Tel Aviv, is engaged in the manufacture and sale of pipe joining and repair devices. Eliezer Krausz is the inventor of two water pipe couplings, allegedly protected by U.S. Patent Nos. 6,293,556 and 7,243,955 (referred to as the "'566" and "'955" patents, respectively). Krausz employs an exclusive United States Distributor, Total Piping Solutions ("TPS"), headquartered in this district, to market its products in the United States.

On July 10, 2009, Krausz filed this action alleging that Romac, a manufacturer and seller of water pipe products for the waterworks industry, was selling a water pipe coupling (known as the "Macro coupling") that infringes on the '566 and '955 patents. On July 21, 2009, Romac moved to dismiss the action or, in the alternative, to transfer it to the Western District of Washington, where its own headquarters are located.

In an apparent attempt to defeat Romac's motion to transfer venue based on the lack of contacts with this District, Krausz responded by filing a Second Amended Complaint. In the Second Amended Complaint, Krausz adds Prescott -- one of its own distributors -- as a co-defendant, solely on the grounds that Prescott also serves as a distributor of Romac products.

Romac is located in Seattle, Washington and has no direct contacts with the Western District of New York. This case's sole connections to this District are: (1) Krausz's United States distributor, TPS, has regional offices here, and TPS employees first brought the alleged infringement to Krausz's attention; (2) Krausz and Romac distributor Prescott has its headquarters here; and (3) Romac sells products throughout the United States, including in the Western District of New York, which accounts for approximately $500,000 of Romac's annual revenue (less than 1% of Romac's total sales per year).

Discussion

I. Defendant Romac's Motion to Dismiss Pursuant to Fed. R. Civ. Proc. 12(b)(6)

Romac moved to dismiss the initial complaint, on the basis that Krausz had failed to allege that every element of the patented device is present in the accused device, either literally or under the doctrine of equivalents. See Lemelson v. U.S., 752 F.2d 1538, 1551 (Fed. Cir. 1985). Specifically, Romac alleges that Krausz's complaint failed to set forth a cause of action for patent infringement, because it: (1) did not allege any facts detailing the elements of the '566 and '955 patents that are being infringed upon; (2) did not specify the limitations of the asserted claims; and (3) provided no facts about the Macro coupling that would enable the reader to determine which limitations of which claims in the '556 and/or '955 patents are present in Romac's Macro coupling.

After Romac's motion to dismiss was filed, Krausz amended the complaint. The operative pleading is now the Second Amended Complaint, which is more than double the length of the original complaint and appears to correct the deficiencies identified by Krausz in its motion to dismiss. Specifically, the Second Amended Complaint details each of the claims and limitations of both patents, and specifies which limitations of which claims in both patents are present in Romac's Macro coupling. (Dkt. #36, ¶¶9-33). Although Romac filed a supplemental memorandum of law in support of its motion to transfer after the Second Amended Complaint was filed, it has not renewed its arguments in support of its motion to dismiss the complaint, apparently conceding that the Second Amended Complaint does not suffer from the same deficiencies as the original complaint. Accordingly, Romac's motion to dismiss is denied.

In its motion to dismiss, Romac also contended that Krausz failed to comply with its obligation to conduct a "reasonable pre-filing inquiry" prior to bringing suit, and should be sanctioned. See View Eng'g, Inc. v. Robotic Vision Sys., 208 F.3d 981, 986 (Fed. Cir. 2000) (before bringing suit, a party should, "at a bare minimum, apply the claims of each and every patent that is being brought in to the lawsuit to an accused device and conclude that there is a reasonable basis for a finding of infringement of at least one claim of each patent so asserted.")

Krausz, however, denies that it failed to meet its Rule 11 pre-filing investigation obligation, and alleges that prior to filing the complaint, it viewed, physically inspected and photographed Romac's "Macro" coupling, analyzed technical drawings and specifications provided in Romac's Macro brochure, and discussed and evaluated this information with TPS representatives. On the record before me, it would appear that Krausz performed, at least minimally, "a good faith, informed comparison of the claims of [its] patent against the accused subject matter." See Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1302 (Fed. ...


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