IP Law Daily, PATENT—N.D. Ill.: Counterclaims for invalidity, unenforceability could go forward after voluntary dismissal of infringement claims, (Apr 8, 2014)

By Thomas Long, J.D.

An actual controversy existed regarding the validity and enforceability of an industrial equipment manufacturer’s patents regarding conveyors for molding facilities, even though the manufacturer had voluntarily dismissed its infringement claims against a competitor, the federal district court in Chicago has decided (Carrier Vibrating Equipment, Inc. v. General Kinematics Corp., April 7, 2014, Dow, R.). The manufacturer’s motion to dismiss the competitor’s counterclaims for declaratory judgment of invalidity and unenforceability of the patents-in-suit was denied.

The dispute between plaintiff Carrier Vibrating Equipment, Inc. (“Carrier”) and defendant General Kinematics Corp. (“Kinematics”) involved technology for controlling the retention time on a vibratory conveyor, typically used in a foundry or other molding facility. Carrier sued Kinematics for alleged infringement of U.S. Patent 7,712,513 (“the '513 patent”). The '513 patent disclosed a system and method for controlling the retention time—the time that a casting is retained in its mold—of a casting being transported on a vibratory conveyor.

Based on advertising material on Kinematics’ website, Carrier asserted that Kinematics’ V2 Shakeout Conveyor system infringed the '513 patent by employing a control system utilizing vector-based measurement to monitor and maintain the shakeout angle, in a manner that met the limitations of the patent.

Kinematics counterclaimed, seeking a declaratory judgment that the '513 patent was invalid and unenforceable. Kinematics later amended its counterclaim to request a declaratory judgment that Carrier’s U.S. Patent 8,096,406 (“the '406 patent”) was invalid and unenforceable. The '406 patent resulted from a continuation of the application that resulted in the '513 patent and had similar claims to the '513 patent.

The parties agreed to a “preemptive” litigation plan, because of Carrier’s belief that Kinematics was going to install its infringing conveyors at a GM/Defiance plant. Under this litigation plan, the court was to first decide Kinematics’ counterclaims that various claims of the '513 patent were invalid for violation of the on-sale bar or for lack of a written description.

During the pendency of litigation, Kinematics’ conveyors were installed at GM/Defiance. In November 2012, Carrier was granted permission to conduct focused discovery to determine whether the Kinematics shakeout conveyors installed at the GM/Defiance facility infringed the patents-in-suit. After conducting a physical inspection, Carrier determined that Kinematics had not actually installed its V2 Shakeout conveyors at GM/Defiance, but instead had installed conveyors called shakeout single mass conveyors. These conveyors did not have the capability to change the angle of attack; consequently, Carrier concluded that they did not infringe either the '513 or '406 patent.

Carrier moved for voluntary dismissal of its infringement claims, with prejudice, against the shakeout single mass conveyors built and installed at GM/Defiance. Carrier also contended that the dismissal of its infringement claims required the court to dismiss Kinematic’s declaratory judgment counterclaims for lack of an actual case or controversy.

The court denied Carrier’s request to dismiss the declaratory judgment counterclaims. In the court’s view, even with the dismissal of Carrier’s infringement claims, an actual controversy existed.

Carrier argued that Kinematics’ only activity regarding its V2 conveyors was advertising on its website, and those advertisements did not contain the structural details needed to conduct a proper infringement analysis. Carrier pointed out that the method claims of the patents-in-suit would require that the V2 conveyors be used as set forth in the claims, not just built or sold, for infringement to occur. Therefore, Carrier argued, because it could not assert an infringement claim against “non-existent” V2 conveyors, there was no controversy to support Kinematics’ counterclaims. Carrier did admit, however, that it intended to bring an infringement suit against Kinematics if it sold one of its V2 machines, provided that the machine was operating in an infringing manner.

A party does not need to have engaged in the actual manufacture or sale of a potentially infringing product to obtain a declaratory judgment, the court said. There only needs to be a showing of “meaningful preparation” for making or using the product. In this case, Kinematics had established the design for its V2 control technology, and it had built and tested a V2-equipped shakeout conveyor. Although this prototype had been dismantled, Kinematics indicated that the control system remained in existence. Furthermore, Carrier inspected and examined the V2-equipped prototype and represented to the court that it had a complete understanding of how the V2 technology worked.

The machines at issue were heavy, expensive equipment that were built to order and designed to fit within a specific customer’s factory line. Kinematics stated that it was ready and able to provide V2 conveyors to any customer interested in the product. Kinematics was understandably hesitant to proceed with the manufacture of V2 equipment before resolving the patent infringement issues raised by Carrier, in the court’s view. Moreover, Carrier’s basis for its infringement allegations was not the actual sale of the V2 but rather Kinematics’ offer to sell the product. Kinematics was still offering to sell the V2 equipment. Therefore, the technology was sufficiently immediate and real to satisfy declaratory judgment jurisdiction.

The case is No. 10-cv-5110.

Attorneys: James R Higgins, Jr. (Middleton Reutlinger) for Carrier Vibrating Equipment, Inc. Thomas I. Ross (Marshall, Gerstein & Borun) for General Kinematics Corp.

Companies: Carrier Vibrating Equipment, Inc.; General Kinematics Corp.

Cases: Patent IllinoisNews