Opinion
Case No. 1:99-CV-,861.
November 20, 2000.
MEMORANDUM OPINION ON DEFENDANT'S MOTION TO DISMISS OR FOR SUMMARY JUDGMENT
On March 29, 2000, the Court issued an order of partial dismissal, dismissing the claim of plaintiff Strandtek International, Inc. ("Strandtek") for declaratory judgment of patent invalidity and non-infringement. The Court permitted plaintiff to file a second amended complaint restating its remaining claims. The second amended complaint asserts a single claim for unlawful interference with existing business relationships and prospective business advantage. Now before the Court is the motion of defendant Minnesota Mining and Manufacturing, Inc. ("3M") for an order of dismissal or summary judgment on the second amended complaint. The Court heard oral arguments on the motion on September 11, 2000 and ordered the parties to file supplemental briefs. The supplemental briefing has now been completed and the Court concludes, for the reasons that follow, that defendant 3M is entitled to summary judgment. Plaintiff Strandtek and defendant 3M are competitors, each manufacturing acoustical insulation products. Defendant 3M is the owner of a patent relating to nonwoven melt blown fiber acoustical insulation products, United States Patent No. Re. 36, 323 ("the '323 patent"), issued October 5, 1999. Strandtek contends the '323 patent is invalid and unenforceable because 3M failed to disclose material prior art during prosecution of the patent before the Patent and Trademark Office ("PTO"). Strandtek's claim for a declaration of patent invalidity was dismissed for lack of a justiciable case or controversy. Nonetheless, Strandtek contends 3M knows the '323 patent is, by virtue of 3M's inequitable conduct before the PTO, unenforceable. Thus, Strandtek contends that 3M, in attempting to induce prospective Strandtek customers not to purchase Strandtek products by asserting its ownership of the '323 patent, has engaged in bad faith conduct in the marketplace. This bad faith conduct is alleged to constitute tortious interference with prospective business advantage.
Because the Court has considered matters outside the pleadings and all parties have been given ample opportunity to present pertinent material, defendant's motion is treated as one for summary judgment pursuant to Fed.R.Civ.P. 56. See Fed.R.Civ.P. 12(c).
To prevail on such a claim under Michigan law, Strandtek must establish each of the following elements:
(1) the existence of a valid business relation (not necessarily evidenced by an enforceable contract) or expectancy; (2) that the defendant knew of the business relationship or expectancy; (3) that the defendant intentionally interfered by improperly inducing or causing a breach or termination of the relationship or expectancy; and (4) that the defendant's improper or unjustified interference resulted in injury to the plaintiff.American Council of Certified Podiatric Physicians and Surgeons v. American Board of Podiatric Surgery, Inc., 185 F.3d 606, 624 (6th Cir. 1999).
Strandtek alleges in particular that 3M intentionally and improperly interfered with ongoing contract negotiations between Strandtek and Johnson Controls, Inc. For present purposes, the Court assumes there are genuine issues of fact concerning the first, second and fourth elements of Strandtek's claim — i.e., whether Strandtek had a valid business relationship or expectancy with Johnson Controls; whether defendant 3M knew of the relationship or expectancy; and whether 3M's interference resulted in injury to Strandtek. Yet, unless Strandtek can also show there is a genuine fact issue concerning the third element as to whether 3M improperly interfered with the relationship or expectancy, there is no genuine issue of material fact and 3M is entitled to summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) (observing that a complete failure of proof concerning an essential element of a claim necessarily renders all other facts immaterial).
The third element requires Strandtek to demonstrate "illegal or unethical conduct" by 3M. American Council of Certified Podriatric Physicians, 185 F.3d at 624. This element will have been satisfied if Strandtek is able to show, as alleged, that 3M knew the '323 patent was not enforceable because 3M had engaged in inequitable conduct before the PTO . See Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1336 (Fed. Cir. 1998), overruled on other grounds, Midwest Indus., Inc. v. Karavan Trailers, Inc., 139 F.3d 1470, 1476-78 (Fed. Cir. 1998). "One who alleges inequitable conduct arising from a failure to disclose prior art must offer clear and convincing proof of the materiality of the prior art, knowledge chargeable to the applicant of that prior art and its materiality, and the applicant's failure to disclose the prior art, coupled with an intent to mislead the PTO." Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995) (emphasis added); see also Seimconductor Energy Lab. Co., Ltd. v. Samsung Electronics Co., Ltd., 204 F.3d 1368, 1373 (Fed. Cir. 2000).
At the conclusion of the hearing on September 11, 2000, the Court instructed counsel for the parties to file supplemental briefs addressing the specific question whether 3M's U.S. Patent No. 4,103,058 ("the '058 patent") was prior art material to the prosecution of the '323 patent. For reasons more fully set forth on the record during the hearing, the Court indicated that 3M's entitlement to summary judgment would rise or fall on the question of the '058 patent's materiality.
In arguing that the '058 patent was material, Strandtek erroneously relies on a superseded standard, citing LaBounty Mfg., Inc. v. United States Trade Comm'n, 958 F.2d 1066, 1074 (Fed. Cir. 1992) ("[I]nformation is material where there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent."). The standard was changed in 1992, when the PTO amended 37 C.F.R. § 1.56 ("Rule 56"). See Molins, 48 F.3d at 1179 n. 8.
Rule 56 now defines information as material to patentability when:
[I)t is not cumulative to information already of record or being made of record in the application, and
(1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or
(2) It refutes, or is inconsistent with, a position the applicant takes in:
(i) Opposing an argument of unpatentability relied on by the Office, or
(ii) Asserting an argument of patentability.
Seminconductor Energy Lab., 204 F.3d at 1374 (emphasis added).
In its supplemental brief, 3M contends the '058 patent is cumulative to other prior art references that were disclosed to the PTO during prosecution of the '323 patent. Indeed, 3M has persuasively demonstrated that the other references were more pertinent and disclose more clearly all the same elements disclosed in the '058 patent. The '058 patent appears to have been cumulative and, therefore, not material.
Strandtek has failed to refute this showing. Further, affording Strandtek the opportunity to conduct additional discovery would be futile. There is no reasonable likelihood that additional evidence could be uncovered that would tend to show that the '058 patent was not cumulative to other prior art references which were presented to the PTO . See Gordon v. Barnes Pumps, Inc., 999 F.2d 133, 138 (6th Cir. 1993) (holding that nebulous assertions about the possible fruits of future discovery are insufficient to forestall summary judgment).
Having duly considered the parties' supplemental submissions, the Court has thus reached the settled conclusion that Strandtek has not and cannot establish, by clear and convincing evidence, that 3M failed to disclose material prior art during its prosecution of the '323 patent. It follows that Strandtek is unable to demonstrate that 3M engaged in inequitable conduct before the PTO.
Hence, Strandtek is unable to establish that 3M's alleged interference with its prospective business advantage was "improper." Strandtek has thus failed to present evidence sufficient to create a genuine issue of material fact in connection with an essential element of its tortious interference claim and 3M is entitled to judgment as a matter of law.
Accordingly, and for the reasons set forth on the record during the September 11, 2000 hearing, defendant 3M's motion for summary judgment will be granted. A judgment order consistent with this memorandum opinion shall issue forthwith.
SUMMARY JUDGMENT ORDER
In accordance with the Court's memorandum opinion of even date, on defendant's motion to dismiss or for summary judgment, IT IS HEREBY ORDERED that the motion of defendant Minnesota Mining and Manufacturing, Inc, for summary judgment on the claims asserted against it in the second amended complaint of plaintiff Strandtek, Inc., for tortious interference with prospective business advantage is GRANTED; and IT IS FURTHER ORDERED that summary judgment is hereby AWARDED to Minnesota Mining and Manufacturing, Inc. on the claim asserted in the second amended complaint.