Caouette v . Presby CV-95-587-JD 04/23/96 C UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Henry Caouette, et a l .

v. Civil N o . 95-587-JD

David Presby, et a l .

REPORT AND RECOMMENDATION

Henry Caouette and Geo-Flow, Inc. (collectively "Geo-Flow") move for a temporary restraining order and preliminary injunction enjoining David W . Presby and Presby Environmental, Inc. (collectively "Presby") from infringement of the '665 patent owned by Geo-Flow. Presby objects, arguing that the '665 patent is invalid, that its own device does not infringe and that plaintiffs have not met its burden for preliminary injunctive relief as a matter of fact and law.

FACTUAL BACKGROUND

Mr. Caouette and M r . Presby have each been in the business

of designing and installing septic systems for many years.

Caouette received United States Patent 4,909,665 entitled

"Fabric-Covered Structure" (referred to as the "'665 patent") on

March 2 0 , 1990. He thereafter licensed the patent to Geo-Flow,

Inc., a Maine corporation owned and operated by his son and son-

in-law. Geo-Flow, Inc. manufactures, distributes and sells septic systems and components. Geo-Flow, Inc., on July 3 0 , 1992, sublicensed the '665 patent to M r . Presby and awarded him the exclusive right to market the "Geo-Flow Leaching System" in New Hampshire and other areas. Presby acknowledged in the licensing agreement that the '665 patent was an improvement over prior art. Presby sold the Geo-Flow system, promoted i t , and developed a promotional, installation handbook for the '665 patent and "Geo- Flow Leaching System".

Thereafter the parties had a falling out. Defendants claim that the sublicense was terminated. Plaintiffs allege Presby was marketing a system which they allege infringes the '665 patent and disparaging the licensed system. Presby claims that he has invented a product on which a patent application is pending which is not a knock-off, doesn't create any confusion to purchasers and is a substantial improvement.

The septic systems at issue use corrugated pipes which, by

definition, mean they have parallel circular ridges and valleys. The difficulty with their use prior to the systems in issue was

that the ridge portion was in contact with the fabric cover and

the holes on the ridges would plug and prevent the biological mat

forming properly. Claim 1 of the '665 patent states:

1. In combination a fabric/grid mesh covering for a corrugated structure having peaks and valleys on its exterior surface with a plurality of perforations defined in said valleys for fluid

2 passage, [A] said fabric/grid mesh covering including [1] a porous fabric [2] substantially adjacent to [3] a grid mesh separation structure formed of [i] material with channels defined therein for positioning against said peaks and extending over the tops of said valleys and [ii] apertures [a] defined in said grid mesh adjacent to and communicating with said channels [b] adapted to allow fluid passing from said perforations in said valleys to pass through said channels and grid mesh apertures to said fabric disposed above said peaks and valleys of said corrugated structure.

(Emphasis and outline form added).

Defendant has not supplied a copy of the claims in his patent

application but his "Enviro-Septic Leaching System" is described

by his expert, J. Ernest Kenney, in his affidavit as follows: This product is marketed under the name Enviro- Septic Leaching System and includes a corrugated plastic drain pipe having perforations in the valleys of the corrugations to permit flow of fluid from a septic system out of the pipe into the earth in which the pipe is normally buried.

The pipe corrugations are covered with an inner layer of batting made up of randomly oriented thin plastic fibers forming a porous mesh contained between fine plastic netting on opposite surfaces of the batting. The batting is also held together with wide stitched plastic threads running through it at spaced intervals. The batting material is green colored and

3 the fine plastic netting is black. The batting is covered with an outer layer of felt filter material having a gray color. In use, the green batting material with its fine plastic netting is placed against the peaks of the corrugations of the drain pipe with the felt filter material on the outside of the pipe assembly. When so assembled, one layer of the fine plastic netting and the inner side of the green batting material all rest against the peaks of the corrugated pipe. However, I do not observe that the fine netting or the combination of the netting with the green fibers provide any structure that can be equated with "channels" in accordance with my interpretation of this term. The fine netting and the green fibers all contact the peaks simultaneously and there are no flow-directing walls or other structure that would appear to direct fluid flow in any particular direction or manner.

Indeed, it is inherent in the netting structure that all of the threads making up the netting lie in the same plane and therefore no channels are provided in any particular direction. Moreover, the green fibers contact the peaks in between the netting and virtually adjacent every thread making up the netting. Based on my observation, the netting virtually becomes part of the batting material and the entire batting assembly of randomly extending green threads and fine plastic netting provide a porous structure permitting fluid flow in any direction over the peaks without any channeling of any kind.

(document n o . 9, Affidavit of Kenney, p p . 21-22).

In addition to alleged patent infringement, plaintiffs

allege that defendants copied a design and installation handbook

produced for use with the Geo-Flow system and are now using it

with the Enviro-Septic System. The handbook was designed and

written by M r . Presby for use with Geo-Flow. Defendant claims

4 that he was not paid by Geo-Flow for i t . However, plaintiffs

have presented a contrary affidavit and a copy of a bill and

credit for at least a revision. Defendants contend that there is

a striking difference in the covers although they are admittedly

similar in form and substance.

STANDARD OF REVIEW

Injunctions in patent cases, including preliminary

injunctions, are authorized by Title 3 5 , United States Code, §

283 which provides:

The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.

If in no other way, at least the parties agree as to the

requirements to obtain a preliminary injunction (document n o . 2 ,

memorandum, p.5; document n o . 9, memorandum, p . 3 ) . The

requirements to establish a preliminary injunction under

are that a party establish: (1) a reasonable

likelihood of success on the merits; (2) it will suffer

irreparable harm; (3) the balance of hardships tip in its favor;

and (4) it is in the public interest. New England Braiding Co.,

Inc. v . A . W . Chesterton Co.,

7 8 , 882 (Fed.Cir. 1992);

Nutrition 21 v . United States,

6 7 , 869 (Fed.Cir. 1991);

5 Hybritech Inc. v . Abbott Laboratories,

(Fed.Cir. 1988). This is the same standard for preliminary

injunctions adopted by the First Circuit. Campbell Soup C o . v .

Giles,

6 7 , 470 (1st Cir. 1995); Gately v . Commonwealth

of Mass.,

(1st C i r . ) , cert. denied, ____ U.S.

____,

6 1 , 114 S . C t . 1832 (1993).

Nevertheless, "a preliminary injunction is a drastic and

extraordinary remedy that is not to be routinely granted." Intel

Corp. v . ULSI System Technology,

(Fed.Cir.

1993), cert. denied, U.S. , 127 L.Ed.216, 114 S . C t .

923 (1994). The Federal Circuit has proscribed the standard for

consideration of the four factors: Our rule regarding whether a preliminary injunction should be granted or denied is that the trial court should weigh and measure each of the four factors against the other factors and against the magnitude of the relief requested. Under this rule, no one factor, taken individually, is necessarily dispositive. If a preliminary injunction is granted by the trial court, the weakness of the showing regarding one factor may be overborne by the strength of others. If the injunction is denied, the absence of an adequate showing with regard to any one factor may be sufficient, given the weight or lack of it assigned the other factors, to justify the denial and as a basic proposition, the matter lies largely in the sound discretion of the trial judge.

Chrysler Motors Corp. v . Auto Body Panels of Ohio, Inc.,

(Fed.Cir. 1990) (citations omitted).

6 DISCUSSION

1. Likelihood of Success

To establish likelihood of success on the merits plaintiffs

must prevail both as to the validity of its patent and

infringement of i t . Hybritech Inc.,

.

provides in part that "[a] patent shall be presumed valid."

It follows that "[t]his presumption of validity places the burden

of persuasion as well as the burden of going forward on the party

asserting invalidity. Stratoflex, Inc. v . Aeroquip Corp.,

,

7 1 , 875 (Fed.Cir. 1983)." Chrysler

Motors,

. Patent '665 appears as Exhibit A to the

Motion for Preliminary Injunction (document n o . 2 ) .

a. Validity.

Defendants' claim to invalidity is based upon an allegation

that the patent is invalid because Anthony Corrao, not Henry

Caouette, is the sole inventor. Corrao's description of his

alleged invention is focused in large part upon the concept of

substituting corrugated pipe for a chamber system. The only

description of an alleged invention by Corrao which could be

construed to implicate patent '665 is paragraph 9 of the Corrao

affidavit (document n o . 9, Affidavit of Corrao) in which he

describes wrapping of a 1 0 " corrugated pipe by a layer of mesh

7 covered with a non-woven fabric. This statement is sufficiently

broad to cover both plaintiffs' patent and defendants' pending

patent application. Plaintiffs' supplemental affidavit, attached

to its Reply Memorandum (document n o . 1 3 , Supplemental Affidavit

of Caouette), denies the Corrao assertion and states that

Corrao's sole contribution was to suggest wrapping multiple

corrugated pipes in a single set of the wraps for which

plaintiffs allege inventorship. This suggestion was deleted from

the patent application.

Corrao brought suit in the state court in Maine alleging in

part co-inventorship (document n o . 1 3 , Exhibit A ) . That suit was

dismissed with prejudice under Rule 41(b)(1), Maine Rules of

Civil Procedure (document n o . 1 3 , Exhibit C ) . Particularly since

that rule provides for dismissal for lack of prosecution, I do

not rely on any res judicata bar it may have in considering that

suit. However, the lack of specificity of the Corrao affidavit

together with his failure to prosecute his suit lead me to

conclude that, in the face of the specific Caouette and Nitkin

affidavits, Corrao's general claims of co-inventorship are

unconvincing. Defendants have failed to sustain their burden of

persuasion based on Corrao.

The second ground for defendants' claim of invalidity is

based upon the affidavit of J. Ernest Kenney, Esq., defendants'

8 expert in patent law. Affidavit of Kenney (with document n o . 9 ) .

This affidavit is opposed by the affidavit of William Nitkin,

Esq., plaintiffs' patent counsel (document n o . 2 , Affidavit of

Nitkin and document n o . 1 3 , Supplemental Affidavit of Nitkin).

The essence of the Kenney affidavit on the issue of infringement

is that if the term "channels" in the '665 patent claims includes

randomly oriented fibers the patent is invalid because it is

covered by prior art. If "channels" does not encompass randomly

oriented fibers, but rather is restricted to a form of structural

conduit or passageway, M r . Kenney opines, the Presby product

(which uses random fibers) does not infringe.

Not surprisingly, M r . Nitkin's supplemental affidavit

supports the opposite view - i.e., the Caouette patent is valid

and the Presby product infringes. The essence of the Nitkin

affidavit on the infringement issue i s : (a) the "prior art"

patents discussed by Kenney do not nullify and invalidate the

'665 patent, and (b) "channel" means " . . . any opening . . .

that allows water to pass . . ." (Supplemental Affidavit, Nitkin,

¶24). Simply put, Nitkin states that infringement is established

by admissions (Supplemental Affidavit, Nitkin, ¶¶28-29) and by

defendants' use of every element of the claim limitations (Nitkin

Affidavit, p p . 11-12).

In determining the meaning of claims the three prime sources

9 are the claims themselves, the specification and the prosecution

history. Markman v . Westview Instruments, Inc.,

6 7 , 979

(Fed.Cir.), cert. denied, ____ U.S. ____,

2 1 , 116 S .

C t . 40 (1995). The meaning of "channel" as used in the '665

claims is central to the validity and infringement issues. The

patent claims and specification are available in full as part of

the record. Only portions of the prosecution history are

included in or referenced in the affidavits. The expert

affidavits are considered extrinsic evidence which, in it

discretion, the court can consider as an aid to the meaning of

the patent language. Id. at 980.

Word(s) used in a claim are given their ordinary and

accustomed meaning, unless from the specification or prosecution

history it appears that the word(s) were used differently by the

inventor. Carroll Touch, Inc. v . Electro Mechanical Systems,

Inc.,

(Fed.Cir. 1993). The specification "may

act as a sort of dictionary, which explains the invention . . . .

The caveat is that any special definition given to a work must be

clearly defined in the specification." Markman, 52 F.3d at 979-

80 (internal citations omitted). The prosecution history is

viewed as an invaluable source of claim interpretation since it

may evidence the patentee's own understanding of terms. Id. at

980. Extrinsic evidence, in addition to expert evidence includes

10 dictionaries and learned treatises.

The use of "channel" by the patentee to include members with

apertures, fibrous materials and open-fiber material indicates a

definition of "channels" which is not consistent with its usual

ordinary and accustomed meaning as a directed or funneled course

or passage. The American Heritage Dictionary, Second College

Edition (1982). The definitions offered by plaintiffs from

Webster's (Supplemental Affidavit of Nitkin, ¶25) reinforce, as

opposed to broaden, the ordinary and accustomed meaning of

channels as a course or route into or along which something is

directed. Plaintiffs, however, maintain that the specification,

by its explanation of the invention, provides a definition of

"channel" which includes non-oriented fibers. (Supplemental

Affidavit of Nitkin, ¶¶ 11-14).

The language of claim 1 uses "channels" as follows: . . . material with channels defined therein for positioning against said peaks . . . and apertures defined in said grid mesh adjacent to and communicating with said channels adapted to allow fluid . . . to pass through said channels and grid mesh apertures . . . .

The specification states that this grid mesh can take different

forms but must have members with apertures or fibrous material

which separates the peaks of the pipe and the fabric and which

allows water or effluent to pass. '665 patent, col. 4 , lines 50-

11 58. The specification indicates that the square or rectangular

plastic mesh is but one embodiment (albeit the one used in

plaintiffs' manufactured product) of the channelled separation

element. '665 patent, col. 3 , lines 3-11, 25-32. The plastic

mesh used in the manufactured product is similar or identical to

that described as "one grid mesh . . . utilized successfully."

'665 patent, col. 3 , line 2 0 . Other grid mesh designs include an

open-fiber and a dimpled material. '665 patent, col. 5 , lines

20-25.

An example used in the patent of one open-fiber embodiment

is "Enkadrain material manufactured by BASF Corporation which

material is an interlocked open-fiber mesh". '665 patent, col.

5 , lines 12-14. The fibers of this material are as randomly

oriented as those used in defendants' product. "[I]t is unlikely

that an inventor would define the invention in a way that

excluded the preferred embodiment, or that persons of skill in

this field would read the specification in such a way." Hoechst

Celanese Corp. v . BP Chemicals Ltd.,

(Fed.Cir.

1996). Plaintiffs contend that it is also unlikely that an

inventor would define an invention in a way that excluded an

alternative embodiment. Applying this standard to the patent

plaintiffs claim, conclusively shows that the inventor did

intend, and define, "channel" as material with openings that

12 allow water or effluent to pass over the peaks of the corrugated pipes. Defendants maintain, however, that the claim prosecution history contains evidence that the '665 patent did not include randomly oriented fibers. First, as M r . Kenney notes, the patent examiner rejected plaintiffs' initial claims which called for a means "to separate the peaks of the corrugated pipes from the fabric wrapper." Thereafter only the claims using "material with 'channels'" survived the claim process. The remainder of the prosecution history (Exh. 2 , document n o . 13) adds little to indicate whether the examiner concluded that "channel" was used as it is commonly understood or as inclusive of randomly oriented fibers. The portions of the prosecution file provided to the court are set out as Exhibits 1 and 2 to the Supplemental Affidavit of Nitkin and Exhibit 5 to the Affidavit of Kenney. Each expert argues sparse portions of the prosecution file but neither is persuasive. The court does not find that the portion of the prosecution file provided adds to an understanding of the words of the claims.

Assuming for the moment that the specifications do demonstrate an "inventor-specific" definition of channels broad enough to include randomly oriented strands the defendants claim that the '665 patent is invalid because it infringes upon

13 existing patents, that i s , it is readable on prior art. In

particular defendants say that if the '665 patent includes

randomly oriented strands or fibers and netting it is then fully

readable on the prior art of the full translation of the German

Broere patent (Affidavit of Kenney, Exhibit 6 ) , the French patent

(Exhibit 11) and the Dutch patent (Exhibit 1 2 ) . The court

agrees. The Dutch patent of mineral wool fiber flocks over

corrugated pipe covered by an open net is an equivalent structure

(as opposed to equivalence under the doctrine of equivalence) to

the Enkadrain type product and to defendants' product to the

extent of randomly oriented strands or fibers separating the

peaks of the pipe and the fabric and which allows water or

effluent to pass. This Dutch patent is a step beyond the similar

German device which suggests granules instead of non-oriented

fibers. The art of the French patent specifically deals with

randomly oriented fibers on a netting over corrugated pipe. The

supplemental affidavit of Nitkin does not adequately distinguish

the '665 patent claims, as plaintiffs now assert them, from this

prior art. Thus, if the '665 patent includes the randomly

oriented fibers it is met by the prior art and is invalid.

Markman, 52 F.3d at 979. If it is interpreted to use "channel"

as it is commonly understood the patent is valid. As between

these two meanings of channel, the correct one is the commonly

14 understood meaning of directed or funneled course or passage.

Thus, the patent is valid.

b. Infringement.

Infringement may be established by "literal infringement" or

under the "doctrine of equivalents." The owner of the patent has

the burden of proof on the issue of infringement. Wilson

Sporting Goods C o . v . David Geoffrey & Assoc.,

7 7 , 685

(Fed.Cir.), cert. denied,

(1990). The first determination to be made is whether there is literal infringement of the patent. In making this determination, the words of the claim in the patent must be compared with the accused device. If the accused device is clearly within the claim, then infringement does exist . . . . The second test is the application of the doctrine of equivalents.

Acme Highway Prod. Corp. v . D.S. Brown Co.,

(6th

C i r . ) , cert. denied,

(1973).

The defendants' product permits fluid flow over the peaks of

the corrugated pipe and uses a plastic strand material between those peaks and the outer netting. The distinction, if any,

centers on the lack of distinct channels in defendants' product.

Channels, as noted earlier, is a distinctive characteristic of

the claims of plaintiffs' patent. Defendants' product, using

randomly oriented strands as it does, does not literally infringe

the plaintiffs' patent.

Turning to the doctrine of equivalents, "[w]hat constitutes

15 equivalency must be determined against the context of the patent,

the prior art, and the particular circumstances of the case."

Graver Tank & Mfg. C o . v . Linde Air Products Co.,

(1950). Most generally stated, "if two devices do the same

work in substantially the same way, and accomplish substantially

the same result, they are the same, even though they differ in

name, form or shape." Machine C o . v . Murphy,

2 0 , 125

(1877); London v . Carson Pirie Scott & Co.,

(Fed.Cir. 1991). The patented product and defendants' product

both allow close to 100% of fabric to allow passage of fluid, the

formation of a biological mat on the fabric area and use a

material to separate the fabric from the peas of corrugated pipe.

The only meaningful difference is the use of a channelized

separator by plaintiffs versus randomly oriented fiber material

by defendants.

However, "[t]he doctrine of equivalents exists to prevent a

fraud on a patent not to give a patentee something which he could

not lawfully have obtained from the [Patent and Trademark Office]

had he tried." Wilson Sporting Goods Co., 904 F.2d at 684

(citation omitted). Here, as discussed under the "validity"

section, if plaintiffs' patented claims are inclusive of randomly

oriented fibers they, like defendants' product, read on the prior

art and would be invalid. Channelization is a significant aspect

16 of plaintiffs' patent. The limiting effect of prior art preclude

a determination of infringement by defendants' product on

plaintiffs' patent. Plaintiffs do not have a reasonable

likelihood of success on the merits on the issue of infringement.

2. Irreparable Harm.

"[W]ithout a clear showing of validity and infringement, a

presumption of irreparable harm does not arise in a preliminary

hearing . . . ." Nutrition 21 v . United States,

6 7 ,

871 (Fed.Cir. 1991). Plaintiffs have not made a clear showing of

validity and infringement. No presumption arises. The evidence,

by affidavit and proffer, indicates diminished royalties and

sales, loss of potential customers and detrimental loss of

reputation (document n o . 2 , Exhibit C ) . Part of this loss, is

due to defendants' use of a design and installation handbook for

use of his product which is obviously and intentionally similar

to one he designed for plaintiffs while its agent. Whatever

causes of action the latter acts may create they have not been

raised independently of the infringement action. There was

insufficient evidence of difficulty in calculating loss of market

share or lost profits to justify the extraordinary relief of a

preliminary injunction. Further, there was no evidence or

analysis as to the inadequacy of money damages. C f . H.H.

Robertson, C o . v . United Steel Deck, Inc.,

8 4 , 390

17 (Fed.Cir. 1987), overruled on other grounds by Markman v .

Westview Instruments, Inc.,

6 7 , 977 (Fed.Cir. 1995).

Plaintiffs have not sustained its burden of irreparable harm.

3. Balance of Hardships.

The parties offered little on either of those requirements.

Essentially, if an injunction is issued defendants cannot market

its new product and plaintiffs avoid all harm. If it does not

issue and plaintiffs succeed it is entitled to damages. Here

neither party has a clear advantage. Hybritech Inc. v . Abbott

Laboratories,

(Fed.Cir. 1988).

4. Public Interest.

"Only rarely will the public interest be seriously affected

by the grant or denial of a preliminary injunction in a patent

case." Donald S . Chisum, Patents § 20.04[1][f][ii](1996). "The

public has an interest both in protecting patent rights and

ensuring that markets are competitive." Alliance Research Corp.

v . Telular Corp.,

0 0 , 406 (C.D. Calif. 1994). The

balance in the area of public interest is directly linked to the

likelihood of success since the public interest in protecting

patents against infringement by preliminary injunction should be

reserved to those likely to succeed.

CONCLUSION

For the reasons set forth, the plaintiffs have failed to

18 carry the substantial burden associated with a preliminary

injunction request. It is recommended that plaintiffs' Motion

for Preliminary Injunction be denied.

Any objections to this report and recommendation must be

filed within ten days of receipt of this notice. Failure to file

objections within the specified time waives the right to appeal

the district court's order. See Unauthorized Practice of Law

Committee v . Gordon,

1 , 13-14 (1st Cir. 1992); United

States v . Valencia-Copete,

, 6 (1st Cir. 1986).

James R. Muirhead United States Magistrate Judge

Date: April 2 3 , 1996

cc: Mary E . Fougere, Esq. Joseph J. Byk, Esq.

19