Enduracoat Technologies, Inc. VS Watson Bowman Acme Corporation; Krebs, LaSalle, Lemieux Consultants, Inc., and Greater New Orleans Expressway Commission
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2009 CA 2346 r ENDURACOAT TECHNOLOGIES INC VERSUS WATSON BOWMAN ACME CORP AS SUCCESSORIN INTEREST TO MASTER BUILDERS INC KREBS LASALLE LEMIEUX CONSULTANTS INC AND GREATER NEW ORLEANS EXPRESSWAY COMMISSION DATE OF JUDGMENT JUL 8 2010 ON APPEAL FROM THE TWENTY SECOND JUDICIAL DISTRICT COURT NUMBER 2004 11858 DIV E PARISH OF ST TAMMANY STATE OF LOUISIANA j4 P HONORABLE WILLIAM J BURRIS JUDGE Stephen K Conroy Tom D Snyder Jr Counsel for Plaintiff Appellant Enduracoat Technologies Inc Rebecca E Fenton Metairie Louisiana Counsel for Defendant Appellee Watson Bowman Acme Corporation Scott C Barney Matt N Terrell Baton Rouge Louisiana BEFORE PARRO KUHN AND McDONALD JJ Disposition AFFIRMED 411 1 lam1 Plaintiff appellant Enduracoat Technologies Inc Enduracoat appeals the trial court judgment granting summary judgment in favor of defendant appellee s Watson Bowman Acme Corporation WABO and dismissing Enduracoat sclaims for damages related to statements a representative of WABO made in a letter to a bidding contractor TOPCOR Services Inc TOPCOR in conjunction with services TOPCOR proposed to perform on a project undertaken by the Greater New Orleans Expressway Commission GNOEC We affirm FACTUAL AND PROCEDURAL BACKGROUND According to the undisputed facts in 1995 the GNOEC undertook a project to repair and renovate pilings of the Lake Ponchartrain Causeway bridges identified as Project Improvement Plan 1107 of the Lake Ponchartrain Causeway Capital The project generally contemplated encasing the pilings supporting the Causeway bridges in fiberglass reinforced polymer jackets and pumping epoxy and grout into the annulus between the jackets and the pilings In May 2003 the GNOEC through its consulting engineers Krebs LaSalle Lemieux Consultants Inc Krebs LaSalle put out a request for proposals for Part D of Project 1107 According to the specifications of Project 1107D s WABO Advanced Pile Encapsulation APE process was the acceptable method for the performance of the piling rehabilitation work however any bidder Generally the APE process involves encasing underwater piles in a translucent fiberglass reinforced polymer jacket and then using a pleural component pump and separate pressurized lines pumping epoxy and aggregate to a header located near the subject piles where the epoxy and aggregate are mixed together and the resulting grout mixture is pumped into the fiberglass reinforced polymer jackets from the bottom up through injection points or loading nipples fabricated onto the sides of the jackets Throughout the pumping portion of the process the grout delivery is monitored through the translucent jacket 2 seeking to use an alternative process could submit its proposal to Krebs LaSalle for approval as an equal to the APE process At the time GNOEC let out bidding for Project 1107D WABO held the licensee rights to the patents issued for the APE process By an addendum to the contract documents of the original bidding documents on August 14 2003 Krebs LaSalle accepted the Enduragrip Pile Encapsulation System EPE process belonging to Enduracoat as an approved equal to the APE process 3 TOPCOR was the lowest bidder for Project 1107D In order to successfully perform the renovation work TOPCOR had to use an encapsulation process Prior to completion of the bidding process on August 25 2003 WABO president sent s to TOPCOR a letter stating that it was aware that in its submission bid to the GNOEC TOPCOR had Enduracoat indicated it will utilize repair material from After reminding TOPCOR that WABO had recently trained TOPCOR personnel in the APE process for encasing structural members spresident stated we have reason to believe that the process to be used WABO by TOPCOR in completion of this job is the same process which was learned from WABO Accordingly the use of the repair materials of third parties according to the APE trained process is addressed by our patents and would 2 WABO APE process was patented under U Patent Nos 4and 4 s S 876 993 410 892 3 According to the affidavit testimony of Timothy Roberts a former officer and director of Enduracoat the EPE process is operated in the same manner as the APE process however the EPE process stems from entirely different scientific methods Noting that the APE process centers on static mixing of the epoxy and grout adjacent to or immediately prior to the injection ports Roberts explained that the EPE process places the static mixer some distance from the port so as to no longer be adjacent to or immediately prior to the injection ports as demonstrated in the APE patents As such Enduracoat maintains that the EPE process was a different system from the APE process 3 not be authorized by license The August 25 2003 letter further requested that if TOPCOR believed the EPE process was not addressed by the APE process patent rights WABO be provided with an appropriate explanation along with technical information to support its position The letter concluded We are confident that a mutually beneficial business resolution can be swiftly achieved and asked s TOPCOR president to contact WABO president s TOPCOR eventually decided to utilize the APE process and submitted a bid in accordance with that decision Enduracoat filed this lawsuit averring that as a result of the letter WABO was liable to it based on theories arising under the Lanham Act 15 U C S a 1125 Louisiana Unfair Trade Practices and Consumer Protection Law La R 51 1426 and state tort law for loss of a S 1401 business opportunity damage to reputation fraud and misrepresentation 4 According to the relevant portions of Section 43 the Lanham Act codified at 15 U aof C S a 1125 1 Any person who on or in connection with any goods or services or any container for goods uses in commerce any word term name symbol or device or any combination thereof or any false designation of origin false or misleading description of fact or false or misleading representation of fact which A is likely to cause confusion or to cause mistake or to deceive as to the affiliation connection or association of such person with another person or as to the origin sponsorship or approval of his or her goods services or commercial activities by another person or B in commercial advertising or promotion misrepresents the nature characteristics qualities or geographic origin of his or her or another person s goods services or commercial activities shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act 5 This law declares as unlawful unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce See La R 51 S 1405A 6 Enduracoat initially named numerous parties as defendants however all except WABO were ultimately dismissed from this litigation 4 WABO filed a motion for summary judgment urging no disputed issue of material fact precluded its dismissal from Enduracoat lawsuit After a hearing s the trial court granted WABO motion and dismissed all of Enduracoat s sclaims This appeal followed JURISDICTION Federal district courts shall have original jurisdiction of any civil action arising under any act of Congress relating to patents 28 U 1338 Such C S a jurisdiction shall be exclusive of the state courts in patent cases See 28 USC a 1338 Jurisdiction under this statute extends to any case in which the well pleaded complaint establishes that plaintiff sright to relief necessarily depends on resolution of a substantial question of federal patent law Immunocept LLC v Fulbright LLP 504 F 1281 1284 Fed Cir 2007 3d The involvement of a patent question in a suit does not alone confer jurisdiction in the federal courts Deats v Joseph Swantak Inc 619 F 973 981 N 1985 Whether Supp Y D a claim arises under federal patent law must be determined from what necessarily appears in the plaintiff statement of his own claim unaided by s anything alleged in anticipation or avoidance of defenses which it is thought the defendant may interpose Christianson v Colt Indus Operating Corp 486 U S 800 809 108 S 2166 2174 100 L 811 1988 Thus a case raising a Ct 2d Ed federal patentlaw defense does not for that reason alone arise under patent law even if the defense is anticipated in the plaintiffs complaint and even if both parties admit that the defense is the only question truly at issue in the case Id 7 Enduracoat filed a cross motion for summary judgment averring entitlement to a judgment concluding that WABO was liable to it for damages which was denied by the trial court when it granted summary judgment in favor of WABO 5 The proper focus is on whether the plaintiff actually pleaded the elements required by the patent laws for a patent infringement claim i ownership of e patent still in force infringement by defendants and relief such as treble damages and injunction See Kunkel v Topmaster Intl Inc 906 F 693 695 Fed Cir 2d 1990 Based on the allegations of Enduracoat spetition we conclude that plaintiff has not alleged ownership of a patent still in force an infringement or relief arising under 35 U C S 283 285 Accordingly we conclude our state courts have jurisdiction to address Enduracoat claims s SUMMARY JUDGMENT A motion for summary judgment is a procedural device used when there is no genuine issue of material fact Duncan v U Ins Co 06 0363 p 3 A S La 11 950 So 544 546 47 Appellate courts review summary judgment 06 29 2d de novo using the same criteria that govern the trial court consideration of s whether summary judgment is appropriate Costello v Hardy 03 1146 p 8 La 04 21 1 864 So 129 137 A motion for summary judgment should only be 2d granted if the pleadings depositions answers to interrogatories and admissions on file together with the affidavits if any show that there is no genuine issue as to material fact and that the movant is entitled to summary judgment as a matter of law See La C art 966B P The initial burden of proof is with the movant However if the movant will not bear the burden of proof at trial on the matter that is before the court on the s 35 U C S 283 allows courts to grant injunctive relief to prevent the violation of any right secured by patent 35 U 284 permits assessments of damage awards including treble C S damages for infringement in appropriate cases and 35 U 285 provides for awards of C S reasonable attorney fees to the prevailing party in exceptional cases 6 motion for summary judgment the movant burden on the motion does not s require him to negate all essential elements ofthe adverse party claim action or s defense but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party claim action or s defense Thereafter if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial there is no genuine issue of material fact La C art 966C Once the P 2 motion for summary judgment has been properly supported by the moving party the failure of the non moving party to produce evidence of a genuine material issue of fact mandates the granting of the motion See Babin v WinnDixie Louisiana Inc 000078 p 4 La 6764 So 37 40 see La C art 00 30 2d P U An appellate court asks the same questions as does the trial court in determining whether summary judgment is appropriate whether there is any genuine issue of material fact and whether the mover is entitled to judgment as a matter of law Guardia v Lakeview Regional Medical Ctn 081369 p 3 La App I st Cir 5 13 So 625 627 Because it is the applicable substantive 09 8 3d law that determines materiality whether a particular fact in dispute is material for summary judgment purposes can be seen only in light of the substantive law applicable to the case Id 08 1369 at p 4 13 So at 628 2d Alleged infringers have previously challenged a notice of infringement letter sent by a competitor to the alleged infringer potential customers alleging s patent infringement and threatening retaliation See GP Indus Inc v Eran Indus Inc 500 F 1369 1371 Fed Cir 2007 alleged infringer sought a 3d 7 preliminary injunction to prevent competitor from issuing further communications to the alleged infringer potential customers alleging product infringement and s threatening legal action Globetrotter Software Inc v Elan Computer Group Inc 362 F 1367 1368 70 Fed Cir 2004 alleged infringer pursued various 3d business tort claims including tortious interference with prospective economic advantage and unfair competition against competitor that had sent communications alleging patent infringement to a potential buyer of the alleged infringer Mikohn Gaming Corp v Acres Gaming Inc 165 F 891 893 94 3d Fed Cir 1998 alleged infringer sought a preliminary injunction to prevent competitor from issuing further communications to customers alleging product infringement and recommending the customers stop using the allegedly infringing systems See Contech Stormwater Solutions Inc v Baysaver Technologies Inc 534 F 616 630 31 D Md 2008 2d Supp The law presumes that a patent holder acts in good faith when asserting rights in a duly granted patent See Springs Window Fashions LP v Novo Industries L 323 F 989 999 Fed Cir 2003 The presumption of good P 3d faith bars a Lanham Act claim unless the complaining party presents affirmative evidence of bad faith on the part of the patent holder See Zenith Electronics Corp v Exzec Inc 182 F 1340 1353 Fed Cir 1999 In the context of 3d publicizing a patent and communicating in the marketplace an intention to enforce a patent right federal patent law preempts statelaw tort liability for communications so long as those communications are not made in bad faith See Globetrotter Software Inc 362 F at 1374 75 3d E3 Under federal law a patentee has a right to inform potential infringers of a patent and potentially infringing activity unless the communication is made in bad faith GP Indus Inc 500 F at 1374 Thus when an alleged infringer asserts state 3d tort law claims based on assertions of patent infringement even if it is not generally a required element of the state cause of action there can be no liability unless the alleged infringer can prove bad faith Plasmart Inc v Wincell Int 1 Inc 442 F 53 57 S 2006 citing Globetrotter Software Inc 2d Supp Y N D 362 F at 1375 77 3d To demonstrate bad faith an alleged infringer must be able to show both that the underlying infringement claim is objectively baseless and that it was asserted with subjective bad faith 1375 77 The objectively See Globetrotter Software Inc 362 F at 3d baseless standard has been defined in the infringement context as it was by the United States Supreme Court in an antitrust action to mean no reasonable litigant could realistically expect success on the merits Ian at 1376 quoting Profl Real Estate Investors Inc v Columbia Pictures Indus Inc 508 U 49 60 113 S 1920 123 L 611 1993 S Ct 2d Ed Moreover in performing its analysis a court should first determine whether an underlying suit is objectively baseless before considering the subjective intent prong because an objectively reasonable effort to litigate cannot be sham regardless of subjective intent Id at 1375 76 quoting Profl Real Estate Investors 508 U at 57 see Contech Stormwater Solutions Inc 534 S 2d Supp F at 631 accord Dominant Semiconductors SDN BHD v Osram GMBH 524 F 1254 1260 Fed Cir 2008 Thus absent a showing of bad 3d faith a patent holder is entitled to enforce its patent and even threaten litigation OJ against alleged infringers See Golan v Pingel Enter Inc 310 F 1360 1370 3d Fed Cir 2002 No matter how adamantly the complaining party believes them mere allegations that the patent holder has acted in bad faith will not overcome the presumption of good faith Instead the complaining party must present affirmative evidence sufficient for a reasonable jury to conclude that the patent holder acted in bad faith in light of the burden of clear and convincing evidence that will adhere at trial Springs Window Fashions LP 323 F at 999 In 3d other words no bad faith exists unless the patent holder asserts a patent infringement claim upon which no reasonable litigant could realistically expect to succeed Globetrotter Software Inc 362 F at 1376 3d In support of its motion for summary judgment WABO entered into evidence the deposition testimony of its corporate representative Ronald Poleon who was the southeast regional sales manager in August 2003 Poleon explained that in August 2003 Markus Burri was the president of WABO Burri was the only WABO representative that had direct contact with the patent attorneys on the issue of the potential infringement by Enduracoat EPE process s After the addendum to the Project 1107D contract documents was issued on August 14 2003 approving the EPE process as equal to the APE process Poleon went on the internet and reviewed the data sheets posted on the Enduracoat website He and 9 Although Poleon identified the approximate date that he viewed the Enduracoat website as having been in October or November 2003 he testified that the date was immediately after Krebs LaSalle issued the addendum While Enduracoat questions the veracity of Poleon s statements relative to the date he looked at the website it is clear from his testimony that it was soon after the August 14 2003 addendum issued Also we note that in his affidavit submitted with Enduracoat crossmotion for summary judgment Roberts stated the only pump s displayed on Enduracoat website occurred after the bid and sometime after WABO claimed to s have seen it ostensibly contradicting Poleon statement that immediately after issuance of the s 10 regional manager Debbie Steiger looked at the website and concluded that the EPE process was similar to the APE process They asked engineering manager Gary Moore to review the information on the website and he likewise concluded that the two processes were similar Poleon estimated that the three WABO employees had reviewed the information posted on the Enduracoat website for about three or four hours Armed with his understanding of the information he had reviewed Poleon went to Burri inquired of the patent status of the APE process and advised that he Steiger and Moore believed the EPE process was similar Burri told Poleon he would have the patent attorneys examine the two processes Poleon explained that like Enduracoat WABO also had been interested in securing the use of its process with TOPCOR for Project 1107D He continued discussions with TOPCOR president James Baker but began to suspect that TOPCOR was leaning toward use of the EPE process Poleon testified that he was never directly advised by Baker that TOPCOR was inclined to use Enduracoat s process but as a salesperson it was his gut feeling Poleon spoke again with Burri in the hope of understanding any potential infringement Despite his curiosity Poleon was never given direct access to the patent attorneys to discuss the issue or told whether WABO believed there was or was not an infringement He said that any infringement that Burri and the attorneys came up with was not disclosed to him Poleon admitted that he never Continued addendum approving the EPE process as an equal based on his observation of the picture of the pump on the website it looked identical to the one utilized in the APE process For purposes of this review we will assume that a picture of the pump was not on the website when Poleon observed it in August 2003 and that his observations were limited to other posted information namely the data sheets 11 personally compared the EPE process with the APE process beyond his observation of the Enduracoat website Shortly before GNOEC awarded the contract for Project 1107D Burri told Poleon he would send a letter to TOPCOR the apparent low bidder asking whether use of the EPE process may infringe on the patented APE process After WABO sent its letter to TOPCOR on August 25 2003 Poleon testified that Baker never responded to WABO request for an explanation s Poleon stated that Baker acknowledged receipt of the letter and indicated that as a small business owner he was concerned about the possibility of infringing on the APE process patent Poleon did not know and never suggested to Baker how he could use the EPE process without infringing on the APE process Poleon told Baker that because the APE patent was a process patent rather than a product patent and that TOPCOR use of the process in installing a product would make s TOPCOR an infringer 10 In further support of its motion for summary judgment WABO submitted the deposition testimony of TOPCOR president Baker According to Baker s testimony TOPCOR consulted with Enduracoat through Marcus Bell TOPCOR wanted Enduracoat to supply its EPE process for the Causeway project In formulating its August 19 2003 bid for Project 1107D Baker contemplated utilizing Enduracoat sEPE process subject to the satisfaction of several concerns Baker first noted that the EPE process needed to get approved as an equal to s WABO APE process before he could contract with Enduracoat concern was about patent issues 10 See 35 U C S His second Baker stated that he assumed that the APE 271 and 281 12 process was a patented process and knew there was a potential problem with using another process During the time he was formulating his bid business associates other than WABO warned him about potential patent infringement problems Baker stated that he advised Bell about his patent infringement concerns and Bell told him that Enduracoat had spent a good deal of money investigating the issue and assured him that there were no patent issues Baker third stated concern s about entering into a contract with Enduracoat was due to the lack of proven experience of its EPE process Baker explained Enduracoat that TOPCOR never entered into a contract In August 2003 he received WABO letter s with He understood s WABO suggestion that a mutually beneficial resolution could be achieved to mean that WABO wanted TOPCOR to use its APE process He talked to Bell who expressed shock and dismay that WABO had sent the letter and indicated that Enduracoat had already covered its bases and was absolutely sure there were no patent issues But Enduracoat did not effectively address TOPCOR sconcerns Baker stated that once it appeared the patent issues were not resolved he told Enduracoat that he would continue his intention of using the EPE process if Enduracoat would indemnify TOPCOR against any patent issues When Enduracoat refused to indemnify TOPCOR in the event of legal action by WABO Baker abandoned the idea of using the EPE process in favor of the APE process 1 In its motion for summary judgment Enduracoat submitted portions of Baker testimony s indicating that it was a reasonable assumption that if TOPCOR had not received WABO s August 25 2003 letter it would have used the EPE process for Project 11071 But read in context it is clear that Baker answer was premised on the inference that had WABO not sent s the letter no patent concerns would have existed A review of the entirety of the deposition testimony makes clear that Baker unequivocally conditioned any contractual arrangement with Enduracoat on resolution of any potential patent issues 13 Based on the evidence submitted and our review of the August 25 2003 letter from WABO president to TOPCOR president WABO met its burden of s s pointing out to the court an absence of factual support for one or more elements essential to Enduracoat claim namely a showing of bad faith s Importantly Enduracoat failed to produce factual support sufficient to demonstrate that WABO was unreasonable or unrealistic in its belief that TOPCOR use of the EPE s process would infringe on its patented APE process When WABO showing is s coupled with the presumption of good faith afforded a patent holder asserting rights in a duly granted patent see Springs Window Fashions LP 323 F at 3d 999 Enduracoat simply failed to point out clear and convincing evidence that would allow a reasonable trier of fact to conclude that the patent holder acted in bad faith i evidence showing that WABO asserted a patent infringement claim e on which no reasonable litigant could realistically expect to succeed Accordingly the trial court correctly concluded that WABO is entitled to summary judgment on the issue of bad faith And because the viability of Lanham Act and statetort liability claims are predicated upon a showing of bad faith the dismissal of Enduracoat slawsuit was proper 12 12 Enduracoat applied for a supervisory writ on the trial court ruling denying its motion for s summary judgment The denial of a motion for summary judgment is an interlocutory judgment which is not appealable See La C arts 1841 and 2083 Louisiana Power and Light Co v P Slaughter 04 2361 La App 1st Cir 11 917 So 532 writ denied 06 0217 La 05 4 2d 06 24 4 926 So 550 Our court has addressed interlocutory issues on the appeal of a 2d judgment when they are identical to the issues raised in the appeal See Dean v Grifftn Crane Steel Inc 05 1226 La App Ist Cir 5 935 So 186 writ denied 06 1334 La 06 2d 06 22 9 937 So 387 Because we have concluded the trial court correctly granted WABO 2d s motion for summary judgment for the same reasons we find no error in the trial court sdenial of the identical issue raised in Enduracoat cross motion for summary judgment s 14 DECREE For these reasons the trial court judgment is affirmed Appeal costs are s assessed against Enduracoat Technologies Inc AFFIRMED 15
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