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United States District Court, Northern District of Illinois, E.D

February 10, 1982


The opinion of the court was delivered by: Bua, District Judge.


Presently before the court is defendant's motion for summary judgment dismissing Count II of plaintiff's action. An introduction of sorts is necessary before the merits of defendant's motion can be addressed.

This lawsuit represents the most recent stage of a dispute between the named parties that has been in the process of litigation since 1976. Although the cause now before the court is an action separate from the initial lawsuit, the present suit is intimately related to the former, and therefore, the history of the earlier action must be related here. The background of that case, which appeared twice before the district court, and twice before the Seventh Circuit Court of Appeals, is summarized below. Much of the following is borrowed from the appellate court's second decision, Roberts v. Sears, Roebuck & Co., 617 F.2d 460 (7th Cir. 1980) ("Roberts II").

The plaintiff inventor sued the defendant retail store chain*fn1 for breach of confidential relation, fraud, and negligent misrepresentation in the context of an agreement entered into by the parties assigning to the defendant patent rights held by the plaintiff in the plaintiff's invention of a quick release socket wrench. The plaintiff prayed for rescission of the agreement, an injunction against further use by the defendant, imposition of a constructive trust upon the defendant, an equitable accounting by the defendant and "such further equitable relief as may be appropriate."*fn2 Included among those equitable prayers was a plea "that damages be awarded to plaintiff."

By the time of trial, the issues tried to the jury had been limited to three separate claims: breach of a confidential relation, fraudulent misrepresentations and negligent misrepresentations. The court, in part, instructed the jury as follows in regard to money damages:

  If you find in favor of the plaintiff upon either
  the first or second claim, then, one

  of the elements of the money damages to be
  considered by you may be the net value to the
  defendant of the profits and benefits derived from
  the use of plaintiff's invention. The award of
  money damages you make may equal the net profits
  which you find the defendant gained as a result of
  its merchandising of wrenches incorporating
  plaintiff's Quick Release invention and idea,
  minus any expenditures which you find the
  defendant has proved it incurred which it would
  not have incurred had it not merchandised such
  wrenches incorporating plaintiff's Quick Release
  invention and idea, from the time of the contract
  in question to the present . . .

The court further instructed the jury that "as a matter of law, any damages you may award under each claim will not be cumulative, and the plaintiff will not be permitted to collect damages under more than one claim." Separate verdict forms were supplied for each of the claims. The jury found for the plaintiff on all three claims and awarded damages of $1,000,000 on each. The total amount of the verdict was represented by that figure. The judgment has been satisfied.

In a post-trial motion, the plaintiff sought equitable rescission and restitution. The district court held that when the plaintiff permitted the case to go to the jury he had elected his legal remedy under Illinois law and could not later also seek equitable relief. Plaintiff appealed, seeking the right to full equitable relief over and beyond the one million dollar legal relief. The defendant cross appealed to set aside the money judgment against it.

In Roberts v. Sears, Roebuck & Co., 573 F.2d 976 (7th Cir. 1978), cert. denied, 439 U.S. 860, 99 S.Ct. 179, 58 L.Ed.2d 168 (1978) ("Roberts I"), the Seventh Circuit affirmed the district court's judgment against defendant on all three claims in plaintiff's complaint and the court's decision not to alter plaintiff's monetary award, but reversed the court's determination that it lacked the power to award rescission and remanded to the district court for a determination of whether rescission was appropriate under the facts of the case.

Subsequent to the Seventh Circuit's decision in Roberts I, the case went through the trial court and a second round in the Seventh Circuit, ultimately resulting in reassignment of the patent rights to the plaintiff. In order to "avoid if possible any future misunderstanding" the appellate court detailed the implementation of its second order as follows:

  [T]he effect of these two assignments will be that
  defendant owned all of the patent rights from June
  15, 1965 to January 20, 1977, and the plaintiff
  shall be considered the owner from January 20,
  1977 on.

617 F.2d at 465.

In its holding in Roberts II, the Seventh Circuit also expressed, in strong language, its opinion on the subject of reconsideration on remand (or presumably in an additional lawsuit) of the damage award in the initial trial. The Court stated:

  "In our prior opinion, we repeatedly referred to
  the `return of plaintiff's patent' and when we
  used the word rescission, we used it in the
  context of returning the plaintiff's patent. We
  did not say that the plaintiff could under any
  theory upon remand be entitled to restitution or
  additional damages or profits. In fact we
  expressly said that the plaintiff did
  elect his remedy as to past damages or
  profits up to the jury verdict and that return of
  his patent might be the most effective way of
  insuring that the plaintiff receive the
  future benefits of the patent."

617 F.2d at 464 (emphasis in original).

After the Seventh Circuit's decision in Roberts II, plaintiff filed this lawsuit for damages for alleged patent infringement and alleged violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. § 1, 2, and Section 7 of the Clayton Act, 15 U.S.C. § 18.

The antitrust count will now be addressed. For the purpose of clarity and because this court believes that the Roberts II decision compels it, this court's analysis will be divided into two time periods: 1) June 15, 1965 — January 20, 1977, and 2) January 20, 1977 to present.

June 15, 1965 — January 20, 1977

It is this court's conclusion that plaintiff cannot maintain its antitrust action for Sears' activities during this time period. Roberts has cited no case, nor has the court been able to locate any decision which would support a finding that the antitrust laws have been violated as to the plaintiff.

Roberts' antitrust allegations relevant to this period are somewhat confused; however, it appears that plaintiff contends that Sears' alleged pattern of activity, including the acquisition of the patent in 1965, enforcement of that patent, the acquisition of a second patent, and "other activities," injured plaintiff and entitled him to seek treble damages under the antitrust laws. Recovery is sought for injury described as follows:

  "[P]laintiff has sustained damage in his business
  and property, through inter alia, the
  loss of royalty income that plaintiff would have
  received, but did not receive from others for the
  licensed manufacture and sale under plaintiff's
  patents of ratchet wrenches equipped with
  plaintiff's quick release feature."

Amended Complaint, Count II, ¶ 19. The inherent problem in plaintiff's antitrust claim*fn3 is obvious. None of the matters which Roberts characterizes as antitrust violations can be said to have caused the injury which Roberts has allegedly suffered — his inability to collect royalties from others for licenses under the Roberts patent. Roberts' assignment to Sears divested Roberts of all rights to license the patent. Once the assignment occurred, Sears' subsequent activities did not in any way affect those rights. The initial assignment was wrongful and fraudulently induced, but it was not an antitrust violation. As the defendant has repeatedly stated,

  "conduct not within the scope of the [Sherman] Act
  is not made into an antitrust violation by
  accompanying conduct which is reprehensible under
  some moral or ethical standard or even illegal
  under some other law."

Sitkin Smelting and Refining Co. v. FMC Corp., 575 F.2d 440, 447 (3d Cir. 1978).

Apparently acknowledging this dilemma, plaintiff attempts to rely on Walker Process Equipment, Inc. v. Food Machinery and Chemical Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965) and Kearney & Trecker Corp. v. Giddings & Lewis, Inc., 452 F.2d 579 (7th Cir. 1972). Defendant correctly points out that these cases, which involved fraud upon the patent office, are inapposite. The patent office dispenses monopoly power in the form of patents. Fraud upon the patent office involves deceiving the government into creating such power where it would not otherwise exist. Such activity frustrates the patent office's duty to protect the public interest, a clear purpose behind its creation. Kearney & Trecker, 452 F.2d at 590-591.

Of course, it is true that the antitrust laws are designed to give private parties the right to, at least in part, protect the public interest by bringing treble damage actions. P. Areeda, Antitrust Analysis, ¶ 159 (1974). It is a fundamental principle, however, that this potent right must be exercised only by those who can also point to some personal antitrust injury created by the alleged anti-competitive conduct. Id. ¶ 160. As has already been stated, however, Roberts cannot make such a showing. See p. 6, supra. The victims of Sears alleged monopoly, if any exist, are those who allegedly were excluded from competing in the manufacture and sale of quick release wrenches.*fn4 Roberts is not in this category as he admits that he was never in the wrench business and never attempted to enter it.*fn5 See Deposition of Peter M. Roberts at 91-94. He simply does not have standing to make the charges included in his complaint.

Roberts' next attempt to breathe life into his antitrust claim is his emphasis on a single Seventh Circuit case, which, he alleges, gives him standing to bring his action against Sears. That case is Moraine Products v. ICI America, Inc., 538 F.2d 134 (7th Cir. 1976). Leaving aside defendant's arguments as to the current validity of the Moraine holding, it simply cannot be said that it supports Roberts' antitrust claim.

The facts of Moraine, in somewhat simplified form, are as follows. Moraine Products, the plaintiff, was an organization founded for the purpose of licensing a patented product. An exclusive license was granted to Atlas, a defendant. Plough, the patentee of a competing product and a process for use of that product also licensed Atlas, and subsequently agreed with Atlas that no further licensing of the Plough patent would occur without the mutual consent of Plough and Atlas. The facts indicated that the Plough and Atlas agreement was effective in excluding a significant number of potential competitors who applied to use the Plough patent. Moraine brought suit. As the Seventh Circuit explained,

  "The gravamen of Moraine's complaint of injury is
  that, because of potential licensees under the
  [Moraine] patent also required a license under the
  [Plough] patent in order to practice the [Moraine]
  invention, the combination unlawfully limiting
  licenses under the [Plough] patent necessarily
  limited the number of licenses under the [Moraine]
  patent and deprived Moraine of royalty income.

538 F.2d 134, 149 (1976).

Atlas argued, in part, that Moraine's claims for loss of royalties were inappropriately brought under the antitrust laws because Moraine lacked standing to sue. The court explained that resolution of the standing issue necessarily depended on determination of whether "the plaintiff . . . had a reasonable business expectancy to protect." Id. at 150. This determination, the court explained, would depend on analysis of the intent and effect of the original licensing agreement between Moraine and Atlas. Such an expectancy would exist if Moraine's original license agreement with Atlas contemplated additional sublicenses by Atlas from which Moraine might derive royalty income. This issue, the court ordered, was to be the subject of "further factual exploration on remand." Id.

Far from being "on all fours" with plaintiff's case, as Roberts claims, Moraine is in fact wholly inapposite with regard to the period presently under discussion. As the Seventh Circuit's holding in Roberts II emphasizes, Roberts had no rights in the patent between 1965 and 1977. The patent had been assigned. Sears was its owner. Roberts, therefore, as a matter of law, could have no business expectancy which now requires vindication by the antitrust laws. No evidentiary inquiry on the part of this court could dispel this fact.

As defendant correctly notes, Roberts' misreading of Moraine is highlighted by the baffling footnote at page 12 of his Memorandum to the effect that there is "obviously" no difference between an assignment of a patent, e.g. the Roberts-Sears agreement and an exclusive license agreement like that present in Moraine. Defendant is absolutely correct in stating that "the precise point made by the Seventh Circuit in Moraine with respect to the standing issue was that the license agreement, unlike a complete assignment, could have contemplated sublicenses from which Moraine could have expected financial benefit." Defendant's Reply Brief at 13.*fn6

Even if it were possible that some theory exists upon which the plaintiff could base his theory of antitrust recovery, this court would nevertheless feel compelled to reconsider its order of June 8, 1981, and find Count II barred under the doctrine of res judicata. The court is persuaded by defendant's analysis of Harper Plastics, Inc. v. Amoco Chemicals Corporation, 657 F.2d 939 (7th Cir. 1981). In this court's earlier opinion, it was stated that res judicata did not bar plaintiff's antitrust claims "because Roberts' Count II claim involves a substantive right, i.e. the right to be free of antitrust injury, significantly different from that asserted in his prior action." Roberts v. Sears, Roebuck & Co., No. 80 C 5986, Order of June 8, 1981 at 3. After further reflection, this court now believes that this distinction was erroneous. Roberts' earlier action was brought for profits lost as a result of plaintiff's assignment of his patent to Sears. The present action claims an alleged loss of royalty income. It must be noted, however, that when the holder of a patent sets a royalty figure, his calculations are based primarily on his assessment of the amount of profit he would obtain if he were to market the invention himself. P. Areeda, Antitrust Analysis ¶¶ 409, 410 (1974). Therefore, rather than attempting to vindicate a separate substantive right in his present action, Roberts is in fact suing for damages which relate to a right substantially identical to that for which damages were recovered in the earlier suit — lost profits. Such a double recovery cannot be allowed. Plaintiff cannot avoid the effects of res judicata merely by asserting his claim under the label of a different theory. Harper Plastics, 657 F.2d at 944. It is appropriate here to reiterate the words of the Seventh Circuit's opinion in Roberts II which were cited earlier. See p. 786, supra. The court stated,

  "We did not say [in our earlier opinion] that
  plaintiff could under any theory
  (emphasis added) upon remand be entitled to
  restitution or additional damages or profits. In
  fact, we expressly said that the plaintiff
  did elect his remedy as to past
  damages or profits up to the jury verdict . . ."

617 F.2d at 464 (emphasis in original except as noted.) It is the court's belief that these words are binding on both the district court in the first lawsuit and upon this court.

For the above reasons, it must be concluded that plaintiff could have and should have properly brought his antitrust claim in the earlier lawsuit, and that, as a result, his attempt to invoke this theory of recovery at this late date must be barred.

January 20, 1977 — Present

As was stated earlier, this second time period is treated separately because it is this court's belief that both the case law relied upon by plaintiff and the Seventh Circuit's decision in Roberts II compel such treatment. The preceding analysis indicates that the defendant is entitled to summary judgment as to the 1965-1977 time period because both the facts and the law of standing prohibit plaintiff's attempt to recover treble damages. The time period presently under discussion is different, however. Although there exists a legal theory upon which plaintiff could conceivably base his claim for damages, see generally Moraine Products v. ICI America, Inc., 538 F.2d 134 (7th Cir. 1976), plaintiff has not demonstrated the sort of conduct, i.e. a conspiracy to restrict royalties, which was found worthy of further factual exploration in Moraine, nor has plaintiff presented the court with any indication that he was possessed of the sort of "business expectancy" which was found controlling on the issue of standing in that case. Not only has plaintiff failed to bring to the court's attention the details of any licensing agreement which exists between Sears and Roberts, he has, in fact, failed even to mention the existence or non-existence of such an agreement.

In light of the complete absence of any facts which would bring plaintiff's claim within the ambit of Moraine, this court sees no basis for proceeding to trial on the antitrust issue for the above time period.


In sum, for the period covering June 15, 1965 — January 20, 1977, defendant is granted summary judgment on Count II of plaintiff's claim both because plaintiff lacks standing to bring his action for that time period, and because of this court's belief that even if a theory of standing could be identified, plaintiff's claim is barred by the doctrine of res judicata. For the period covering January 20, 1977 to the present, summary judgment for the defendant will also be granted because of the absence of any fact on which recovery could be based.


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