The opinion of the court was delivered by: SHADUR
MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE
Each side in this hard-fought patent suit
seeks summary disposition of part of the other side's prayer for relief. Defendants-Counterplaintiffs Sodick Company, Ltd., Sodick, Inc. and KGK International Corp. (collectively "Sodick") have moved alternatively (1) for partial summary judgment under Fed. R. Civ. P. ("Rule") 56 upholding Sodick's Counterclaim Count II or (2) for an order narrowing the issues under Rule 16. Plaintiff-Counterdefendant AG Fur Industrielle Elektronik AGIE ("Agie") has moved for dismissal of Sodick's Counterclaim Count I under Rule 12(b)(6).
For the reasons stated in this memorandum opinion and order, Sodick's motion for partial summary judgment is granted and Agie's motion to dismiss is denied.
Facts and Procedural History
This case involves patent rights to specific designs of wire electrical discharge machine tools ("wire EDM's") and even more specifically to computer numerically controlled versions of those machines ("CNC wire EDM's"). As Sodick describes it, a CNC wire EDM works like a sophisticated jigsaw. It performs delicate cutting jobs on metal or other electrically conductive material such as ceramics. Cutting is performed by a wire electrode that passes through the material being cut and is stretched between two guides, one on either side of a workpiece. Unlike a jigsaw, however, cutting is not accomplished by physical contact between the wire and the material being cut, but instead by electroerosion: Electrical discharges emitted from the wire electrode pass through a dielectric liquid such as deionized water (the "fluid medium") and erode the conductive material being cut. As the electric sparks from the wire electrode shave off bits of the material being cut, the flushing fluid removes the cuttings from the cutting area.
Both Agie and Sodick make wire EDM machines. Agie has claimed that Sodick's designs infringe on an Agie patent, while Sodick has counterclaimed that Agie's patent was procured by fraud. At issue in the current motions is:
1. whether Sodick's newest type of wire guide and fluid medium flushing assemblies (the "New Assemblies") -- the structures that determine how the fluid medium is discharged in relation to the wire electrode -- infringe one or more of Claims 1, 7, 9, 20 and 22 (the "Five Claims") of Agie's earlier-procured United States Patent No. 3,928,163 (the "'163 patent"),
2. whether Sodick's Count I states a cause of action for antitrust violations.
Only the first of those motions involves a factual inquiry as to which a determination of materiality must be made.
Many of the necessary factual findings were dealt with in this Court's May 5, 1990 order (the "Order")
preliminarily enjoining Agie from further pursuing before the ITC any enforcement proceedings related to Sodick wire EDM's equipped with the New Assemblies, pending this Court's ruling on Sodick's motion for partial summary judgment on Count II. Although Sodick later withdrew that motion in its then-pending form, it has since refiled basically the same motion. That current motion seeks a summary declaratory judgment finding that the New Assemblies simply implement prior art (prior to the '163 patent, that is), so that the Agie patent cannot block the New Assemblies.
(a) Flushing liquid is discharged through the outlets of several discrete channels 23 formed in the upper die 12 and several discrete channels 22 formed in the lower die 11. Lehmann states in part that "each die has several channels 22 and 23, respectively, which provide a link between the external face and the internal face of the die." None of the channels 22 and 23 is coaxial with the axis of the wire electrode 7.
(b) Flushing liquid is discharged from the outlets of channels 22 and 23 at a substantial angle to the axis of the wire electrode 7.
(c) Flushing liquid, as it leaves the outlets of channels 22 and 23, is not discharged parallel to the axis of the wire electrode 7.
(d) Flushing liquid, as it leaves the outlets of channels 22 and 23, is not discharged alongside of the wire electrode.
(e) Flushing liquid, as it leaves the outlets of channels 22 and 23, is not discharged in contact with the wire electrode.
2. Agie's '163 Patent. On April 23, 1974 Agie applied for its own patent (issued December 23, 1975 as the '163 patent) on the wire EDM assembly shown in Exhibit 2. As Exhibit 2 illustrates, that patent differed from the Lehmann patent in that the '163 patent flushing assembly includes a single duct that surrounds the wire electrode coaxially and that discharges flushing fluid in a single stream in contact with, alongside of and parallel to the wire electrode. Claims 1, 7 and 9
of the '163 patent describe Agie's machine as a wire electroerosion machine tool with a wire guide and fluid delivery means including:
a portion defining an outlet for discharging a fluid medium alongside of said electrode in contact with the outer surface thereof and parallel to the axis thereof towards a working area of said electrode, and a portion providing duct means for leading said fluid medium from a supply conduit to said outlet in such a way as to cause said fluid medium to be discharged through said outlet as aforesaid when supplied from said supply conduit.
Agie did not cite the Lehmann patent as prior art during the course of its original prosecution of the '163 patent. At the request of one of Agie's competitors, however, the '163 patent was reexamined by the United States Patent and Trademark Office ("PTO") as Reexamination Request No. 90/000,629 filed September 17, 1984 (the "Reexamination"), and on November 5, 1985 Reexamination Certificate No. B1 3,928,163 was issued. In the course of the Reexamination Agie added several new claims, including Claims 20 and 22. Each of those claims included a limitation virtually identical to that quoted above from Claim 1.
As the following discussion reflects, much of Sodick's legal position rests on what did and what did not take place during the reexamination proceedings.
Part of the reexamination involved comparison of the '163 patent's claims to prior art including the Lehmann patent. On February 20, 1985 Agie filed a Statement and Amendment of Patent Owner seeking to distinguish the '163 patent from Lehmann and other prior art. That statement represented that no prior art at issue in the Reexamination taught "any EDM apparatus where the flushing liquid is discharged along the surface of a wire electrode and parallel to the axis of that electrode," and specifically that "the Lehmann reference is equally deficient in any teaching of flushing fluid parallel to the axis of the electrode."
It is considered that the fluid discharging from the [Lehmann] reference means delivering fluid to the working area inherently discharges parallel to the direction of travel of the wire. Note that claim 16 merely requires movement of fluid along the axis of the wire. Surely, the [Lehmann] reference fluid does that.
In addition, the PTO rejected Claim 9 as anticipated by or obvious in view of other prior art.
On July 9, 1985 Agie filed with the PTO a response to that Office Action, asserting numerous distinctions between the '163 and Lehmann patents. That response said in part:
It must be kept firmly in mind that a principal purpose [of Agie's design] is to provide a flushing fluid nozzle and wire guide which results in a flow of flushing fluid which is both parallel to the wire and in contact with the wire as the fluid leaves the nozzle outlet.
Thus, each of the Lehmann and Crookall statements clearly establish that the Lehmann reference does not inherently disclose discharge of flushing fluid from the dies parallel to the wire electrode. . . . Lehmann in no way teaches the subject matters of claims 1 or 16. . . . New claims 20-24 also distinguish over Lehmann for the same reasons as discussed with respect to claims 1 and 16.
Agie also filed with its response the statement of Professor John R. Crookall ("Crookall") and the affidavit of Lehmann himself. Crookall concluded:
I do not believe that the devices shown in Lehmann will necessarily produce a discharge of dielectric fluid that is generally parallel to and surrounding the wire electrode.
Lehmann's affidavit stated in pertinent part (emphasis added):
Figures 2 and 3 are not drawn to scale. For example, the written description states that the wire diameter is between 0.180 and 0.200 millimeters. The relative size of the wire is shown in Figures 2 and 3 as being much larger than that. The outside diameter for wire drawing dies in Europe in the early 1970's was commonly 25 millimeters. . . . The characteristics of the flushing fluid flow which result from any apparatus constructed in accordance with Figures 2 and 3 of my patent will depend on the values which are chosen for various parameters of the structures shown. Such parameters include the cross-sectional areas of the channels 22 or 23, the relationship between the channel cross-sectional areas and the cross-sectional area of the wire, and the velocity of the fluid through the channels. . . . For example, if the cross-sectional areas of channels 22 or 23 were approximately the same size as the wire and the velocity of the water through the channels was relatively high, the flushing fluid could be partially deflected by the wire and could appear to bounce off the wire without the creation of any substantial parallel flow.
Ultimately the PTO accepted Agie's arguments and issued its July 29, 1985 Statement of Reasons for Allowance, reading in part:
It is considered that the apparatus of said references [including Lehmann] are incapable of flushing the fluid in the manner recited in the instant claims.
24. In the operation of the Sodick wire EDM's equipped with the New Assemblies, with or without AWT:
(a) Flushing liquid is discharged through several (four or six, depending on the nozzle) discrete ports in a nozzle portion of a water guide.
(b) Flushing liquid is discharged from the ports in the nozzle portion of the water guide at an angle approximately 45 degrees to the axis of the wire electrode.
(c) Flushing liquid, as it leaves the ports in the nozzle portion of the water guide, is not discharged parallel to the axis of the wire electrode.
(d) Flushing liquid, as it leaves the ports in the nozzle portion of the water guide, is not discharged alongside of the wire electrode.
(e) Flushing liquid, as it leaves the ports in the nozzle portion of the water guide, is not discharged in contact with the wire electrode.
(f) Essentially all of the flushing fluid used to flush the working zone is discharged from the ports in the nozzle portion of the water guide.
Sodick's Motion for Summary Judgment
Sodick's summary judgment motion on Count II seeks a declaratory judgment that the New Assemblies do not infringe the Five Claims of the '163 patent. For Agie to claim literal infringement it would have to show that the New Assemblies embody every element of the '163 patent's claims ( Stewart-Warner Corp. v. City of Pontiac, Michigan, 767 F.2d 1563, 1570, 226 U.S.P.Q. (BNA) 676 (Fed. Cir. 1985)). Agie has apparently eschewed any theory of literal infringement (Agie Mem. 4-5) in favor of resting its case on the doctrine of equivalents. Under the statement of that doctrine in the Supreme Court's seminal decision -- Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 608, 94 L. Ed. 1097, 70 S. Ct. 854 (1950), quoting Sanitary Refrigerator Co. v. Winters, 280 U.S. 30, 42, 74 L. Ed. 147, 50 S. Ct. 9 (1929) -- a patent may be infringed even if not literally infringed if the accused device "performs substantially the same function in substantially the same way to obtain the same result" -- an inquiry frequently termed the function-way-result test. That is the test this Court must apply.
Although equivalency is generally a question of fact ( Graver Tank, 339 U.S. at 609), summary judgment will be appropriate if it turns out that there is no real dispute about equivalency because Agie is estopped from arguing nonequivalence under the doctrine of prosecution history estoppel ( Brenner v. United States, 773 F.2d 306, 307, 227 U.S.P.Q. (BNA) 159 (Fed. Cir. 1985)). According to Townsend Engineering, 829 F.2d at 1090, quoting Thomas & Betts Corp. v. Litton Systems, Inc., 720 F.2d 1572, 1579, 220 U.S.P.Q. (BNA) 1 (Fed. Cir. 1983), prosecution history estoppel:
limits a patentee's reliance on the doctrine of equivalents by preventing him from contending later in an infringement action that his claims should be interpreted as if limitations added by amendment were not present.
In addition to limiting the patentee's reliance on the doctrine of equivalents where the patentee has formally added limiting amendments to the patent's claims, Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1362, 219 U.S.P.Q. (BNA) 473 (Fed. Cir. 1983) (quoted in Townsend, id.) says that prosecution history estoppel applies:
to claim amendments to overcome rejections based on prior art, and to arguments submitted to obtain the patent.
Because Agie counters Sodick's current motion by raising numerous assertedly genuine issues of fact for determination at trial, the question boils down to whether Agie is estopped from raising any of those issues by reason of limiting interpretations that Agie put on the '163 patent in its attempt to convince the PTO Examiner that the '163 patent was distinct from prior art.
Both parties frame the inquiry in the same way. It is, as Agie Mem. 16 states:
Does the duct structure in Sodick's modified assemblies perform the same or substantially the same function as the duct structure in the embodiment described in the '163 patent specification, in the same or substantially the same way, to achieve the same or substantially the same result?
According to Agie, the relevant "function" of the duct structure in the '163 patent is that stated in the claims themselves:
to lead the flushing fluid from a supply conduit to the outlet in such a way as to cause the fluid to be discharged alongside, in contact with and parallel to the wire, towards a working area of the wire.
Throughout this case each of the parties has put great stress on its own interpretation of the word "outlet." There is no dispute that the outlet of the '163 patent's assembly coincides with the plane formed by the lowest end of the entire nozzle assembly -- for in the '163 patent the flushing fluid duct and the nozzle assembly end at the same point. What is hotly disputed, however, is just what constitutes the "outlet" of the Sodick assembly.
Agie, on the other hand, looks to its own statements at the Reexamination, as well as those of the PTO Examiner, to support its conclusion that the outlet is the plane that forms the lowest point on the assembly as a whole. Agie in particular notes that it specifically did not distinguish the Lehmann patent at the Reexamination by contending that Lehmann's outlets were the duct ports, even though that argument, if true and if accepted, would have been the logical response to the PTO's rejection of the '163 patent as anticipated by or obvious in light of Lehmann. Instead Agie argued and the Examiner eventually found that the Lehmann patent did not inherently disclose how fluid would be discharged -- an argument that would have been frivolous if the inquiry was merely into how fluid was discharged from the duct ports.
Much of that dispute, however, turns out to be beside the point. Even if Agie were to have its way so that the Sodick "outlet" were to be placed at the bottom exit of the nozzle assembly as a whole, the fluid flowing past that point still cannot be "alongside, in contact with and parallel to" the wire. As Exhibit 5 shows, if a line is drawn down the center of each fluid duct and beyond, the lines converge at a point below the plane forming the nozzle opening -- a point that Sodick R. Mem. 14 places at 1.9 millimeters below the plane that Agie says forms the outlet. Of course an understanding of the elementary physical principle that a fluid under pressure will diverge from the center as it exits from a constraining pathway or duct would suggest that the precise point chosen by Sodick -- 1.9 millimeters below the nozzle -- is not the relevant point either. If the inquiry is one of determining the point, if any, at which the bulk of the fluid is generally travelling parallel to the wire in a column, that point will obviously be even farther down the wire (and hence farther below the plane forming the nozzle opening) than Sodick's measurement would suggest. But what is certain is that no matter precisely where that point is, it must be below the opening of the nozzle assembly. Thus even at the point where the fluid leaves the entire assembly it is not on the whole travelling alongside of, in contact with and parallel to the electrode -- a point that Agie itself seems to recognize when it says (Agie Mem. 18, emphasis added):
Both [New Assembly] discharges are alongside, in contact with and parallel to the wire electrode, or at least substantially so, at the outlet of the assembly, or slightly below it.
As Agie would have it, it does not matter whether the duct structure creates a flow of fluid that is parallel to the wire as it leaves the Agie-defined "outlet" or rather achieves such a parallel flow some distance downstream of the outlet. Either way, Agie says, the device functions as a substantial equivalent to a device, like that disclosed by the '163 patent, that provides that kind of flow as the fluid leaves the nozzle outlet.
It is true that much of what Agie said to the PTO during the Reexamination could be read to suggest that Agie's main concern was that parallel flow be assured at some point along the wire before the fluid would have reached the working area. But Agie also unmistakably took the position at that time that the best way to do that -- indeed the only way to assure that such flow would result under all operating conditions -- was to make certain that the flow had stabilized alongside, in contact with and parallel to the wire before the fluid left the constraints of the nozzle. Agie's Response (Sodick Mem. Ex.19 at 5) states it most clearly:
In considering the merits of the Ullmann invention, it must be kept firmly in mind that a principal purpose is to provide a flushing fluid nozzle and wire guide which results in a flow of flushing fluid which is both parallel to the wire and in contact with the wire as the fluid leaves the nozzle outlet. By using the flushing system of the EDM machine itself to create a flow of flushing fluid parallel to the wire, rather than leaving the flow characteristics of the fluid in the work gap up to the ...