The opinion of the court was delivered by: MILTON I. SHADUR
After two false starts, Northlake Marketing & Supply, Inc. ("Northlake") has filed its five-count Second Amended Complaint ("SAC") against Glaverbel S.A. ("Glaverbel"), Foseco, Inc. ("Foseco") and Fosbel, Inc. ("Fosbel") (the latter two are collectively termed "Foseco-Fosbel" for convenience).
Three counts seek judicial declarations only against Glaverbel and Fosbel as to United States Patent Nos. 4,792,468 ("'468"), 4,920,084 ("'084") and 4,489,022 ("'022"), all owned by Glaverbel and exclusively licensed to Fosbel: Count I requests a ruling that Northlake is not infringing Patents '468 and '084, while Counts II and III allege that all three patents (1) are invalid under 35 U.S.C. §§ 101, 102, 103 and 112 and (2) are unenforceable for having been fraudulently or inequitably obtained. Counts IV and V accuse all three defendants of having obtained and of seeking to enforce those allegedly invalid patents in violation of (1) the Sherman and Clayton Antitrust Acts (15 U.S.C §§ 1, 2 and 15) and (2) the common law of unfair competition.
In earlier litigation Glaverbel and Fosbel had sued Northlake and other parties in the United States District Court for the Northern District of Indiana, asserting two claims of patent infringement. On those claims Magistrate Judge Andrew Rodovich granted summary judgment in Northlake's favor, finding that Glaverbel and Fosbel had failed to meet their burden of establishing a genuine factual issue as to the existence of such infringement. Northlake had also responded with counterclaims asserting both the invalidity of Patent '022 (and another patent not at issue here--see n.11) and violations of federal antitrust and state unfair competition law. After a bench trial Magistrate Judge Rodovich dismissed those counterclaims on March 31, 1992 on the ground that Northlake had failed to meet its burden of proof.
As a consequence of that last ruling this Court's December 9, 1992 memorandum opinion and order held that this is not the proper forum for Northlake to advance its claims based on Patent '022, so all such claims were stricken from the SAC. This Court's April 7, 1993 memorandum opinion and order summarized the effect of two other rulings that it had made:
In combination, this Court's oral ruling of December 17, 1992 and its brief February 26, 1993 memorandum opinion and order (the "Opinion") held that to the extent that Northlake's current antitrust and unfair competition claims arise out of any alleged conduct up to and including the date of Judge Rodovich's decision, those claims are barred against all three defendants on claim preclusion grounds.
Now before this Court is the Foseco-Fosbel Fed. R. Civ. P. ("Rule") 56 motion for summary judgment on the remaining temporal segment of Northlake's antitrust and unfair competition claims-that is, any such claims covering the period from April 1, 1992 to the present.
For the reasons set forth in this memorandum opinion and order, the Foseco-Fosbel motion is granted, those claims are dismissed with prejudice and Foseco is dismissed as a party to this action.
Summary Judgment Standards
Familiar Rule 56 principles impose on the movant the burden of establishing the lack of a genuine issue of material fact ( Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)). For that purpose this Court is "not required to draw every conceivable inference from the record--only those inferences that are reasonable"--in the light most favorable to the nonmovant ( Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir. 1991) and cases cited there).
But it is not the movant alone that bears a burden under Rule 56. In accordance with the teaching of Celotex, 477 U.S. at 322-23 and the plain command of Rule 56(c) and (e), a nonmovant plaintiff has the burden of coming forth with evidence in support of its case. Here is how Winskunas v. Birnbaum, 23 F.3d 1264, 1267 (7th Cir. 1994) has framed the issue:
When as in the present case a defendant moves for summary judgment on the ground that the plaintiff lacks evidence of an essential element of his claim, the plaintiff is required by Fed.R.Civ.P. 56, if he wants to ward off the grant of the motion, to present evidence of evidentiary quality--either admissible documents or attested testimony, such as that found in depositions or in affidavits--demonstrating the existence of a genuine issue of material fact.
And Buscaglia v. United States, 25 F.3d 530, 534 (7th Cir. 1994) has paraphrased Rule 56(e) to convey the same message:
The non-movant may not rely upon mere allegations, but must present specific facts to show that a genuine issue of material fact exists.
Not just any tendered material will suffice to meet that burden. Such proffered material must meet the strictures of the Federal Rules of Evidence so as to be admissible at trial ( Winskunas, 23 F.3d at 1267; Waldridge v. American Hoechst Corp., 24 F.3d 918, 921 n.2 (7th Cir. 1994)).
Where a nonmovant fails to present evidence that satisfies its burden in opposing the movant's Rule 56 motion, the motion must be granted ( Waldridge, 24 F.3d at 920-21).
Northlake is a competitor of Foseco, Fosbel and Glaverbel in the United States market for the ceramic welding and repair of industrial ovens used principally by the steel, glass and copper industries (Foseco's Vice President of Administration Anthony Money ("Money") Dep. 11, 24; Northlake's President James Hamilton ("Hamilton") Aff. PP1,4). Foseco is a wholly-owned Delaware-incorporated great-grandchild subsidiary of Dutch company Foseco Holding BV (Money Dep. 4, 14). Fosbel is an Ohio corporation whose stock is held 51% by Foseco Holding BV and 49% by Glaverbel (Money Dep. 21).
Of the nine seats on Fosbel's Board of Directors, Foseco controls five and Glaverbel controls the other four (Money Dep. 23).
Under the joint venture agreement pursuant to which the participants formed Fosbel, Foseco manages Fosbel and supplies it with the powders used in ceramic welding, while Glaverbel supplies technical advice and has made Fosbel the exclusive licensee of its Patents '468 and '084 (Money Dep. 10-11; Fosbel's Director of Business Development Chuck Zvosec Dep. 28, 73; P. Supp. Mem. Ex. C at 2). Fosbel supplies the actual ceramic welding services to industrial customers (Money Dep. 24).
Lack of Evidence Supporting Northlake's Claims
For nearly 30 years (ever since the decision in Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 176-77, 15 L. Ed. 2d 247, 86 S. Ct. 347 (1965)) it has been established that a suit for violation of the antitrust laws may be predicated on a defendant's attempted enforcement of a fraudulently procured patent (though since Walker v. FMC the Federal Circuit has supplanted the concept of "fraud on the Patent Office" with a term that has somewhat broader connotations--" inequitable conduct"--the basis for an antitrust claim remains that of actual fraud in the procurement; see, e.g., FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1417-18 (Fed. Cir. 1987) and cases cited there). Northlake's SAC alleges just such conduct by Foseco and Fosbel, but that is not enough for Rule 56 purposes. In response to Foseco-Fosbel's motion Northlake must present sufficient evidence to support the reasonable inference that Foseco or Fosbel or both acted or attempted to act in such a manner after March 31, 1992. Northlake runs aground on that requirement.
More specifically, Northlake invokes Walker v. FMC by alleging that defendants hindered its ability to secure ceramic welding work by telling prospective customers that Northlake was infringing Glaverbel's patents (remember that it is a predicate of Northlake's claim, which is being accepted as true solely for purposes of dealing with the current motion, that the patents were procured by inequitable conduct). To support that allegation Northlake cites to Hamilton's affidavit. What follows is a summary of what he says there.
In June 1992 Hamilton asked Inland Steel ("Inland") about the possibility of Northlake's replacing Fosbel in performing such work on Inland's coking ovens (Hamilton Aff. P4). On August 5, 1992 Northlake performed a trial repair to Inland's satisfaction, and Northlake was then invited to submit a price for such repair work and was also advised that Fosbel would be told of Northlake's successful trial and would be "given the opportunity to submit a new price in response to Northlake's quotation" (Hamilton Aff. PP5,6). During an October 1992 meeting with Inland supervisor Willie Johnson ("Johnson") Hamilton was told that Northlake had submitted a lower bid than Fosbel but that Fosbel's Vice President of Sales Ernie Goffe ("Goffe") and salesman Jerry Verdi ("Verdi") had told Johnson that Fosbel was going to sue Northlake for patent infringement, a warning that Johnson had reported to his supervisor Alan Ellis (Hamilton Aff. PP9-10). Johnson suggested that Northlake should present evidence to Inland of its "legal rights" to use the ceramic welding process, and it then submitted a copy of Magistrate Judge Rodovich's grant of summary judgment in its favor in the Indiana litigation (Hamilton Aff. PP11-12). Northlake ultimately secured Inland's business and began doing ceramic repair work for it on January 25, 1993 (Hamilton Aff. P13).
Northlake's problem is that the key pieces of evidence in that account--the claimed statements by Fosbel employees Goffe and Verdi that interfered with Northlake's effort to get business from Inland--face problems posed by the hearsay rule and other rules of evidence. Although Johnson's testimony as to the making of such statements would clearly have been admissible as nonhearsay under Fed. R. Evid. ("Rule"
) 801(d)(2)(D), the asserted statements were not heard directly by Hamilton but were rather relayed to him by Johnson. If the story of what Johnson told Hamilton were being offered for the truth of the matter asserted (that is, to prove that Goffe and Verdi had really said what Johnson reported to Hamilton), those purported Goffe-Verdi statements would be inadmissible hearsay (Rule 801(c) and 802). With those statements thus out of the case for that purpose, this Court would have been tendered no evidence that Fosbel or Foseco voiced any warnings or threats of suits for infringement of Glaverbel's patents ( Wigod v. Chicago Mercantile Exch., 981 F.2d ...