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Sloan Valve Co. v. Zurn Industries

May 6, 2010

SLOAN VALVE COMPANY, A DELAWARE CORPORATION, PLAINTIFF,
v.
ZURN INDUSTRIES, INC., A DELAWARE CORPORATION, AND ZURN INDUSTRIES, LLC, A DELAWARE LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge

CORRECTED MEMORANDUM OPINION AND ORDER

For the following reasons, the Court grants in part and denies in part Plaintiff Sloan Valve Company's ("Sloan") Motions Under Rule 12.

BACKGROUND

Sloan filed its complaint against Defendants Zurn Industries, Inc. and Zurn Industries, LLC (collectively "Zurn") on January 13, 2010 alleging infringement of U.S. Patent No. 7,607,635 entitled "Flush Valve Handle Assembly Providing Dual Mode Operation" (the "'635 Patent") and the corresponding U.S. Patent Application Publication No. 2006/015729 (the "'729 Patent Application"). (R. 1-1, Complaint, ¶ 1.)

I. Sloan's Complaint

Sloan's complaint contains the following allegations. Sloan is a leading manufacturer of plumbing products. Id. at ¶ 7. In 2004, John Wilson, an engineer working in Sloan's research and development group, conceived a new dual flush valve and handle assembly that would distribute one amount of water when pushed down, and a reduced quantity of water when lifted up. Id. at ¶ 11. Sloan recognized Wilson's invention as a solution to satisfy the need for a dual mode flush product for commercial application and accordingly decided to invest in testing, developing and commercializing Wilson's invention. Id. at ¶¶ 11-12. After testing a number of experimental handle assemblies, Sloan announced the commercial introduction of the product on August 1, 2005. Id. at ¶¶ 13, 16. On August 4, 2005, Zurn announced a water-saving valve and handle assembly that, upon information and belief, Zurn derived by copying Sloan's dual mode flush handle. Id. at ¶¶ 18-22.

Sloan filed a patent application in the United States Patent and Trademark Office ("U.S. Patent Office") claiming the unique features of the dual mode flush handle assembly and valves. Id. at ¶ 23. On July 13, 2006, the U.S. Patent Office published Sloan's patent application as the '729 Patent Application. Id. at ¶ 24. On October 27, 2009, after finding Wilson's invention patentable, the U.S. Patent Office issued the '635 Patent.

Count I of Sloan's complaint alleges that Zurn's making, using, offering to sell, importing or selling dual mode handle assemblies and flush valves infringe Claims 1, 4-6, 10-12, 14, 19, 28-31 and 33-34 of the '635 Patent. Id. at ¶ 36. Count II of Sloan's complaint alleges that Zurn infringed the '729 Patent Application by making, using, or offering for sale the invention in at least Claims 10-11, 15 and 31 of the '635 Patent between the publication of the '729 Patent Application and the issuance of the '635 Patent. Id. at ¶¶ 40-43. Sloan's complaint also alleges claims against Zurn for inducement to infringe the '635 Patent and contributory infringement of the '635 Patent.

II. Zurn's Answer, Counterclaim and Affirmative Defenses

On February 2, 2010, Zurn filed its Answer, Counterclaims, and Affirmative Defenses to Sloan's complaint. (R. 17-1, Zurn's Answer, Counterclaims, and Affirmative Defenses.) In its counterclaim, Zurn seeks a declaration of invalidity (Count I) and non-infringement (Count II) of all of the claims of the '635 Patent, and unenforceability of the '635 Patent due to inequitable conduct (Count III). Zurn also filed seven affirmative defenses which assert: (i) detrimental reliance, (ii) lack of actual notice of the '729 Patent Application, (iii) denial of infringement of any valid claim of the '635 Patent, (iv) estoppel, (v) invalidity and unenforceability of the '635 Patent, (vi) misuse/unclean hands, and (vii) entitlement to attorneys' fees.

Zurn's claim of inequitable conduct contained in Count III of its counterclaim derives from statements made by Sloan during a reexamination that Sloan failed to disclose to the United States Patent Office during the prosecution of the '635 Patent. On May 11, 2009 and July 10, 2009, Sloan filed a (i) Request for Reexamination of United States Patent No. 7,481,413 (the "'413 Patent") and (ii) Corrected Request for Reexamination of the '413 Patent (collectively "Request for Reexamination of the '413 Patent"). Id. at ¶¶ 15-16. Zurn alleges that Sloan made statements concerning prior art in the Request for Reexamination of the '413 Patent that are inconsistent with the specifications of the '729 Patent Application and the '635 Patent.

Specifically, in the Request for Reexamination of the '413 Patent, Sloan described U.S. Patent No. 1, 912,937 and stated that, "[t]he bore is inherently larger than the plunger so as to allow the plunger to passes [sic] there through. One of ordinary skill would understand the bore to be sized sufficiently larger than the plunger so as to avoid excessive frictional forces that would cause operation to be difficult and that would result in greater amount of operational wear." Id. at ¶ 20. The '635 Patent and the '729 Patent Application state that, "[y]et another possible alternate construction of the bushing passage is to make the inside diameter of the bushing passage appreciably larger than the outside diameter of the plunger." Id. at ¶ 22. Zurn alleges that in the Request for Reexamination of the '413 Patent, Sloan argued that a plunger having a smaller radius than the inside diameter of the bushing was inherently taught by prior art references, and that in the specifications and claims of the '635 Patent Sloan stated that part of its invention included a plunger having a smaller radius that the inside diameter of the bushing. Id. at ¶¶ 24-25.

Zurn thus alleges that at least one claim in the '635 Patent covers a plunger having a smaller radius than the inside diameter of the bushing which is inherently taught by prior art references. Id. at ¶ 26. Zurn further alleges that Sloan did not disclose the Request for Reexamination of the '413 Patent to the United States Patent Office during the prosecution of the '635 Patent, and that it willfully did not advise the United States Patent Office that prior art inherently taught a plunger having a smaller radius than the inside diameter of the bushing. Id. at ¶ 29. Finally, Zurn alleges that the United States Patent Office would have considered this teaching and Sloan's statements material to the examination of the '635 Patent.

LEGAL STANDARD

I. 12(b)(1) Motion to Dismiss

The standard of review for a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction depends on the purpose of the motion. See United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003) (en banc). If a defendant is challenging the sufficiency of the allegations regarding subject matter jurisdiction, the Court must accept all well-pleaded factual allegations as true and draw all reasonable inferences in favor of the plaintiff. See id. If, however, the defendant denies or controverts the truth of the jurisdictional allegations, the Court may look beyond the pleadings and view any evidence submitted to determine if subject matter jurisdiction exists. See id.; see also St. John's United Church of Christ v. City of Chicago, 502 F.3d 616, 625 (7th Cir. 2007). "Where ...


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