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Viskase Companies, Inc. v. World Pac International AG

August 9, 2010

VISKASE COMPANIES, INC., PLAINTIFF,
v.
WORLD PAC INTERNATIONAL AG AND WORLD PAC INTERNATIONAL USA, AND SUN PRODUCTS MARKETING UND MANUFACTURING AG, DEFENDANTS.
WORLD PAC INTERNATIONAL USA, DEFENDANT/COUNTER-PLAINTIFF,
v.
VISKASE COMPANIES, INC., PLAINTIFF/COUNTER-DEFENDANT



MEMORANDUM OPINION AND ORDER

In August of 2009, plaintiff Viskase sought a declaratory judgment that it does not infringe any valid claim of U.S. Patent No. 6,200,613 (the "'613 patent"), which is owned by defendant World Pac International USA ("World Pac USA").*fn1 In response, World Pac brought a counterclaim for patent infringement and moved for a preliminary injunction. For the following reasons, I deny the preliminary injunction motion.

I. Background

The '613 patent, entitled "Food Casing," issued on March 13, 2001. The patent is directed to a food casing whose multi-layered structure allows it effectively to impart color and/or flavor to enclosed foods, while preventing losses in weight, flavor and taste. The patent contains ten claims, nine of which depend directly or indirectly from independent claim 1.

Claim 1 recites: 1. A food barrier casing for enclosing a foodstuff to be boiled cooked or otherwise heated in the casing and for imparting a color and/or flavor to the foodstuff, wherein the casing comprises at least one steam and/or gas impermeable plastic foil (1), and an absorbent inner layer (2) joined to an inner side of the impermeable plastic foil (1), the inner layer (2) comprising fibers selected from the group consisting of woven fibers, fabric, knits, and fleece, and wherein the inner layer (2) is impregnated with coloring and/or flavoring agents in an amount sufficient to impart color and/or flavor to the foodstuff when the food barrier casing encloses the foodstuff.

A preferred embodiment of the invention, depicted in Fig. 1 of the patent, is a four-layered structure that includes, beginning with its outer-most layer, a polyethylene layer, then a polyamide or nylon layer, then another polyethylene layer, and finally an absorbent inner layer adjacent to the enclosed food. The patent teaches that substances used to flavor or color foods may be impregnated into the absorbent inner layer, then "reliably transferred...during the cooking or boiling process." Col. 4 lns. 28-29. "Since the outer layers of the casing are impermeable, the substances cannot be rinsed out during the boiling process. No losses in weight, taste and flavor result during the production and boiling process or during transport and storage... ." Col. 4 lns. 30-34.

World Pac has commercialized patented products in the United States since 1999. These products practice the patent as taught in the preferred embodiment, i.e., their structure consists of an outer-most polyethylene later, a nylon layer, then another polyethylene layer that is extruded wet onto the previous two layers, thereby functioning as an adhesive for the absorbent inner layer.

Prior to World Pac's claimed invention, three varieties of casings were known in the art. The first were cellulose fiber casings used to impart colors or flavors to foods using techniques such as smoking in a smokehouse. The '613 patent states that because cellulose fiber casings are permeable to steam and gas, products cooked in these casings always lose weight, color, and flavor during processing and storage, and also have a short shelf life unless they are quickly repackaged in a barrier casing. Col. 1 lns. 27-35. The second type of casings known in the art were pure plastic casings, which the '613 patent explains were developed "[t]o avoid the disadvantage of steam and gas permeability." Col. 1 ln 39. These casings effectively prevent losses in weight, flavor and taste during production and storage, but they are ineffective to absorb and transfer colors or flavors to the enclosed foods. Col. 1 lns. 44-54. Also known at the time of the invention, though not discussed in the patent, were plastic-coated fibrous casings. For example, Viskase's product line at that time included its "MP" (for moisture-proof) fibrous casings, which were fibrous casings coated with a type of plastic called polyvinylidene chloride or "PVDC."

As Viskase's own witnesses acknowledged, World Pac's patented products were perceived by customers as offering valuable improvements over the previously available casings. For example, Jeffrey Sherry stated in his deposition that there was a perception in the industry that fibrous casings, including Viskase's MP fibrous casings, were more susceptible to bacteria and pathogens than "plastic" casings, which were viewed as being "impervious, safer, better."*fn2 Sherry Dep. at 36:24-37:5.*fn3 Myron Nicholson stated similarly in his deposition that Viskase's customers did not perceive MP fibrous casings as having the food-safety qualities associated with "plastic" casings. Nicholson Dep. at 210:19-211:5. Mr. Sherry testified that the trend in the market was toward plastic casings, see Sherry Dep. 67:1-2, and Messrs. Sherry and Nicholson both referred to a "niche" occupied by World Pac in what Mr. Sherry called a "booming" market. Sherry Dep. at 56:11-16, Nicholson Dep. at 226:10-12.

Accordingly, Viskase began to research ways to fill the "hole" it perceived in its product line with a casing that would compete with World Pac's patented casings. Sherry Dep. at 72:20-22. As part of its efforts, Viskase obtained samples of World Pac casings (including, in at least one instance, a "stolen" sample taken from a garbage can) and reverse engineered them to determine the materials and method of construction. Viskase documents discussing its research and development activities refer to a "World Pac knock-off," a "World Pac replacement," and a "World Pac me-too." These efforts culminated in the launch of the accused Viscoat casings.

The Viscoat casings do not exactly replicate the design of World Pac's products. In particular, while World Pac uses an extruded layer of polyethylene as an adhesive to join the inner absorbent layer to the nylon and outer polyethylene layers, Viskase uses a polyurethane-based adhesive to join the various layers of the Viscoat casings together. Like World Pac's patented casings, however, the Viscoat casings have an outer polyethylene layer joined to a nylon layer, which is then joined to an absorbent, fibrous inner lining.

World Pac first became aware of the Viscoat casings at the American Meat Institute ("AMI") trade show in October of 2005, where Viskase launched the product. World Pac's attorney alerted Viskase to the '613 patent and stated that Viscoat brochures distributed at the trade show "appear to recite all of the elements of at least claim 1" of the patent. The parties communicated on the issue over the next several months, during which time World Pac requested a sample of the Viscoat product. Viskase denied infringement but refused to provide a sample. These conversations ended in March of 2006, after which the parties did not communicate on the topic again until July 2009.*fn4 Then in August of 2009, World Pac sent letters to several of its customers informing them that Viskase infringed the '613 patent. It was these letters that prompted Viskase to file the instant declaratory action.

II. Legal Standard

World Pac is entitled to a preliminary injunction if it can establish four factors: "1) a reasonable likelihood of success on the merits; (2) irreparable harm if an injunction is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction's favorable impact on the public interest." Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001)(citing Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed. Cir. 1994)). A preliminary injunction cannot issue, however, unless World Pac establishes both of the first two factors. Amazon.com, 239 F.3d at 1350. Because I conclude, as explained in the remainder of this opinion, that World Pac has failed at this stage to establish a likelihood of success on the merits of its infringement claim, I need not embark upon the remainder of the inquiry. Reebok Intern. Ltd. v. J. Baker, Inc., 32 F.2d 1554, 1556 (Fed. Cir. 1994) ("Because, irrespective of relative or public harms, a movant must establish both a likelihood of success on the merits and irreparable harm...the district court may deny a preliminary injunction based on the movant's failure to establish either of these two crucial factors without making additional findings respecting the other factors.")

To prove a likelihood of success on the merits, World Pac must show that, in light of the presumptions and burdens that will inhere at trial, 1) World Pac will likely prove that Viskase infringes the '613 patent, and 2) World Pac's infringement claim will likely withstand Viskase's challenge to the '613 patent's validity and enforceability. Id. at 1350-51. Helifix Ltd. V. Blok-Lok, Ltd., 208 F.3d 1339, 1351 (Fed. Cir. 2000). If Viskase raises a "substantial question" of either noninfringement or invalidity, then to carry its burden of showing a ...


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