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DSM Desotech, Inc. v. 3D Systems Corp.

United States District Court, N.D. Illinois, Eastern Division

September 28, 2012

DSM DESOTECH, INC., Plaintiff,
v.
3D SYSTEMS CORPORATION, and 3D Systems, Inc., Defendants.

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[Copyrighted Material Omitted]

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Jeffrey Brandon Burgan, Bruce Michael Gagala, David R. Van Buskirk, Emer L. Simic, Jonathan Thielbar, Lawrence Scott Beall, Leydig, Voit & Mayer, Ltd., Andrew Stanley Marovitz, Britt Marie Miller, Thomas Vangel Panoff, Mayer Brown LLP, Chicago, IL, for Plaintiff.

Alex Peter Middleton, Erin Lind Shencopp, Paula W. Render, Jones Day, Chicago, IL, Jonathan A. David, Lerner David Littenberg Krumholz & Mentlik LLP, Westfield, NJ, for Defendants.

Memorandum Opinion and Order

SHARON JOHNSON COLEMAN, District Judge.

Coming before the Court is defendants 3D Systems Corporation and 3D Systems, Inc.'s (collectively " 3D" ) motion for summary judgment its affirmative defenses of equitable estoppel and laches on plaintiff DSM Desotech, Inc.'s (" Desotech" ) patent infringement claims. 3D asserts that this Court should grant judgment in its favor because Desotech should have pursued its patent claims prior to 2008 when it filed the instant lawsuit. Having considered all the submissions of the parties and heard oral argument on the motion, this Court denies 3D's motion for summary judgment on the defenses of equitable estoppel and laches as to infringement of U.S. Patent Nos. 6,340,297 and 6,733,267, for the reasons stated below.

Background

The following facts are not in dispute. 3D Systems Corporation and 3D Systems, Inc., manufacture stereolithography machines that use lasers to create solid parts or objects from UV-curable photopolymer liquid resins. Both DSM Desotech and 3D manufacture resin used in this process. 3D also distributes and sells resin (its own and other manufacturers' resin) for use in stereolithography. Desotech filed this lawsuit on March 14, 2008, charging 3D with infringing U.S. Patent No. 6,340,297 (" the '267 patent" ) issued on January 22, 2002, and related U.S. Patent No. 6,733,267 (" the '267 patent" ) issued on May 11, 2004. The patents-in-suit are apparatus patents. The accused devices are the Zephyr recoaters used in 3D's stereolithography machines, first introduced in 1996. 3D claims non-infringement of the patents and asserts the defenses of equitable estoppel and laches.

In March 1999, Desotech acquired DuPont's Somos resin business, including one of 3D's Original stereolithography machines, the SLA-250. Desotech was aware of the Zephyr recoater installed in 3D's Original SLA machines as of February 18, 1999, coincident with Desotech's purchase of the Somos business from DuPont. Desotech also purchased an SLA-7000 in August 1999. On March 21, 2001, both Desotech and 3D issued press releases announcing their intention to develop and jointly market non-liquid stereolithography hardware, software, and materials. Desotech and 3D created the joint venture Optoform LLC in December 2001 to develop their relationship.

On January 25, 2002, Desotech sued Vantico, a resin manufacturer for infringement of one of Desotech's resin patents as well as its '297 patent. The complaint against Vantico alleged: " Upon information and belief, 3D Systems Corp. (" 3D

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Systems" ) has manufactured and sold, and continues to make and sell, apparatus including Zephyr recoaters that are covered by the claims of the '156 patent [issued to DuPont prior to purchase by Desotech] and the '297 patent." Desotech did not name 3D as a defendant in the lawsuit against Vantico. The Vantico arbitration settled on December 17, 2004, when Desotech and Vantico signed a " Settlement and Mutual Release and Non-Exclusive License Agreement."

Although it is unclear from the record precisely how 3D acquired the information, the parties agree that 3D learned of the Vantico suit at some point shortly after it was filed. At the time, 3D and Desotech were forging a business relationship. By 2003, 3D had internally evaluated whether Desotech could or would enforce its patent against 3D, and had requested opinions from outside patent counsel. 3D became aware of the '267 patent when it was issued on May 11, 2004. On May 27, 2004, 3D's outside counsel indicated that 3D's Zephyr recoaters were non-infringing of Desotech's patents.

3D and Desotech entered a two-year resin supply agreement in which Desotech became a non-exclusive supplier of resin to 3D. During the two-year term of the supply agreement (2002-2004), Desotech never expressly raised the issue of infringement with respect to 3D's machines with Zephyr recoaters. On June 22, 2004, 3D and Desotech entered a new non-exclusive two-year resin supply agreement that covered more of Desotech's resin products.

Desotech's General Counsel, in a December 18, 2003, letter to 3D, raised the subject of Desotech's resin patents and the possible infringement by the sale of 3D's new " Bluestone" resin, but did not raise the issue of infringement of Desotech's '297 and '267 apparatus patents. In October 2004, Desotech filed a patent infringement suit against 3D in Germany, asserting that 3D's Bluestone resin infringed on one of its resin patents. Desotech did not sue 3D for infringement based on the '297 patent or the '267 patent at this time. The German litigation was terminated in January 2010, when the German Federal Supreme Court issued a final decision revoking Desotech's resin patent at issue.

On August 23, 2004, Desotech's counsel wrote to 3D's counsel stating: " The purpose of this letter is to clarify DSM Desotech Inc.'s discussions with 3D Systems Corporation regarding our interest in your cooperation with discovery in a 3rd party matter that does not directly involve 3D Systems Corporation. It is not DSM Desotech Inc.'s intention to use any such discovery information to assert DSM Desotech Inc. patents against 3D System Corporation. We are willing to enter into an agreement to the effect that we will use the information produced only for our third party dispute and no other purpose."

From 2002 through 2007, 3D was involved in a series of negotiations with Desotech that included negotiations regarding a supply and distribution agreement in 2002 and an expanded supply and distribution agreement in 2004, a Memorandum of Understanding (" MOU" ) in 2005 and 2006, and negotiations involving a cross licensing agreement pursuant to the MOU in 2006 and 2007. In 2006 and 2007, both Desotech and 3D participated in active and ongoing negotiations to reduce the MOU to a final agreement. In a January 11, 2006, press release announcing the MOU, James Reitz, Desotech's Somos Business Manager, stated, " [t]his agreement allows both [parties] to fully focus on efforts to grow stereolithography technology to the benefit of the rapid prototyping and rapid manufacturing markets." They continued exchanging correspondence until November

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2007 when the negotiations came to an end.

On September 2, 2005, 3D's patent counsel updated a report entitled " DSM N.V. and DSM Desotech, Inc. Patents," which lists the '267 and '297 patents and reiterates the noninfringement position from the previous formal opinions. 3D did not seek new formal opinions on infringement after developing the Pro series machines. 3D has not made any technical changes to the recoating ...


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