To Hell In A Handbag: Patent Unenforceable, Plaintiff And Counsel Hit With Fees

Posted on | September 28, 2008 | No Comments

2008-1539 Advanced Magnetic v. Romag Fasteners
SD/NY 98-cv-7766
Judge Paul Crotty

Plaintiff AMC appeals from the order of Judge Paul Crotty finding the case exceptional under § 285 and awarding attorney’s fees, and ruling AMC’s 5,572,773 patent unenforceable due to inequitable conduct.  The court also found litigation misconduct and AMC’s counsel jointly responsible for the attorney’s fees under § 1927.  During the earlier jury trial, the court granted Romag judgment as a matter of law upon the close of AMC’s case.

The case related to magnetic snap fasteners like the type commonly used in the fashion industry to secure the flap on handbags and purses.

First, the court addressed whether it had jurisdiction to hear the inequitable conduct claims after Romag had, upon getting the JMOL, agreed to dismiss its counterclaims, including that for inequitable conduct.  The court determined that it did have jurisdiction–not only did Romag "reserve" these arguments for its fees motion, but the court found inherent power to consider Romag’s claims as part of the "totality of the circumstances" implicated by a § 285 request.

As for the inequitable conduct, the court reviewed the testimony and found the patent invalid for misidentification of inventorship.

The named inventor, Irving Bauer, is also the president and owner of plaintiff AMC.  The owner of an oil burner (boiler) installation and repair business, Bauer was approached by an acquaintance to purchase 4,021,891 and 4,453,294, then the industry standards covering purse snaps.  Unfortunately for Bauer, shortly after his purchase the industry announced a design around re: the ’294, rendering the patents nearly worthless.  Bauer, however, came up with the application for the ’773, a patent which would cover the industry once again.

One problem–Bauer was not the inventor (according to the court), but rather a Robert Riceman.  Riceman claimed to have an earlier conception for the alleged industry design-around but, because of contractual obligations, his inventions would accrue to a third party and not to Bauer or Riceman.  According to the court, Bauer claimed inventorship to protect his investment in the ’294 and his plans to control the purse snap industry.  Simply put, the court found Bauer’s claim to inventorship impossible to believe.  Among the court’s many relevant paragraphs:

The Court found Bauer’s testimony regarding his purported invention completely incredible. At no point in Bauer’s rambling, often-incoherent testimony did he offer any scientific or technical explanation for the claimed increase in magnetic attraction caused by the hollow post. Nor did he present any evidence to substantiate this claim. See infra Discussion Part I.C.2. The Court refuses to believe that Bauer, lacking any training or experience in the field, and equipped only with curiosity and pluck, was able to successfully design around the industry standard ‘294 Patent. His testimony bore clear indicia of fabrication. While voluble—if not responsive—on direct, he was evasive and argumentative on cross examination. The Court is convinced beyond a shadow of a doubt that Bauer could not be the inventor of the ‘773 snap.

With the patent now invalid, the court turned to litigation misconduct and focused its gaze on AMC’s trial counsel.  AMC had retained a Dr. Dev Ratman as an infringement expert, and his reports duly opined that Romag’s snaps had, as claimed, holes int he rivets that cause an increase in magnetic attraction.  He based this on a finite element analysis.

Unfortunately, Dr. Ratman had hired another person (Bell) to perform the analysis.  Despite Rule 26 and specific discovery requests, AMC never disclosed Bell nor his test results to Romag.  The matter came to light during Dr. Ratman’s deposition shortly before trial.

More unfortunate is the fact that Bell’s tests showed that the accused snaps did not infringe.

The court found that the failure to timely acknowledge and produce the Bell tests needlessly prolonged the litigation and constituted litigation misconduct.  Further, the court found that AMC pursued its infringement claim to trial despite no evidence of infringement–yet another example of misconduct.  Because AMC’s counsel were involved in this misconduct, they were found to be joint and severally liable.

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