IN RE: Multidistrict Patent and Antitrust Litigation Involving Koratron

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Boa F AAT -	: ' JUDICIAL PANEL ON RE
: MULTIDISTRICT LITIGATION Ny |
y THE JUDICIAL PANEL FILED EN |
MULTIDISTRICT LITIGATION JUN 19 969 Sela
PATRICIA D. WILT Ln
IN RE MULTIDISTRICT PATENT AND ) CLERK 35
ANTITRUST LITIGATION INVOLVING ) ~ DOCKET NO. 20 no
KORATRON )
OPINION AND ORDER
BEFORE ALFRED P. MURRAH, CHAIRMAN, AND JOHN MINOR WISDOM, Lo
WILLIAM H. BECKER¥*, JOSEPH S. LORD, III, EDWIN A ROBSON, A
STANLEY A. WEIGEL, AND EDWARD WEINFELD, JUDGES OF THE PANEL oo
JOHN MINOR WISDOM, JUDGE OF THE PANEL
Koratron Company, Inc. is a California corporation with oo
its principal offices in San Francisco. The Company employs a
patented process for manufacturing "permanent press" garments :
which are washable yet retain their shape and creases without )
being ironed. Koratron has 365 licensees in the United States: Co
257 are garment manufacturers licensed to use the patented process, :
and the rest are textile mills and others licensed to use Koratron's
trademark.
Koratron is now in sixteen cases originally filed in
1/ on
six different district courts. Ten are pending in California, :
nine of which are in the Northern District of California. There
is one case in the Southern District of New York, one in the
District of Colorado, one in the Eastern District of Kentucky,
and one in the Northern District of Georgia.
*¥ Judge Becker did not participate in this decision. :

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° 2
Stated generally, all of these actions turn on
whether Koratron used its patents, trademarks, and licensing
agreements to create a monopoly in restraint of trady, There
is no doubt that the actions involve one or more common questions
of fact and that Section 1407 (a) was designed for actions of
the type now before us. The only question is which forum is
most appropriate "for the convenience of parties and witnesses"
and will best "promote the just and efficient conduct for such
actions", in accordance with the statutory objectives of
Section 1407(a).
The cases may be divided into three groups: (1) the
patent licensee cases, (2) the Kotzin case, and (3) the Deering
® Milliken cases.
I. The Patent Licensee Cases.
Thirteen of the sixteen cases are between Koratron
and garment manufacturers licensed to use Koratron's patents,
In each of the thirteen cases, except Oxford Industries, Inc.
v. Koratron Company, Inc., Koratron sued a garment manufacturer
for failure of the licensee to pay royalties. The licensees
responded by attacking the scope and validity of the patent and
alleged that Koratron had violated the antitrust laws. In each
case the licensee contended that its business had been damaged
as a result of a secret agreement between Koratron and Dan River
Mills.
®

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@
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Dan River Mills agreement is the starting point for
most of this litigation. All of the licensee agree-
ments contain a"most favored royalty" provision which
in essence provides that any licensee shall be entitled
to the benefit of any more favorable terms subsequently
granted	to another licensee. Under the Dan River Mills
agreement with Koratron, however, Dan River is not
| required to pay royalties to Koratron for the use of its
patent. The other garment manufacturers now want the |
® benefit of this agreement i.e. royalty free use of the
patent and a refund of all royalties paid after the
date of the Dan River Mills agreement. Koratron contends
that the Dan River Mills agreement is void since it was
induced by fraud and coercion. Koratron has brought
third party actions against Dan River Mills. Common
| questions of fact relating to this agreement and its
effect on the prior licenses make § 1407 clearly appli-
cable to these cases.
| The Oxford case at present involves -only the effect
of the Dan River Mills agreement on the contractural
® relationship between Koratron and Oxford. Recognjzing
: these common questions of fact all the parties in the

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® .
patent licensee cases except Oxford agree that some
type of consolidation of these cases is appropriate and
necessary for their just and efficient conduct. Koratron
would like to have all cases transferred to the Northern
District of California under § 1404(a) while other
parties favor the more limited transfer for consolidated
or coordinated pretrial proceedings under § 1407.
~ Sections 1404(a), 1406(a), and 1407 are not mutually
exclusive and, when appropriate, should be used in con-
cert to effect the most expeditious disposition of
® multidistrict litigation. Compare In re Hendersonville
Air Disaster Cases _ Fed. Supp. (Jud. Pan. on
Mult. Lit. 1969) with In re Falls City, Nebraska Aircrash
Litigation =Fed.Supp._____	(Jud. Pan. on Mult. Lit. 1969).
At the hearing before the Panel, counsel for
: Oxford strongly opposed the inclusion of that case in any
consolidated or coordinated pretrial proceedings.
Although conceding that there was a common party, a common
licensee agreement between the parties, and common questions
of fact concerning the Dan River Mills agreement, counsel
urges that this simple case will be delayed and the ends
® |

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[| _ - 5 ~
of justice abused by including it with the other more
complicated actions. We hold that these common questions
of fact require that this case be included for consoli-
dated or coordinated pretrial purposes. If this case
and its concomitant discovery are as simple as counsel
urges, it may be remanded as soon as that limited dis-
covery is completed.
II. The Kotzin Case
A-1 Kotzin Company, a Los Angeles garment manu-
® facturer which has never been licensed under any Koratron
patent, is the defendant in a patent infringement action
brought by Koratron in the Central District of California.
In addition to denying infringement, Kotzin responded
to the charges by attacking the validity of the Koratron
patent and by raising antitrust claims similar to those
presented in the patent licensee cases. This was the first
case filed and substantial discovery has occurred already.
Counsel for Kotzin does not oppose the inclusion of this
case in consolidated or coordinated pretrial proceedings.
- We hold that there are sufficient common questions of fact
to justify its transfer under § 1407.
®

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| _ .
III. The Deering Milliken Cases
Koratron commenced an action against Deering
Milliken, a mill licensee, in the Northern District of :
California. Shortly thereafter Deering Milliken sued
Koratron in the Southern District of New York. The
California case is presently on appeal to the Ninth
Circuit while the New York case has been stayed pending
determination of venue questions being raised in the
appeal. Regardless of whether venue is properly laid
in New York there can be no doubt that pretrial pro-
® ceedings should be conducted in a single court. These
cases more nearly resemble the Kotzin case since patent
validity is a major issue and it is clear that they
would benefit from consolidated or coordinated pretrial
proceedings.
Iv. Choice of Forum
Deering Milliken argues strongly that the appro-
priate forum for coordinated or consolidated pretrial
proceedings is 'where the action is". In the garment
industry the action is in New York. A large number of
Koratron's licensees are located in the East, and it
® |

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® CL
is reasonable to conclude that additional cases will
be filed in the Southern District of New York. Bayly
Manufacturing Co., the Colorado plaintiff, supports
Deering Milliken's position.
Koratron and the California plaintiffs favor
the Northern District of California.
We cannot deny that the selection of either
coastal district will result in substantial inconvenience
and additional cost to those parties and their attorneys
who will be required to travel across-country for pre-
@ trial proceedings. However nearly all favor consolidated
pretrial proceedings and thus there must be inconvenience
to some. Any inconvenience and added expenses "will be
more than offset by saving from and convenience of
coordinated or consolidated pretrial proceedings directed
by the transferee judge.” In re Antibiotic Drug Litigation
295 Fed. Supp. 1402, 1404 (Jud. Pan. on Mult. Lit. 1968).
We find arguments favoring the Northern District
of California the most compelling. Nine of these 13
transferable cases are now pending in the Northern District
® |

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of California. This fact is not dispositive of the
question, but it is certainly relevant to the selection
of a proper transferee forum. In re Protection Device
Cases 295 Fed.Supp. 39 (Jud. Pan. Mult. Lit. 1968).
The fact that virtually all the documentary evidence
involving the Dan River Mills agreement will come from
Koratron's corporate offices and its officers all of
whom are located in the San Francisco area is particularly
significant due to the important role played by that
® agreement. As Judge Ryan held in transferring Siegel tothe Northern District of California:
"While plaintiff [Siegel] is directly
involved with one action pending in this
District, defendant [Koratron] is faced
with many actions or claims resulting
from a great many licenses. The earliest
actions were instituted in California and
have been consolidated. Many of defendant's
key witnesses will be common to all of the
actions and obviously the convenience of
defendant and also the witnesses would be
served	by trial in a single forum.
kkk
The pendency of other actions in California,
which have already been consolidated, appears
to be a most compelling reason for trans-
fer . . . 'there is a strong policy favor-
ing the litigation of related claims in the
[) same tribunal' . . .

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"After considering all of the relevant
factors, I conclude that the convenience
of parties and witnesses and the interest
of justice would be best served by trans-
ferring this action to the United States
District Court for the Northern District
of California."
IT IS THEREFORE ORDERED that the following four
cases now pending elsewhere are hereby transferred for
coordinated or consolidated pretrial proceedings under
28 U.S.C. § 1407 to the Northern District of California:
Deering Milliken, Inc. v. S.D.New York 67 Civ. 2383
i Koratron Co., Inc.Bayly Manufacturing Co. Vv. Colorado C-1109
Koracorp Inc., et al
Koratron Co., Inc. v. C.D. Calif. 67-1264-PH
A-I Kotzin Co.
Oxford Industries, Inc. Vv. N.D.Georgia 12557
Koratron Co., et al.
The Chief Justice of the United States has temporarily
assigned Judge William E. Doyle of the District of Colorado
to the Northern District of California and Chief Judge Harris
has consented to the assignment of these cases to Judge Doyle.

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® IN RE MULTIDISTRICT PATENTAND ANTITRUST LITIGATION
INVOLVING KORATRON
DOCKET NO. 20
FOOTNOTES
1/ Three of these cases are on appeal: Koratron v.
Cowden and Koratron v. Deering Milliken in the Northern
District of California and Cowden v. Koratron in the Eastern
District of Kentucky. Because of the possibility of these
cases being remanded to the district court for further pro-
ceedings, the Panel included the parties in the show cause
order.
2/ Four of the cases now pending in the Northern District
of California, Blue Bell, Inc. v. Koratron, Henry I. Siegel Co.
v. Koratron, Salant & Salant, Inc. v. Koratron and Standard
Romper, Inc. v. Koratron were initially filed in the Southern
District of New York and transferred to the Northern District
of California under Section 1404(a), Title 28, U.S.C.
3/ The issues may be divided and classified as follows:
¢o 1. Actions brought by Koratron to establish the	validity and infringement of its patent.
(1 case)
2. Actions by Koratron to compel arbitration of the
disputes between it and certain licensees.
(2 cases)
3. Actions by Koratron to seek payment of royalties
under the licensing agreement.
(3 cases)
4. Actions by non-licensee infringers for a
declaratian that the patents are invalid
and/or not infringed
5. Actions brought by licensees involving one or
more of the following issues:
a. validity and infringement of patent
b. illegality of license agreements
c. Koratron's alleged monopoly in res-
traint of trade
d. illegal extension of patent monopoly
(9 cases)

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® Cont'd - Pootnotes
4/ The adverse parties, defendants in some cases,
plaintiffs in others are: Jack Winter, Inc., Armory
Garment Company, Metro Pants Company, Haggar Company
and Levi Strauss & Company (filed in the Northern Dis-
trict of California); Henry I. Siegel Company, Inc.,
Bluebell, Inc., Standard Romper Company and Salant &
Salant Inc. (originally filed in the Southern District
of New York but transferred under § 1404(a) to the
Northern District of California), Bayly Manufacturing
Company (District of Colorado); and Cowden Manufacturing
Company (Northern District of California and Eastern
District of Kentucky).

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Te oT TTT TTT mTTne ©IT WT — |
| : JUDICIAL PANEL ON -
=. MULTIDISTRICT LITIGATION or
FILED 8
THF JUDICIAL PANEL JUNTU1070 pos
MULTIDISTRICT LITIGATION PATRICIA D. Howarp (8 GHEE
CLERK OF THE RANE SSRs
IN RE KORATRON PATENT LITIGATION: ) Ee
KORATRON COMPANY, INC. V. LION ) DOCKET NO. 20 |
UNIFORM, INC. (S.D. OHIO, No. 3833) ) on
OFINION AND ORDER oo
BEFORE ALFRED P., MURRAH, CHAIRMAN, AND JOHN MINOR WISDOM,
EDWARD WEINFELD, EDWIN A, ROBSON, WILLIAM H. BECKER, JOSEPH
S. LORD, III, AND STANLEY A, WEIGEL, JUDGES OF THE PANEL NE
PER CURIAM }
On Novembei 28, 1969, Koratron Company, Inc. brought
a patent infringement action in the United States District :
Court for the Northern District of Zalifornia against Lion
Uniform, Inc. That action was assigned to Judge William E.
Doyle to whom all such actions had been assigned following
transfer under 28 U.S.C. Section 1407. In re Koratron Patent
Litigation 302 F.Supp. 239 (JPML 1969). On March 6, 1970, oe
Judge Doyle dismissed that action for lack of venue under
28 U.S.C. Section 1400(b) and Koratron perfected an appeal
to the United States Court of Appeals for the Ninth Circuit.
Shortly thereafter Koratron brought a virtually |

Case MDL No. 20 Document2 Filed 04/29/15 Page 13 of 18
identical action against Lion in the Southern District of
Ohio where venue is apparently not disputed. We then
entered a "conditional transfer order’ pursuant to Rule 12
of the Rules of Procedure of the Judicial Panel on Multi-
district Litigation transferring this action to the Northern
District of California for coordinated or consolidated pretrial
proceedings and with the prior consent of that court assigning
it to Judge Doyle. Lion filed a timely notice of opposition
and motion to vacate and brief in support; and the "conditional
transfer order" was stayed indefinitely. No party has requested
® a hearing and we have not determined that one is necessary.
Perhaps we would have been more persuaded by the
brief in support of Lion's motion to vacate if we could
accept counsel's characterization of the issue before as. L/
But that issue is not whether the second action should be
stayed but whether it should be transferred to the Northern
District of California for pretrial proceedings under Section
1/ In his motion and brief counsel states that: ''The
single issue on this motion is whether a plaintiff who has
appealed from dismissal of an action in one United States
District Court can properly force the defendant to the trouble
and expense of concurrently defending such appeal, and also of
trying a second later filed action in another district court
by the same plaintiff against the same defendant on the same
[ issues".
-2-

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®
1407. Since this action is said to be virtually identical
with the previous action commenced in the Northern District
of California there can be little doubt that it contains
questions of fact common to the other actions involved in
this multidistrict litigation nor can it be gainsaid that
such a transfer would greatly inconvenience this defendant.
We are convinced that transfer of this action to the Northern
District of California and its assignment to Judge Doyle will
promote the just and efficient conduct of this litigation.
The dismissal of the prior action against defendant foi lack
® of venue was without prejudice to the pending action. Whether
this action should be stayed pending resolution of the pending
appeal or whether the defendant should be required to partici-
pate in pretrial proceedings is a matter to be decided by the
transferee judge.
IT IS THFREFORE OUDLLED that the defendant's sotion
to vacate is denied and the stay of the May 8, 1270 condi-
tional transfer crder is hereby lifted. The ZTleik of the
Fanel is directed to transinit a certified copy of that order
to the Clerk of the Northern District of Zalifo:rnia for filing
® pursuant to 28 U.S.C, §1427(c).
-3-

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[ES————— } I a TTI	TT A IT Ta -— ——
JUDICIAL PANEL OW
Lo HULTIDISTRICT UITISATION FoTHE JUDICIAL PANEL FILED oo
ON HAY 1 Ea
MULTIDISTRICT LITIGATION HAY 12 187) w
PATRICIA	D. HOWARD in
CLERK OF THE PANEL g
IN RE KORATRON PATENT LITIGATION ) :
)
Koratron Company, Ine. v. W. Koury ) DOCKET NO. 20
Company, Ine., M.D. North Carolina, ) J
Civil Action No. C-147-G-70 ) 2OW)
OPINION AND ORDER EX
BEFORE ALFRED P. MURRAH, CHAIRMAN, AND JOHN MINOR WISDOM, Sy
EDWIN A. ROBSON, WILLIAM H. BECKER, JOSEPH S. LORD, III, EE
AND STANLEY A. WEIGEL, JUDGES OF THE PANEL
PER CURIAM Lo
In June of 1969, four actions involving Koratron's :
"permanent press" process for garments were transferred to the :
Northern District of California for assignment to Judge William =
E. Doyle. In re Koratron Litigation, 302 F. Supp. 239 (JPML
1969)... Those cases and the twelve related actions originally :
filed in the Northern District of California or transferred there :
under 28 U.S.C. §l404(a) all raised common fact questions involving
Koratron's use of its patents, trademark and licensing agreements
concerning the "permenent press" process. Koratron brought this Le
action against Koury, one of its many licensees, in July of 1970,
seeking recovery of royalties due under the licensing agreement
and damages for subsequent patent infringement.
Upon learning of the existence of this case, the .
Clerk of the Panel entered and served a conditional transfer

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o a.
order pursuant to Rule 12, of the Panel's Rules of Procedure.
Koury now moves to vacate that order and Koratron opposes
that motion. This matter was originally set for hearing on
February 26, 1971, but was vacated at the request of counsel
for Koury. Due to circumstances beyond his control, counsel
for Koury was also unable to attend the rescheduled hearing
on March 26, 1971. The Panel allowed counsel for Koratron
to present that party's position and gave counsel for Koury
a reasonable time thereafter to submit his reply to the
matters raised at the March hearing. On the basis of the
briefs and supplemental remarks of counsel, we deny the
motion to vacate and order the action transferred.
[ Koury admits that its action has many fact questions
in common with the actions previously deemed appropriate for
coordinated or consolidated pretrial proceedings, but it
opposes transfer because of asserted difficulties in "catching-
up" to already completed discovery in the actions before Judge
Doyle. Koury argues that substantial discovery has already
been completed in the transferee court and that it will be
both difficult and expensive for it to secure and analyze the
discovery materials already produced there. Even if this task
is accomplished, Koury complains that it will be handicapped by
the fact that it did not participate in that earlier discovery.
We are aware of the difficulties created by transfer
® of tag-along cases after discovery has begun in the transferee
court, but we are convinced that those difficulties are

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° L
outweighed by the benefits of centralized management of pre-
trial proceedings. Denial of transfer might eliminate Koury's
problem of participating in the discovery before Judge Doyle
but could result in the type of duplicative discovery which
our original transfer was intended to prevent.
Koury attempts to avoid this problem by alterna-
tively requesting a stay of its action "pending a trial upon
the merits of any or all of the presently consolidated
actions. . . ." This tactic is apparently designed to give
Koury the benefit of discovery in the cases before Judge Doyle,
without imposing on it any of the burdens carried by the parti-
cipants in those proceedings. Similar arguments have been
® uniformly rejected in the past because they do not eliminate
the threat of repetitive discovery. As we said in the Frost
Patent Litigation, 316 F. Supp. 977, 979 (JPML July 21, 1970),
"we believe that Section 1407 was intended to provide a pro-
cedure which would insure that repetitious and duplicative
discovery is avoided by providing that all related actions be
assigned to a single judge." And see In re Plumbing Fixtures
Litigation, 311 F. Supp. 349, 351 (JPML 1970); In re Gypsum
Wallboard Litigation, 303 F. Supp. 510, 511-12 (JPML 1969).
Koury's entry into this litigation will be con-
siderably eased by the fact that it is represented by patent
counsel who has represented another client before Judge Doyle
® from the beginning of pretrial proceedings. And the transferee

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® a
| court will, in any event, insure that all previous discovery
is made available to Koury and may also allow Koury, if
necessary, to supplement the discovery already completed.
In re Gypsum Wallboard, supra. We can find no support for
the contention advanced in Koury's supplemental papers that
the remand and trial of the transferred cases is imminent and
conclude that it is important to transfer this case immediately
so that Koury may be represented at the pretrial conference
presently scheduled for May 21, 1971.
IT IS THEREFORE ORDERED that Koury's motion to
vacate is denied and the stay of the September 28, 1970
conditional transfer order is hereby lifted. The Clerk of
® the Panel is directed to transmit a certified copy of that
order to the Clerk of the Northern District of California for
filing pursuant to 28 U.S.C. §1407(c).
)