IN RE: Deering Milliken Patent Litigation

: Case MDL No. 388 Document 2 Filed 05/19/15 Page 1 of 9
“- Th! i .- emit AL ean uit :
BEFORE THE JUDICIAL BANELT\GGANCH |‘ON PANTS Ey
MULTIDISTRICT LITIGATION 255 |	. 319 77, .
ge 12 BE IN
IN RE DEERING MILLIKEN ) DOCKET	NO NEB : |
PATENT LITIGATION ) pallor THE VeCLERK Ut
OPINION AND ORDER
BEFORE MURRAY I. GURFEIN, CHAIRMAN, AND EDWIN A. ROBSON, | |STANLEY A. WEIGEL, ANDREW A. CAFFREY, ROY W. HARPER, AND i
CHARLES R. WEINER, JUDGES OF THE PANEL. |
PER CURIAM
This litigation consists of two actions, one pending
in the District of South Carolina and the other pending
in the Middle District of North Carolina. Both actions |
involve allegations of invalidity and infringement of certain : oo
patents, patent misuse and antitrust violations. .
The South Carolina action actually consists of 37
different actions which were consolidated for trial by co
the South Carolina court.’ The South Carolina action :
involves, on the one hand, numerous companies, or divisions
of companies (the "throwsters"), that process synthetic
filament yarns in order to make the yarns suitable for
a wide variety of end uses, and, on the other hand, Deering } :
Milliken, Inc. (DMI), Deering Milliken Research Corp. (DMRC),
1/ The Panel originally considered in 1970 the question
of transfer under 28 U.S.C. §1407 concerning the actions
that have been consolidated in South Carolina. The Panel
at that time declined to order Section 1407 transfer because
it appeared likely that numerous motions under 28 U.S.C.
§1404(a) to transfer the non-South Carolina actions to
the District of South Carolina would be granted. In re .
| Deering Milliken Patent Litigation, 328 F. Supp. 504, 505-06
(J.P.M.L. 1970). Those motions were in fact granted, and
the Panel was not further involved with the actions until
now.
| i : :
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Case MDL No. 388 Document 2 Filed 05/19/15 Page 20f9 -
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1 Moulinage et Retorderie de €havanoz (Chavanoz), Ateliers
2 Ronnais de Construction Textiles (ARCT-France) and ARCT,
3 Inc. (the defendants?’ ). In the South Carolina action, |4 the defendants charged the throwsters with, inter alia,
5 infringing several patents dealing with various aspects
of synthetic yarn texturing. The throwsters, each of which |
6
allegedly was a licensee of one or more of these patents, |!	
7
claimed that the patents were invalid, misused and unen- |
8 forceable, and also sought relief under the federal antitrust |
9 laws.’ |
0 After very extensive discovery and other pretrial | |
1 proceedings, the South Carolina action went to a non-jury | Co
5 trial on only the liability issues in June, 1976. The
trial was concluded after 91 trial days, and thereafter
3 SL
; :
1 | Co
2/ Although these parties are actually the plaintiffs in |
3 some of the 37 actions that have been consolidated in the i :
District of South Carolina, these parties have been designate
; as "defendants" in the South Carolina action. Duplan Corp.
v. Deering Milliken Inc., 444 F. Supp. 648, 658 (D.S.C. !
1977).
7 i|
3/ The district court in South Carolina characterized the i
3 throwsters' antitrust claims as follows: ~
| .
!
) The antitrust claims fall into two categories: {
(a) the claim of a vertical conspiracy between the |
named defendants arising out of [certain] license
and sub-license agreements and the manner in which
the business of the defendants was conducted, and
(b) a claim of horizontal conspiracy between the named |
defendants and Leesona [Corp., which is a manufacturer |	and seller of textile machinery and which licensed
patents and technology relating to the yarn processing | :
techniques involved in the South Carolina action, ] | :	arising out of agreements entered into in 1964 which
settled certain patent litigation then pending between
Leesona and the defendants.
Id. at 660. |
== i .
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1 the South Carolina district court held as follows: (1)
0. the throwsters had established their claim of a horizontal
3 conspiracy in violation of Sections 1 and 2 of the Sherman
4 Act among Chavanoz, DMRC, DMI and Leesona; 2%’ (2) the throwsters'
claims against ARCT-France and ARCT, Inc. for damages as
5
a result of those two defendants' alleged violation of
6
the antitrust laws were to be dismissed on the merits;
7 (3) the licensing program and attendant conduct of Chavanoz,
8 DMRC and DMI constituted a misuse of the patents involved
9 in this litigation and all those patents were therefore
10 unenforceable; (4) each of the patents involved in the
11 South Carolina action was either invalid or had not been
infringed by the throwsters; and (5) all claims by any
12
defendant against the throwsters for patent infringement
3
C and unpaid royalties were to be dismissed on the merits.
14 Duplan Corp. v. Deering Milliken, Inc., 444 F. Supp. 648
15 (D.S.C. 1977).
16 On March 26, 1979, the Court of Appeals for the Fourth
17 Circuit affirmed the South Carolina district court's rulings
18 with only one exception. The Court of Appeals found that
19 defendants ARCT-France and ARCT, Inc. had participated
in the horizontal conspiracy alleged by the throwsters,
20
and that the throwsters had therefore established the liability
21 of those two defendants on the throwsters' antitrust claims.
22
4/ The court found that the 1964 settlement agreement between
23 Leesona and the defendants "amounted in effect to the cross-
| licensing of the Chavanoz and Leesona patents by the two4 patent owners who effectively dominated the false twist
[texturing] industry, and this gave them the power to fix
| and maintain prices in the form of royalties which they
5 I consistently exercised thereafter.” Id. at 686 (footnote
omitted). |H
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1 Duplan Corp. v. Deering Milliken, Inc., 594 F.2d 979 (4th
2 Cir. 1979), rehearing and rehearing en banc denied,
3 May 29, 1979.3
4 The North Carolina action before the Panel was commenced
5 in September, 1976, by DMRC and Chavanoz against J.P. Stevens
6 & Co., Inc. (Stevens). DMRC and Chavanoz allege that Stevens
infringed five patents, each of which has now been held
7
invalid and unenforceable in the South Carolina action.
8
Stevens filed two counterclaims. One alleges patent in-
3 validity, non-infringement and patent misuse. The other
10 alleges that Stevens has been injured by the same horizontal
11 antitrust conspiracy involved in the South Carolina action.®’
12 Stevens joined ARCT-France, ARCT, Inc. and DMI as additional
13 defendants on the second counterclaim.
No discovery has yet been taken in the North Carolina
14
action. The North Carolina action was initially stayed
15
pending the outcome of the liability trial of the South
16 Carolina action, and the North Carolina action was again
17 stayed pending a final decision by the Court of Appeals
18 on the appeal in the South Carolina action.
19
20 -
5/ DMRC and Chavanoz represented at oral argument before
21 the Panel that certain parties intend to file a petition
for a writ of certiorari before the United States Supreme
Court.
22
6/ Stevens was not a licensee under any of the patents
23 involved in the South Carolina action. According to Stevens’
counterclaim, however, Stevens was a licensee of Leesona.
24 In order to purchase false twist texturing machines from
Leesona, Stevens states, it was required to sign a "use
55 license agreement" with Leesona and to pay royalties thereunderto Leesona. :
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® Stevens has moved the Panel, pursuant to 28 U.S.C.	2 §1407, to transfer the North Carolina action to the District
3 of South Carolina for coordinated or consolidated pretrial
a - proceedings with the action pending there. DMRC, ARCT-France,
5 ARCT, Inc., Chavanoz and plaintiffs in the South Carolina
action oppose this motion.
© We find that, although these actions may still involve
’ some common questions of fact, transfer under Section 1407
8 would not necessarily serve the convenience of the parties
9 and witnesses or promote the just and efficient conduct
10 of the litigation. Accordingly, we deny the motion to
11 transfer.
12 Stevens argues that the North Carolina action and
C2 the South Carolina action share a multitude of factual	| questions concerning, inter alia, the following matters:
14 | (1) whether the five patents which are common to both actions
15 are invalid and unenforceable; (2) whether the defendants |
16 | in the South Carolina action and Leesona conspired in violation
17 | of the federal antitrust laws concerning those patents;
18 | and (3) the nature of damages suffered by Stevens and by
19 the throwsters involved in the South Carolina action. |
20 | Stevens recognizes that many of these common questions |of fact have already been resolved in the South Carolina
21 action, and Stevens states that it intends to rely on the
22 ! doctrine of collateral estoppel not only to invalidate
23 ! the patents asserted against it, but also to establish
C | the liability of the defendants to Stevens for the antitrust |25 | violations alleged in Stevens' counterclaim. Stevens states|
| |
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1 that it will rely upon the Supreme Court's decisions in
2 Blonder-Tongue Laboratories, Inc. v. University of Illinois
3 Foundation, 402 U.S. 313 (1971), and Parklane Hosiery Co.
4 v. Shore, ~~ U.S. , 58 L.Ed. 2d 552 (1979), in arguing
5 for the application of the doctrine of collateral estoppel
in the North Carolina action. Stevens emphasizes that
© both Blonder-Tongue and Parklane state that the application
7 of collateral estoppel is a matter for the trial court's
8 discretion, based on fairness to the parties. Stevens
9 maintains that the South Carolina judge, who presided over
10 both extensive pretrial proceedings and a very lengthy
11 : trial, is clearly the judge most familiar with this litigation
10 and is therefore in the best position quickly and efficiently
to resolve the claims raised in the North Carolina action.
13 Thus, Stevens argues, Section 1407 transfer is necessary
14 in order to eliminate the possibility of inconsistent pretrial
15 rulings, prevent any duplicative discovery, and conserve
16 the time of the parties, the witnesses and the judiciary.
17 The opponents of transfer, on the other hand, emphasize
18 that the South Carolina action is ten years old and is
19 very far advanced. Opponents concede that the doctrine
of collateral estoppel will likely dispose of the patent
2° validity and enforceability issues in the North Carolina
21 action once the appellate process runs its course in the
22 South Carolina action. But these parties maintain that
23 the applicability of that doctrine to the antitrust issues
24 | in the North Carolina action will be hotly disputed by
25 | the parties because of Stevens' status as a non-licensee ®	| |
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1 of the patents involved in the South Carolina action.
@ Opponents further argue that statute of limitations issues
3 are present regarding Stevens' antitrust counterclaim.
These issues are not present in the South Carolina action,
‘ opponents contend, and that action would bre unfairly delayed
> by transfer of the North Carolina action under Section
6 1407 at this late stage of the proceedings in the South
7 Carolina action.
8 We find movant's arguments unpersuasive. Most, if
9 not all, of the common questions of fact between the two
10 actions before us arise from the liability issues in each
11 action. All pretrial proceedings, as well as a trial,
on the liability issues in the South Carclina action have
12 long since been completed. Furthermore, the views of the
@: district judge in the South Carolina action, and those
14 of the Court of Appeals, on those issues are well documented.
15 Duplan Corp. v. Deering Milliken Inc., supra, 444 F. Supp.
16 648, aff'd in part and rev'd in part, 594 F.2d 979. As
17 a result, from the standpoint of familiarity, the judge
18 in the North Carolina action will be close to the shoes
of the South Carolina judge. Also, interjection of the
19 North Carolina action into the extremely advanced proceedings
20 in the South Carolina action could delay the completion
21 of those proceedings. Under these circumstances, we conclude
22 that the purposes of centralizing pretrial proceedings
23 under Section 1407 can best be achieved by leaving each
4 action alone. See In re Western Electric Co., Inc. Semi- |
® conductor Patent Litigation, 436 F. Supp. 404, 406 (J.P.M.L. |1977). |i

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1 We note that at oral argument before the Panel counsel
2 for DMRC and Chavanoz and counsel for Stevens stated that
3 all discovery heretofore completed in the South Carolina
4 action and relevant to the North Carolina action may be
5 used in that action. Transcript at 99 and 106.
. IT IS THEREFORE ORDERED that the motion, pursuant
to 28 U.S.C. §1407, to centralize the actions listed on
’ the following Schedule A for coordinated or consolidated
8 pretrial proceedings be, and the same hereby is, DENIED.
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@- SCHEDULE A
3
MDL-388 —-- IN RE DEERING MILLIKEN PATENT LITIGATION
4 _—
5 DISTRICT OF SOUTH CAROLINA
6
Duplan Corp., et al. v. Deering Civil Action
. Milliken, Inc., et al. No. 71-306
8 MIDDLE DISTRICT OF NORTH CAROLINA
9 Deering Milliken Research Corp., et al. Civil Action
v. J.P. Stevens & Co., Inc. No. C-76-492-G
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