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RPA International Pty Ltd. v. Compact International

July 14, 2009

RPA INTERNATIONAL PTY LTD., D/B/A NUFURN PTY LTD.; NUFURN, INC.; AND DENNIS MICHAEL KRAWCHUK, AN INDIVIDUAL, PLAINTIFFS,
v.
COMPACT INTERNATIONAL, INC.; LEE JOHNSON, AN INDIVIDUAL; PRE SALES, INC.; ERIC SEGAL, AN INDIVIDUAL; BZ GLOBAL SDN. BHD.; BZ GLOBAL (H.K.) LIMITED; CHEE CHOON CHEAH, AN INDIVIDUAL; AND KOK CHEONG SOO, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge

ORDER

The matter before the Court is the Renewed Motion for Summary Judgment (Doc. # 143).

Background

On May 26, 2006, Plaintiffs initiated this action by filing the Complaint (Doc. # 1). The Complaint alleges that Plaintiff Dennis Michael Krawchuck owns Plaintiff RPA International Pty Ltd. and Plaintiff Nufurn, Inc. (collectively referred to as "Plaintiffs"). The Complaint alleges that Krawchuck is the owner of U.S. Patent No. 6,969, 113 (the "113 patent"), entitled "Folding Chair with Metal Inserts," which was issued to Krawchuck on November 29, 2005. Complaint, ¶ 4. The Complaint alleges that the '113 patent is the source of a resin folding chair invented by Krawchuck (the "Gladiator chair"). The Complaint alleges that Defendant Kok Cheong Soo is a director of Defendant BZ Global Sdn. Bhd, and BZ Global (H.K.) Limited (collectively referred to as the "BZ Defendants"). Count III of the Complaint alleges that the BZ Defendants infringed the '113 patent. Specifically, Count III alleges that the BZ Defendants: (1) "have been, and are, willfully infringing the '113 Patent by knowingly and purposefully importing, using, offering to sell, and/or selling infringing chairs within the United States; by inducing others in the United States to infringe the '113 Patent; and/or by contributing to the infringement by others in the United States of the '113 Patent;" (2) "knowingly and purposefully imported; caused, induced and/or contributed to the importation, use, offer to sell and sale of; used; and/or sold infringing chairs in the United States with the supply of infringing chairs to the Compact Defendants, the PRE Defendants, and others in the United States;" and (3) "have injured Plaintiffs and unless enjoined by the Court, the [BZ] Defendants will continue willfully to infringe, to induce the infringement of, and/or contributorily to infringe the '113 Patent." Complaint, ¶¶ 51-53. The Complaint requests the following relief: (1) judgment that '113 patent is infringed by Defendants; (2) a preliminary and permanent injunction enjoining Defendants from infringing, inducing infringement of, or contributorily infringing the '113 patent; (3) an award of Plaintiffs' lost profits and other damages, not less than a reasonable royalty, for Defendants' infringement of the '113 patent; (4) judgment that Plaintiff is entitled to treble damages in accordance with 35 U.S.C. section 284; and (5) judgment that Plaintiffs is entitled to attorneys' fees, costs and expenses in accordance with 35 U.S.C. section 285.

On May 25, 2007, Defendants PRE Sales, Inc. and Segal were dismissed from the action (Doc. # 72).

On May 31, 2007, Defendant Soo filed an Answer, Affirmative Defenses and Counterclaims (the "Counterclaim") (Doc. # 74). Soo alleges the following affirmative defenses to the infringement claim alleged in Count III of the Complaint: (1) Plaintiffs RPA International Pty Ltd. and Nufurn have no standing; (2) the '113 patent is invalid for failure to comply with the requirements of 35 U.S.C. section 101, et seq.; (3) the relief sought is barred by the doctrines of unclean hands and patent misuse; (4) Defendants are authorized to use the technology of the '113 patent by at least one equitable owner of that patent; (5) Defendants have not infringed the '113 patent; (6) an award of damages in excess of a reasonable royalty is unavailable because the owner of the '113 patent has not lost profits or suffered other damages; and (7) the '113 patent is unenforceable by reason of the commission of inequitable conduct in the prosecution thereof.

The Counterclaim alleges that Soo used to work as a designer at Mah Sing Plastic Industries Sdn. Bhd. of Malaysia ("Mah Sing"). The Counterclaim alleges that, at that time, RPA worked with Mah Sing to develop a plastic chair, the ACE1, that had an appearance generally like a wooden chair. The Counterclaim alleges that Soo left Mah Sing in 2002, and that RPA thereafter approached Soo regarding the development of a mold for a new plastic table design, and a new chair that would be an alternative to the ACE1. The Counterclaim alleges that Soo indicated to RPA that he thought he could come up with a design that used a different type of plastic than used in the ACE1, and that the parties reached an agreement whereby Soo would receive five percent of the sales price of the new chair designs and an additional ten percent of the sale price of the chairs if Soo was the source of the sales. The Counterclaim alleges that Soo developed a new chair design that resulted in the Gladiator chair, and that RPA sought his assistance in preparing original and supplemental patent applications. The Counterclaim alleges that RPA "repeatedly emphasized the mutual benefit of Mr. Soo designing the [Gladiator] chair and assisting RPA in obtaining patent protection on the [Gladiator] chair." Counterclaim, ¶ 23. The Counterclaim alleges that "[t]hroughout the process of seeking to obtain patent protection on the [Gladiator chair] design, [] Mr. Soo assisted in those efforts with the understanding that, as the actual inventor and designer of the [Gladiator] chair, he would be listed as inventor." Id., ¶ 24. The Counterclaim alleges that RPA did not list Soo as an inventor on any of the three patent applications filed regarding the Gladiator chair; that RPA failed to disclose that Soo would not be listed as an inventor; and that Krawchuck listed himself as the sole inventor of the Gladiator chair, even though he was not the inventor. The Counterclaim alleges that RPA failed to make payments to Soo in connection with the Gladiator chair pursuant to the parties' agreement.

The Counterclaim alleges the following claims for relief: (1) correction of inventorship, which seeks a declaration that Soo and/or Cheah are the inventors of the '113 patent pursuant to 35 U.S.C. section 256; (2) declaration and transfer of ownership, which seeks a declaration that Soo and/or Cheah are the owners of the '113 patent; (3) declaration that the '113 patent is invalid pursuant to 35 U.S.C. section 101, et seq., on grounds that the omission of Soo and Cheah as inventors was done with deceptive intent; (4) declaration of unenforceability, on grounds that Krawchuck deceived the Patent and Trademark Office by omitting to reference Soo and Cheah's roles as inventors; (5) infringement of the '113 patent on grounds that RPA and Krawchuck have unlawfully offered for sale, sold, manufactured and used the '113 patent; (6) breach of contract on grounds that RPA failed to pay Soo five percent of the price of tables and chairs purchased by RPA and an additional ten percent of the price of sales if Soo was the source of the sales pursuant to the parties' agreement; (7) unjust enrichment on grounds that Soo and/or Cheah conferred a substantial benefit on Krawchuck by creating the Gladiator chair, and that it is unjust for Plaintiffs to retain this benefit without conferring any benefit upon Soo or Cheah; (8) quantum meruit/ misappropriation of ideas/ breach of implied contract on grounds that Plaintiffs misappropriated the ideas of Soo and Cheah, and profited therefrom; (9) federal unfair competition on grounds that Plaintiffs made misrepresentations with respect to the '113 patent which violate the Lanham Act, 15 U.S.C. section 1125; (10) unfair competition/ false advertising in violation of sections 17200 and 17500 of the California Business and Professions Code; and (11) interference with contract and actual and/or prospective economic advantage on grounds that Plaintiffs/Counterclaim Defendants are aware of their business and economic and contractual relationships with Defendants/ Counterclaim Plaintiffs, and "have charged one or more of the Counterclaim Plaintiffs and their customers with infringing the Mr. Krawchuck patent, knowing that such patent is invalid, unenforceable, non-infringed, and in fact rightfully owned by Soo and/or Mr. Cheah as the true inventor." Id., ¶¶ 98-99.

On October 19, 2007, default was entered as to Defendants Compact Intl Inc., BZ Global Sdn Bhd, and BZ Global HK Limited (Doc. # 99). On January 31, 2008, default was entered as to Defendants Johnson and Cheah (Doc. # 110). On January 31, 2008, the Court held that default judgment against Defendants Compact Intl Inc., BZ Global Sdn Bhd, BZ Global HK Limited, Johnson and Cheah was not proper "at this stage of the proceedings because there are claims proceeding against Defendant Kok Cheong Soo." Id. at 6.

On July 28, 2008, Soo, the only remaining and active Defendant in this case, filed a motion for summary judgment (Doc. # 112). The motion for summary judgment stated in full:

Defendant's Answer, Affirmative Defenses and Counterclaims were filed on September 13, 2006 and subsequently on May 31, 2007 the Amended Answer, Affirmative Defenses and Counterclaims were filed.

Defendant has been hurt by this action of Plaintiffs and respectfully moves this Court for summary judgment on all Counterclaims against Plaintiffs.

Soo's Nov. 3 Mot. for Summary Judgment, p. 1-2. On November 3, 2008, the Court issued an order denying the motion for summary judgment (Doc. # 118). The Court found that, other than the vague assertion that "Defendant has been hurt," the motion for summary judgment did not identify any basis in fact or in law, undisputed or otherwise, which would justify granting summary judgment. Mot. for Summary Judgment, p. 2. The Court concluded that Soo has failed to satisfy his initial burden of establishing the absence of a genuine issue of material fact as required by Rule 56 of the Federal Rules of Civil Procedure.

On April 27, 2009, Plaintiffs filed the Renewed Motion for Summary Judgment, pursuant to Rule 56(a) of the Federal Rules of Civil Procedure. Plaintiffs contend that "[t]here are no material issues of disputed fact concerning Soo and the BZ companies' infringement of the '113 patent" such that Plaintiffs are entitled to summary judgment against Soo on Count III of the Complaint. Mot. for Summary Judgment, p. 8. Plaintiffs contend that Soo's affirmative defenses to Count III in the Complaint are without merit. Plaintiffs contend that Soo cannot satisfy one or more of the necessary elements with respect to his counterclaims, and requests that the Court dismiss all of Soo's counterclaims alleged in the Counterclaim. In the alternative, Plaintiffs request that judgment be entered in favor of Nufurn on all matters ...


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