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Ansell Healthcare Products LLC v. Tillotson Corp.

July 30, 2008

ANSELL HEALTHCARE PRODUCTS LLC, ET AL., COUNTERCLAIMANTS,
v.
TILLOTSON CORPORATION, COUNTERCLAIM DEFENDANT.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

The parties to this litigation are caught up in a massive struggle over the legitimacy of a patent covering an "elastomeric material" that is peculiarly suited to making surgical gloves that conform to the shape of a surgeon's hands but do not exert pressure that might numb the hands. Litigation is being pursued in federal courts in Georgia, Delaware, and the District of Columbia, as well as before the International Trade Commission ("ITC"). In this Court, Ansell Healthcare Products LLC and Ansell Protective Products, Inc. (collectively, "Ansell" or "Ansell Counterclaimants"), importers and sellers of surgical gloves, allege that a patent to the elastrometric material owned by Tillotson Corporation ("Tillotson") was obtained by fraudulent and inequitable conduct and is, therefore, invalid. Ansell has sought a declaratory judgment in Delaware that its gloves do not infringe on Tillotson's patent. Inasmuch as these parties are already joined in litigation concerning the legitimacy of the Tillotson patent, it is neither efficient nor economical to conduct a separate suit over the same issues in the District of Columbia. This case will be transferred to the United States District Court for the District of Delaware.

I. BACKGROUND

Tillotson was the owner of United States Patent No. 5,014,362 (the "'362 Patent") which was surrendered during reissue proceedings that led to U.S. Patent No. Re. 35,616 (the "Reissue '616 Patent"), also owned by Tillotson. The Reissue '616 Patent, filed on November 13, 1995 and published on September 30, 1997, is titled "Elastomeric Covering Material and Hand Glove Made Therewith." See Tillotson's Mot. to Dismiss for Improper Venue or in the Alternative to Transfer ("Tillotson Mem.") [Dkt. ## 6 & 8] at 1. According to the Amended Counterclaim Complaint ("Am. Compl.") [Dkt. # 5], Tillotson "has had a pattern of filing district court lawsuits in Georgia alleging infringement of the Reissue '616 Patent that are not designed to obtain an adjudication on the merits," but are used "to coerce the named defendants into agreeing to take licenses" to the Reissue '616 Patent to avoid the cost of litigation. See Am. Compl. ¶ 10. Tillotson has "directly asserted counterclaims of infringement of the Reissue '616 Patent in declaratory judgment actions initiated by Ansell counterclaimants in the United States District Court for the District of Delaware." Id. ¶ 11. Tillotson also alleges patent infringement by Ansell Counterclaimants in a pending action before the ITC, alleging infringement of the Reissue '616 Patent on the part of the Ansell Counterclaimants, their parent corporation, Ansell Ltd., their sister corporation, Ansell (Thailand) Ltd., their suppliers, and at least one customer. Id. ¶ 12.

Ansell alleges that Tillotson knows that the Reissue '616 Patent is invalid because its "claims were . . . impermissibly broader in scope" than those of the '362 Patent and the Reissue '616 Patent was "based on a defective reissue declaration"; in addition, the Reissue '616 Patent is "unenforceable by reason of Tillotson's fraudulent and inequitable conduct." Id. ¶ 13. The alleged fraudulent and inequitable conduct constituted a "knowingly false" and "highly material" misrepresentation to the United States Patent and Trademark Office (the "PTO") that Tillotson had been unaware of certain prior art when the '362 Patent was obtained. Id. ¶¶ 14(d) & (e). Had Tillotson revealed the prior art at the time it was prosecuting the '362 Patent, the PTO allegedly would not have allowed the patent in the form it was issued. Id. ¶ 14(j). Ansell further alleges that the PTO would not have allowed claim 23 of the Reissue '616 Patent had it known that Tillotson intentionally and knowingly relied upon unreliable test data. Id. ¶ 14(o). Tillotson's alleged conduct is claimed to constitute unfair competition which warrants an award of punitive damages. Id. ¶¶ 21 & 25.

A. Litigation in the Northern District of Georgia

Tillotson filed suit in the Northern District of Georgia on June 7, 2005, alleging infringement of the Reissue '616 Patent by certain gloves manufactured by Shiziahaung Hongray Plastic Products, Ltd. ("Hongray") and sold by Darby Dental Supply Co. ("Darby Dental") and Island Dental Co., Inc. ("Island Dental"). See Tillotson Mem., Ex. B (Second Am. Compl., Tillotson Corp. v. Shijazhaung Hongray Plastic Products, Ltd. et al., No. 4:05-118 (N.D. Ga. filed Nov. 8, 2005) ("Georgia Litigation")). Island Dental and Darby Dental filed a counterclaim for non-infringement and invalidity of the Reissue '616 Patent and filed a third-party cross-claim against Ansell. See Tillotson Mem., Exs. C & D. While Tillotson urges the Court to transfer this suit to Georgia for consolidation with the Georgia Litigation, Ansell informs the Court that the Georgia Litigation has been stayed pending resolution of the ITC investigation, pursuant to 28 U.S.C. § 1659. See Ansell Counterclaimant's Opp'n to Tillotson's Mot. to Dismiss for Improper Venue or in the Alternative to Transfer ("Ansell Opp'n") [Dkt. # 11] at 14.

B. Litigation in the District of Delaware

Ansell first filed suit against Tillotson in the District of Delaware on August 25, 2006, seeking a declaratory order that its products do not infringe the Reissue '616 Patent. See Tillotson's Reply in Supp. of Mot. to Dismiss for Improper Venue or in the Alternative to Transfer ("Tillotson Reply") [Dkt. # 12], Ex. K (Compl., Ansell Healthcare Products LLC v. Tillotson Corp. (D. Del. filed Aug. 25, 2006); Compl., Ansell Protective Products, Inc. v. Tillotson Corp. (D. Del. filed Feb. 20, 2007) ("Delaware Litigation")). In response to the August 2006 complaint, Tillotson accused Ansell Healthcare of infringing the Reissue '616 Patent with respect to certain gloves. The February 2007 lawsuit was filed because "[i]t is Ansell Protective Products rather than Ansell Healthcare . . . that sells these gloves." See Tillotson Reply, Ex. K ¶ 8. The current status of the Delaware Litigation is not revealed by the parties.

C. Litigation in the ITC

On May 30, 2007, Tillotson filed a Section 337 Complaint*fn1 with the ITC, requesting an investigation into the alleged unlawful sale and importation into the United States of nitrile gloves that utilize the invention claimed in Tillotson's Reissue '616 Patent. See In the Matter of Certain Nitrile Gloves, U.S. Int'l Trade Comm'n Inv. No. 337-TA-608, Fed. Reg. 37052 (July 6, 2007). The ITC action named Ansell's parent company, Ansell Ltd., a respondent in the investigation. Id. On September 6, 2007, Tillotson moved to amend its original complaint to include several additional respondents, including Ansell. See Order 21, In the Matter of Certain Nitrile Gloves, U.S. Int'l Trade Comm'n Inv. No. 337-TA-608. The ITC granted that motion on September 20, 2007. See 72 Fed. Reg. 58884 (Oct. 17, 2007). Trial on the ITC investigation took place in May 2008. Ansell filed the instant Counterclaim with the ITC on April 4, 2008, and a day later removed it to this Court. See 19 U.S.C. § 1337(c); 19 C.F.R. § 210.14(e) (allowing removal of timely counterclaims to U.S. District Court with appropriate venue). On April 24, 2008, Tillotson filed a Motion for a More Definite Statement [Dkt. # 3], in response to which Ansell filed an Amended Counterclaim on April 28, 2008 [Dkt. # 5]. Tillotson's Motion to Dismiss for Improper Venue or in the Alternative to Transfer [Dkt. ## 6 & 8] was filed on May 15, 2008, and is now fully briefed.

II. DISCUSSION

Tillotson challenges venue in this Court and, alternatively, asks the Court to transfer this matter to Georgia or Delaware. The Court believes it would be wholly inappropriate to transfer this case to Georgia, and thereby rob Ansell of its statutory right to litigate its Counterclaim in federal court, because defendants in the Georgia Litigation (of which Ansell is not one) have elected to stay that case pending the ITC disposition. Ansell, however, controls its own complaints in the Delaware Litigation, and offers no reason why the instant Counterclaim could not, and should not, be joined before a single court. According to Tillotson, the Delaware Litigation arises from the same nucleus of facts, involves the same witnesses, and would use the same documents or sources of proof. See Tillotson Reply at 7. The Court will therefore transfer this case to the District of Delaware.

The purpose of 28 U.S.C. § 1404(a) is "to prevent the waste of 'time, energy and money' and 'to protect the litigants, witnesses and the public against unnecessary inconvenience and expense.'" See Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (citation omitted). "Transfer under section 1404(a) involves a multi-part analysis: first, the court must determine that venue is proper in the transferor district; next, it must ensure both jurisdiction and venue will lie in the proposed transferee district; and finally, it must weigh several private and public interest factors to determine whether transfer would, indeed, be 'in the interest of justice.'" See Elemary v. Holzmann, 533 F. Supp. 2d 144, 149 (D.D.C. 2008). "The ...


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