Appeal from a partial summary judgment entered pursuant to Rule 54(b) Fed.R. Civ.P. by the United States District Court for the Central District of California (Pfaelzer, J.) and ordering dismissal as untimely certain antitrust claims appearing in a Second Supplemental and Amended Complaint filed by Korody-Colyer Corporation (Korody) against General Motors Corporation (GM). We affirm.
BACKGROUND
In January 1980, Korody sued GM, seeking a judgment declaring GM’s U.S. Patent No. 3,555,972 invalid. GM counterclaimed for infringement of that patent. In January 1982, Korody answered the counterclaim, allеging inter alia that GM’s charge of infringement was made in bad faith to hamper competition, that the patent was obtained by fraud, that GM knew there was no basis for a valid patent when it filed its application, and that GM knowingly failed to disclose extensive pertinent prior art to the PTO. At the same time, Korody added an antitrust claim alleging an illegal tie-in and demanding á jury trial on that claim. In July 1982, the district court entered a stipulated order staying proceedings on the antitrust claim pending completion of a bench trial of the patеnt validity issue. Proceedings on GM’s infringement counterclaim were also stayed.
On August 10, 1984, Judge Pfaelzer held GM’s patent invalid as fraudulently obtained and for obviousness under 35 U.S.C. § 103.
Korody-Colyer Corp. v. General Motors Corp.,
In June 1986, Korody filed the Second Supplemental and Amended Complaint at issue here. That complaint contained an added claim that GM had violated the antitrust laws by enforcing a knowingly invalid patent fraudulently obtained, a claim designated by all concerned as a “Walker Process” claim. 1
On December 3, 1986, after a hearing, Judge Pfaelzer filed clear, succinct, and complete findings and conclusions and entered her summary judgment of the same date, holding that Korody’s “Walker Process” claim was barred by the four-year
ISSUE
Whether the district court erred in dismissing Korody’s Second Supplemental and Amended Complaint as barred by the statute of limitations.
OPINION
JURISDICTION
In
USM Corp. v. SPS Technologies, Inc.,
KORODY’S ARGUMENTS
It is undisputed that, absent tolling, Korody’s Second Supplemental and Amended Complaint (amendment) is barred. Making initially no reference to what the district court did, Korody simply repeats before us the four reasons for tolling rejected by the district court: (1) The July 1982 stay worked an equitable estoppel; (2) The June 1986 amendment related back to the earlier antitrust complaint; (3) GM fraudulently concealed certain evidence; (4) GM’s antitrust violation was continuing. None of those arguments has merit.
(1) Equitable Estoffel
[1] Korody at no point suggested to the district court or to this Court any basis whatever for failure to amend its complaint because of the stay. It admits that its antitrust counsel “withdrew” when the stay was entered, to return to the fray only after the trial and appeal were completed in the patent validity case. It states the obvious, i.e., that the parties “understood” that the stipulated order “stayed the antitrust claim”, and implies that it was thereby precluded or excused from amending its antitrust claim. The argument slides over what was stayed, i.e., discovery on Korody’s tie-in claim, the only antitrust claim then extant. 2 Korody’s argument also disingenuously disregards Judge Pfaelzer’s clear explanation at the hearing:
THE COURT: I never — just so that you can add to your argument — the Court never kept them from amending any pleading on any ground whatsoever.
[COUNSEL FOR GM]: Absolutely not.
THE COURT: I don’t have any order in that file that said that.
It also disregards this in the district court’s finding 11 and conclusion 7:
11. At no time did the Court’s order рreclude Korody from amending or seeking to amend its antitrust complaint.
7. The statute of limitations was not equitably tolled under the Court’s July21, 1982 Order, because that Order did not preclude amendment of the Complaint to add Walker Process claims.
It also disregards this colloquoy at the hearing:
[COUNSEL FOR KORODY]: Yes, your Honor. While this Court was working on that [the related patent validity case] the antitrust attorneys were out of the court, in fact.
THE COURT: They were only out of the Court in the sense that we delayed the trial of the tie-in case. Nobody ever told anybody on Korody-Colyer’s side that they could not amend the pleadings.
[COUNSEL FOR KORODY]: Indeed.
THE COURT: Never.
[COUNSEL FOR KORODY]: I agree____
THE COURT: If you want a Walker Process claim you have to plead it.
Korody’s reply brief offers an after-the-fact interpretation of its counsel’s acknowledgement, saying the parties’ “understanding” was not limited to the language of the order (which literally stayed only discovery). Yet Korody points to absolutely no evidence indicating any “understanding” of GM that Korody was precluded from adding its “Walker Process” claim to its pleadings. Nowhere does Korody explain its failure even to seek leave of court to аmend. Korody also unfairly accuses Judge Pfaelzer of making a post hoc interpretation of the stay when she said the order stayed “only the antitrust action that was there.” Nowhere does Korody explain how a claim that had not been made could have been stayed.
Korody’s reliance on
Mt. Hood Stages, Inc. v. Greyhound Corp.,
On the entire record, it is clear that, from the time the stay order issued, Korody simply forgot about its antitrust action. Neither before nor after the stay did Korody indicate (until June 1986) any intent to present a “Walker Process” antitrust claim. It cannot now seize upon the stay as basis for excusing its slumber and its failure to amend its pleadings for more than four years.
(2) Relation Back
Korody says its amendment asserting a “Walker Process” claim relates back to its original complaint asserting a tie-in. A mere comparison of the two complaints totally undermines Korody’s position.
Under Rule 15(c), Fed.R.Civ.P. an amendment may relate back when the earlier complaint gave adequate notice of the new claim.
Besig v. Dolphin Boating & Swimming Club,
Korody offers two disingenuous arguments in support of its “relation back” position: its original complaint included the catchall and meaningless phrase, “among other things”; and its amendment is merely a “more detailed” statement of its original complaint. The first would undermine
Korody builds at most a colorable argument around its citation of
Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, Inc.,
Korody’s assertion that its original complaint put GM on notice that Korody was asserting both tying and enforcement-of-a-fraudulently-obtained-patent claims came as a surprise not only to GM, but to the district court, who said:
Remember this is a case I have been working on for a long, long time and it would never have occurred to me that there is [in the original complaint] an antitrust violation based on the way they use the patent.
Korody’s decision to press its unsupportable “relation back” arguments on appeal come as an equal surprise to us, particularly in view of Judge Pfaelzer’s conclusion 6:
6. Korody’s amended Walker Process claims do not relate back under Rule 15(c) of the Federal Rules of Civil Procedure because these amendments state a wholly new cause of action based on entirely different events and seek damages completely different from those originally sоught.
(3) Concealment
Korody says GM concealed until 1983 the “(Jutland Document”, a report of GM’s patent counsel listing five patents and calling them “the closest prior art”. Until it had seen that document, says Korody, it had no basis for amending its complaint to allege a “Walker Process” claim. The argument is fallacious.
First, in 1980, Korody received from GM a number of prior patents and established in the patent trial that GM failed to disclose material prior art patents totalling nine in number. In a conclusion 5, simply ignored by Korody, the district court correctly concluded that Korody had all it needed for its July 1986 amendment in January 1982. That conclusion is confirmed in Korody’s January 1982 answer to GM’s counterclaim for infringement, which contained these allegations:
16. On information and belief, the charge of infringement directed against Plaintiff was not made in good faith but for the purpose of hampering legitimate business competition.
* * * * * *
18. On information and belief, Plaintiff alleges that the patent in suit was obtained by committing fraud upon the United States Patent Office, that, before the application for patent was filed, Defendant made its own search and evaluated the results thereof and concluded that there was no basis for a valid patent, but nevertheless, thereafter proceеded to file the application which resulted in the patent in suit. Defendant, its patent attorneys, and the applicant for the patent in suit, failed to disclose to the Patent Office extensive prior art references of which they had knowledge, and which were pertinent to the subject matter being claimed in the application, even thoughthe disclosure of such information was required by Patent Office rule as well as by case decisional law of the United States Supreme Court. [Emphasis added.]
The foregoing allegations in Korody’s January 1982 аnswer were in substance identical to its 1986 assertion of its “Walker Process” claim, which reads:
(b) the acquisition, through the knowing and active commission of fraud, of the United States and foreign patents on the aforesaid crosshead piston, including U.S. Letters Patent No. 3,555,972 to Hulsing (“Hulsing patent”), which defendant knew was invalid and unenforceable;
(c) the threatened and attempted enforcement and enforcement, in bad faith, of its fraudulently-obtained, invalid and unenforceable patents against competitors in the relevаnt market and submarket, including plaintiff and plaintiff’s suppliers.
Indeed, Korody’s 1982 allegations are
closer
than are its 1986 assertions to the language appearing in
Walker Process,
Second, Korody’s argument that its January 1982 allegations were based on “information and belief”, and that it could not then have asserted a “Walker Process” complaint without violating Rule 11, comes with particularly poor grace. Korody’s answer to GM’s counterclaim is of the boiler plate variety, containing twenty “information and belief” allegations, most of which never saw the light of day at trial. Within one such allegation, Korody asserted twelve different bases on which it is possible to hold a patent invalid. The answer also included Korody’s antitrust tie-in allegations as an affirmative defense of misuse. Korody’s effort to demean its allegations as based on “information and belief” is accompanied by no citation of authority that would countenance blind assertions not based on information, and its present concern for Rule 11 is at best belated.
Third, Korody’s argument thаt without the Outland Document it could not have asserted intentional, willful concealment of pertinent prior art is specious. Korody’s answer made just that allegation, albeit in different words (“[GM] made its own search and evaluated the results thereof and concluded that there was no basis for a valid patent.”).
A “Walker Process” claim involves a patentee’s enforcement of a patent the patentee knows is invalid. If the Outland Document might have constituted additional evidence of knowledge and intent, or made proof at trial easier, that would not be controlling. The evidence Korody had in 1980, and its January 1982 fraud allegations (GM’s bad faith enforcement to injure competition, GM’s knowledge of unpatentability before it filed its application, and GM’s failure to disclose known pertinent prior art), coupled with the monopoly and market allegations in its then-filed antitrust complaint, obviously encompassed all that was needed to found a “Walker Process” claim.
3
Korody points to
Kimberly-Clark Corp. v. Johnson & Johnson,
In
Argus Chemical Corp. v. Fibre Glass-Evercoat Co., Inc.,
Lastly, Korody vigorously argues that summary judgment was improper because the district court resolved a genuine issue of material fact when it found that GM had disclosed documents relating to the closest prior art, including the Outland Document, in 1980. That the parties dispute the date on which the Outland Document was disclosed, and the district court in colloquy referred to that document as “crucial”, does not make the issue one of genuine material fact.
See Matsushita Electric Industrial Co. v. Zenith Radio Corp.,
(4) Continuing Violation
Because GM’s antitrust violation was “continuing”, says Korody, damages should be awarded for the period July 1982-JuIy 1986.
Korody argues that GM’s threats against its supplier Riken in 1983 was a violation. That issue was not raised before the district court. It is, therefore, improperly presented and cannot be considered here. 4 Korody then argues that GM’s defense of its patent through the trial and appeal of Korody’s declaratory judgment suit constituted a continuing violation. 5
The Ninth Circuit, whose antitrust rulings are followed by this court in appeals from judgments of district courts of that circuit,
see Loctite Corp. v. Ultraseal Ltd.,
T%e initiation of a lawsuit is the final, immutable act of enforcement of an allegedly illegal contract. At that point in time the lawsuit assumes an existence separate from the contract. All subsequent acts are controlled by the exigencies of litigation, not enforcement of the contract. The complaint puts the aggrieved party on notice that there is a possible antitrust violation. In every lawsuit, a party has a right, and an attorney has a duty, to prosecute or defend vigorously. Furthermore, no new injury results from the act of appealing that the defendant does not already endure as a result of the act of filing the action initially. This is true because the reasonable expectation from the commencement of a law suit is that the plаintiff will pursue the litigation until it prevails or the last appeal is exhausted.
******
We hold that the last overt act in the enforcement of this contract was the initiation of the lawsuit in state court. Any injury to Pace resulting from continued prosecution through the normal course of the appellate process related back to the initial decision to file.
Id. at 238-39 (citations omitted; emphasis added.)
Korody has shown no error in conclusions 4 and 9 of Judge Pfaelzer:
4. GM’s last overt act to “enforce” its Hulsing patent, its April 13, 1981 letter to Korody, was more than four years prior to the filing of Korody’s Second Supplemental and Amended Complaint.
******
9. Because the last overt aсt taken by GM in defense of its Hulsing patent was more than four years before Korody filed its amendment to add Walker Process claims, no tolling of the statute of limitations by virtue of a continuing antitrust violation can be established.
Thus, Korody’s “continuing violation” argument has no support in fact or law.
ATTORNEY FEES
Korody’s brief, in places, recognizes that it stipulated to the stay order, and yet, in other places, argues that GM should be estopped to rely on the statute of limitations because GM “actively sought and obtained” the stay.
In asserting that GM “sought” the stay, Kоrody not only ignored its own stipulation (and its assertion elsewhere in its brief that the parties stipulated the stay to conserve resources and judicial economy), but presented a partial and distorted quotation from
American Pipe and Construction Co. v. Utah,
The Supreme Court “has not hesitated to find the statutory period tolled or suspended by the conduct of the defendant” where the policies of repose and certainty inherent in the limitations provisions are fulfilled. American Pipe and Construction Co. v. Utah,414 U.S. 538 , 558-559,94 S.Ct. 756 , 768-69,38 L.Ed.2d 713 (1974).
What the Court said in
American Pipe,
Similarly, in cases where the plaintiff has refrained from commencing suit during the pеriod of limitation because of inducement by the defendant, Glus v. Brooklyn Eastern Terminal,359 U.S. 231 ,79 S.Ct. 760 ,3 L.Ed.2d 770 , or because of fraudulent concealment, Holmberg v. Armbrecht,327 U.S. 392 ,66 S.Ct. 582 ,90 L.Ed. 743 , this Court has not hesitated to find the statutory period tolled or suspended by the conduct of the defendant. (Emphasis added.)
If the Outland Document were not disclosed in 1980, as above indicated, that would not have constituted fraudulent concealment of the basis for Korody’s amendment, a basis it had fully on hand in what was disclosed in 1980 and asserted in Korody’s 1982 answer. Nothing of record indicates, and Korody does not argue, that GM “induced” it to refrain from amending its complaint. The deletion from the quote, if undetected, would thus have served Korody’s interest. Korody’s reply brief makes no mention of why it distorted the quota
Though GM called to Korody’s attention the inapplicability of
Pace
to this appeal before Korody filed its brief, Korody persisted in presenting its version of
Pace
to this court as support for its continuing violation theory. Indeed, Korody not only ignored the Ninth Circuit’s explicit rejection of the theory it prеsented here, but went further in separately citing
Twin City Sportservice, Inc. v. Charles O. Finley & Co.,
Korody quotes a portion of a brief filed by GM’s present counsel in
Handgards, Inc. v. Ethicon, Inc.,
Though each of the foregoing instances was called to Korody’s attention in GM’s brief, Korody’s reply brief makes no reference whatever to them. Korody's filing and maintenance of the appeal borders the frivolous. It is saved from that designation only by some of its arguments. Though lacking merit, those arguments appear sufficiently colorable to bring the appeal itself just inside the border of frivolity-
That we do not find the entirе appeal frivolous, however, does not excuse Korody’s above-described distortions, which wasted the resources of the court and the parties and abused the judicial process. Though we consider those distortions reprehensible, we do not find that GM faced untoward difficulties in responding to them and therefore decline to award GM its attorney fees on appeal. 7
CONCLUSION
Korody has shown no error of any kind in the careful and correct determinations of the district court. Accordingly, the partial summary judgment appealed from is affirmed.
’ AFFIRMED.
Notes
. In
Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp.,
. The complaint contained the usual allegations of monopoly, etc., but the only act charged was a tie-in.
. As was well said in
Starview Outdoor Theatre, Inc. v. Paramount Film Distributing Corp.,
As Judge Pfaelzer perceptively observed in this case, "Is there a patent lawyer alive who doesn’t understand what a Walker Process claim is?” Korody attempts to use the latter statement in support of its argument that GM was оn notice that Korody "had a basis” for a "Walker Process" claim, but Korody thereby blurs the distinction between notice of a basis for a claim and the notice with which the statute of limitations deals, i.e., notice of a party’s intent to enforce that claim.
. The record contains only the unsubstantiated statement of Korody’s president that there was such a threat in 1983.
. Though the distinction is of no moment in this case, Korody’s repeated reference to GM’s "enforcement” can be misleading. GM’s mandatory counterсlaim for infringement was never tried. The trial and appeal dealt only with the validity and enforceability of GM’s patent.
. Korody at one point says Pace is "not inconsistent” with its position, but "to the extent it might be” it should not be followed "because it is not a final decision or is wrongly decided” without saying why it was not "final" or why it was "wrongly decided.” Korody does then attempt to distinguish Pace, on the sole and irrelevant ground that it involved suits in state and federal courts. That treatment does not excuse the waste of judicial and litigant resources created by the need to deal with Korody’s рresentation of Pace.
. GM indicated in its briefs an intent to move for sanctions if it prevailed on appeal. There is no need for such a post-decision motion, which would require the court to re-visit the briefs. Requests that particular conduct be sanctioned may and should when appropriate be stated in a brief. Moreover, it is the abuse of the judicial process that is the cause for sanction and it is not necessary to await a determination of which side prevails before requesting a sanction. As indicated in the text, a filing of such a post-decision motion in this case would be fruitless.