Alpek Polyester, S.A. v. Polymetrix AG (Fed. Cir. 2021)

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While the Federal Circuit has patent law as its principal focus, as a U.S. Circuit Court of Appeals, questions come before the Court on more mundane, procedural matters (which, sometimes being dispositive, does not reduce their importance to the parties and occasionally the rest of us).  One such case was decided on December 16th in Alpek Polyester, S.A. v. Polymetrix AG (complicated, as should be evident from the caption, by involving non-US. parties and having putatively infringing activities arising both here and abroad).

The case arose over Polymetrix's asserted infringement of U.S. Patent Nos. 7,790,840, 7,868,125, and 7,192,545 owned by Alpek (a Mexican company) and exclusively licensed to co-Plaintiff DAK Americas LLC (a U.S. company), the patent claim being directed to methods for producing polyethylene terephthalate (PET) resins; because the matters on appeal were exclusively procedural there was no need in the opinion (or here) to delve into the scope of the claims any further.  Defendant Polymetrix is a Swiss company in the business of supplying equipment and engineering services for constructing plants for making PET resin (while not making the resin itself, i.e., it provides the means but not the product and thus did not itself practice the claimed methods).

The activity that prompted the lawsuit was Polymetrix contracting with a Polish company, Indorama Ventures Poland sp. z o.o. ("IVP") wherein Polymetrix equipped a manufacturing plant located in Wloclawek, Poland to run the patented process.  When the work was completed Polymetrix entered into a "commissioning" period during which the plant was tested (using the patented process to product PET resin); during this time Polymetrix retained ownership of the equipment and IVP withheld payment until the installation passed appropriate tests.

Jurisdiction arose in the U.S. when IVP sent to affiliates in the U.S. (Auriga Polymers and AlphaPet Inc.) samples of PET resin made in the Wloclawek plant using Polymetrix equipment to perform the patented process.  There were three instances of this importation, including one wherein an AlphaPet employee brought the sample into the country personally.  Alpek sued following these activities, alleging that Polymetrix induced infringement under 35 U.S.C. § 271(b) (the predicate literal infringement lying under the provisions of § 271(g)).  While the opinion references "a complicated and protracted international discovery process" that ensued, only three incidents were worthy of the Court's consideration.  The first involved failure of Defendant Polymetrix to disclose under Federal Rule of Civil Procedure 26 the identity of IVP's director, Mr. Saini (the relevance of this failure being Polymetrix's reliance on a declaration in support of a summary judgment motion at issue in this appeal).  Second was disputed testimony in a deposition (of a Rule 30(b)(6) witness representing Auriga) that Polymetrix owned the plant in Wloclawek, Poland, supporting Alpek's motion to amend its complaint to include an allegation of direct infringement under § 271(g).  The third and final discovery dispute involved an assertion of privilege by Polymetrix over an opinion of counsel concerning Alpek's infringement allegations, which Alpek alleged had been waived by disclosure to a potential corporate suitor.

Polymetrix filed a summary judgment motion that it did not infringe, which the District Court granted.  The District Court rejected Alpek's arguments that there were disputed issues of material fact, denied Alpek's motion to strike the Saini testimony due to failure to satisfy Rule 26 when Polymetrix did not identify him as someone with knowledge about the company and its activities, and held that the misstatement at deposition was inadmissible under Federal Rule of Evidence 602 because the witness lacked personal knowledge regarding importation of PET resin made in the Polish plant using the patented process.  The District Court also denied Alpek's motion to amend the complaint as being untimely.  This appeal followed.

The Federal Circuit affirmed, in an opinion by Judge Lourie joined by Judges O'Malley and Stoll.  The opinion addresses the four arguments raised by Alpek on appeal:

• First, Alpek argues that the court abused its discretion by disregarding [the Rule 30(b)(6) witness's] admission that the July 17, 2014 sample was brought into the United States 'for Polymetrix' [arguing that the statement was admissible because the witness's testimony under Rule 30(b)(6) does not require personal knowledge to be admissible].

• Second, Alpek argues that the court erred by finding that Polymetrix did not ratify IVP's importation by using test results from the United States [by receiving and relying on test results it knew were produced by Auriga and AlphaPet in the U.S.]

• Third, Alpek argues that the court erred in failing to recognize fact disputes that stem from Polymetrix's ownership of the equipment under a Swedish law interpretation of the contract[ and]

• [F]ourth, Alpek argues that the court erred by declining to strike the Saini declaration upon which Polymetrix heavily relied to support its summary judgment motion [based on Federal Rule of Civil Procedure 37].

Polymetrix's counterargument was based on the causation prong of § 271(b), i.e., that its activities did not cause IVP to import into the U.S. PET resin samples for testing.  Regarding Alpek's first argument, Polymetrix contended that the witness misspoke due to misunderstanding the question (which the witness clarified at the time during subsequent testimony during the deposition).  The Federal Circuit, applying Eighth Circuit law appropriate for reviewing the District Court's decision here, noted that in the Eighth Circuit evidence to be considered on summary judgment must be "admissible evidence," citing Crews v. Monarch Fire Prot. Dist., 771 F.3d 1085, 1092 (8th Cir. 2014) (emphasis in original) (citing Nooner v. Norris, 594 F.3d 592, 603 (8th Cir. 2010).  Under the applicable abuse of discretion standard, the Federal Circuit found no abuse (noting that the witness did not testify at trial and "would not [have been] admissible at trial under Federal Rule of Evidence 801(d)(2)" nor Federal Rule of Civil Procedure 32(a)(3) relating to the testimony of an adverse party.  The opinion also distinguished seemingly contrary precedent in General Mills Operations, LLC v. Five Star Custom Foods, Ltd., 703 F.3d 1104, 1110 (8th Cir. 2013), because the disputed testimony was not by an adverse party's witness.  Finally, the Federal Circuit did not find Alpek's argument persuasive insofar as it relied on two words ("for Polymetrix") "excerpted from one question in one deposition in the larger context of a protracted discovery process that lasted years" and was asserted by Alpek for an inducement argument that was "contrary to the overwhelming majority of the evidence which demonstrates that Polymetrix had no knowledge or concern about where, when, or how IVP conducted performance tests."  In the panel's view the evidence showed the witness simply misspoke.  The Court found no genuine issue of material fact here that would justify the "delay and expense" of a trial.

Regarding Alpek's second argument, the Federal Circuit did not see any genuine issue of material fact on the evidence, which the Court considered to be supported only with "a conclusory assertion by [Alpek's] expert."  According to the opinion, the "overwhelming majority of the evidence" supported a finding that AlphaPet was not the source of the data relied upon by Polymetrix with regard to the performance of the Polish plant (including agreement with the District Court that Alpek blundered when it asserted that this data "match[ed] up almost exactly," the opinion stating that "If the AlphaPet test results were really the source of the data for Polymetrix's report, we can discern no reason why the two sets of data would not match up exactly" (emphases in opinion).

As for Alpek's third argument, the Federal Circuit agreed with the District Court that the details of Swedish contract law, asserted to support Alpek's contention that under that law Polymetrix was responsible for the activities in the Polish plant, were "inapposite."  "As a matter of American law," according to the opinion, 'the mere fact that Polymetrix owned the plant equipment is wholly insufficient for Alpek to meet its burden of proving that Polymetrix took active steps to induce IVP to infringe," citing MGM Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 935–36 (2005), in support for this principle.

Finally, the Court rejected Alpek's fourth argument, based in part on the breadth of the District Court's discretion on discovery matters and enforcement of the Civil Procedure rules.  The Federal Circuit saw none of the surprise or prejudice the Rule was intended to prevent, in view of the "more than 1,000 documents produced during discovery" bearing the witness's name.

Having dispensed with the summary judgment portion of the appeal, the panel turned to the District Court's denial of Alpek's motion to amend its complaint.  Here the Court found no justification for Alpek's failure to file its motion by the deadline date the District Court had established, and the panel rejected Alpek's allegations that witness testimony adduced during a deposition that occurred after the deadline alerted it to the factual bases for the amended complaint, i.e., that Polymetrix was a literal infringer under § 271(g).  And Alpek's arguments, according to the opinion, "consist[ed] of mere disagreement with the magistrate judge's view of the facts."  Under these circumstances the Federal Circuit affirmed denial of Alpek's motion to amend.

The final issue considered by the Court was Alpek's motion to compel production of attorney opinion based on waiver due to disclosure to Polymetrix's corporate suitor.  The Court agreed with Polymetrix that the panel need not address the issue because it "has no bearing on the district court's summary judgment ruling."  The opinion notes that Alpek had the burden of showing that Polymetrix caused IVP's infringement of the patents-in-suit, while the opinion even if offered into evidence would only address Polymetrix' intent to induce infringement, citing Omega Patents, LLC v. CalAmp Corp., 920 F.3d 1337, 1352–53 (Fed. Cir. 2019).  Because the District Court's basis for granting summary judgment was Alpek's failure to establish Polymetrix's causation of IVP's asserted infringement, "the issue of intent did not factor into the district court's grant of summary judgment" according to the Court (emphasis in opinion).  This issue, in view of the Court's affirmance of the District Court's grant of summary judgment, was thus moot according to the panel.

Alpek Polyester, S.A. v. Polymetrix AG (Fed. Cir. 2021)
Nonprecedential disposition
Panel: Circuit Judges Lourie, O'Malley, and Stoll
Opinion by Circuit Judge Lourie

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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