TurboCare Div. of Demag Delaval v. General Elec.

Citations: 938 F. Supp. 83; 40 U.S.P.Q. (BNA) 1795; 40 U.S.P.Q. 2d (BNA) 1795; 1996 U.S. Dist. LEXIS 14057Docket: Civil Action No. 95-30069-MAP

Court: District Court, D. Massachusetts; September 18, 1996; Federal District Court

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TurboCare Division of Demag Delaval Turbomachinery Corporation holds an exclusive license to U.S. Patent No. 4,436,311, which pertains to a sealing system for fluid turbines. TurboCare initiated a lawsuit against General Electric Company (GE) on March 30, 1995, alleging patent infringement. In response, GE filed a five-count counterclaim, which includes a request to correct the inventorship of the patent, claims of a "shop right," and declarations of noninfringement, invalidity, and unenforceability.

TurboCare moved for partial summary judgment on several counts of GE's counterclaim. A significant aspect of this case involves res judicata, which prevents relitigation of claims that were or could have been addressed in a prior suit. The criteria for res judicata include a final judgment on the merits, identical parties (or those in privity), and the same operative facts.

The prior relevant litigation occurred in 1992 when GE sued Ronald E. Brandon, the former owner of the '311 patent, alleging that he improperly obtained the patent based on work from other GE employees. The court dismissed GE's claims, stating that they were barred by the statute of limitations due to lack of clarity in the cause of action.

In evaluating GE's counterclaims, the magistrate judge concluded that res judicata barred GE's claims in Counts I, II, and V, as the New York litigation constituted a final judgment involving the same parties and facts. However, Count IV was not barred because it could involve legal theories that were not previously asserted. The memorandum addresses GE's objections to the magistrate judge's recommendations regarding TurboCare's motion for partial summary judgment.

GE argues that res judicata does not bar Counts I and V of its claims against Brandon, while not contesting the recommendations on Counts II and IV. GE's first point is that Counts I and V do not stem from the same core facts as the previous New York litigation. GE asserts that Count V, which it claims could not have been raised earlier, should not be subject to res judicata. 

In discussing Count I, the court examines whether it shares an identity of cause of action with the prior litigation. GE's current claim under 35 U.S.C. § 256, which seeks to correct inventorship of the '311 patent, is found to have the same core factual basis as the 1992 lawsuit, particularly regarding Brandon's alleged misuse of proprietary information and failure to credit other GE employees. The court notes that GE previously recognized these connections, and its argument that the current claim is distinct fails, as the underlying facts remain unchanged. Consequently, Count I is barred by res judicata.

For Count V, GE objects to its recommended dismissal by asserting that it involves distinct facts from the New York case and that legal limitations prevented the claim from being brought earlier. GE correctly identifies that an "actual controversy" must exist for a declaratory judgment to be issued under 28 U.S.C. § 2201, which requires a reasonable apprehension of patent infringement. However, the court finds that TurboCare has not established the existence of such an "actual controversy" as defined by the Federal Circuit in 1992, as GE's subjective concerns are insufficient to meet this burden.

In Indium Corp. of America v. Semi-Alloys, Inc., the court addressed GE's Count V claim in the context of res judicata. The court found that GE did not have objective fear of a lawsuit by Brandon in 1992, which allowed Count V to be included in the case, as it could not have been raised in the prior action. Res judicata typically bars claims that were or could have been raised in a previous lawsuit, aiming to prevent claim splitting. However, claims not available during the first suit are exempt from this bar. The court determined that Count V could partially survive TurboCare's motion, but it cannot revive any matters previously decided against GE in the 1992 litigation. Specifically, GE's prior claim regarding Brandon's acknowledgment of other employees' contributions was dismissed with prejudice, and GE cannot reassert claims based on the same core facts from that case. Nonetheless, GE may pursue legal theories not reliant on those core factual allegations. Ultimately, the court allowed GE to continue with Counts IV and V, subject to the limitations regarding res judicata.