ArcelorMittal France et al v. AK Steel Corporation

Filing 58

MEMORANDUM ORDER denying 48 MOTION to Dismiss for Failure to State a Claim Or, in the Alternative, Motion to Stay. ORDER, Setting Hearings( An In-Person Status Conference is set for 6/21/2016 at 04:30 PM in Courtroom 4B before Judge Sue L. Robinson). Signed by Judge Sue L. Robinson on 4/19/2016. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

ARCELORMITTAL FRANCE,
ARCELORMITIAL ATLANTIQUE ET
LORRAINE, and ARCELORMITTAL
USA LLC,

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Plaintiffs,

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v.

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AK STEEL CORPORATION,
Defendant.

Civ. No. 13-685-SLR

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MEMORANDUM ORDER
At Wilmington this \1\-\rday of April, 2016, having reviewed defendant's motion to
dismiss and the papers submitted in connection therewith;
IT IS ORDERED that said motion (D.I. 48) is denied as follows:
1. Background. Plaintiffs filed the present action for patent infringement on
April 16, 2013 for infringement of U.S. Patent No. RE44,153E ("the RE153 patent"). 1
Such patent was obtained during the pendency of the appeal of Civ. No. 10-50, 2 in
which action plaintiffs asserted U.S. Patent No. 6,296,805 ("the '805 patent") against
defendant3 by complaint filed in January 2010. The litigation proceeded to claim
construction and trial, ending in a jury verdict in defendant's favor. On appeal, the

1

The court has jurisdiction pursuant to 28 U.S.C. § 1338.
The procedural history of which is only recounted to the extent needed for the
resolution of this motion.
3
In addition to AK Steel Corporation, Severstal Dearborn, Inc. and WheelingNisshin,
Inc.
2

Federal Circuit upheld the claim construction in part and reversed in part; 4 the Court
also reversed the jury's verdict of anticipation. With respect to obviousness, the Court
concluded that a new trial was required because the claim construction error prevented
the jury from properly considering plaintiffs' evidence of commercial success. See
ArcelorMittal France v. AK Steel Corp., 700 F.3d 1314 (Fed. Cir. 2012) ("ArcelorMittal
/'). During the appeal process, in order to "correct" the construction of "very high
mechanical resistance," plaintiffs obtained the RE153 patent which added a number of
dependent claims. 5 The Federal Circuit agreed with the district court that claims 1-23
were invalid, but held that claims 24 and 25 were valid. Specifically, claim 24 confined
claim 1 to the construction affirmed in ArcelorMittal I by reciting, "[t]he coated steel
sheet of claim 1, wherein said mechanical resistance is in excess of 1500 MPa." Claim
25 depends on and further limits claim 24 to a coated steel sheet "that is composed
predominantly of martensite." See ArcelorMittal France v. AK Steel Corp., 786 F.3d
885, 887-88 (Fed. Cir. 2015) ("ArcelorMittal//").
2. On remand, the court reasoned that plaintiffs had conceded (by not
addressing) the fact that the trial record had no evidence of past infringement of claim 1
of the '805 patent as construed by the Federal Circuit. Therefore, given that the court
would not allow the record to be opened on remand if the '805 patent were still at issue,
there were no genuine issues of material fact as to infringement of claims 24 and 25 of

4

Specifically, the Federal Circuit reversed the construction for "hot-rolled steel sheet"
and upheld the construction for "very high mechanical resistance," that is, "the flat-rolled
steel has been subjected, after rolling, to additional controlled heating and cooling and
has an ultimate tensile strength of 1500 MPs or greater."
5 By memorandum and order dated December 5, 2013, the district court invalidated all
claims of the RE153 patent as violative of 35 U.S.C. § 251 (d). (D.I. 19, 20, 21)

2

the RE153 patent and such claims were invalid as obvious. 6 (D.I. 41, 42) The court
also granted plaintiffs' motion for leave to file a first amended complaint replacing the
RE153 patent with U.S. Reissue Patent No. RE44,940 ("the RE940 patent"), issued on
June 10, 2014, as a continuation of the patent application that issued as the RE153
patent.
3. Standard. A motion filed under Federal Rule of Civil Procedure 12(b)(6) tests
the sufficiency of a complaint's factual allegations. Bell At/. Corp. v. Twombly, 550 U.S.
544, 555 (2007); Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A complaint must
contain "a short and plain statement of the claim showing that the pleader is entitled to
relief, in order to give the defendant fair notice of what the ... claim is and the grounds
upon which it rests." Twombly, 550 U.S. at 545 (internal quotation marks omitted)
(interpreting Fed. R. Civ. P. 8(a)). Consistent with the Supreme Court's rulings in
Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Third Circuit requires a twopart analysis when reviewing a Rule 12(b)(6) motion. Edwards v. A.H. Cornell & Son,
Inc., 610 F.3d 217, 219 (3d Cir. 2010); Fowlerv. UPMC Shadyside, 578 F.3d 203, 210
(3d Cir. 2009). First, a court should separate the factual and legal elements of a claim,
accepting the facts and disregarding the legal conclusions. Fowler, 578 F.3d. at 21011. Second, a court should determine whether the remaining well-pied facts sufficiently
show that the plaintiff "has a 'plausible claim for relief.'" Id. at 211 (quoting Iqbal, 556
U.S. at 679). As part of the analysis, a court must accept all well-pleaded factual
allegations in the complaint as true, and view them in the light most favorable to the

6

The parties did not address the limitation of claim 25 as to invalidity. (D.I. 41 at 11
n.16) These decisions are on appeal. (Civ. No. 10-50, 0.1. 343)

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plaintiff. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Christopher v. Harbury, 536
U.S. 403, 406 (2002); Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).
In this regard, a court may consider the pleadings, public record, orders, exhibits
attached to the complaint, and documents incorporated into the complaint by reference.

Tellabs, Inc. v. Makar Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Oshiver v. Levin,
Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 n.2 (3d Cir. 1994).
4. The court's determination is not whether the non-moving party "will ultimately
prevail" but whether that party is "entitled to offer evidence to support the claims."

United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 302 (3d Cir.
2011 ). This "does not impose a probability requirement at the pleading stage," but
instead "simply calls for enough facts to raise a reasonable expectation that discovery
will reveal evidence of [the necessary element]." Phillips, 515 F.3d at 234 (quoting

Twombly, 550 U.S. at 556). The court's analysis is a context-specific task requiring the
court "to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 663-64.
5. The '940 patent. The '940 patent contains two independent claims. Claim 17
reads:
A hot-rolled coated steel sheet comprising a hot-rolled steel sheet coated
with an aluminum or aluminum alloy coating, wherein said coated steel
sheet is in the form of a delivery coil and the steel in the sheet
comprises the following composition by weight:
0.15%<carbon<0.5%
0.5%<manganese<3%
0.1 %<silicon<0.5%
0.01 %<chromium< I%
titanium<0.2%
aluminum<0.1 %
phosphorus<0.1 %
sulfur<0.05%
0.0005%<boron<0.08%, the remainder being iron and impurities inherent
in processing, and the steel sheet has a very high mechanical resistance

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in excess of 1500 MPa after thermal treatment and the aluminum or
aluminum alloy coating provides a high resistance to corrosion of the steel
sheet.
(6:20-39) (emphasis added) Claim 27 reads:
A hot-rolled coated steel sheet comprising a hot-rolled steel sheet coated
with an aluminum or aluminum alloy coating, wherein the steel in the sheet
comprises the following composition by weight:
0.15%<carbon<0.5%
0.5%<manganese<3%
0.1 %<silicon<0.5%
0.01 %<chromium< I%
titanium<0.2%
aluminum<0.1 %
phosphorus<0.1 %
sulfur<0.05%
0.0005%<boron<0.08%, the remainder being iron and impurities inherent
in processing, and the steel sheet has a very high mechanical resistance
in excess of 1500 MPa after a subsequent thermal treatment, and the
aluminum or aluminum alloy coating provides a high resistance to
corrosion and prevents decarburization during said subsequent
thermal treatment of the steel sheet.
(7:1-26) (emphasis added) Despite plaintiffs' characterization of the '940 patent claims
as "materially different," the two independent claims are strikingly similar to that which
came before. Claim 1 of the RE 153 patent reads:
A hot-rolled coated steel sheet comprising a hot-rolled steel sheet coated
with an aluminum or aluminum alloy coating, wherein the steel in the sheet
comprises the following composition by weight:
0.15%<carbon<0.5%
0.5%<manganese<3%
0.1 %<silicon<0.5%
0.01 %<chromium<1 %
titanium<0.2%
aluminum<0.1 %
phosphorus<0.1 %
sulfur<0.05%
0.0005%<boron<0.08%, the remainder being iron and impurities inherent
in processing, and the steel sheet has a very high mechanical resistance
after thermal treatment and the aluminum or aluminum alloy coating
provides a high resistance to corrosion of the steel sheet.

5

(RE153 patent, 5:9-26) Claims 24 and 25 read:
24. The coated steel sheet of claim 1, wherein said mechanical resistance
is in excess of 1500 MPa.
25. The coated steel sheet of claim 24 that is composed predominantly of
martensite.
(RE153 patent, 6:52-55)
6. Complaints. In Civ. No. 10-50, plaintiffs alleged that defendant "has been
and is now making, using, selling, or offering for sale, within the United States,
aluminum coated boron steel products which infringe one or more claims of the '805
patent." (Civ. No. 10-50, D.I. 1

at~

11) In the case at bar, plaintiffs alleged in the initial

complaint that defendant "makes, offers to sell and/or sells aluminum coated, boroncontaining steel sheet products in the United States[, ... which] are formed by a
process involving, among other things, hot rolling, cold rolling, and coating the steel with
aluminum." Plaintiffs further alleged that the "steel sheet products are intended for
further processing, including heat treatment and stamping, to form, inter alia,
components for use in automobiles." This further processing results in the steel sheet
products having "an ultimate tensile strength greater than 1000 MPa, and at least some
of the products have an ultimate tensile strength greater than 1500 MPa." Plaintiffs
concluded that "automotive parts suppliers, among others, directly infringe one or more
of the claims of the RE153 patent when they make, use, offer to sell and/or sell steel
meeting the limitations of those claims, or products incorporating steel meeting the
limitations of those claims." Moreover, "to the extent that [defendant] makes, offers to
sell and/or sells steel meeting the limitations of one or more of the claims of the RE 153
patent, it also directly infringes those claims." (D. I. 1 at~~ 15-17)

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7. In the amended complaint, plaintiffs similarly allege that defendant "makes,
offers to sell and/or sells ... steel sheet products in the United States[, which] ... are
formed by a process involving, among other things, hot rolling, cold rolling, and coating
the steel with aluminum." The steel sheet products "are intended for further processing,
including heat treatment and stamping, to form, inter alia, components for use in
automobiles." The further processing results in "at least some of the products hav[ing]
an ultimate tensile strength greater than 1500 MPa and a predominantly martensitic
microstructure." Therefore, "automotive parts suppliers, among others, directly infringe
one or more of the claims of the RE940 patent when they make, use, offer to sell and/or
sell steel meeting the limitations of those claims, or products incorporating steel meeting
the limitations of those claims." Moreover, "to the extent that [defendant] makes, offers
to sell and/or sells steel meeting the limitations of one or more of the claims of the
RE940 patent, [defendant] also directly infringes those claims. (0.1. 43

at~~

16-18)

8. Issue preclusion. Issue preclusion, also called collateral estoppel, applies
when "(1) the issue sought to be precluded [is] the same as that involved in the prior
action; (2) that issue [was] actually litigated; (3) it [was] determined by a final and valid
judgment; and (4) the determination [was] essential to the prior judgment." Anderson v.

C./.R., 698 F.3d 160, 164 (3d Cir. 2012) (quoting In re Graham, 973 F.2d 1089, 1097
(3d Cir. 1992)). "[P]roof of [non]-infringement by collateral estoppel is only appropriate
in limited circumstances, where it is shown that a close identity exists between the
relevant features of the accused device and the device previously determined to be
[non]-infringing." Yingbin-Nature (Guangdong) Wood Indus. Co. v. Int'/ Trade Comm'n,
535 F.3d 1322, 1333 (Fed. Cir. 2008); see also Brain Life, LLC v. Elekta Inc., 746 F.3d

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1045, 1055 (Fed. Cir. 2014) ("[T]he trial court's findings that [defendant's] products ...
were not materially different from the products at issue in the [prior litigation] would bar
plaintiff from asserting those claims."); Acumed LLC v. Stryker Corp., 525 F.3d 1319,
1324 (Fed. Cir. 2008) (noting that claim preclusion does not apply with respect to
infringement unless the accused device and the device previously held infringing are
"essentially the same," meaning that the differences between them are merely
"colorable" or "unrelated to the limitations in the claim of the patent") (citations omitted);
Del Mar Avionics, Inc., v. Quinton Instrument Co., 836 F.2d 1320, 1324 (Fed. Cir. 1987)

(holding that claim preclusion did not apply because a "device not previously before the
court, and shown to differ from those structures previously litigated, requires a
determination on its own facts").
9. The parties disagree on whether the accused steel sheet products are the
same as those involved in the prior action. Specifically, in Civ. No. 10-50 (after the
substitution of the RE153 patent for the '805 patent), defendant's steel sheet products
were found non-infringing as to claims 24 and 25 of the RE153 patent requiring a very
high mechanical resistance in excess of 1500 MPa, based on the court's finding no
record evidence of the accused steel sheet products having an ultimate tensile strength
above 1500 MPa. (D.I. 41at6)
10. According to defendant, the judgment of non-infringement in Civ. No. 10-50
prevents plaintiffs from asserting that the steel sheet products at issue directly infringe
the claims of the RE940 patent, as the independent claims each contain a limitation
requiring a very high mechanical resistance in excess of 1500 MPa. (D.I. 49)
Defendant explains that plaintiffs have "pursued infringement allegations against the

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same product for over six years on closely related patents, and hav[e] engaged in
extensive fact and expert discovery, a five day jury trial, two appeals, and summary
judgment briefing on remand proceedings," but still allege the same factual allegations. 7
(D.I. 54 at 3) Defendant concludes that the accused steel sheet products are not
"colorably different" or "materially different" than those asserted in the previous case. At
most, plaintiffs have alleged heat-treatments by third parties that might make
defendant's steel sheet products meet the claims. However, without an allegation that
defendant's steel sheet products are materially different than those which were the
subject of Civ. No. 10-50, the allegations must fail as they do not state a plausible claim
for direct infringement. (D.I. 51 at 3-4)
11. Plaintiffs, in contrast, argue that the aluminum-coated boron steel sheet
products at issue in the Civ. No. 10-50 case are different from the steel sheet products
now accused of infringement. Plaintiffs base their argument on a declaration (presented
in opposition for a motion for summary judgment in Civ. No. 10-50) in which it is averred
that plaintiffs "had evidence which came into existence after the [Civ. No. 10-50] case
trial, that [defendant] was selling aluminum-coated boron containing steel that was
being hot-stamped to achieve an ultimate tensile strength of greater than 1500 MPa and
then shipped to automotive makers." (D.I. 51 at 2, ex. A) Plaintiffs characterize the
amended complaint as alleging "infringement based on [defendant's] products that are
now subjected to a hot[-]stamping operation that results in the steel having an ultimate
tensile strength greater than 1500 MPa;" that defendant "now designs its new, post-

7

Defendant argues that any actionable claims based on the RE940, which did not issue
until June 2014, would also be subject to intervening rights under 35 U.S.C. § 252.
9

2011 products to meet automotive product[] specifications requiring steel with an
ultimate tensile strength greater than 1500 MPa;" that defendant "has knowledge that its
post-2011 products meet the 1500 MPa specifications after hot[-]stamping;" and that
defendant's "products are not suitable for substantial non-infringing uses." (D.I. 51 at 34)

12. In light of the procedural labyrinth plaintiffs have created, I believe the only
fair way to resolve this litigation is to determine whether defendant has changed its
products since the first round of discovery was undertaken in connection with the '805
patent. In this regard, keep in mind that plaintiffs have always sought evidence that the
accused steel sheet products had a tensile strength of 1500 MPa or greater. 8 In
connection with the first trial, plaintiffs failed to produce such evidence after full blown
discovery and testing. On remand, plaintiffs produced a declaration that, at best, raised
a question as to whether the accused steel sheet products had changed. 9 The court did
not open the record on remand, an issue still on appeal.
13. Certainly it would be inappropriate to open the record absent any
demonstrated "changes" in the accused steel sheet products, based on collateral
estoppel. It is equally certain that new products can be the subject of new infringement
suits. Given the protracted history of this litigation, the court is reluctant to simply open

8

And the record indicates that the automobile industry's specifications have not
changed either. Oral Argument commencing at 32:08, ArcelorMittal France v. AK Steel
Corp., 700 F.3d 1314 (Civ. No. 2011-1638), held on September6, 2012, available at
http://www.cafc.uscourts.gov/oral-argument-recordings?title=&field_case_number_value
=11-1638&field - date- value2%5Bvalue%50%5Bdate%5D=&=Search.
9 The court listened to the oral argument related to the appeal in ArcelorMittal I.
Contrary to the Federal Circuit's observation, defendant's counsel did not concede that
the accused steel sheet products had an ultimate tensile strength of 1500 MPa or
greater. (Contrast 700 F.3d at 1322 and the argument commencing at 32:08)
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the doors to discovery without some modicum of proof (more substantive than the
declaration already submitted) that the accused steel sheet products have changed. To
that end, I will require defendant to: (1) identify the most knowledgeable corporate
deponent to testify about the manufacture of the accused steel sheet products
(including the tensile strength requirements) from 2010 through 2013 (when the instant
law suit was filed and plaintiffs were required to have a good faith basis for filing such);
and (2) produce the manufacturing specifications (including those relating to the tensile
strength requirements) for the same time period. 10 The court will conduct an in-person
status conference at the conclusion of such discovery. 11
14. Conclusion. For the foregoing reasons, the court denies defendant's
motion to dismiss.
IT IS FURTHER ORDERED that:
15. Defendant shall produce the documents required above on or before May
17, 2016.

10

The court has placed the onus of the discovery on defendant for two reasons. In the
first instance, despite the fact that plaintiffs asserted the existence of a "new" product in
the 2013 declaration, defendant did not respond with anything more substantive than
attorney argument. Second, given plaintiffs' aggressive litigation tactics, the court has
little faith that plaintiffs would conduct reasonable, focused discovery on their own.
Consider this discovery something akin to the mandatory exchange of relevant
materials that occurs at the outset of many patent cases.
11 Issues such as indirect infringement, the "in the form of a delivery coil" limitation, and
intervening rights are better addressed in light of a more fulsome record. The court, in
its discretion, denies defendant's alternate motion to stay the case pending the Federal
Circuit's decision in ArcelorMittal II. The court may revisit this issue at the conclusion of
the abbreviated discovery period.
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16. Defendant shall identify the deponent by May 17, 2016 and make the
deponent available for deposition to be completed before June 14, 2016. The
deposition shall be limited to five (5) hours, absent agreement by the parties.
17. The court will conduct an in-person status conference on June 21, 2016, at
4:30 p.m. in courtroom 4B on the 4th Floor, J. Caleb Boggs Federal Building, 844 King

Street, Wilmington, Delaware.

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