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ArcelorMittal and Arcelormittal Atlantique et Lorraine v. AK Steel Corp.

United States District Court, D. Delaware

February 7, 2019

ARCELORMITTAL and ARCELORMITTAL ATLANTIQUE ET LORRAINE, Plaintiffs,
v.
AK STEEL CORPORATION, SEVERSTAL DEARBORN, INC. and WHEELING-NISSHIN INC., Defendants.

          Jeffrey B. Bove, RatnerPrestia, Wilmington, DE; Hugh A. Abrams, Shook, Hardy & Bacon L.L.P., Chicago, IL - attorneys for Plaintiffs.

          Adam W. Poff, Pilar G. Kraman, Young Conaway Stargatt & Taylor, LLP, Wilmington, DE; Roderick R. McKelvie, Christopher N. Sipes, Jeffrey H. Lerner, Covington & Burling LLP, Washington, DC - attorneys for Defendants

          MEMORANDUM OPINION

          NOREIKA, U.S. DISTRICT JUDGE

         Presently before the Court is the motion of Defendants AK Steel Corp., Severstal Dearborn, Inc. and Wheeling-Nisshin, Inc. (collectively, “Defendants”) to declare this case exceptional under 35 U.S.C. § 285 since at least April 16, 2013 and for an award of attorneys' fees and related costs incurred from that time forward. (See D.I. 354). For the reasons set forth below, Defendants' motion for attorneys' fees is DENIED.

         I. BACKGROUND

         Now more than nine years old, this case has a long and tortured history. Plaintiffs ArcelorMittal France and ArcelorMittal Atlantique et Lorraine (collectively, “Plaintiffs” or “ArcelorMittal”) filed this action on January 22, 2010, alleging that Defendants[1] infringed U.S.

         Patent No. 6, 296, 805 (“the '805 Patent”). (See D.I. 1 ¶¶ 11-15). The '805 Patent, which issued on October 2, 2001 and is titled “Coated Hot- and Cold-Rolled Steel Sheet Comprising a Very High Resistance After Thermal Treatment, ” is directed to boron-containing steel sheets that have been hot-rolled and coated with an aluminum-based coating. ('805 Patent at 1:47-64; see also id.

         at 1:37-44, 2:37-40). Hot-rolling and cold-rolling of steel sheets are processing steps used to achieve a desired final thickness. (Id. at 2:37-40). After undergoing thermal treatment, the claimed steel sheets have “very high mechanical resistance.” (Id. at 1:6-8, see also Id. at 1:61-62). Claim 1 of the '805 Patent is the only independent claim and it recites:

1. 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.

(Id. at Claim 1). The remaining fifteen claims of the '805 Patent ultimately depend from claim 1. Most of the dependent claims are directed to a steel sheet having a certain composition or made using certain conditions (id. at Claims 2-3, 5, 7, 9, 13, 16) or to a process of making a casting using the steel sheet (id. at Claims 4, 6, 8, 10-12).[2]

         A. Trial on the '805 Patent and the First Appeal

         At the outset of the case, Defendants urged the judge then handling the case, Judge Robinson, to engage in early claim construction, arguing that construction of the term “hot-rolled coated steel sheet comprising a hot-rolled steel sheet coated with an aluminum or aluminum alloy coating” would likely be dispositive of Plaintiffs' infringement claims. (D.I. 29 at 5). Although this proposal was initially rejected (see, e.g., D.I. 31 at 1; D.I. 32 at 4), at Defendants' continued request (D.I. 45 at 2-4), the judge ultimately allowed early claim construction on the two terms that Defendants agreed would be “the sole bases for any non-infringement assertions with respect to independent claim 1” (D.I. 68 ¶ 5). On December 16, 2010, Judge Robinson issued a claim construction opinion construing those two terms - i.e., “hot-rolled steel sheet coated with an aluminum or aluminum alloy coating, ” and “the steel sheet has a very high mechanical resistance after thermal treatment.” (D.I. 189; see also D.I. 70 (Defendants' election of the two terms for early construction)).

         As to “hot-rolled steel sheet, ” the dispute between the parties was whether the term encompassed hot-rolled steel sheets that had undergone the additional step of cold-rolling prior to coating with aluminum. Plaintiffs argued that optional cold-rolling to achieve a desired thickness prior to coating was not excluded by the claim (D.I. 126 at 11-13), whereas Defendants argued that the “hot-rolled steel sheet” of claim 1 was limited to steel sheets that only underwent hot-rolling prior to coating (D.I. 136 at 10-12). Judge Robinson adopted the position advocated by Defendants, construing “hot-rolled steel sheet coated with an aluminum or aluminum alloy coating” to mean “a steel sheet that has been reduced to its final thickness by hot-rolling and coated with an aluminum or aluminum alloy coating.” (D.I. 189 at 11). Excluded from the meaning of the term were sheets that had undergone “hot-rolling followed by cold-rolling” prior to coating with aluminum. (Id.).

         As to “very high mechanical resistance, ” the dispute between the parties was whether, after thermal treatment, [3] the resulting steel sheet must have an ultimate tensile strength in excess of 1000 MPa, as Plaintiffs proposed, or in excess of 1500 MPa, as Defendants proposed. (See D.I. 150). Citing the specification, Plaintiffs argued that the whole purpose of the '805 Patent is to produce coated steel sheets having a mechanical resistance exceeding 1000 MPa. (D.I. 126 at 17; see also '805 Patent at 1:37-42 (“The purpose of the invention is to produce a hot- or cold-rolled steel sheet . . . which, after thermal treatment performed on the finished casting, makes it possible to obtain a mechanical resistance in excess of 1000 MPa . . . .”)). In Plaintiffs' view, that the invention's purpose is to achieve this numerical resistance demonstrated that the “very high mechanical resistance” claim language must refer to 1000 MPa or greater. (D.I. 126 at 17). Defendants, on the other hand, argued that the '805 Patent uses the word “high” in connection with mechanical resistance to refer to tensile strength that may exceed 1500 MPa. (D.I. 136 at 18-19; see also '805 Patent at 2:50-54). Therefore, according to Defendants, “very high mechanical resistance” referred to an ultimate tensile strength in excess of 1500 MPa. (D.I. 136 at 18-19). The district court again adopted the position argued by Defendants, construing the term “the steel sheet has a very high mechanical resistance after thermal treatment” to mean “the flat-rolled steel sheet has been subjected, after rolling, to additional controlled heating and cooling and has an ultimate tensile strength of 1500 MPa or greater.” (D.I. 189 at 14).

         The parties agreed to forego summary judgment motions, opting instead for an expedited jury trial, which began on January 10, 2011. (See D.I. 68 ¶¶ 6, 12). At trial, based on the construction of the “hot-rolled steel sheet” term, Plaintiffs were precluded from arguing that Defendants' steel sheet products literally infringed claims 1, 2, 5, 7 and 16 of the '805 Patent (“the Asserted Claims”).[4] (See D.I. 205 at 2 (“Cold-rolling . . . is a prerequisite to defendants' coating and thermal treatment steps. Absent any indication that defendants provide a hot-rolled, coated sheet product prior to cold-rolling, defendants cannot [literally] infringe.”)). Although it appeared that Defendants' finished products had an ultimate tensile strength below the 1500 MPa required by the construction of the “very high mechanical resistance” term, Plaintiffs were permitted to argue that Defendants infringed under the doctrine of equivalents. (Id. at 1-2). On January 14, 2011, the jury returned a verdict finding that Defendants did not infringe the Asserted Claims of the '805 Patent and that the Asserted Claims were invalid as anticipated and obvious. (D.I. 215). Judgment was entered in favor of Defendants on January 24, 2011. (D.I. 218). After denial of Plaintiffs' renewed motion for judgment as a matter of law and motion for a new trial (see D.I. 248, 249), final judgment was entered in favor of Defendants on August 26, 2011 (D.I. 251). On September 21, 2011, Plaintiffs appealed, challenging the construction of both of the construed terms, as well as the jury verdict. (D.I. 253).

         On November 30, 2012, the Federal Circuit issued its opinion, which affirmed-in-part, reversed-in-part, vacated-in-part and remanded on issues relating to infringement and to obviousness. See ArcelorMittal France v. AK Steel Corp. (ArcelorMittal I), 700 F.3d 1314 (Fed. Cir. 2012). As to claim construction, on the “hot-rolled steel sheet” term, the Federal Circuit reversed, finding that the district court's construction improperly excluded hot-rolled steel sheets that additionally underwent cold-rolling to achieve final thickness prior to coating with aluminum. Id. at 1320. Emphasizing the importance of the transition phrase “comprising” used in claim 1, the Federal Circuit found that the claim “expressly contemplates additional, unstated steps such as cold-rolling.” Id. Moreover, the specification disclosed hot-rolled steel sheets that were also cold-rolled before coating - indeed, some of them must have been additionally cold-rolled to achieve the desired thickness. Id. at 1320-21 (citing '805 Patent at 1:47-48, 2:30-31, 2:37-40, 3:7-9, 3:44- 46, 4:8-9). Therefore, the correct construction of “hot-rolled steel sheet” is simply “a steel sheet that has been hot-rolled during its production.” ArcelorMittal I, 700 F.3d at 1321.

         As to “very high mechanical resistance, ” Plaintiffs argued on appeal that the stated purpose of the invention is to achieve a mechanical resistance in excess of 1000 MPa and, therefore, “very high mechanical resistance” in claim 1 must be keyed off this value. See ArcelorMittal I, 700 F.3d at 1321. The Federal Circuit rejected that argument and affirmed Judge Robinson's construction, finding it supported by the intrinsic evidence, as well as extrinsic evidence. Id. (“The specification does not define ‘very high' mechanical resistance, but it implies that the 1500 MPa level is necessary for ‘high' mechanical resistance. If 1500 MPa is high mechanical resistance, then very high resistance must be at least 1500 MPa.”); see also Id. at 1322 (“By defining ‘high' mechanical resistance as greater than 1500 MPa, the prior art here suggests that ‘very high' mechanical resistance would be understood to be at least that high.”). Thus, the term “the steel sheet has a very high mechanical resistance” had been properly construed as “the flat-rolled steel has been subjected, after rolling, to additional controlled heating and cooling and has an ultimate tensile strength of 1500 MPa or greater.” Id. at 1321-22. Judge Wallach dissented, focusing on the invention's purpose as highlighted by Plaintiffs and emphasizing the specification's interchangeable use of the terms “very high, ” “high” and “substantial.” Id. at 1327 (Wallach, J., dissenting). For the dissent, there were no “technical distinctions as to varying resistance levels” in relation to these descriptors, and each was intended to refer to a mechanical resistance that improved upon the prior art - i.e., one in excess of 1000 MPa. Id. at 1327-28. Thus, the dissent agreed with Plaintiffs that “very high mechanical resistance” means “mechanical resistance in excess of 1000 MPa.” Id. at 1328.

         Because the construction of “hot-rolled steel sheet” precluded Plaintiffs from arguing literal infringement at trial (D.I. 205), and because the Federal Circuit held that the term does not exclude products that optionally undergo cold-rolling prior to coating, the Federal Circuit vacated the jury's verdict of no infringement and remanded for a determination of literal infringement under the proper claim construction.[5] See ArcelorMittal I, 700 F.3d at 1322. Similarly, because the incorrect construction prevented the jury from considering the commercial success of Plaintiffs' product, which is cold-rolled prior to coating, the jury's verdict of obviousness was vacated and remanded for a determination of commercial success.[6] The Federal Circuit mandate issued on March 27, 2013. (D.I. 264-1 at 2).

         B. Remand After ArcelorMittal I, Invalidity of the Reissued Patent and the Second Appeal

         On August 8, 2011, while the post-trial motions were pending, Plaintiffs filed an application for reissue of the '805 Patent. With their initial filings, Plaintiffs submitted an Information Disclosure Statement (“IDS”) that included the Final Jury Instructions, Jury Verdict Sheet and Plaintiffs' post-trial briefing from this litigation. (See D.I. 278, Ex. C at 106 (IDS submitted with application for reissue)).[7] Then, on December 5, 2012, Plaintiffs submitted another IDS, which included the November 30, 2012 opinion from the Federal Circuit in the ArcelorMittal I appeal. (See D.I. 278, Ex. C at 48, 50). The reissue ultimately issued on April 16, 2013 as U.S. Reissued Patent No. RE44, 153 (“the RE'153 Patent”), with the same specification and initial sixteen claims as the '805 Patent, but with nine new dependent claims.[8] (See RE'153 Patent at Claims 17-25). Claims 17-22 of the RE'153 Patent recite limitations regarding the manufacturing process of the claimed steel sheet - e.g., hot-shaping and cooling at a rate that produces certain features (claim 17), cold-rolling the hot-rolled sheet after pickling (claim 21), etc. Of the new claims, claims 23-25 are relevant here:

23. The coated steel sheet of claim 1, wherein said mechanical resistance is in excess of 1000 MPa.
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.

(RE'153 Patent at Claims 23-25).

         Although the ArcelorMittal I mandate directed the court on remand to address issues of literal infringement and commercial success under the correct claim construction of the “hot-rolled steel sheet” term of the '805 Patent, the remand instead largely focused on the RE'153 Patent and whether it was an improper broadening reissue in violation of 35 U.S.C. § 251(d).[9] After receiving submissions by the parties as to how to proceed on remand (see D.I. 271-73), Judge Robinson directed the parties to focus on Defendants' noninfringement arguments in light of the mandate, as well as Plaintiffs' argument that the construction of “very high mechanical resistance” should be revisited in light of the reissued patent (see D.I. 312 at 43:8-46:5; see also D.I. 276).

         With respect to the “very high mechanical resistance” term of the RE'153 Patent, as they did previously for the '805 Patent, Plaintiffs argued that “very high mechanical resistance” in the RE'153 Patent claims refers to an ultimate tensile strength in excess of 1000 MPa. (See D.I. 278 at 4). That proposed construction, they argued, was now supported by a dependent claim - the new claim 23 in the RE'153 Patent - which specifically provided that the “very high mechanical resistance” of claim 1 “is in excess of 1000 MPa.” (RE'153 Patent at Claim 23; see also D.I. 278 at 4). Defendants agreed that, in light of this dependent claim, the “very high mechanical resistance” in the RE'153 Patent must refer to ultimate tensile strength exceeding 1000 Mpa. (See D.I. 287 at 13 (“Defendants agree with Arcelor that the term ‘very high mechanical resistance' in the RE153 patent should be construed to mean an ultimate tensile strength above 1000 MPa . . . .”)). In Defendants' view, however, this new construction meant that claims 1-23 of the RE'153 Patent were invalid as improperly broadened in violation of § 251(d) because the RE'153 Patent was filed more than two years after the original '805 Patent issued - and the term in the '805 Patent had been definitively construed by the Federal Circuit to mean “in excess of 1500 MPa.” (Id. at 14). Plaintiffs, on the other hand, argued that the new construction did not render claim 1 of the RE'153 Patent invalid because it remained identical to claim 1 of the '805 Patent and therefore could not be considered broadened. (See D.I. 291 at 7-9).

         On remand, Defendants moved for summary judgment of noninfringement implementing part of the ArcelorMittal I mandate. (See D.I. 281, 282 (AK Steel's motion and opening brief); D.I. 279, 280 (Severstal Dearborn and Wheeling-Nisshin's motion and opening brief)). Defendants argued that there was no evidence that any of their products had an ultimate tensile strength in excess of 1500 MPa, as required by the affirmed construction of “very high mechanical resistance.” (D.I. 282 at 8; see also D.I. 280 at 1).[10] Therefore, in Defendants' view, even under the corrected construction of “hot-rolled steel sheet” on remand, Plaintiffs could not prove literal infringement of the '805 Patent because Defendants' products still failed to meet the “very high mechanical resistance” limitation. Defendants also argued that any valid claim of the RE'153 Patent would have no broader scope than the '805 Patent and, therefore, would not be infringed for the same reason. (See, e.g., D.I. 282 at 10; D.I. 280 at 7). In their briefs, Defendants also argued that claims 1-23 of the RE'153 Patent were invalid under § 251(d) as broadening the scope of the original '805 Patent outside the two-year window permitted under the statute.[11] (See D.I. 282 at 16 (“[I]t would be appropriate not only to enter judgment of non-infringement for AK Steel, but to find as well that the broadened claims of the reissue patent (Claim 1-23) are invalid under Section 251(d).”); see also D.I. 280 at 7). Plaintiffs opposed, arguing that fact issues existed as to infringement in light of the new (and agreed-upon) construction of “very high mechanical resistance” as used in the RE'153 Patent. (See D.I. 288 at 7 (“[E]vidence in the trial record confirms that [Defendants] made offers for sale of accused products having a [ultimate tensile strength] ¶ 1, 000 MPa or greater after hot stamping. In light of these admitted offers, genuine issues of material fact preclude a grant of summary judgment . . . .”). Plaintiffs also argued under Rule 56(d) that, even under the Federal Circuit's construction requiring 1500 MPa, summary judgment was inappropriate because there was evidence that Defendants had recently begun selling steel sheets that were hot-stamped to achieve a mechanical resistance in excess of 1500 MPa. (See Id. at 12-15). Plaintiffs did not address Defendants' arguments as to noninfringement based on the original trial record.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October 25, 2013, Judge Robinson granted Defendants&#39; motions for summary judgment of noninfringement. (D.I. 298; see also D.I. 297). First addressing the RE&#39;153 Patent claim construction issued raised by Plaintiffs, she compared the Federal Circuit&#39;s construction of &ldquo;very high mechanical resistance&rdquo; as it appeared in claim 1 of the original &#39;805 Patent with use of that term in the RE&#39;153 Patent. (See D.I. 297 at 6-7). She found that the term &ldquo;very high mechanical resistance&rdquo; as used in claim 23 of the RE&#39;153 Patent was of a broader scope than the scope definitively given to the term by the Federal Circuit, which was binding on remand. (Id. at 6). As such, she concluded that claim 23 was improperly broadened in violation of &sect; 251(d) and therefore invalid. (Id. at 8-9). As to the remaining claims, Judge Robinson found those invalid as well, declining to apply the original scope of the '805 Patent to the remainder of the RE'153 Patent because “the mandate of the Federal Circuit ha[d] been ...


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