SHERWIN-WILLIAMS COMPANY v. PPG INDUSTRIES, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

THE SHERWIN-WILLIAMS COMPANY, ) CIVIL ACTION NO. 17-1023

)

Plaintiff/Counterclaim-defendant, ) JUDGE JOY FLOWERS CONTI

)

)

)

v. )

)

PPG INDUSTRIES, INC., )

)

Defendant/Counterclaimant. )

OPINION

I. Introduction

On November 3, 2020, the special master entered a report and recommendation (“R&R”)

to address a discrete issue on which the special master requested additional briefing, namely,

whether The Sherwin-Williams Co. (“Sherwin”) should be bound by its admission to the United

States Patent and Trademark Office (“USPTO”) that the Perez Patent discloses a BPA-free

coating (ECF No. 761 at 1). The special master recommended that the motion by PPG

Industries, Inc. (“PPG”) to exclude the opinions set forth in ¶¶ 94-117 of the rebuttal expert

report of Dr. Joseph Schork (“Schork”) (ECF No. 349), be granted.

The special master’s R&Rs were issued after extensive briefing and oral argument by

video conference, which the court attended. (May 27, 2020 Transcript, ECF No. 553). The court

also considered the additional briefing relating to Sherwin’s objections to the special master’s

R&R #761 (ECF Nos. 784, 791, 802). The objections will be reviewed de novo. The parties

had ample notice and opportunity to be heard pursuant to Federal Rule of Civil Procedure

53(f)(1). This opinion will not address issues which were not fully litigated or will be the subject

of other R&Rs from the special master.1

II. Factual and Procedural Background

In 2012, PPG filed a reexamination proceeding to challenge the ‘047 and ‘847 patents

(the “parent patents,” which are part of the prosecution history of the Asserted Patents in this

case, Texas Instruments Inc. v. U.S. Int'l Trade Comm'n, 988 F.2d 1165, 1173 (Fed. Cir. 1993)).2

On May 25, 2012, the USPTO agreed with PPG that Sherwin’s patents were invalid, based on

the Perez Patent (ECF No. 350-2). The patent examiner concluded that “since Perez makes no

teaching with respect to the presence of [BPA] . . ., it is the position of the examiner that they are

not present.” (ECF No. 350-2 at 10.) In its written response to the examiner on August 27, 2012

seeking reconsideration, Sherwin admitted that the Perez Patent disclosed a BPA-free coating,

although it contended that its patents were valid for other reasons. Specifically, Sherwin stated:

Because of its use of epoxies, Christenson’s coating contains BPA. Perez, on

the other hand, is a BPA-free coating (Valspar3 agrees with the Office’s

finding in this regard).

(ECF No. 350-3 at 21).

1 In particular, Sherwin argues that the court should not adopt the position that the reexamination proceedings may

be admitted in their entirety for any relevant purpose (ECF No. 784 at 16). The court will not address the scope of

the reexamination evidence in this decision, because it is not necessary to the resolution of the pending motion and

is the subject of a separate motion in limine currently under consideration by the special master. In addition, the

court does not address whether Schork’s opinions would be excluded under the alternative rationale that they are

based on a commercial formulation, rather than the teachings of the Perez Patent itself, because that issue is also

pending before the special master. Finally, Sherwin argues in its reply brief that it should be permitted to present

evidence to the jury that Perez does not disclose a complete “coating.” The court will not resolve the “complete

coating” issue in this decision because the focus of PPG’s motion in limine and the special master’s R&R #761 was

on the “BPA-free” evidence in Schork’s Rebuttal Report.

2 Sherwin’s reliance on Georgia-Pacific Corp. v. U.S. Gypsum Co., 195 F.3d 1322, 1333 (Fed. Cir. 1999), opinion

amended on reh'g, 204 F.3d 1359 (Fed. Cir. 2000), is misplaced because that decision stated that for a party to be

bound by a statement made to the PTO in connection with a later prosecution of a different patent, the statement

would have to be one that the examiner relied upon in allowing the claims in the patent at issue.

3 It is undisputed that Sherwin is Valspar’s successor-in-interest.

There was substantial further litigation in the reexamination proceedings, which was ably

recounted by the special master in R&R #490 (ECF No. 490). In summary, after Sherwin

submitted a unilateral covenant not to sue, the court in Valspar I declared PPG’s appeal moot.

The Patent Trial and Appeal Board (“PTAB”) interpreted Valspar I as reinstating the examiner’s

underlying decision, which rejected Sherwin’s patent claims. In addition, PPG pointed to

language in Valspar I to argue that the covenant not to sue must be broadly construed to cover

the Asserted Patents at issue in this case. Sherwin argued that Valspar I ended the entire

reexamination proceeding without any action on the merits, and the only appropriate action was

administrative termination with no preclusive effect. (See R&R #490 at 5-7). In Valspar II, the

court agreed with Sherwin and clarified that the entire reexamination was vacated and had no

preclusive legal effect on this case. In adopting R&R #490, this court discussed the decision in

Valspar II, as follows:

In Valspar Sourcing, Inc. v. PPG Industries, Inc., 780 F. App'x 917 (Fed. Cir. 2019)

(“Valspar II”), the Federal Circuit Court of Appeals recognized that a parallel

district court litigation (i.e., this case) existed which did not include the patents at

issue in the Federal Circuit and stated: “it was clear that this court’s intent [in

Valspar I] was to nullify the entire inter partes reexamination without any collateral

effect on other litigation.” Id. at 919, 922. In other words, the decision in Valspar

I should not be interpreted as deciding that an implied license exists regarding the

claims Sherwin Williams is pursuing in this case.

(ECF No. 530 at 8).

In its invalidity contentions in March 2017, Sherwin contended that Perez did not

disclose a BPA-free coating and the “Valspar admissions” did not admit that Perez disclosed or

rendered obvious that limitation (ECF No. 467-4 at 3, filed under seal). Apparently, there was

no fact discovery about whether Perez disclosed a BPA-free coating. In his initial expert report,

PPG’s technical expert, Dr. Robson Storey (“Storey”), noted Sherwin’s admission to the USPTO

that Perez disclosed a BPA-free coating (ECF No. 395-1 ¶¶ 90, 112, filed under seal). Schork

opined (in the challenged section of his rebuttal report) that Perez does not disclose a BPA-free

coating (ECF No. 467-2 ¶¶ 94-117, filed under seal). Paragraphs 101-115 of the Schork Rebuttal

Report discuss the Coors coatings, for the proposition that when PPG did formulate Perez into

inside spray coatings, those coatings contained BPA, and therefore Perez does not disclose a

BPA-free coating. Id. Storey prepared a reply expert report in which he countered those Schork

rebuttal opinions (ECF No. 395-8 ¶¶ 70-80). PPG also deposed Schork.

III. Discussion

PPG contends that the special master correctly recommended that ¶¶ 94-117 of the

Schork Rebuttal Report be precluded in their entirety. PPG points out, correctly, that the entire

challenged section of the Schork Rebuttal Report addresses whether Perez discloses a BPA-free

coating. PPG argues that Valspar II vacated the decision, but did not expunge the record, of the

reexamination proceeding. PPG contends that Sherwin is bound by its admission to the USPTO

that Perez discloses a BPA-free coating and that Schork’s opinions to the contrary must be

excluded from evidence.

Sherwin argues that it should not be bound by the statement its attorney made during the

reexamination proceeding. It contends that the decision in Valspar II wiped the slate clean for

Sherwin to relitigate the issue whether Perez discloses a BPA-free coating. Sherwin contends

that estoppel doctrines do not apply and that PPG would not be unfairly prejudiced. In the

alternative, Sherwin argues that the preclusion of ¶¶ 94-117 is overbroad because the Coors

coatings were not at issue in the reexamination proceeding and Sherwin should be entitled to

rebut whatever evidence PPG intends to present about the Coors coatings at trial.

The court agrees with the special master’s reasoning and recommendation. Sherwin’s

statement in the reexamination proceeding was not an off-the-cuff comment by an attorney

during oral argument. Instead, it was an unambiguous position taken by a party in a written brief

filed three months after the USPTO decision. Sherwin stated that one of PPG’s references

(Christenson) did contain BPA, but “Perez, on the other hand, is a BPA-free coating.” (ECF No.

350-3 at 21). Sherwin’s efforts to portray the position it took as an inadvertent mistake (ECF

No. 784 at 11-12) are rejected.

As this court explained in its opinion of November 19, 2020, filings in the patent office

represent positions of the party which have consequences. (ECF No. 780 at 6). The court “can

take judicial notice of Patent & Trademark Office filings.” Taza SystemS, LLC v. Taza 21 Co.,

LLC, No. 2:11CV073, 2013 WL 5145859, at *3 (W.D. Pa. Sept. 13, 2013) (citing Old Reliable

Wholesale, Inc. v. Cornell Corp., 635 F.3d 539, 549 (Fed. Cir. 2011); and Erbe v. Billeter, No.

06-113, 2006 WL 3227765 (W.D. Pa. Nov. 3, 2006)). Here, Sherwin is bound by the position it

took at the USPTO that Perez discloses a BPA-free coating. Contrary opinion evidence by

Schork is not relevant, does not “fit,” would confuse the issues, and is properly excluded.

PPG is entitled to rely on the position Sherwin took at the USPTO. In Procter & Gamble

Co. v. Nabisco Brands, Inc., 711 F. Supp. 759 (D. Del. 1989), the court stated: “a patentee's

representations to the PTO during the prosecution of its patent application about the scope of the

prior art is a binding admission and should ‘be accepted at face value’ during subsequent

litigation over the patent.” Id. at 770 (citing In Re Nomiya, 509 F.2d 566, 570–71 (C.C.P.A.

1974); Tyler Refrigeration Corp. v. Kysor Industrial Corp., 601 F. Supp. 590, 600 (D. Del. 1985)

(quoting 2 Chisum, D., A Treatise on Law of Patentability, Validity, and Infringement §

5.03[3][e] (1981) (“It is well settled that an applicant's admission as to the relevant art—both in

terms of available sources and in terms of scope of the art—will be accepted as binding upon

him.”)).4 The principle that a party’s admissions during prosecution are binding “applies with

equal force to arguments made by a patentee to sustain the patentability of claims during

4 The court need not address the extent of prejudice suffered by PPG due to Sherwin raising this issue in a rebuttal

expert report. PPG would be prejudiced simply by having to litigate an issue that was resolved by Sherwin’s

admission before the USPTO.

reexamination.” Spectrum Int'l, Inc. v. Sterilite Corp., 164 F.3d 1372, 1379 (Fed. Cir. 1998).

See Digital Biometrics, Inc. v. Identix, Inc., 149 F.3d 1335, 1347 (Fed. Cir. 1998) (“The public

has a right to rely on such definitive statements made during prosecution. Notice is an important

function of the patent prosecution process, as reflected by the statute itself, see 35 U.S.C. §

112”).

In Spectrum, the court faced a similar issue involving explicit statements made by a

patent applicant during prosecution to distinguish a claimed invention over prior art. 164 F.3d at

180. The court concluded that “the prosecution history, which includes ‘all express

representations made by or on behalf of the applicant to the examiner to induce a patent grant,’

limits the interpretation of the claims ‘so as to exclude any interpretation that may have been

disclaimed or disavowed during prosecution in order to obtain claim allowance.’” Id. (quoting

Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 452, 227 USPQ 293, 296

(Fed.Cir.1985)). The court explained that by distinguishing the claimed invention over the prior

art, an applicant indicates what the claims do not cover. Id. If a patentee relinquishes subject

matter to distinguish a prior art reference during prosecution, the patentee “cannot during

subsequent litigation escape reliance [by the defendant] upon this unambiguous surrender of

subject matter.” Id. (citations omitted). In sum, “claims may not be construed one way in order

to obtain their allowance and in a different way against accused infringers.” Id.

Similarly, in BASF Agro B.V. v. Makhteshim Agan of North America, Inc., 519 F. App'x

1008 (Fed. Cir. 2013), the court rejected a patentee’s attempts to introduce expert testimony to

qualify statements it made during the prosecution history. The court stated: “During the process

of obtaining a patent, a patentee may make statements to the Patent Office to distinguish her

claimed invention from the prior art. Where such statements indicate a clear disavowal of

subject matter, the patentee disclaims such subject matter and narrows the scope of her claims.”

Id. at 2016. The court reiterated that the “public has a right to rely on representations a patentee

has made in the course of obtaining her patent.” Id. (citing Spectrum). Because the prosecution

history was clear, and the public was entitled to rely on it, the proffered inconsistent expert

testimony was not probative and was not admissible to contradict the record. Id. at 1018.

The same analysis applies here. Sherwin made a clear statement to the examiner in its

efforts to distinguish the Christenson and Perez prior art references during prosecution. That

statement is part of the record and can be relied upon by the public. Sherwin cannot take the

position that Perez is BPA-free to obtain the patent and assert a contrary position in this lawsuit.

The proffered inconsistent expert testimony by Schork is not probative and is not admissible.

The special master correctly concluded that Valspar II does not require the expungement

of all statements made, and positions taken, by a party during the reexamination. Valspar II did

not address any of the legal principles set forth above. Instead, the issues in dispute were: (1)

whether the examiner’s decision in PPG’s favor would remain in place; and (2) whether

comments in Valspar I about the scope of Sherwin’s unilateral covenant not to sue were binding

on this court. In Valspar II, the court agreed with Sherwin and clarified that the entire

reexamination was vacated and had no preclusive legal effect on this case. The issue whether

Sherwin should be bound by its position that Perez disclosed a BPA-free coating was simply not

raised or resolved in Valspar II.

The special master correctly distinguished the decisions on which Sherwin relied. See

Zenith Labs., Inc. v. Bristol-Myers Squibb Co., 19 F.3d 1418, 1425 (Fed. Cir. 1994) (noting that

“actual reliance by the examiner need not be shown” in claim construction); 3rd Eye

Surveillance, LLC v. United States Elbit Sys. of Am., LLC, 145 Fed. Cl. 200, 205 (2019) (court

noting, in dicta, it was unconvinced whether estoppel should attach to a now-vacated final

written decision from the PTAB); Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc.,

No. CV 03-0597, 2007 WL 3274093, at *3 (D. Ariz. Nov. 2, 2007) (distinguishing Proctor &

Gamble and concluding that a party is not bound by a statement the PTO rejected during an inter

partes proceeding). Sherwin’s reliance on the recent nonprecedential decision in Cook Group,

Inc. v. Boston Scientific Scimed, Inc., 809 F. App'x 990 (Fed. Cir. 2020), is misplaced. Although

Sherwin focuses on the reference to consideration of the admission by the “factfinder,” the

dispute involved the PTAB’s refusal to “bind Patent Owner to attorney arguments made in its

preliminary response.” Id. at 999 n.3. The court held that “an admission in a preliminary patent

owner response is evidence appropriately considered by a factfinder [i.e., the PTAB].” Id. at

1000. In context, these decisions do not require this court to permit Sherwin to disavow the

position it took before the USPTO that Perez discloses a BPA-free coating and present

contradictory evidence to the jury.

IV. Conclusion

In summary, R&R #761 is adopted, as supplemented herein, as the opinion of the court.

The proffered evidence set forth in ¶¶ 94-117 of the Schork Rebuttal Report will not be

admissible and Sherwin will be bound by its position at the USPTO that Perez discloses a BPA-

free coating. The court’s decision is without prejudice to Sherwin’s opportunity to seek to

present appropriate rebuttal evidence about the Coors coatings, depending upon what evidence

PPG presents at trial.

An appropriate order will be entered.

/s/ Joy Flowers Conti

Joy Flowers Conti

Senior United States District Judge

Dated: January 21, 2021