thermo-ply v. ohio willow wood company et. al

7/27/2019 Thermo-Ply v. Ohio Willow Wood Company et. al.

1/32

IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS

BEAUMONT DIVISION

_______________________________________

THERMO-PLY, INC.,

Plaintiff, Case No. 1:13-cv-652

vs.

THE OHIO WILLOW WOOD COMPANY,

and BRUCE KANIA,

Defendants.

_______________________________________

COMPLAINT AND DEMAND FOR JURY TRIAL

(Injunctive Relief Sought)

Plaintiff, Thermo-Ply, Inc. (Thermo-Ply), sues Defendants, The Ohio Willow Wood

Company (OWW) and Bruce Kania (Kania), and alleges the following:

NATURE OF THE ACTION

1. This is an action for preliminary and permanent injunctive relief, equitable relief,damages, costs, expert fees, and attorneys fees resulting from OWW and Kanias violations of

Sections 1 and 2 of the Sherman Act through fraudulently acquired patents.

2. This is also an action for declaratory judgment pursuant to 28 U.S.C. 2201 andRule 57, Federal Rules of Civil Procedure, for the purpose of determining a question of actual

controversy between Thermo-Ply and OWW: that a patent assigned to OWW is invalid.

JURISDICTION AND VENUE

3. This Court possesses subject matter jurisdiction over this action pursuant to 28U.S.C. 1331.


2/32

4. This Court possesses personal jurisdiction over OWW and Kania because OWWand Kania engaged in conduct, activities, and transactions in this District and in the State of

Texas giving rise to the claims asserted in this case.

5. As described in detail below, OWW and Kania acted in concert inanticompetitive activity within this judicial district, including their knowingly improper

enforcement of U.S. Patent No. 7,291,182 (the 182 Patent) against Thermo-Ply in this Court

on November 7, 2007, Case No. 9:07-cv-274 (the 182 Patent Case), which improper

enforcement is a material basis for the antitrust claims asserted in this case.

6. In the 182 Patent Case, this Court determined on summary judgment that theasserted claims of OWWs asserted 182 Patent, on which Kania is named as an inventor, were

obvious and, therefore, invalid. See Order Granting Defendants Motion for Summary

Judgment (Dkt. No. 105).

7. On December 7, 2011, the Federal Circuit Court of Appeals affirmed this Courtsorder in the 182 Patent Case invalidating OWWs 182 Patent on summary judgment.

8. OWW is additionally subject to this Courts jurisdiction because, uponinformation and belief, it has distributed, offered for sale, and sold goods in the State of Texas,

and has placed its products in an unrestricted stream of commerce, expecting distribution

throughout the United States.

9. Venue is proper in this judicial district under 28 U.S.C. 1391(b) (2) and under

15 U.S.C. 15, as well as 15 U.S.C. 22.

THE PARTIES

10. Thermo-Ply is a Florida corporation, with its principal place of business in St.Petersburg, Florida. Thermo-Ply manufactures, markets, and sells prosthetic products, including

2


3/32

prosthetic liners made of fabric-covered thermoplastic gel where the gel includes block co-

polymers and plasticizing oil (Fabric Covered Thermoplastic Gel Liners). The Fabric

Covered Thermoplastic Gel Liners manufactured by Thermo-Ply are ultimately resold to

amputees, including those residing in the United States.

11. OWW is an Ohio corporation, which also manufactures, markets, and sells

Fabric Covered Thermoplastic Gel Liners throughout the United States.

12. Kania is an individual residing in Shepherd, Montana, who has engaged in

conduct, activities, and transactions giving rise to the claims in this lawsuit.

COUNT ONE DECLARATORY JUDGMENT OF INVALIDITYOF THE 951 PATENT

13. Thermo-Ply repeats and realleges the allegations of paragraphs 1 through 12

above, as if set forth fully herein.

14. On September 3, 2013, the very same day that OWWs U.S. Patent No.

8,523,951 (the 951 Patent) was issued, OWW sued Thermo-Ply in the United States District

Court for the Southern District of Ohio, Case No. 2:13-cv-861, alleging that Thermo-Ply is

infringing OWWs 951 Patent by making fabric covered gel liners (the 951 Infringement

Lawsuit).

15. The only fabric covered gel liners manufactured by Thermo-Ply are Fabric

Covered Thermoplastic Gel Liners.

16. OWW has not served the complaint and summons for the 951 Infringement

Lawsuit on Thermo-Ply, and Thermo-Ply has not otherwise appeared in the 951 Infringement

Lawsuit.

3


4/32

17. United States District Court for the Southern District of Ohio lacks personal

jurisdiction over Thermo-Ply. Thus, the 951 Infringement Lawsuit is not an appropriate forum

or venue for Thermo-Plys declaratory judgment claim against OWW relating to the 951 Patent.

18. The 951 Patent is invalid and unenforceable under at least 35 U.S.C. 101,

102, 103, and 112.

19. One or more claims of the 951 Patent are invalid and unenforceable under 35

U.S.C. 102 as being anticipated and Thermo-Ply is not liable for infringement of the 951

Patent because, more than one year prior to the filing of the original application which matured

into the 951 Patent, the alleged invention was patented by others and/or described in printed

publications, or was in public use or was on sale in this country.

20. In light of the publically disclosed prior art existing at the time the alleged

invention of the 951 Patent was made, one or more claims of the 951 Patent are invalid and

unenforceable under 36 U.S.C. 103, as being obvious to one skilled in the art to which the

alleged invention relates. Therefore, Thermo-Ply is not liable for infringement of the 951

Patent.

21. One or more claims of the 951 Patent are indefinite and ambiguous, rendering

the claims invalid and unenforceable under 35 U.S.C. 112. Therefore, Thermo-Ply is not liable

for infringement of the 951 Patent.

22. One or more claims of the 951 Patent are invalid and unenforceable for lack of

enablement, and Thermo-Ply is therefore not liable for infringement of the 951 Patent.

23. OWW misused the 951 Patent by commencing and maintaining a federal action

in bad faith and without probable cause and in suing for royalties and other damages because it

knew or should have known that the 951 Patent is invalid.

4


5/32

24. OWW committed patent misuse by bringing and maintaining a federal action on

the 951 Patent in bad faith with knowledge that the asserted 951 Patent is invalid and/or

unenforceable against Thermo-Ply.

25. As a result of OWWs allegations that Thermo-Ply is infringing the 951 Patent,

an actual controversy exists as to the 951 Patents invalidity, unenforceability, non-

infringement, and OWWs misuse of the 951 Patent.

26. This claim is exceptional under 35 U.S.C. 285.

27. Thermo-Ply retained its below-listed counsel to defend and vindicate its rights

and interests in this action, and is obligated to pay such counsel reasonable attorneys fees.

WHEREFORE, Thermo-Ply respectfully requests that this Court enter judgment in favor

of Thermo-Ply and against OWW, declare that the 951 Patent is invalid and unenforceable

against Thermo-Ply and that OWW committed patent misuse by bringing and maintaining a

federal action against Thermo-Ply for infringement of the 951 Patent, grant Thermo-Ply an

award of its attorneys fees and costs, and grant such other and further relief that this Court

deems just and appropriate.

COUNT TWO ANTITRUST VIOLATION SHERMAN ACT

SECTIONS 1 AND 2 VIOLATIONS BASED UPON ASSERTIONS

OF FRAUDULENTLY ACQUIRED PATENTS

28. Thermo-Ply realleges and incorporates by reference the allegations of paragraphs

1 through 12, and 14 through 27 above, as if set forth fully herein.

29. On information and belief, individuals associated with the filing and prosecution

of the applications that led to the U.S. Patent No. 5,830,237 (the 237 Patent), U.S. Patent No.

6,964,688 (the 688 Patent), the 182 Patent, and the 951 Patent (collectively, OWWs

Fraudulently Procured Patents), including Kania and one or more of OWWs attorneys,

5


6/32

deliberately and intentionally committed fraud before the United States Patent and Trademark

Office (the PTO) in the procurement of OWWs Fraudulently Procured Patents.

30. On information and belief, the deliberate and intentional material

misrepresentations and failure to disclose prior art to the PTO by OWW and Kania materially

affected allowance of OWWs Fraudulently Procured Patents in that one or more claims of each

patent would not have been granted (at least in their present form) but for those fraudulent

misrepresentations and omissions.

Relevant Market

31. Because the products manufactured by Thermo-Ply and OWW are sold viainterstate commerce throughout the United States, the United States is the relevant geographic

market for the purposes of Thermo-Ply's claims under Sections 1 and 2 of the Sherman Act.

32. A relevant market for purposes of Thermo-Plys claims under Sections 1 and 2 ofthe Sherman Act is the market for Fabric Covered Thermoplastic Gel Liners, which products are

used by amputees as a cushion between a residual limb and a prosthetic device and, in some

cases, to assist in attaching a prosthetic device to a residual limb.

33. A number of companies, including Thermo-Ply, OWW, Alps South LLC(Alps), DAW Industries, Inc. ("DAW"), Silipos, Inc. ("Silipos"), Fillauer Companies, Inc.

("Fillauer"), and Otto Bock HealthCare GmbH ("Otto Bock"), compete within the Fabric

Covered Thermoplastic Gel Liner market.

The Attempt to Monopolize

34. OWWs attempt to monopolize in violation of Sections 1 and 2 of the ShermanAct arises out of OWW's scheme to unreasonably restrain trade and harm competition in the

6


7/32

United States and to monopolize, or attempt to monopolize, the market for Fabric Covered

Thermoplastic Gel Liners worn by amputees within the United States.

35. OWW fraudulently procured patent protection for its Fabric CoveredThermoplastic Gel Liners and, as a result, several patents purportedly covering Fabric Covered

Thermoplastic Gel Liners, including OWWs Fraudulently Procured Patents, have been issued

to Kania and others who ultimately assigned them to OWW.

36. OWW markets and sells throughout the United States Fabric CoveredThermoplastic Gel Liners, known as its "Alpha" line of products, which are commercial

embodiments of one or more of OWWs Fraudulently Procured Patents.

37. Therefore, OWW's activities in violation of Sections 1 and 2 of the Sherman Actoccur through the use of, and affect, interstate commerce.

38. To accomplish its objectives of illegally restraining trade and obtaining andmaintaining a monopoly in the market for Fabric Covered Thermoplastic Gel Liners, OWW, in

concert with Kania, obtained and used OWWs Fraudulently Procured Patents to foreclose and

restrain competition in the market for Fabric Covered Thermoplastic Gel Liners, to directly

cause injury to competitors, including Thermo-Ply, and to directly cause injury to competition in

the relevant market.

39. OWW has restrained competition and injured competitors by filing patentinfringement lawsuits, alleging infringement of some of OWWs Fraudulently Procured Patents,

against Thermo-Ply and DAW (which sells Thermo-Plys Fabric Covered Thermoplastic Gel

Liners under a private label arrangement), and other competitors in the relevant market,

including Alps.

7


8/32

40. OWW has filed those actions for alleged infringement of OWWs FraudulentlyProcured Patents in an effort to exclude its competitors from the Fabric Covered Thermoplastic

Gel Liner market and cause them to expend enormous time, money, and effort to defend

themselves against OWWs infringement actions.

41. The time, money, and effort required to defend against OWWs actions foralleged infringement of OWWs Fraudulently Procured Patents, and the stigma against OWWs

competitors caused by those suits, gravely impaired and continues to impair the ability of

OWWs competitors to compete, and creates an intentional reduction or elimination of

competition, in the relevant market.

42. Additionally, upon information and belief, as a result of OWW bringing orthreatening infringement litigation on OWWs Fraudulently Procured Patents, OWW has

entered into agreements to license OWWs Fraudulently Procured Patents to chosen competitors

of OWW in the relevant market.

43. Under such licenses, competitors have agreed to limit their sales of FabricCovered Thermoplastic Gel Liners in United States, or have agreed to pay a substantially

increased royalty if their sales volume for Fabric Covered Thermoplastic Gel Liners exceeds

certain limits (OWWs Capped Licenses).

44. As a practical matter, OWWs Capped Licenses are intended to and do preventOWWs competitors who enter into such licenses from selling competing Fabric Covered

Thermoplastic Gel Liners above the stated ceilings within the United States, and thus

deliberately reduce or eliminate competition in the relevant market.

45. As a result of OWW's conduct described above, trade in the market for FabricCovered Thermoplastic Gel Liners has been unlawfully restrained in the United States and in

8


9/32

interstate commerce, and such conduct will, or has, allowed OWW to obtain and maintain

monopoly power in the market for Fabric Covered Thermoplastic Gel Liners.

OWW's Fraudulent Procurement of the 182 Patent, 237 Patent, 688 Patent, and 951

Patent and Conduct During Reexamination Proceedings Before the PTO

46. OWWs Fraudulently Procured Patents are all substantially similar and

essentially cover the same subject matter, a Fabric Covered Thermoplastic Gel Liner that

provides a cushion and, in some instances, a means of attachment, between an amputee's

residual limb and a hard prosthetic socket.

47. Kania, who is named as an inventor on each of OWWs Fraudulently Procured

Patents, has claimed before this Court and other courts that he started developing a Fabric

Covered Thermoplastic Gel Liner in the early 1990s. During this time, he was assisted by co-

developers, including Dr. Carol Salusso and David Zimmerman.

48. According to Kanias sworn testimony, sometime in 1994 he approached OWW

about helping him further develop and market certain products, supposedly including a Fabric

Covered Thermoplastic Gel Liner.

49. Kania has further testified that OWW agreed to help him develop and prosecute

patents on Fabric Covered Thermoplastic Gel Liners in exchange for an exclusive license

agreement whereby Kania assigned the resulting patents to OWW and OWW paid Kania a

substantial royalty on the sales of liners that commercialized any resulting patents. As part of

their license agreement, OWW paid all costs for procuring the patents on Kanias so-called

inventions and hired patent counsel to obtain such patents.

50. Kania is not, nor has he ever been, an employee of OWW. Kania is not affiliated

with OWW and is not an officer, director, or agent of OWW. Consequently, Kania and OWW

9


10/32

are separate actors capable of agreeing, acting in concert, or colluding to unlawfully restrain

trade in violation of Section 1 of the Sherman Act.

51. Kania and OWW have acted in concert to obtain OWWs Fraudulently Procured

Patents and to unlawfully attempt to enforce these patents against OWW's competitors,

including Thermo-Ply.

52. On March 5, 1996, OWW filed patent application No. 08/611,306, which issued

on November 3, 1998, as the 237 Patent, entitled Gel and Cushioning Devices.

53. The 237 Patent, as originally issued, contained broad claims that purported to

generally claim as an invention, a fabric covered gel liner (which would include a Fabric

Covered Thermoplastic Gel Liner), described in the 237 Patent as tube sock-shaped covering

for enclosing an amputation stump composed of a fabric covering with a gel composition on

the inside of the fabric.

54. On July 23, 1998, OWW filed a continuation of the No. 08/611,306 application,

application No. 09/121,300, which issued on November 6, 2007, as the 182 Patent, also entitled

"Gel and Cushioning Devices."

55. The 182 Patent, as originally issued, contains broad claims that purport to

generally claim as an invention, a fabric covered gel liner (which would include a Fabric

Covered Thermoplastic Gel Liner), described in the 182 Patent as a cushion liner for enclosing

an amputation stump composed of a fabric covering with a gel composition on the inside of the

fabric that will be next to the skin of the wearer when the liner is donned.

56. On October 15, 1999, OWW filed patent application No. 09/418,505, which

issued on November 15, 2005, as the '688 Patent entitled "Tube Sock-Shaped Covering."

10


11/32

57. The '688 Patent, as originally issued, contained broad claims purporting togenerally claim a fabric covered gel liner (which would include a Fabric Covered Thermoplastic

Gel Liner), which the 688 Patent describes as a tube-shaped, fabric covering for enclosing an

amputation stump coated on only the inside of the fabric covering with a polymeric material.

58. On December 22, 2008, OWW filed application No. 12/341,038, which issued onSeptember 3, 2013, as the 951 Patent, entitled "Prosthetic Socket Interface and Assembly."

Application No. 12/341,038 is a continuation of the No. 11/120,251 application, now

abandoned, which is a divisional of the No. 09/418,505 application, which issued as the 688

Patent.

59. The 951 Patent, as issued, contains broad claims purporting to generally claim aa Fabric Covered Thermoplastic Gel Liner, which the 951 patent describes as a prosthetic

component made of fabric covered thermoplastic gel and which is used to cover a residual leg,

and which, in some claims, includes a docking means for attachment of an external device.

60. Since at least 2004, OWWs attorneys have prosecuted the applications orreexaminations of OWWs Fraudulently Procured Patents and have filed and prosecuted

infringement lawsuits on OWWs Fraudulently Procured Patents for OWW against OWWs

competitors in the Fabric Covered Thermoplastic Gel Liner market.

61. Before the application that resulted in the '951 Patent was filed on December 22,2008, OWW and its attorneys were aware of prior art that covered the same subject matter as

claimed in the 951 Patent that had been on sale in the United States for more than a year before

July 31, 1995, the critical date for the 951 Patent.

11


12/32

62. In the declarations filed in connection with that original application, Kania,Robert Arbogast, who was OWW's then-CEO, and OWWs Director of Engineering, and James

Colvin, among others, were listed as inventors.

63. In those declarations, Kania, Arbogast, and Colvin each intentionallymisrepresented that they knew of no other inventors, other than those listed on the declaration

for the invention being claimed, when they knew that was not true.

64. Kania, Arbogast, Colvin, and OWWs attorneys also failed to disclose materialprior art to the PTO, or they intentionally mischaracterized the nature of such prior art, in the

prosecution of the application that resulted in the 951, 688, and 182 Patents and also in

connection with the reexaminations of the 688, 237, and 182 Patents. Upon information and

belief, they did so for the purpose of misleading the PTO as to the material prior art in existence

before the critical date of those patents, so that the PTO would issue the 951, 688, and 182

Patents and also issue reexamination certificates for the 688, 237 and 182 Patents.

65. Additionally, to overcome an office action rejecting claims set forth in the 688Patent application, OWW intentionally misled the PTO by amending the application to

eliminate all of the co-inventors who originally were listed as inventors, except for Kania, even

though the inventions of some of these inventors remained in the claims of the application and

in the patent claims as issued.

The Salusso Material Information OWW Withheld From the PTO

66. Prior to 1996, Kania disclosed to OWW and others, both in a written productdescription and orally, that Dr. Carol Salusso worked with him as a co-developer of the Fabric

Covered Thermoplastic Gel Liner later claimed in OWWs Fraudulently Procured Patents.

12


13/32

67. Despite knowing of Dr. Salussos contribution, neither OWW nor its patentcounsel ever contacted Dr. Salusso in connection with the applications for OWWs Fraudulently

Procured Patents.

68. Dr. Salusso was not listed as a co-inventor on any of OWWs FraudulentlyProcured Patents and was unaware that Kania and OWW sought patents on technology that she

co-invented until Thermo-Plys counsel contacted her in connection with the 182 Patent Case,

which OWW filed in this Court.

The Silipos Material Prior Art OWW Withheld From the PTO or Mischaracterized

69. In April of 1999, an attorney for Silipos, one of OWW's competitors, wrote toOWW's then-CEO, Arbogast, in response to OWWs accusation that a Silipos product infringed

the 237 Patent. In his letter, Silipos attorney expressly informed Arbogast that Silipos had

been selling its Silosheath product line since 1992, which products included: one containing a

polymeric gel on only the inside of the sock and another type containing a polymeric gelatinous

material on both sides. He further stated that Silipos' original sales of their "Silosheath tube-

shaped sock product line having the gelatinous material on only the inside of the sock pre-date

the filing date of the Kania application" (the Silipos April 1999 Letter).

70. The Silipos April 1999 Letter also enclosed a copy of Silipos' November 29,1994, amendments to a later abandoned patent application that Silipos originally filed on June 5,

1993. Claim 1 of the Silipos amendment claimed and disclosed a protective garment

comprising: a fabric outer layer; and an inner layer comprising a gel, said gel comprising a poly

(styrene-ethylene-butylene-styrene) tri-block copolymer and mineral oil, wherein said inner

layer is directly accessible to the skin of a wearer of the protective garment. (The Silipos

Claim 1 Amendment).

13


14/32

71. The gel disclosed in the Silipos Claim 1 Amendment is a thermoplastic gel. TheSilipos Claim 1 Amendment and the other amendments to Silipos June 5, 1993, patent

application predate the critical dates for all of OWWs Fraudulently Procured Patents, and

expressly or implicitly disclose the inventions claimed in OWWs Fraudulently Procured

Patents.

72. The Silipos April 1999 Letter establishes that OWW possessed actual knowledgeno later than April of 1999--approximately six months before it filed its application for the 688

Patent and over six (6) years before it filed a divisional application that led to the 951 Patent--

that Silipos had disclosed, manufactured, and sold products covered by OWWs Fraudulently

Procured Patents before the critical date for each of OWWs Fraudulently Procured Patents.

73. Silipos attorney also wrote to OWWs patent attorney on October 28, 1999, andenclosed an invoice dated November 1, 1993, that lists various Silosheath products (the Silipos

October 1999 Letter). One of the products listed on the invoice enclosed with the Silipos

October 1999 Letter was Silipos Silosheath product that had the gel on only the inside of the

sock. In addition to the invoice, Silipos attorney also enclosed an example of that Silosheath

product with the Silipos October 1999 Letter to OWWs patent attorney.

74. Thus, at the time the parent application for the 951 and 688 Patents was filed,

during the prosecution of those patents, during the prosecution of the 182 Patent application,

and during the reexaminations of the 688, 237, and 182 Patents, OWW had actual knowledge

that Kania was not the inventor of the invention claimed in the OWWs Fraudulently Procured

Patents and their applications for those patents.

75. Furthermore, OWW failed to disclose to the PTO:

a. the Silipos April 1999 Letter or the Silipos October 1999 Letter;

14


15/32

b. the 1994 amendments to the Silipos application; or

c. the Silosheath with the thermoplastic gel on only the inside of the sock

that had been sent by Silipos attorney to OWW's patent counsel,

at any time during the prosecution of the application that resulted in the 951, 688 and 182

Patents or in any of the subsequent reexamination proceedings of the 688, 237, and 182

Patents, although such information would have been highly material to a patent examiner in

determining whether a patent should be issued and whether claims should be allowed in a

subsequent reexamination.

76. Silipos had another product in the Silosheath product line, known as the single

socket gel liner (SSGL), which was on sale before the critical dates for each of OWWs

Fraudulently Procured Patents. The SSGL is a Fabric Covered Thermoplastic Gel Liner, and is

a tube-shaped fabric covered liner made of a Coolmax material that is open at one end and

closed at the other and that has a gel material composed of a block co-polymer and mineral oil

on only the inside surface, so that when the SSGL is worn, the thermoplastic gel is next to the

skin and is capable of creating an airtight seal between the skin and the SSGL.

77. The SSGL was advertised in trade publications and on sale as early as October of

1994. Silipos confirmed that the SSGL was on sale prior to March 5, 1995, during a Rule

30(b)(6) deposition taken in connection with a patent infringement case that OWW filed against

Alps, alleging infringement of the 237 Patent. In 2006, Jean-Paul Comtesse, a former Silipos

executive who was employed by Silipos before July 31, 1995, also confirmed that the SSGL was

on sale prior to March 5, 1995, during his deposition taken in the same case.

78. Over 10 years ago, and many years before the 951, 688, and 182 Patents

issued, OWW obtained a Silipos SSGL. Although OWW may have submitted a document

15


16/32

referencing the SSGL as prior art in connection with its applications for the 951 and 688

Patents, OWW never provided any additional information concerning the SSGL to the PTO

during the prosecution of the original applications for the 951, 688, and 182 Patents, and

failed to show the SSGL to the patent examiner even though OWW had an example of an SSGL

in its possession and knew that the SSGL met all of the limitations of the Fabric Covered

Thermoplastic Gel Liner claimed in the applications for OWWs Fraudulently Procured Patents.

79. In 2006, before the first reexamination certificate concerning the 688 and 237

Patents issued, Mr. Comtesse was deposed in the presence of OWW's counsel in a case OWW

filed against Alps alleging Alps infringement of the 237 Patent based on Alps sales of Fabric


80. In his 2006 deposition, Mr. Comtesse testified that:

a. in October, 1994, Silipos marketed its SSGL to its customers and that

the SSGL was on sale prior to March of 1995;

b. the SSGL was made of a layer of tri-block co-polymer gel, covered on

the outside with Coolmax fabric and was open at one end and enclosed

at the other;

c. the inside of the fabric cover of the SSGL was dipped in a co-polymer

gel and the fabric was thus directly coated on only the inside with the

gel;

d. if there was gel on the outside of the SSGLs fabric cover, the liner was

rejected by quality control;

e. the gel layer of the SSGL was worn against the amputee's skin and was

capable of creating an airtight seal between the skin and the liner;

f. the gel on the Silipos SSGL was thicker at the distal end than at the open

end and such gel ranged between 4 or 5 millimeters at the distal end and

up to 2 to 2.5 millimeters at the opposite end; and

g. the thermoplastic gel in the SSGL sold before March of 1995 included

mineral oil.

16


17/32

81. Mr. Comtesse's testimony was corroborated in the presence of OWW's attorneys

by the Rule 30(b) (6) deposition of Silipos representative, Andrew McKelvey, taken in 2005

and by the exhibits to that deposition.

82. After OWWs 688 Patent issued in November of 2005, the PTO granted three

reexamination requests concerning different claims of the 688 Patent. After claim 1 and the

claims that depend on claim 1 were rejected during the reexamination proceedings, OWW

requested an interview with the reexamination examiners.

83. During this interview with the PTO reexamination examiners in July of 2007

(which occurred after the Comtesse and Silipos Rule 30(b) (6) depositions), which was attended

by Kania, Colvin, and two of OWWs attorneys, OWW asserted that its claimed invention was

different from the Silipos prior art and should be allowed because its invention claimed a liner

in which thermoplastic material was coated on only the inside of the liner fabric.

84. To distinguish the Silipos Silosheath prior art, OWW brought with it to the

interview, a product that OWW claimed was a Silosheath from the pre-critical date period.

This supposed Silipos Silosheath had gel on both the inside and outside of the fabric and it was

on this basis that the PTO later distinguished the Silosheath from the invention claimed in the

688 Patent, although the PTO did require amendments to the claims to clarify that the gel had

to reside on only the inside surface of the liner.

85. Neither OWW, nor OWWs attorneys, nor Kania brought a Silosheath with gel

on only the inside of the fabric or an SSGL to the interview with the PTO reexamination

examiners. Nor did they disclose their knowledge concerning such products to the

17


18/32

reexamination examiners, even though they were aware from numerous sources that Silipos had

such products on sale before the 688 Patents critical date.

86. Despite OWW, its patent attorneys, and Kania all knowing that there were other

Silipos Silosheath products manufactured and sold prior to the critical date that had gel on only

the inside of the fabric, and despite their knowledge that the SSGL also has gel on only the

inside of the fabric, and despite their knowledge of the deposition testimony of Comtesse and

Silipos Rule 30(b)(6) representative, they failed to disclose this information to the PTO during

the July, 2007 interview or thereafter during the reexaminations proceedings for the 688, 237

and 182 Patents.

87. After the July, 2007, reexamination interview, one of OWWs attorneys

responded to the PTO in connection with the reexaminations of the 688 Patent, and

intentionally mischaracterized the construction of the SSGL depicted in a pre-critical date

advertisement. Although OWW had earlier obtained an example of an SSGL, which clearly

showed the thermoplastic gel coating on only the inside of the fabric, and despite language from

the advertisement itself stating that the SSGL is worn next to the amputee's skin, OWW's

counsel represented to the PTO that the SSGL was not relevant to the claimed invention,

because it was constructed so that the thermoplastic gel was sandwiched between inner and

outer fabric coverings. OWW made similar misrepresentations to the PTO in connection with

the reexaminations of the 182 and 237 Patents.

The Fay Material Information and Prior Art OWW Failed to Disclose to the PTO

88. In July of 2006, OWW's counsel deposed John Jack Fay, President of Thermo-

Ply, in connection with another patent infringement action that OWW brought against Alps, this

time alleging infringement of the 237 and 499 Patents.

18


19/32

89. During his deposition, Mr. Fay testified that his prior company, Florida

Orthopedic Center (Florida Orthopedic), made and sold Fabric Covered Thermoplastic Gel

Liners as early as 1992. During his deposition, Mr. Fay produced and described two different

Fabric Covered Thermoplastic Gel Liners that Florida Orthopedic made and sold no later than

1994 (the Fay Prior Art Liners) together with patient notes relating to those liners, receipts for

materials used to make them, and even the obituary of the patient for whom the Fay Prior Art

Liners were made. The Fay Prior Art Liners were sold before the critical dates for each of

OWWs Fraudulently Procured Patents.

90. Mr. Fay also testified that Florida Orthopedic made and sold other Fabric

Covered Thermoplastic Gel Liners in the 1992 through 1994 time frame.

91. Shortly after Mr. Fay's deposition, Arbogast, Colvin, and one of OWWs

attorneys traveled to the offices of Thermo-Plys counsel and personally inspected the Fay Prior

Art Liners. Despite OWW's knowledge that the Fay Prior Art Liners anticipated or made

obvious the inventions claimed in OWWs Fraudulently Procured Patents, OWW failed to

disclose its knowledge about the Fay Prior Art Liners to the PTO during the:

a. interview in July of 2007 in connection with the reexamination

proceeding of the 688 Patent, or at any time thereafter in that

reexamination;

b. reexamination of the 237 Patent;

c. prosecution and reexamination of the 182 Patent; or

d. prosecution of the 951 Patent.

92. During his October 7, 2008, deposition taken in the 182 Patent Case, Kania

testified in the presence of OWWs counsel that the Fay Prior Art Liners met all the limitations

of at least one of the claims in the 182 Patent.

19


20/32

The Michael Material Information OWW Withheld From the PTO

93. On April 19, 2007, OWW's own expert witness in the field of prosthetics, John

Michael (Michael), testified in a lawsuit involving the 237 Patent, which suit Thermo-Ply

filed against OWW in the United States District Court for the Middle District of Florida, that a

fabric covered gel liner was "obvious" in the 1980s, and that a patent claiming such an invention

would be invalid for obviousness. Mr. Michaels testimony occurred in the offices, and in the

presence, of OWWs counsel.

94. In that same case, Michael also testified at a July 18, 2007,Markman hearing that

liners with a distal means for attaching a prosthesis appeared in the United States before 1990.

95. Despite having actual knowledge of Michael's testimony, OWW and its counsel

continued to represent to the PTO during reexamination proceedings that the subject matter of

the 688 and 237 Patents, including claims for a liner with a distal attachment means, was

patentable. OWW also continued to represent during the prosecution of the '182 Patent

application, the reexamination of the 182 Patent, and the subsequent prosecution of the 951

Patent that the subject matter of those patents was patentable.

96. Although OWW, its attorneys, and Kania were obligated to do so, they all failed

to disclose to the PTO the above-described:

a. material information and prior art regarding the Silipos products;

b. material information regarding Dr. Salussos co-inventorship of and

contributions to the claimed invention in OWWs Fraudulently Procured

Patents;

c. material information regarding the Fay Prior Art Liners; or

d. material information regarding Michaels testimony regarding prior art,

20


21/32

in connection with the applications and/or reexaminations of OWWs Fraudulently Procured

Patents (collectively, OWWs Fraudulent Non-Disclosures).

97. The information withheld in OWWs Fraudulent Non-Disclosures demonstrate

that the inventions claimed in OWWs Fraudulently Procured Patents were on sale before the

respective critical dates and/or were obvious to a person of ordinary skill in the art.

98. OWW, its attorneys, and Kania also intentionally and falsely represented to the

PTO the characteristics of the SSGL and that Kania was the inventor of the inventions claimed

in OWWs Fraudulently Procured Patents despite the fact that they all knew that:

a. OWWs Fraudulently Procured Patents had been invented by otherpersons before Kania;

b. Dr. Salusso was a co-developer with Kania of his putative inventions;

and

c. OWW amended the '688 Patent application to eliminate co-inventors

despite their contributions remaining in the application for the patent as

issued.

(collectively, OWWs Fraudulent Misrepresentations).

The Materiality of OWWs Fraudulent Non-Disclosures

and OWWs Fraudulent Misrepresentations

99. As a result of OWWs Fraudulent Non-Disclosures and OWWs Fraudulent

Misrepresentations to the PTO, the PTO issued the 951, 688, and 182 Patents as well as

reexamination certificates allowing the claims of the 688 and 237 Patents, as amended during

the reexamination.

100. But for OWWs Fraudulent Non-Disclosures and OWWs Fraudulent

Misrepresentations, the PTO would not have issued the 951, 688, and 182 Patents or the

reexamination certificates for the 688 and 237 Patents.

21


22/32

101. After the reexamination certificate for OWWs 688 Patent issued in early 2009,

Alps CEO filed an ex parte reexamination request regarding all 71 claims of OWWs 688

Patent, as those claims had been amended during the earlier reexamination proceedings. In

connection with that reexamination request, some of the foregoing material information was

disclosed to the PTO.

102. On June 19, 2009, the PTO issued an office action rejecting all 71 claims. After

OWW responded to that office action, the PTO issued another office action on November 12,

2009, again rejecting all of the relevant claims of the 688 Patent. OWW responded by

proposing significant amendments to all of the independent claims of the 688 Patent.

103. Alps CEO also filed ex parte reexamination proceedings regarding all of the

claims of both the 237 and 182 Patents, in which reexaminations of some of the above-

described material information was disclosed to the PTO.

104. In response to those reexamination proceedings, the PTO rejected all 23 claims

of the 237 Patent on April 27, 2009, and then issued a final office action rejecting all claims of

the 237 Patent on January 12, 2010.

105. Also in response to those reexamination proceedings, the PTO rejected all 62

claims of the 182 Patent on June 19, 2009. After OWW responded to the office action rejecting

all of the claims of the 182 Patent, the PTO issued a final office action rejecting all of the

relevant claims of the 182 Patent on November 3, 2009. On February 3, 2010, after OWW

again responded to the PTO's final action rejecting the relevant claims of the 182 Patent, the

PTO issued an office action yet again rejecting all of the relevant claims of the 182 Patent.

106. Before the PTO rejected the relevant claims of the 182 Patent, this Court

declared, in an order dated November 20, 2009, that the claims of the 182 Patent asserted by

22


23/32

OWW against Thermo-Ply in the 182 Patent Case were obvious and, therefore, invalid. This

Courts invalidation of the asserted claims of the 182 Patent was affirmed on December 7,

2011, by the Federal Circuit Court of Appeals.

107. OWW appealed the final rejection of the 237 Patent claims to the Board of

Patent Appeals and Interferences (the "Board"). The focus of OWWs Board appeal was the

examiners determination that claims of the 237 Patent were unpatentable over a Comfort

Zone reference (an advertisement featuring Silipos' SSGL product), as further described by Mr.

Comtesse's declaration and deposition testimony, in view of a patent by John Chen and previous

prior art admissions.

108. OWW's intentional misconduct continued during the Board appeal. In OWW's

appeal brief, and in the hearing before the Board, OWW's counsel falsely misrepresented that:

a. Mr. Comtesse was "an interested party" because he was still receiving

royalties from products Silipos sells, although he was not and did not;

b. Mr. Comtesse admitted that he is running a company that is a competitor

of OWW, which was also not true; and

c. Mr. Comtesse was the inventor of the Silipos prior art products at issue,

which he was not.

At the time of his deposition and declaration at issue, Mr. Comtesse was merely a disinterested

third party witness, whose testimony was clearly relevant and admissible for the purposes of

describing Silipos products within his personal knowledge during the 1994 to 1995 time period.

109. OWW, through its counsel, specifically intended to mislead the Board because

OWW knew that, if considered, Mr. Comtesse's deposition testimony would result in the Board

affirming the PTO's final rejection of all 23 claims of the 237 Patent.

23


24/32

110. Relying on OWWs intentional misrepresentations, the Board found that Mr.

Comtesse was an interested party, his testimony must be corroborated with sufficient evidence,

and that sufficient corroborating evidence was not provided to the PTO. Accordingly, on

September 30, 2011, the Board reversed the PTO's rejection of all 23 claims of 237 Patent. But

for the intentional misrepresentations to the Board by OWW's counsel, the PTOs rejection of

all 23 claims of the 237 Patent would have been affirmed.

111. A U.S. district court ultimately found the 237 Patent was invalid. In 2012, the

United States District Court for the Southern District of Ohio held, in the action styled The Ohio

Willow Wood Company v. Alps South, LLC, Case No. 2:04-cv01223, that the 237 Patent was

invalid as obvious based on the collateral estoppel effect of this Courts decision in the 182

Patent Case that the 182 Patent was invalid.

112. OWW had actual knowledge of, but failed to disclose to the PTO, at any time

after the 237 Patent originally issued or in any of the subsequent reexamination proceedings:

a. that Kania was not the inventor of the invention claimed in the 237

Patent and its application;

b. the Silipos April 1999 Letter and the Silipos October 1999 Letter;

c. the 1994 amendments to the Silipos application; or

d. the examples of the Silosheath or the SSGL that Silipos counsel had

been sent to OWW's patent counsel,

although such information was highly material to a patent examiner in determining whether a

patent should be issued and whether claims should be allowed in a subsequent reexamination.

Moreover, OWW provided materially false information to the Board, which resulted in a

reversal of the PTO's final rejection of all 23 claims of the 237 Patent.

24


25/32

113. OWW, its counsel, and/or Kania knew that this undisclosed material information

anticipated, made obvious, or otherwise undermined or destroyed the patentability of the claims

of OWWs Fraudulently Procured Patents, as originally issued and, in the cases of the 688 and

237 Patents, as amended in the reexamination proceedings for these patents, and as filed and

issued in the 951 Patent, and that a reasonable patent examiner would have regarded such

undisclosed material information as important to the patentability of the inventions claimed in

OWWs Fraudulently Procured Patents.

OWW and Kania Used Federal Litigation to Enforce

OWWs Fraudulently Procured Patents as a Means to Exclude Competition

While Knowing That Such Litigation Was Objectively Baseless

114. OWW and Kania have used the federal courts since 2004 to enforce OWWsFraudulently Procured Patents as part of their scheme to exclude competition in the relevant

market of Fabric Covered Thermoplastic Gel Liners.

115. In 2004, OWW sued one of Thermo-Plys customers, DAW, for infringement ofOWWs 237 Patent in the United States District Court for the Southern District of Ohio, based

on DAWs sales of its Cool Liners, which are Fabric Covered Thermoplastic Gel Liners

manufactured by Thermo-Ply for DAW under a private label arrangement.

116. In 2005, OWW filed another lawsuit against DAW in the Southern District ofOhio, this time for infringement of OWWs 688 Patent, based on DAWs sales of its Fabric

Covered Thermoplastic Gel Liner products, which were also manufactured by Thermo-Ply for

DAW under a private label arrangement.

117. In November of 2007, OWW filed the 182 Case, in which it sued Thermo-Ply inthis Court, alleging Thermo-Plys infringement of the '182 Patent based on its sales of Fabric


25


26/32

118. OWW and Kania continued using the federal courts to exclude competition in themarket for Fabric Covered Thermoplastic Gel Liners. OWW and Kania again sued Thermo-Ply

in the Southern District Court of Ohio, on September 3, 2013 (the very day the 951 Patent

issued), alleging that Thermo-Plys manufacture of Fabric Covered Thermoplastic Gel Liners

infringes the 951 Patent.

119. OWW has also filed infringement actions against other competitors in the FabricCovered Thermoplastic Gel Liner market. In 2004, OWW sued Alps for infringement of the

237 Patent in the Southern District of Ohio, based on Alps sales of Fabric Covered

Thermoplastic Gel Liners.

120. In 2005, OWW again sued Alps for infringement of the '688 Patent. Once again,the suit was based on Alps sales of Fabric Covered Thermoplastic Gel Liners.

121. OWW also asserted a counterclaim for infringement of the 182 patent againstAlps in an action that is pending in the United States District Court for the Middle District of

Florida, again based on Alps sales of Fabric Covered Thermoplastic Gel Liners.

122. The day before the 951 Patent issued, OWW sued Alps yet again in the SouthernDistrict of Ohio, this time for infringement of OWWs 951 Patent. As before, this suit is based

on Alps sales of Fabric Covered Thermoplastic Gel Liners.

123. In 2006, OWW also sued Fillauer in the United States District Court for theSouthern District of Ohio, alleging that Fillauer infringed OWWs 237 and 688 Patents by

selling Fabric Covered Thermoplastic Gel Liners.

124. OWW has initiated and maintained lawsuits against Thermo-Ply and Thermo-Plys customer, DAW, regarding the OWW Fraudulently Procured Patents while knowing that

the undisclosed material information described above would or should ultimately render the

26


27/32

claims of these patents invalid and unenforceable. OWWs litigation against Thermo-Ply was

initiated, and is being maintained, in bad faith and is objectively baseless and is, therefore, a

sham.

125. Because OWW and Kania committed fraud on the PTO in obtaining OWWsFraudulently Procured Patents, and/or because, at the time OWW initiated the patent litigation

against Thermo-Ply described above it was objectively baseless, and/or because OWW had

knowledge of facts that would render OWWs Fraudulently Procured Patents invalid and

unenforceable, OWW is not immune from liability for violating the antitrust laws of the United

States.

OWW Violated Section 1 of the Sherman Act

126. As described above, OWW and Kania, acting in concert, have unreasonablyrestrained trade in the market for Fabric Covered Thermoplastic Gel Liners in the United States

by filing lawsuits to enforce OWWs Fraudulently Procured Patents against Thermo-Ply and its

customer, DAW, as well as other competitors in the Fabric Covered Thermoplastic Gel Liner

market, in a naked effort to force Thermo-Ply and these other competitors from this market in

violation of Section 1 of the Sherman Act.

127. OWW has also unreasonably restrained trade in the market for Fabric CoveredThermoplastic Gel Liners in violation of Section 1 of the Sherman Act by coercing Fillauer and,

upon information and belief, other competitors, through litigation alleging infringement of

OWWs Fraudulently Procured Patents or through threats of such litigation, into agreements that

license OWWs Fraudulently Obtained Patents to them, but impose such unreasonable royalties

for their sale in the United States of Fabric Covered Thermoplastic Gel Liners beyond certain

minimal ceilings that, as a practical matter, Fillauer and, upon information and belief, other

27


28/32

competitors, are placed at a significant disadvantage in selling Fabric Covered Thermoplastic

Gel Liners, thereby impairing their ability to compete effectively, which has in turn harmed

competition within the Fabric Covered Thermoplastic Gel Liners market.

128. OWWs Capped Licenses are effectively agreements to limit their sales ofcompeting Fabric Covered Thermoplastic Gel Liners in the United States.

129. OWWs conduct in violation of Section 1 of the Sherman Act isper se unlawfuland unlawful under the rule of reason.

130. As a direct and proximate result of OWWs violation of Section 1 of theSherman Act, Thermo-Ply has been injured in its business and property. Thermo-Ply has had to

expend substantial time, money, and effort in defending the lawsuits brought against it by OWW

for Thermo-Plys alleged infringement of the 182 Patent and the 951 Patent. As a

consequence of such expenditures, Thermo-Plys ability to further develop and market its

existing Fabric Covered Thermoplastic Gel Liner products has been impaired, as has its ability

to develop and market new products.

131. In addition, as a result of OWW's enforcement of the 182 Patent and the 951Patent, and OWW's assertion in the marketplace that Thermo-Ply infringes its patents,

customers and potential customers have been reluctant to do business with Thermo-Ply, and it

has lost sales and profits as a result.

132. The injuries sustained by Thermo-Ply as a result of OWW's violation of Section1 of the Sherman Act are antitrust injuries, that is, injury of the type the antitrust laws were

intended to prevent and that flow from OWW's unlawful acts.

133. Thermo-Plys injuries flow directly from the concerted actions of OWW andKania to unreasonably restrain trade in the market for Fabric Covered Thermoplastic Gel Liners

28


29/32

by initiating and maintaining a series of lawsuits against Thermo-Ply, its customer, DAW, and

other competitors in these markets, seeking to enforce OWWs Fraudulently Procured Patents

for the purpose of excluding these competitors, including Thermo-Ply, from the market.

134. As a result of OWW's violation of Section 1 of the Sherman Act, Thermo-Ply isentitled to recover treble damages and its costs of suit, including reasonable attorneys fees,

pursuant to Section 4 of the Clayton Act, 15 U.S.C. 15, and it is entitled to injunctive relief,

pursuant to Section 16 of the Clayton Act, 15 U.S.C. 26.

OWW Has Violated Section 2 of the Sherman Act

135. OWW has also monopolized or is attempting to monopolize the market forFabric Covered Thermoplastic Gel Liners in violation of Section 2 of the Sherman Act.

136. On information and belief, OWW has a present market share exceeding 50% ofthe Fabric Covered Thermoplastic Gel Liner market, which market share has and will continue

to increase as a result of OWWs Capped Licenses with Fillauer and, upon information and

belief, other competitors, which effectively limit their sales of Fabric Covered Thermoplastic

Gel Liners in the United States.

137. OWW has willfully engaged in predatory, anti-competitive, and exclusionaryconduct with the specific intent of monopolizing the market for Fabric Covered Thermoplastic

Gel Liners in aggressively seeking to enforce OWWs Fraudulently Procured Patents by

initiating and maintaining a series of infringement lawsuits against significantly smaller

competitors in this market, such as Thermo-Ply, DAW, Alps, and Fillauer, each of which has

lesser financial resources and which may be less able to defend themselves in such litigation.

138. If OWW has not already obtained monopoly power in the Fabric CoveredThermoplastic Gel Liners market, there is a dangerous probability that OWW will succeed in

29


30/32

obtaining monopoly power in that market in the United States if OWW is successful in using

OWWs Fraudulently Procured Patents to eliminate Thermo-Ply and other competitors from this

market, which would substantially increase OWWs market power.

139. As a direct and proximate result of OWW's violation of Section 2 of the ShermanAct, Thermo-Ply has been injured in its business and property. Thermo-Ply will likely be

required to expend substantial sums in defending the recent lawsuit brought against it by OWW

to enforce the 951 Patent. As a consequence of such expenditures, Thermo-Plys ability to

further develop and market its existing products has been impaired, as has its ability to develop

and market new products.

140. In addition, as a result of OWW's enforcement of OWWs Fraudulently ProcuredPatents against it and its customer, DAW, and OWW's assertions in the marketplace that

Thermo-Ply is infringing OWWs Fraudulently Procured Patents, customers and potential

customers have been reluctant to do business with Thermo-Ply, and it has lost sales and profits.

141. The injuries sustained by Thermo-Ply as a result of OWW's violation of Section2 of the Sherman Act are antitrust injuries: that is, injury of the type the antitrust laws were

intended to prevent and that flows from that which makes OWW's acts unlawful. Thermo-Plys

injuries flow directly from OWWs predatory, anticompetitive, and exclusionary conduct in

monopolizing or attempting to monopolize the market for Fabric Covered Thermoplastic Gel

Liners by initiating and maintaining a series of lawsuits against Thermo-Ply and its customer, as

well as other competitors in the relevant market, that seek to enforce OWWs Fraudulently

Procured Patents and to drive these competitors, including Thermo-Ply, from the relevant

market.

30


31/32

142. As a result of OWW's violation of Section 2 of the Sherman Act, Thermo-Ply isentitled to recover treble damages and its costs of suit, including reasonable attorneys' fees,

pursuant to Section 4 of the Clayton Act, 15 U.S.C. 15, and it is entitled to injunctive relief,

pursuant to Section 16 of the Clayton Act, 15 U.S.C. 26.

143. Thermo-Ply has retained its below-listed counsel to defend and vindicate itsrights and interests in this action, and is obligated to pay such counsel reasonable attorneys

fees.

WHEREFORE, Thermo-Ply respectfully requests that this Court:

(A) Grant judgment in favor of Thermo-Ply and against OWW and Kania;(B) Award Thermo-Ply three times its damages and costs of this action, including

reasonable attorneys fees, for OWW and Kanias violation of the antitrust laws, pursuant to

Section 4 of the Clayton Act, 15 U.S.C. section 15;

(C) Enjoin OWW and Kania from bringing, maintaining, or supporting any lawsuitinvolving OWWs Fraudulently Procured Patents, pursuant to Section 16 of the Clayton Act, 15

U.S.C. section 26; and

(D) Grant Thermo-Ply such other and further relief as the Court deems just andappropriate.

DEMAND FOR JURY TRIAL

Thermo-Ply demands a trial by jury on all issues so triable.

31


32/32

Respectfully submitted,

/s/ J. Thad Heartfield

J. Thad Heartfield, Esq.Texas Bar No. 09346800

E-mail: [email protected]

THE HEARTFIELD LAW FIRM

2195 Dowlen Road

Beaumont, Texas 77706

(409) 866-3318 Telephone

(409) 866-5789 Facsimile

and

Richard E. Fee, Esq.Florida Bar No. 813680


Kathleen M. Wade, Esq.

Florida Bar No. 127965


FEE & JEFFRIES, P.A.

1227 North Franklin Street

Tampa, Florida 33602

(813) 229-8008 - Telephone

(813) 229-0046 Facsimile

Counsel for Plaintiff, Thermo-Ply, Inc.

thermo-ply v. ohio willow wood company et. al

Documents