Free Motion to Amend/Correct/Modify - District Court of Colorado - Colorado

Case 1:04-cv-00617-LTB-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Case No. 04-cv-0617-LTB-BNB POLYROCK TECHNOLOGIES, LLC, a Colorado limited liability company, Plaintiff, vs. GENERAL STEEL DOMESTIC SALES, LLC, a Colorado limited liability company, d/b/a General Steel Corporation; GENSTONE ENTERPRISES, LLC, a Colorado limited liability company, d/b/a GenStone; JEFF KNIGHT; KEVIN KISSIRE; and CHUCK DEMAREST, Defendants. DEFENDANTS GENERAL STEEL DOMESTIC SALES, LLC, GENSTONE ENTERPRISES, LLC AND JEFF KNIGHT'S AMENDED ANSWER AND COUNTERCLAIM TO PLAINTIFF'S SECOND AMENDED COMPLAINT Defendants General Steel Domestic Sales, LLC (hereinafter "General Steel"), Genstone Enterprises, LLC (hereinafter "Genstone") and Jeff Knight (hereinafter "Knight") (collectively "Defendants"), by and through their undersigned attorneys, Lewis Scheid, LLC, hereby answer the Second Amended Complaint of PolyRock Technologies, LLC (hereinafter "PolyRock") as follows: 1. Defendants deny that Plaintiff PolyRock has any action against Defendants to

protect intellectual property rights or proprietary technology (including an economical process for manufacturing lightweight panels that closely resemble stone or brick masonry), for the production of molded polyurethane siding or building panels. Defendants are without

knowledge or information regarding the samples of products manufactured under a license at the websites identified by PolyRock in its Paragraph 1 and therefore deny same. Defendants are 1

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without knowledge or information regarding PolyRock's statement that "Unlike brick or stone, which required a skilled mason to perform installation, plaintiff's panels can be installed by a person having basic carpentry skills and standard carpentry tools" and therefore deny same. Defendants are without knowledge or information regarding PolyRock's licenses of the "Proprietary Technology, charging an up-front fee and an ongoing royalty to manufacturers" and therefore deny same. Defendants are further without knowledge or information regarding

PolyRock's licensed products generating significant "interest in the marketplace" and therefore deny same. 2. Defendant General Steel admits that it sells steel buildings used in commercial,

industrial or storage purposes. Defendants deny the remaining allegations in Paragraph 2. 3. 4. 5. Defendants deny the allegations of Paragraph 3. Defendants deny the allegations of Paragraph 4. Defendants deny all allegations concerning the Defendants made in Paragraph 5

of the Complaint. Defendants admit that an Order that is not final was entered by the Jefferson County District Court which makes certain statements therein. The Defendants specifically deny that any of the Jefferson County District Court findings are correct and specifically deny that the Order has any relevance to this proceeding. 6. 7. 8. Defendants deny the allegations of Paragraph 6. Defendants deny the jurisdictional allegations of Paragraph 7. Defendants deny the allegations of Paragraph 8 due to Plaintiff's lack of subject

matter jurisdiction.

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9.

Defendants are without knowledge or information regarding the truth of the

allegations of Paragraph 9 and therefore deny same. 10. 11. 12. 13. 14. 15. 16. Defendants deny the allegations of Paragraph 10. Defendants deny the allegations of Paragraph 11. Defendants deny the allegations of Paragraph 12. Defendants deny the allegations of Paragraph 13. Admitted. Admitted. Defendants admit that Knight is a resident of Colorado and president of General

Steel. Defendants deny the remaining allegations of Paragraph 16. 17. Defendants are without knowledge or information regarding the allegations of

Paragraph 17 and therefore deny same, except Defendants admit that Defendant Kissire was formerly employed by General Steel and Genstone. 18. Defendants are without knowledge or information regarding the truth of the

allegations of Paragraph 18 and therefore deny same, except Defendants admit that Defendant Demarest was a former consultant of General Steel. 19. Defendants are without knowledge or information regarding the truth of the

allegations of Paragraph 19 and therefore deny same. 20. 21. 22. 23. Defendants deny the allegations of Paragraph 20. Defendants deny the allegations of Paragraph 21. Defendants deny the allegations of Paragraph 22. Defendants deny the allegations of Paragraph 23.

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24. 25. 26. 27. 28. 29. 30.

Defendants deny the allegations of Paragraph 24. Defendants deny the allegations of Paragraph 25. Defendants deny the allegations of Paragraph 26. Defendants deny the allegations of Paragraph 27. Defendants deny the allegations of Paragraph 28. Defendants deny the allegations of Paragraph 29. In response to the allegations of Paragraph 30, Defendants incorporate by

reference their responses to Paragraphs 1 through 29. 31. 32. 33. 34. 35. 36. 37. 38. Defendants deny the allegations of Paragraph 31. Defendants deny the allegations of Paragraph 32. Defendants deny the allegations of Paragraph 33. Defendants deny the allegations of Paragraph 34. Defendants deny the allegations of Paragraph 35. Defendants deny the allegations of Paragraph 36. Defendants deny the allegations of Paragraph 37. In response to the allegations of Paragraph 38, Defendants incorporate by

reference their responses to Paragraphs 1 through 33. 39. 40. 41. 42. 43. Defendants deny the allegations of Paragraph 39. Defendants deny the allegations of Paragraph 40. Defendants deny the allegations of Paragraph 41. Defendants deny the allegations of Paragraph 42. Defendants deny the allegations of Paragraph 43.

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44.

In response to the allegations of Paragraph 44, Defendants incorporate by

reference their responses to Paragraphs 1 through 29. 45. 46. 47. 48. 49. Defendants deny the allegations of Paragraph 45. Defendants deny the allegations of Paragraph 46. Defendants deny the allegations of Paragraph 47. Defendants deny the allegations of Paragraph 48. In response to the allegations of Paragraph 49, Defendants incorporate by

reference their responses to Paragraphs 1 through 29. 50. 51. 52. 53. 54. 55. 56. Defendants deny the allegations of Paragraph 50. Defendants deny the allegations of Paragraph 51. Defendants deny the allegations of Paragraph 52. Defendants deny the allegations of Paragraph 53. Defendants deny the allegations of Paragraph 54. Defendants deny the allegations of Paragraph 55. In response to the allegations of Paragraph 56, Defendants incorporate by

reference their responses to Paragraphs 1 through 55. 57. 58. 59. 60. Defendants deny the allegations of Paragraph 57. Defendants deny the allegations of Paragraph 58. Defendants deny the allegations of Paragraph 59. In response to the allegations of Paragraph 60, Defendants incorporate by

reference their responses to Paragraphs 1 through 29. 61. Defendants deny the allegations of Paragraph 61.

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62. 63.

Defendants deny the allegations of Paragraph 62. Each allegation not expressly admitted herein is denied. AFFIRMATIVE DEFENSES FIRST AFFIRMATIVE DEFENSE

The Complaint fails to state a claim upon which relief can be granted. SECOND AFFIRMATIVE DEFENSE The claims asserted by Plaintiff are barred in whole or in part pursuant to the doctrines of laches, estoppel and waiver. THIRD AFFIRMATIVE DEFENSE Plaintiff is barred from enforcing any rights against Defendants pursuant to the doctrine of unclean hands. FOURTH AFFIRMATIVE DEFENSE Plaintiff's claims are barred in whole or in part because their alleged Proprietary Technology was in the public domain or was not protectable in any way. FIFTH AFFIRMATIVE DEFENSE The claims asserted by Plaintiff are barred in whole or in part pursuant to the applicable statutes of limitations. SIXTH AFFIRMATIVE DEFENSE The claims asserted by Plaintiff are barred in whole or in part due to lack of standing. SEVENTH AFFIRMATIVE DEFENSE The claims asserted by Plaintiff are barred in whole or in part due to failure of consideration.

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EIGHTH AFFIRMATIVE DEFENSE The claims asserted by Plaintiff are barred in whole or in part due to breaches of contract and releases by Plaintiff's predecessors in interest. NINTH AFFIRMATIVE DEFENSE The claims asserted by Plaintiff are barred in whole or in part due to lack of privity. TENTH AFFIRMATIVE DEFENSE The claims asserted by Plaintiff are barred in whole or in part due to Defendants' right to set off damages caused by the actions of Plaintiff's predecessors in interest. ELEVENTH AFFIRMATIVE DEFENSE Plaintiff's claims are barred in whole or in part by its failure to join indispensable parties. TWELFTH AFFIRMATIVE DEFENSE Plaintiff's claims are barred in whole or in part due to Plaintiff's misuse of a patent related to the manufacture of artificial building products, in particular, US Patent No. 6, 607,683 (`683 Patent). THIRTEENTH AFFIRMATIVE DEFENSE Plaintiff's claims are barred in whole or in part due to Plaintiff's failure to mitigate damages. COUNTERCLAIM Defendant Genstone brings the following claims against Plaintiff as its Counterclaim. I. JURISDICTION 1. The First, Second and Third Claims for Relief are actions for Declaratory

Judgment pursuant to 28 U.S.C. §2201 regarding an actual case or controversy concerning issues

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of patent infringement arising under the patent laws of the United States, 35 U.S.C. §101 et. seq. This Court has subject matter jurisdiction under 28 U.S.C. §2201 and §1338. The Court has jurisdiction of the Fourth Claim for Relief, Federal False Advertising pursuant to §43(a) of the Lanham Act, pursuant to 15 U.S.C. §1121, 28 U.S.C. §1338(a) and 28 U.S.C. §1331. This Court has jurisdiction of the additional state law claims pursuant to 28 U.S.C. §§1338(a) and 1367. II. VENUE 2. Venue is proper in this judicial district under 28 U.S.C. §1391 and §1400(b). III. CASE OR CONTROVERSY 3. On or about March 2003 Plaintiff sent a letter to Defendant Genstone alleging

that Genstone's products and process to manufacture those products infringed the `683 patent. Plaintiff later filed this lawsuit in United States District Court for the District of Colorado, and included a claim for patent infringement of the `683 Patent. That claim was dropped from the Plaintiff's Amended Complaint, but the issue of infringement of the `683 patent by Defendant Genstone remains as of yet unresolved. 4. Defendant Genstone has sold one or more types of artificial stone and brick

products since October 2003 and Defendant Genstone has a reasonable apprehension that it will be sued for patent infringement by Plaintiff, its licensee or its related companies. 5. A case or controversy exists as to whether any of the artificial stone and brick

products sold by Defendant Genstone infringe the `683 patent and Defendant Genstone seeks declaratory and injunctive relief that products it sold or are still selling are non-infringing, that the `683 patent is invalid or unenforceable and to enjoin Plaintiff from suing or claiming to

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potential manufacturers, distributors or customers that these products of Defendant Genstone infringe upon the `683 patent. 6. Polyrock maintains a website at www.polyrocktechnologies.com and thereon has

made false or misleading advertising representations to promote its business to manufacturers, consumers and distributors who visit that website. Those false or misleading representations include, but are not limited to, the following false statements on the home page of Polyrock's website. Therein a paragraph in bold letters states, "Polyrock Technologies, LLC is THE ONLY APPROVED PATENTED technology worldwide to make synthetic panels that replicate stone. Following US Patent Number 6,607,683, we have filed patents in over 50 countries worldwide. We have licensee worldwide that can make our panels available for your project now!" 7. Contrary to these statements, there are several patented technologies that are used

to manufacture polyurethane products, all predating the method used by Plaintiff's predecessors and disclosed in the `683 patent. Upon information and belief, Plaintiff does not have patent applications in over 50 countries worldwide. 8. Upon information and belief, Polyrock and its licensees have made ongoing

threats of litigation to consumers, manufacturers and distributors of artificial building products for infringement of the `683 patent including distributors and customers considering obtaining product from Genstone. Plaintiff and its licensees do not have a good faith basis for making those claims of infringement including claims that Genstone products infringe its patent rights.

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FIRST CLAIM FOR RELIEF (Declaratory Judgment that the `683 Patent is Invalid Pursuant to 35 U.S.C. §§ 102, 103 and 112 and 37 C.F.R. § 1.56) 9. 10. Paragraphs 1 through 8 are incorporated herein by this reference. Upon information and belief, the `683 patent and each of the claims asserted

therein are invalid and unenforceable pursuant to 35 U.S.C. §§102, 103(a) and 112. 11. Upon information and belief, the `683 patent and each of the claims set forth

therein are invalid and unenforceable due to Plaintiff's inequitable conduct, pursuant to 37 C.F.R. § 1.56. SECOND CLAIM FOR RELIEF (Declaratory Judgment of Non-infringement of the `683 Patent) 12. 13. Paragraphs 1 through 11 are incorporated herein by this reference. The artificial stone and brick products sold by Defendant Genstone at any time do

not infringe upon any claim of the `683 patent. THIRD CLAIM FOR RELIEF (Declaratory Judgment of Misuse of the `683 Patent) 14. 15. Paragraphs 1 through 13 are incorporated herein by this reference. Plaintiff has misused the `683 patent by impermissibly extending the scope of the

subject matter of the `683 patent, and by threatening to bring claims against manufacturers, distributors and customers of artificial stone building products for infringement of the `683 patent, without a good faith basis for bringing such claims. Upon information and belief, such misuse of the `683 patent has damaged the Defendants in the form of lost business opportunities, lost customers, attorneys fees, and costs.

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FOURTH CLAIM FOR RELIEF (Federal False Advertising Pursuant to 15 U.S.C. §1125(a)) 16. 17. Paragraphs 1 through 15 are incorporated herein by this reference. Polyrock has made false or misleading statements to manufacturers, distributors

and consumers that they are the only approved patented technology worldwide to make synthetic panels that replicate stone. In particular, they have made false or misleading statements on their website as set forth above. These statements were made as a commercial advertisement and in commerce and are likely to be misleading to customers of both the Plaintiff and the Defendant Genstone. 18. Upon information and belief those false and misleading statements have caused or

are likely to cause damages to the Defendant Genstone who is a competitor of the Plaintiff. However, it is difficult to ascertain the amount of those damages and Plaintiff has no adequate remedy at law. These false and misleading statements constitute false advertising in violation of Section 43(a) of the Lanham Act and require actual and prospective corrective advertising to attempt to correct damages done by Plaintiff. FIFTH CLAIM FOR RELIEF (Violation of the Colorado Consumer Protection Act Pursuant to Colo. Rev. Stat. §6-1-105) 19. 20. Paragraphs 1 through 18 are incorporated herein by this reference. In the course of its business, Polyrock has made statements on their website to

manufacturers, distributors and consumers holding themselves out to be the only approved patented technology worldwide to make synthetic panels that replicate stone, and claiming to have patent applications on file in over 50 countries. These statements constitute a knowingly 11

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false representation in violation of the Colorado Consumer Protection Act, C.R.S. §§ 6-1105(1)(b) and (c). 21. These misleading statements and misrepresentations significantly impact the

public, both as to actual and potential manufacturers, distributors and consumers, who are led to believe that Polyrock and its licensees are the only authorized source for polyurethane building products. Upon information and belief those false and misleading statements have caused or are likely to cause damages to the Defendant Genstone who is a competitor of the Plaintiff. However, it is difficult to ascertain the amount of those damages and Plaintiff has no adequate remedy at law. These false and misleading statements require actual and prospective corrective advertising to attempt to correct damages done by Plaintiff.

SIXTH CLAIM FOR RELIEF (Interference with Prospective Business Advantage) 22. 23. Paragraphs 1 through 21 are incorporated herein by this reference. Upon information and belief, Plaintiff Polyrock and licensees of Plaintiff have

represented to customers that they have the only approved patented technology worldwide to make synthetic panels that replicate stone, and upon information and belief have threatened to bring action against customers who do business with other manufacturers or distributors of polyurethane building products, including Genstone. 24. Upon information and belief, these misrepresentations have induced customers to

do business only with Plaintiff Polyrock or one of its licensees, and upon information and belief have caused other manufacturers and suppliers of polyurethane products, including Genstone, to lose potential business opportunities. 12

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25.

The actions of the Plaintiff have been accompanied by circumstances of fraud,

malice or willful and wanton conduct, and, as a result, the Defendant Genstone is entitled to a reasonable sum as exemplary damages inc accordance with C.R.S. Section 13-21-102. REQUESTED RELIEF WHEREFORE, Defendant Genstone prays for judgment against Plaintiff as follows: a. That the Court declare that the artificial stone and brick products sold by Genstone do not infringe any claim of the `683 patent. b. c. That the Court declare that the `683 patent is invalid and unenforceable. That the Court declare that the Plaintiff, it's licensees and distributors, or any subsidiary or successor-in-interest is barred from enforcing the `683 patent against Genstone or any customers of Genstone pursuant to the doctrines of laches, estoppel and unclean hands and due to its patent misuse. d. That the Plaintiff, its licensees and distributors, or any subsidiary or successor-in-interest be enjoined from claiming to any customers or potential customers of Defendants that Defendants products may infringe the `683 patent. e. That the Defendant Genstone be awarded its actual damages, including, but not limited to, lost business opportunities, lost customers and sales and any actual or prospective corrective advertising caused by or made

necessary by the actions of Plaintiff.

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f.

That the Defendant Genstone be awarded punitive damages pursuant to C.R.S. 13-21-102 based upon the egregious actions of Plaintiff.

g.

That the Defendant Genstone be awarded treble damages caused by the actions of Plaintiff pursuant to C.R.S. 6-1-113(2)(a)(III) and 15 U.S.C. 1117.

h.

That, pursuant to C.R.S. Section 6-1-113 and 15 U.S.C. 1117 the Court award Defendant Genstone its attorneys' fees and costs in this action.

i.

That the Court grant such other and further relief as the Court deems just and proper under the circumstances. JURY DEMAND

Defendant Genstone hereby demand a jury trial on all issues triable to a jury in this matter. Respectfully submitted this 30th day of November, 2005. /s/ Kurt Lewis ____________________________ Kurt S. Lewis Lewis Scheid LLC 2300 Fifteenth Street, Suite 320 Denver, CO 80202 (303) 534-5040 ATTORNEYS FOR DEFENDANTS GENERAL STEEL DOMESTIC SALES, LLC GENSTONE ENTERPRISES, LLC & JEFF KNIGHT
CERTIFICATE OF SERVICE

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I hereby certify that on this 30th day of November, 2005, I electronically filed the foregoing DEFENDANTS GENERAL STEEL DOMESTIC SALES, LLC, GENSTONE ENTERPRISES, LLC AND JEFF KNIGHT'S AMENDED ANSWER AND COUNTERCLAIMS TO PLAINTIFF'S SECOND AMENDED COMPLAINT with the Clerk of court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: John A. DeSisto E-mail: [email protected] Susan M. Hargleroad E-mail: [email protected]

/s/ Kurt Lewis ____________________________

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