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

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

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Filed 11/30/2005

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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' MOTION TO AMEND ANSWER AND TO ADD COUNTERCLAIM Defendants General Steel Domestic Sales, LLC ("General Steel") Genstone Enterprises, LLC ("Genstone") and Jeff Knight ("Knight") (Collectively "Defendants"), through their undersigned counsel, pursuant to Fed.R.Civ.P. 15, hereby move to amend their Answer to Plaintiff's Second Amended Complaint in the form of Defendants General Steel Domestic Sales, LLC, Genstone Enterprises, LLC and Jeff Knight's Amended Answer and Counterclaim to Plaintiff's Second Amended Complaint (incorporated by reference and submitted herewith) ("Amended Answer"). As grounds therefore, Defendants state as follows: CERTIFICATE OF COMPLIANCE WITH D.C.Colo.LCivR. 7.1A Pursuant to D.C.Colo.LCivR. 7.1A, Defendants' counsel certify that they have communicated with Plaintiff's counsel and Defendant Demarest's counsel before filing this Motion. Defendant Demarest's counsel does not oppose this Motion to Amend. Counsel for the Plaintiff opposes the Motion to Amend.

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1.

Defendants Amended Answer and Counterclaim modifies the responses to the

allegations of the Second Amended Complaint, adds affirmative defenses, including Patent Misuse and Failure to Mitigate, and adds Counterclaims on behalf of Defendant Genstone against the Plaintiff for Declaratory Judgment of Patent Invalidity, Declaratory Judgment of Non-Infringement, Declaratory Judgment of Patent Misuse, Federal False Advertising Pursuant to 15 U.S.C. Section 1125(a)); Violation of the Colorado Consumer Protection Act and Interference with Prospective Business Advantage. 2. Plaintiff's Original Complaint, filed on March 29, 2004, included patent

infringement as its first and primary claim for relief. Upon information and belief, Plaintiff has only one issued patent, U.S. Patent No. 6,607,683 ("the `683 patent"). In Plaintiff's Amended Complaint, the claim for patent infringement was dropped, but Plaintiff continued to assert a claim for misappropriation of the Plaintiff's "Proprietary Technology", and the Second Amended Complaint still alleges: 11. PolyRock also owns through assignment United States Patent No. 6,607,683, entitled Methods and Apparatus for Manufacturing Articles With Natural Characteristics and other U.S. and foreign patent applications relating to aspects of the Proprietary Technology developed by Harrington. Sec. Am. Compl. ¶11. 3. As recently as the week of November 21, 2005, counsel for the Plaintiff

represented that Plaintiff was considering adding back the patent claim to its Complaint in this matter. Plaintiff has not disavowed that it has a claim for patent infringement against one or more Defendants.

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4.

Plaintiff's website states on the home page, "Polyrock Technologies, LLC is THE

ONLY APPROVED PATENTED technology worldwide to make synthetic panels that replicate stone." See PolyRock website pages attached as Exhibit A to this Motion. 5. The Proprietary Technology asserted by the Second Amended Complaint is

essentially indistinguishable from the claims of the `683 patent and the litigation of this case on the trade secret claims will closely involve the `683 patent and its claims. 6. The Second Amended Complaint alleges that Plaintiff, "licenses the Proprietary

Technology, charging an up-front fee and an ongoing royalty, to manufacturers." Based upon Defendants' investigation the licensing done by the Plaintiff is of the `683 patent. 7. Defendant Genstone and the Plaintiff compete in the sale of molded polyurethane

building products that replicate natural building materials. 8. The counterclaims for declaratory judgment of invalidity, non-infringement and

patent misuse, as well as the remaining counterclaims and the additional defenses contained in Defendants' Amended Answer and Counterclaims are inextricably connected to the technology at issue in this case and the allegations of the Second Amended Complaint. The Defendant Genstone has a reasonable apprehension of a lawsuit for patent infringement for its activities in distributing molded polyurethane building products that replicate natural building materials. See Goodyear Tire & Rubber Company v. Releasomers, Inc., 824 F.2d 953, 955 (Fed.Civ. 1987). 9. The Court's Order of November 23, 2005 provides that the deadline to amend

pleadings is November 30, 2005, and therefore this motion is timely made. No party will be prejudiced by this Motion to Amend. It will not delay the trial set on August 14, 2006. 10. Defendants have recently discovered information that Plaintiff and/or Plaintiff's

licensees have made representations to suppliers, distributors and others in the trade of artificial 3

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stone and brick panels to the effect that they are the "only approved manufacturer" of this product, and that any one else manufacturing or supplying a similar product is infringing the `683 patent. The `683 patent does not claim the Plaintiff's product, but rather a particular method of manufacturing the Plaintiff's product, which is far from being the only method of manufacturing artificial stone and brick panels available in the marketplace. Plaintiff's representations that they are the only source of this product, coupled with the threats of bringing separate lawsuits against those non-infringing parties, is an impermissible extension of the scope of their patent rights, or at least constitutes bad faith in enforcing their patent rights, and therefore supports the defense and claim of misuse of the `683 patent. The actions described above also form a basis for the additional counterclaims in Defendants' Amended Answer. 11. Pursuant to Fed.R.Civ.P. 15, motions to amend are to be freely granted when

justice requires. Smith Contracting Corp. v. Trojan Const. Co., Inc., 192 F.2d 234, 236 (10th Cir. 1951). Here, the circumstances are strongly in favor of granting these amendments to Defendants' Answer, where Defendant have filed this motion before the Court-appointed deadline for amending the pleadings, and for the other reasons stated above. WHEREFORE, Defendants respectfully request the Court grant Defendants' Motion to Amend Answer and Add Counterclaims and Order Plaintiff to Respond to the Counterclaim contained in the Amended Answer submitted herewith.

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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 Phone: (303) 534-5040 Facsimile: (303) 534-5039 [email protected]
ATTORNEYS FOR DEFENDANTS GENERAL STEEL DOMESTIC SALES, LLC GENSTONE ENTERPRISES, LLC & JEFF KNIGHT

CERTIFICATE OF SERVICE

DEFENDANTS' MOTION TO AMEND ANSWER AND TO ADD COUNTERCLAIM 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]

I hereby certify that on this 30th day of November, 2005, I electronically filed the foregoing

s/ Kurt Lewis Kurt S. Lewis

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