Free Amended Complaint - District Court of Arizona - Arizona

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PETER E. HEUSER, OSB ID No. 81128 [email protected] Kolisch Hartwell, P.C. 200 Pacific Building 520 Southwest Yamhill Street Portland, OR 97204 Telephone: (503) 224-6655 Facsimile: (503) 295-6679 DANIEL R. MALINSKI, SBA No. 005911 [email protected] Burch & Cracchiolo, P.A. 702 East Osborn, Suite 200 Phoenix, Arizona 85014 Telephone: (602) 274-7611 Facsimile: (602) 234-0341

Attorneys for Plaintiffs and Counterclaim Defendants Richard G. Krauth and R.M. Wade & Co.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

Richard G. Krauth, an individual, and R.M. Wade & Co., an Oregon corporation, Plaintiffs, vs. Phelps Dodge Corporation, a New York corporation, Phelps Dodge Bagdad, Inc., a Delaware corporation, Phelps Dodge Chino, Inc., a Delaware corporation, Phelps Dodge Morenci, Inc., a Delaware corporation, Phelps Dodge Sierrita, Inc., a Delaware corporation, Phelps Dodge Tyrone, Inc., a Delaware corporation, and Phelps Dodge Miami, Inc., a
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No. CV 04-0544 PHX PGR

FIRST AMENDED COMPLAINT FOR PATENT INFRINGEMENT

JURY TRIAL DEMANDED

FIRST AMENDED COMPLAINT FOR PATENT INFRINGEMENT
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Delaware corporation, Defendants.

Phelps Dodge Corporation, a New York corporation, Phelps Dodge Bagdad, Inc., a Delaware corporation, Phelps Dodge Chino, Inc., a Delaware corporation, Phelps Dodge Morenci, Inc., a Delaware corporation, Phelps Dodge Sierrita, Inc., a Delaware corporation, Phelps Dodge Tyrone, Inc., a Delaware corporation, and Phelps Dodge Miami, Inc., a Delaware corporation, Counterclaim Plaintiffs, vs. Richard G. Krauth, an individual, and R.M. Wade & Co., an Oregon corporation, Counterclaim Defendants. For their complaint, plaintiffs Richard G. Krauth and R.M. Wade & Co. (collectively "plaintiffs") allege against defendants Phelps Dodge Corporation ("Phelps Dodge") and Phelps Dodge Bagdad Inc., Phelps Dodge Chino Inc., Phelps Dodge Morenci Inc., Phelps Dodge Sierrita Inc., Phelps Dodge Tyrone Inc., and Phelps Dodge Miami (collectively the "Mining Corporations"), as follows: THE PARTIES 1. Plaintiff Richard G. Krauth is an individual having an address at

7466 N. Fourth St., Fresno, California 93721. Mr. Krauth is the named inventor and owner of U.S. Patent No. 5,005,806 entitled Controlled Percolation System and Method for Heap Leach Mining ("the `806 Patent") and U.S. Patent No.
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5,030,279 entitled Controlled Percolation Method for Heap Leach Mining ("the '279 Patent"). 2. Plaintiff R.M. Wade & Co. is a corporation duly organized and

existing under the laws of the State of Oregon, having its principal place of business at 9995 S.W. Avery Street, Tualatin, Oregon 97062 ("Wade"). 3. Defendant Phelps Dodge Corporation is, upon information and

belief, a New York corporation having an office at 2600 N. Central Avenue, Phoenix, AZ 85004, and is a holding company of multiple subsidiaries including each of the individual Mining Corporations, substantially controls the activities of each of the Mining Corporations, and through the mines and other held corporations conducts a substantial amount of business in the State of Arizona ("Phelps Dodge"). 4. Defendant Phelps Dodge Bagdad is, upon information and belief, a

Delaware corporation having an office at 100 Main Street, Bagdad, AZ 86321. 5. Defendant Phelps Dodge Chino Inc. is, upon information and belief,

a Delaware corporation having an office at 210 Cortez Ave, Hurley, NM 880439744. 6. Defendant Phelps Dodge Morenci Inc. is, upon information and

belief, a Delaware corporation having an office at 4524 US Hwy 191, Morenci, AZ 85540. 7. Defendant Phelps Dodge Sierrita Inc. is, upon information and

belief, a Delaware corporation having an office at 6200 W. Duvall Mine Road, Green Valley AZ 85614. 8. Defendant Phelps Dodge Tyrone Inc. is, upon information and belief,

a Delaware corporation having an office at Highway 90 S & Tyrone Mine Road, Tyrone NM 88065.

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FIRST AMENDED COMPLAINT FOR PATENT INFRINGEMENT
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9.

Defendant Phelps Dodge Miami Inc. is, upon information and belief,

a Delaware corporation having an office at 4342 E. US Highway 60, Claypool AZ 52292. JURISDICTION AND VENUE 10. The claim of plaintiffs arises under the laws of the United States

relating to patents, Title 35 of the United States Code. Diversity exists between the parties and the amount in dispute exceeds seventy five thousand dollars ($75,000). Therefore, this Court has jurisdiction of this action under 28 USC §§ 1331, 1332 and 1338(a). 11. Venue is proper in this district pursuant to 28 USC § 1391(b)(2) and

(c) because a substantial part of the events giving rise to the claim occurred here. BACKGROUND 12. Wade has, for many years, been in the business of designing fluid

distribution equipment. On a date prior to July 30, 1990, Mr. Krauth conceived and reduced to practice an invention disclosed in the `806 Patent. On

approximately the same date Mr. Krauth conceived and reduced to practice an invention disclosed in the `279 Patent. A patent application was filed on these inventions in the United States Patent and Trademark Office. The application was fully examined and the two patents were duly and legally issued. One patent was issued on April 9, 1991 and was assigned U.S. Patent No. 5,005,806. A copy of this patent is appended hereto as Exhibit A. A second patent issued on July 9, 1991 and was assigned U.S. Patent No. 5,030,279. A copy of the '279 Patent is

appended hereto as Exhibit B. The `806 Patent and `279 Patent will sometimes collectively be referred to as "the Krauth Patents." 13. The Krauth Patents were exclusively licensed to Wade, which has

been operating under the Krauth Patents ever since. 14. Products used in the system covered by the `806 Patent have been

sold by Wade and are now being sold by Wade. Such products have been marked
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with U.S. Patent No. 5,005,806 since shortly after the issuance of the `806 Patent. Products used in the method covered by the `279 Patent have been sold by Wade and are now being sold by Wade. Such products have been marked with U.S. Patent No. 5,030,279 since shortly after issuance of the `279 Patent. 15. On August 16, 2004, the Court ordered that this case be stayed or

suspended, pending reexamination proceedings in the United States Patent and Trademark Office. In those proceedings, plaintiffs presented prior art that had been uncovered by defendants so that the United States Patent and Trademark Office could reconsider the patentability of the inventions in view of this new prior art. Along with that prior art, plaintiffs also presented the arguments of patent invalidity that had been presented to them by defendants. In Office actions dated October 5, 2005, the United States Patent and Trademark Office reaffirmed the patentability of the claimed inventions in view of the prior art previously of record, as well of that new prior art presented by defendants. INFRINGEMENT OF THE `806 PATENT 16. Upon information and belief, each of the Mining Corporations

purchased products used in the system covered by the `806 Patent from a source other than Wade. The Mining Corporations then used these products to copy the system covered by the '806 Patent. The Mining Corporations have been and are practicing the patented system in the United States without authorization from either of the plaintiffs and thereby have infringed and are infringing the `806 Patent. 17. Defendant Phelps Dodge infringes the `806 Patent by holding itself

out to others that it owns the Mining Corporations where the direct infringement is taking place. Defendant Phelps Dodge further infringes the patent by acting as the alter ego and the agent of the Mining Corporations. Phelps Dodge further

infringes the `806 Patent, on information and belief, by inducing the direct infringement by the Mining Corporations, in violation of 35 USC § 271(b).
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18.

Defendants Phelps Dodge and the Mining Corporations have been

unjustly enriched by obtaining the benefit of the '806 Patent without paying for same. Due to this unjust enrichment, plaintiffs should be awarded an allocation from Phelps Dodge and the Mining Corporations of a reasonable portion of increased profitability achieved as a result of their infringement of the '806 Patent. In any event, plaintiffs should pursuant to 35 USC § 284 be awarded an amount adequate to compensate for the infringement. INFRINGEMENT OF THE `279 PATENT 19. Upon information and belief, each of the Mining Corporations

purchased products used in the method covered by the `279 Patent from a source other than Wade. The Mining Corporations then used these products to copy the method covered by the '279 Patent. The Mining Corporations have been and are practicing the patented method in the United States without authorization from either of the plaintiffs and thereby have infringed and are infringing the `279 Patent. 20. Defendant Phelps Dodge infringes the `279 Patent by holding itself

out to others that it owns the Mining Corporations where the direct infringement is taking place. Defendant Phelps Dodge further infringes the patent by acting as the alter ego and the agent of the Mining Corporations. Phelps Dodge further

infringes the `279 Patent, on information and belief, by inducing the direct infringement by the Mining Corporations, in violation of 35 USC § 271(b). 21. Defendants Phelps Dodge and the Mining Corporations have been

unjustly enriched by obtaining the benefit of the '279 Patent without paying for same. Due to this unjust enrichment, plaintiffs should be awarded an allocation from Phelps Dodge and the Mining Corporations of a reasonable portion of increased profitability achieved as a result of their infringement of the '279 Patent. In any event, plaintiffs should pursuant to 35 USC § 284 be awarded an amount adequate to compensate for the infringement.
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WILLFUL INFRINGEMENT OF BOTH THE `806 AND `279 PATENTS 22. On March 2, 2002 Wade informed Phelps Dodge of the Krauth

Patents. Despite this knowledge, Phelps Dodge and its subsidiary Mining Corporations continued their infringement of the Krauth Patents, thus rendering the infringement willful and making the case exceptional. This entitles plaintiffs to treble damages and attorney fees pursuant to 35 USC §§ 284 and 285. 23. On December 20, 2002 Wade followed up and provided Phelps

Dodge another notice of the Krauth Patents. Despite this second notice, Phelps Dodge and its subsidiary Mining Corporations continued their willful infringement of the Krauth Patents, thus further entitling plaintiffs to treble damages and attorney fees pursuant to §§ 284 and 285. 24. Wade subsequently requested a meeting with Phelps Dodge

personnel so on May 2, 2003 plaintiffs met with Phelps Dodge personnel. Despite this meeting where Phelps Dodge's and the Mining Corporations' infringement of the Krauth Patents were discussed, the willful infringement continued. As a result, plaintiffs were forced to file this action. PRAYER FOR RELIEF WHEREFORE, Plaintiffs demand judgment: 1. For a decree that Phelps Dodge and the Mining Corporations have

infringed the '806 Patent; 2. For a preliminary and permanent injunction restraining and enjoining

Phelps Dodge, the Mining Corporations, their agents, servants, employees, officers, and those persons in active concert or participation with Phelps Dodge or the Mining Corporations, from further infringement of the '806 Patent pursuant to 35 USC § 283. 3. For an accounting against Phelps Dodge and the Mining Corporation

for an amount adequate to compensate for the infringement of the '806 Patent, including a reasonable percentage of the increase in profitability resulting from
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infringement of the '806 Patent, pursuant to 35 USC § 284; in any event plaintiffs shall be awarded no less than a reasonable royalty for the unauthorized use of the patented system by Phelps Dodge and the Mining Corporations. 4. For damages in an amount equal to three times the amount of

damages found or assessed, to compensate plaintiffs for the willful infringement of the '806 Patent by Phelps Dodge and the Mining Corporations, pursuant to 35 USC § 284. 5. For a decree that Phelps Dodge and the Mining Corporations have

infringed the '279 Patent; 6. For a preliminary and permanent injunction restraining and enjoining

Phelps Dodge, the Mining Corporations, their agents, servants, employees, officers, and those persons in active concert or participation with Phelps Dodge or the Mining Corporations, from further infringement of the '279 Patent pursuant to 35 USC § 283. 7. For an accounting against Phelps Dodge and the Mining

Corporations for an amount adequate to compensate for the infringement of the '279 Patent, including a reasonable percentage of the increase in profitability resulting from infringement of the '279 Patent, pursuant to 35 USC § 284; in any event plaintiffs shall be awarded no less than a reasonable royalty for the unauthorized use of the patented process by Phelps Dodge and the Mining Corporations. 8. For damages in an amount equal to three times the amount of

damages found or assessed, to compensate plaintiffs for the willful infringement of the '279 Patent by Phelps Dodge and the Mining Corporations, pursuant to 35 USC § 284. 9. For an award of reasonable attorney fees against Phelps Dodge and

the Mining Corporations pursuant to 35 USC § 285; and 10.
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For such other and further relief as may be just and proper.
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JURY DEMAND Plaintiffs hereby demand a trial by jury of all issues so triable. Dated this 22nd day of December, 2005.

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Respectfully submitted,
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KOLISCH HARTWELL, P.C.

By s/Peter E. Heuser Peter E. Heuser 200 Pacific Building 520 S.W. Yamhill Street Portland, Oregon 97204 BURCH & CRACCHIOLO, P.A. Daniel R. Malinski 702 East Osborn, Suite 200 Phoenix, Arizona 85014 Attorneys for Plaintiffs and Counterclaim Defendants

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CERTIFICATE OF SERVICE

I hereby certify that on December 22, 2005, I electronically transmitted the foregoing FIRST

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AMENDED COMPLAINT FOR PATENT INFRINGEMENT to the Clerk's office using the CM/ECF system for the filing and transmittal of a Notice of Electronic filing to the following CM/ECF registrants: Terry E. Fenzl C. Mark Kittredge PERKINS COIE BROWN & BAIN P.A. 2901 North Central Avenue Post Office Box 400 Phoenix, Arizona 85001-0400

KOLISCH HARTWELL, P.C.

By s/ Peter E. Heuser Peter E. Heuser 200 Pacific Building 520 S.W. Yamhill Street Portland, Oregon 97204 BURCH & CRACCHIOLO, P.A. Daniel R. Malinski 702 East Osborn, Suite 200 Phoenix, Arizona 85014 Attorneys for Plaintiffs and Counterclaim Defendants

Case 2:04-cv-00544-PGR

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Filed 12/27/2005

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