Remcor Products Co. v. Scotsman Group Inc., 32 USPQ2d 1273, 1280-82 (N.D. Ill. 1994)
In a recent U.S. case there was a narrow escape from a ruling estopping patent enforcement as a consequence of statements made during the acquisition of a U.S. company by its present British parent.
BACKGROUND:
Remcor holds patents on an icemaker/dispenser mechanism. In 1991 Remcor was acquired by IMI plc, a British corporation and under the Hart-Scott-Rodino Antitrust Improvements Act a "notification and Report Form" was filed with the F.T.C. of the impending merger. During the consideration period, there were inquiries to Remco by F.T.C. counsel and a follow-up filing was made. In so doing, Remcor stated,
(a) the technology for ice-beverage dispensers was readily available to the industry;
(b) ice-beverage dispensers are commodity products which compete in a market in which there are many competitors; and
(c) all of Remcor's competitors had designed around the Remcor patent.
There were no further communications, no hearings, the F.T.C. issued no decision, no ruling or judgment and no injunction. After the regulatory waiting period expired, the acquisition of Remcor was consummated.
Remcor later sued Scotsman Group for infringement of the icemake/dispenser patents.
Scotsman Group raised, inter alia, the defense of "judicial estoppel" based on the above statements ("admissions") by Remcor in its FTC filings. Remcor responded by arguing that the FTC proceedings were insufficiently "judicial or quasi-judicial" in character to give rise to the doctrine and further that those proceedings "did not result in a `judgment or its administrative equivalent.'" The court disagreed with Remcor's assertions--holding that, under the above circumstances,
The notification and filing requirements of the FTC exist ... so that that regulatory body may determine if the planned acquisition violates the anti-trust laws. ... Presumably, the FTC relied on plaintiff's responsive statements in not determining that the planned acquisition was violative of the anti-trust laws. ... As such, Remcor achieved a favorable result from an administrative body based on assertions Remcor made to that body in carrying out its statutorily mandated function. [32 USPQ2d at 1281]
Accordingly, clients engaged in administrative filings should avoid statements which might be damaging to their intellectual property rights even if no formal administrative proceeding, hearing or ruling occurs. As a minimum, this is a reminder that patent/trademark counsel should be consulted on the matter. (Many times over we have had the experience of being brought in on the 11th-hour eve of a corporate closing, almost only as an after-thought of the merger counsel--far too late to be of any value in a situation like the above.)
On the other side of the coin, in opposing intellectual property rights, explorations to discover filings such as the above might well be worth pursuing.