Opinion ID: 696348
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 2 The related litigation started in 1984 in the United States District Court for the Southern District of Florida. The parties were Philips, the Windmere Corporation, and Izumi. Philips complained of patent infringement and unfair competition, and Izumi and Windmere raised defenses and counterclaims of patent misuse and antitrust violations. The Florida case was tried in 1986 as to all issues, Windmere and Izumi successfully arguing that it was incorrect and inefficient to separate the patent aspects from the antitrust and misuse counterclaims. The decision was appealed to the Federal Circuit. In accordance with this court's decision, U.S. Philips Corp. v. Windmere Corp., 861 F.2d 695, 8 USPQ2d 1885 (Fed.Cir.1988), cert. denied, 490 U.S. 1068, 109 S.Ct. 2070, 104 L.Ed.2d 635 (1989), and the Florida district court's order, the antitrust counterclaims and the unfair competition count were retried in Florida in 1990. 3 Philips and Windmere, but not Izumi, were parties to the retrial, which was decided in favor of Windmere. Philips appealed to the Federal Circuit. While the appeal was pending, Philips and Windmere reached a settlement. On their joint motion the Federal Circuit dismissed the appeal and vacated the Florida district court's judgment. U.S. Philips Corp. v. Windmere Corp., 971 F.2d 728, 23 USPQ2d 1709 (Fed.Cir.1992). The Federal Circuit denied Izumi's petition to intervene, on the ground that Izumi did not have standing to protest the vacatur of a decision to which Izumi was not a party. Id. at 730-31, 23 USPQ2d at 1710-11. The Supreme Court dismissed Izumi's petition for certiorari, Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips Corp., --- U.S. ----, 114 S.Ct. 425, 126 L.Ed.2d 396 (1993), holding that Izumi did not have standing to seek review of the question of vacatur since Izumi was not a party. 4 Meanwhile, in June 1985 Philips had filed suit against Sears, Roebuck & Co. and Izumi in the United States District Court for the Northern District of Illinois, asserting substantially the same patent infringement and unfair competition claims that were asserted in the suit Philips filed in 1984 in Florida against Windmere and Izumi. The patent was the same in the Illinois and the Florida cases, plus a design patent in the Illinois action. The accused product was the same Izumi-manufactured rotary shaver, which was sold by Windmere under the Ronson trademark and by Sears, Roebuck under the Sears trademark. In the Illinois action Izumi pled several antitrust counterclaims on the same grounds as were pled by Windmere in Florida; that is, that Philips violated the antitrust laws in its competition with Windmere, and that the litigation against Windmere and Izumi in Florida, and against Izumi in Japan, was sham. 5 The Florida case was tried in 1986 as to all issues. In 1987 the Illinois district court dismissed Izumi's antitrust counterclaims, holding that these counterclaims were mature at the time of the Florida litigation to which Izumi was a party, were litigated therein, and were compulsory to Izumi in the Florida action. After the Federal Circuit in 1988 required retrial of the antitrust counterclaims in Florida, the Illinois district court instructed Izumi, who had requested reconsideration of the dismissal, to include its antitrust counterclaims in the retrial. The Illinois court stated that Izumi should direct its request to the Florida District Court where the retrial of the original cause is scheduled. U.S. Philips Corp. v. Sears Roebuck & Co., No. 85 C 5366, slip op. at 3, 1989 WL 56893 (N.D.Ill. May 19, 1989). Izumi did not direct a request to the Florida district court, despite this instruction. Thus Izumi was not a party to the 1990 retrial of the antitrust counterclaims in Florida, although Izumi reportedly continued as indemnitor to Windmere, Philips v. Windmere, 971 F.2d at 730, 23 USPQ2d at 1710, and Izumi's president testified concerning the unfair competition and antitrust claims. Declaration of William Androlla, counsel to Izumi, of record in U.S. Philips Corp. v. Windmere Corp., 971 F.2d 728, 23 USPQ2d 1709 (Fed.Cir.1992). 6  THE ANTITRUST COUNTERCLAIMS 7 Izumi now seeks to try, in the Illinois action, the same antitrust counterclaims that were tried in the Florida action, stating that it has the right to do so. The Illinois court did not agree, and entered an interlocutory order pursuant to 28 U.S.C. Sec. 1292(b). The first question is as follows: 8 1. [W]hether Izumi is barred from pursuing such antitrust counterclaims on the basis that such counterclaims were compulsory counterclaims in a previously filed action of U.S. Philips Company et al. v. Windmere Corp. et al. which could not be asserted in this action, and whether Izumi has standing to raise these particular antitrust counterclaims. 9  The antitrust counterclaims pled by Izumi in the Illinois suit include the same antitrust issues that were pled and fully litigated in the Florida action to which Izumi and Windmere were parties until the retrial. In both the Illinois and the Florida actions the principal antitrust claims were (1) predatory pricing by Philips in competition with Windmere, (2) Philips' purchase of the Schick trademark in 1981, whereby it was not available to Windmere, and (3) sham patent litigation by Philips in Florida and in Japan. 10 It is not controverted that all of these antitrust counterclaims were ripe throughout the period of the Florida action, for they were the same claims being litigated in that action. The Illinois court at least twice directed Izumi to participate in the Florida antitrust litigation. Izumi refrained from doing so, despite the reiterated directive from the Illinois court when the antitrust issues were to be retried in Florida. Thus the Illinois court held that these counterclaims were compulsory to Izumi in Florida. 11 Izumi argues that its antitrust counterclaims were not compulsory in terms of Fed.R.Civ.P. 13(a), 2 and therefore that it has the absolute right to choose when and where to litigate them. In this case, however, the issue is not simply whether Izumi's antitrust counterclaims were compulsory in the technical definition of this term, but whether they were required to be brought by Izumi on the particular facts of this case, wherein they were already being fully litigated in a suit to which Izumi was present as a party, then as a witness, and as indemnitor. It is not irrelevant that the Illinois district court instructed Izumi to participate in the litigation, and then the relitigation, of these counterclaims. Under these circumstances, we think that Izumi's interest in these counterclaims was indeed required to be raised by Izumi in the Florida action in which the counterclaims were already being litigated. Izumi does not have the absolute right to relitigate the same claims in Illinois, having voluntarily removed itself from the Florida litigation of these claims, and having declined to comply with the Illinois court's admonition to seek to reenter that litigation. This is particularly compelling because Izumi's antitrust counterclaims are based primarily on Philips' behavior in competition with Windmere, the precise subject of the Florida action. 12 In the Florida litigation Izumi and Windmere had successfully opposed Philips' attempt to sever the antitrust counterclaims from the patent issue. Izumi and Windmere, represented by the same counsel, argued to the Florida court that: 13 [Severance of patent infringement] would cause a waste of judicial time and impose an undue burden on Defendants in having to duplicate proof and witnesses at those trials, and require the impaneling of two juries. Defendants' Counterclaims, both as to misuse and antitrust violations to a significant degree encompass Plaintiffs' acquisition and use of the patent in suit and false assertion of alleged common law trademark rights as part of Plaintiffs' efforts to restrain legitimate competition and monopolize the relevant market.... By necessity Defendants' witnesses and proof on these issues are pertinent to all claims and would be duplicitous in both trials. 14 Defendants' Memorandum in Opposition to Plaintiff's Motion to Sever Counterclaims, at 6-7, U.S. Philips Corp. v. Windmere Corp., 680 F.Supp. 361 (S.D.Fla.1987). Windmere and Izumi prevailed on the motion, and the patent and antitrust issues were fully tried in the same trial. 15 To support its position that it is entitled to bring its counterclaims in a second forum, Izumi places weight on Southern Construction Co. v. Pickard, 371 U.S. 57, 60-61, 83 S.Ct. 108, 110-11, 9 L.Ed.2d 31 (1962), wherein the Court held that a compulsory counterclaim could be litigated in either of two pending actions that under the Miller Act were required to be brought in different jurisdictions. Southern Construction indeed permitted a choice of either forum; but it did not permit a choice of both forums. Southern Construction weighs against Izumi's attempt to relitigate in Illinois the claims that were fully litigated in the Florida action to which Izumi was a party, witness, and indemnitor. 16 Izumi also cites Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 671, 64 S.Ct. 268, 273-74, 88 L.Ed. 376 (1944), wherein the Court held that an antitrust defense could be asserted in a later action, if not raised by a related defendant in the first infringement action. However, Mercoid did not hold that the same antitrust claim could be fully litigated a second time, if it were raised and litigated by a related party in the first action. 17 Izumi does not dispute that its antitrust counterclaims are substantially the same as those that were litigated in Florida. On this basis, and in view of the Illinois district court's admonitions to Izumi, we discern no error in the district court's holding that Izumi could not, in these circumstances, retry the same antitrust counterclaims in Illinois. 18 Izumi and Windmere successfully obtained the litigation of the antitrust counterclaims together with the patent claim in Florida, by arguing that severance would be a waste of judicial time and an undue burden on Defendants. See supra. This argument, and the ensuing full litigation of the antitrust counterclaims in Florida, create a form of judicial estoppel against Izumi's position that it now has the absolute right to relitigate the same claims against the same party. Judicial estoppel is an equitable principle that holds a party to a position on which it prevailed, as against later litigation arising from the same events. Eagle Foundation, Inc. v. Dole, 813 F.2d 798, 810 (7th Cir.1987). 3 See Davis v. Wakelee, 156 U.S. 680, 689, 15 S.Ct. 555, 558, 39 L.Ed. 578 (1895) (Where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position.) 19 The doctrine of judicial estoppel is directed to the preservation of the integrity of judicial proceedings by protecting against litigants who  'play fast and loose with the courts.'  In re Cassidy, 892 F.2d 637, 641 (7th Cir.), cert. denied, 498 U.S. 812, 111 S.Ct. 48, 112 L.Ed.2d 24 (1990) (quoting Scarano v. Central R. Co., 203 F.2d 510, 513 (3d Cir.1953)). See Levinson v. United States, 969 F.2d 260, 264 (7th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 505, 121 L.Ed.2d 441 (1992). The Seventh Circuit has held that judicial estoppel may lie when [e]ven though [the party] did not prevail on the appeal as a whole, he did prevail on the subsidiary question of what issues were to be decided by the court. Cassidy, 892 F.2d at 641. 20 We conclude that the criteria of judicial estoppel, as defined by the Seventh Circuit, were met. Izumi took the position that the antitrust counterclaims were compulsory in the Florida litigation, or at least that they should not be severed because the witnesses and proof would be duplicated. The Florida court adopted this position, and the claims were fully litigated in Florida. Izumi's present position that it had the right not to participate in the retrial of the issues that it insisted should be tried together, and can now require a duplicate trial of the identical issues, leaves us with the firm impression that Izumi has played fast and loose with the courts. Although the Illinois court did not mention this ground, we think that judicial estoppel provides a sound rationale for affirmance of the district court's decision. See Cassidy, 892 F.2d at 641 (Because the doctrine of judicial estoppel is intended to protect the courts rather than the litigants, it is proper for the appellate court to raise the estoppel in an appropriate case.) Appellate review of the interlocutory order is not confined to the precise questions certified by the district court. [A]ll questions material to the order are properly before the court of appeals. Nuclear Engineering Co. v. Scott, 660 F.2d 241, 246 (7th Cir.1981), cert. denied, 455 U.S. 993, 102 S.Ct. 1622, 71 L.Ed.2d 855 (1982). See United States v. Connolly, 716 F.2d 882, 885 (Fed.Cir.1983) ([T]he nature and scope of our review are not limited to the certified question, but ... we are free to consider all questions material to the trial court's order sustaining its jurisdiction.), cert. denied, 465 U.S. 1065, 104 S.Ct. 1414, 79 L.Ed.2d 740 (1984). B 21 Izumi also argues that it raised additional antitrust issues in Illinois, beyond those litigated in Florida. These additional issues are described as relating to the charge that Philips' litigation was sham. Windmere and Izumi had alleged in Florida that Philips' patent infringement suit was sham, and also that Philips had improperly sued Izumi in Japan. 22 The charge that Philips' patent infringement suit in Florida was sham can not be deemed to have substance, for Philips prevailed in Florida on that issue. A winning lawsuit is by definition a reasonable effort at petitioning for redress and therefore not a sham. Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., --- U.S. ----, ---- n. 5, 113 S.Ct. 1920, 1928 n. 5, 123 L.Ed.2d 611 (1993). Further, the place to challenge litigation as sham is in the asserted sham litigation, to which Izumi was a party. 23 Izumi also presses the claim that Philips filed sham patent litigation in Japan in 1978. No substantive support for this assertion is before us, and no argument is offered that this is a different issue from that raised in the Florida action. We discern no error in the district court's holding that all of the antitrust counterclaims were barred. II