ALJ Rogers Rules On Motion For Sanctions In Certain Bulk Welding Wire Containers (337-TA-686)
On April 16, 2010, ALJ Robert K. Rogers, Jr. issued the public version of Order No. 30 (dated January 8, 2010) in Certain Bulk Welding Wire Containers and Components Thereof and Welding Wire (Inv. No. 337-TA-686). In the Order, ALJ Rogers denied former Respondent Atlantic China Welding Consumables, Inc.’s (“Atlantic”) motion for sanctions against Complainants The Lincoln Electric Company and Lincoln Global, Inc. (collectively, “Lincoln”) for Lincoln’s alleged failure to conduct a reasonable pre-filing investigation to confirm that the products it tested were actually manufactured by or on behalf of Atlantic.
In support of their motion, Atlantic asserted that Lincoln violated Commission Rule 210.4(c)(3) by asserting that Atlantic’s products infringed the patents-in-suit because those products were not Atlantic’s products. According to the Order, Atlantic further asserted that “Lincoln’s belief that the identified products were Atlantic’s products was not objectively reasonable under the circumstances, and that Lincoln failed to perform an adequate pre-filing inquiry,” with respect to Lincoln’s original complaint, and also its amended complaint after being informed by Atlantic that the products in Lincoln’s original complaint were not Atlantic products. Atlantic argued that Lincoln should have known that the products Lincoln obtained were not Atlantic products, because the “retainer rings in the alleged Atlantic containers that Lincoln examined are clearly different than the retainer rings used by Atlantic in their products,” and Lincoln should appreciate such differences given that “Lincoln has asserted a retainer ring patent against Atlantic in a district court litigation.” Atlantic also argued that it was unreasonable for Lincoln to fail to investigate the unique ISO certificate number of the products tested by Lincoln with Atlantic’s ISO certificate number that “can be found on its website,” and “that if Lincoln had done so, it would have learned that Atlantic did not manufacture the products.” Atlantic sought “monetary sanctions comprising: (l) the attorneys’ fees and costs Atlantic has been forced to incur by the existence of this investigation; and (2) a monetary penalty in an amount that is greater than or equal to Atlantic’s attorneys’ fees and costs.”
Both Lincoln and the Commission Investigative Staff opposed Atlantic’s motion. Lincoln alleged that it sought Atlantic wire from Michigan Arc Products, Inc. (“MAP”), “a known distributor of Atlantic wire,” and MAP “provided what it represented to be Atlantic wire.” Although this section was heavily redacted, ALJ Rogers held that “it was reasonable for Lincoln to rely on [MAP’s] representation that the product it provided was an Atlantic product,” at least in part because “[t]here is no dispute that in the past, Atlantic has made product at MAP’s request.” ALJ Rogers further held that Atlantic’s arguments regarding the retainer rings were not persuasive and that “it was not unreasonable under the circumstances for Lincoln not to investigate the ISO numbers,” at least in part due to the representations from the supplier, and testimony that “ISO numbers are not commonly used by members of the industry to identify product origin.”
ALJ Rogers additionally found that Lincoln did not unreasonably delay conducting a post-filing investigation after it was provided information by Atlantic’s counsel on September 21, 2009 that Atlantic’s products were not at issue. ALJ Rogers held it was “reasonable for Lincoln to conduct an investigation on its own and not rely solely on the informal representations of Atlantic’s counsel.” The Order noted that delays in Lincoln’s investigation after September 21, 2009, were not entirely due to Lincoln, but rather, “MAP was less than cooperative in providing the necessary discovery.” According to the Order, shortly after MAP produced discovery Lincoln moved to terminate the investigation as to Atlantic.
