Oblon, Spivak Wins Six-Patent Ohio Lawsuits For French Steel Maker Usinor S.A. - Summary Judgment Motions Granted; Court Rules For Usinor On All Asserted Patents

On July 30, 2002, U.S. Federal District Court Judge Susan J. Dlott granted three summary judgment motions filed by the Oblon, Spivak Law Firm on behalf of its client, French steel maker Usinor S.A., that completely defeats all of the infringement contentions of AK Steel Corporation of Middletown, Ohio, in two separate patent infringement lawsuits brought by AK Steel and its predecessor, Armco, Inc.

Finding that there are no genuine issues of material fact to warrant a trial, Judge Dlott granted judgment in favor of Usinor subsidiaries Sollac and Ugine on all six patents asserted in the lawsuits. In its ruling, the District Court concluded that a Special Patent Master, whom the Court had appointed in 2001, decided correctly that AK Steel's six patents were either invalid or not infringed by Usinor's products and manufacturing processes. The District Court's ruling effectively ends, at least at the district court level, AK's patent challenges against Usinor's manufacture and sale of aluminum-coated stainless steel (called "AL409"), a unique product used almost exclusively in mufflers, tailpipes, and other components of automotive exhaust systems to prevent corrosion and "red-rusting." The victory in the patent cases supports the related antitrust lawsuit filed by the Firm on behalf of Usinor because of the alleged bad faith filing and prosecution of the patent cases by AK Steel, and the monopolistic position of AK Steel in the AL409 market.

Usinor, S.A. has its roots as one of the oldest and largest steel manufacturers in the world. Headquartered in France, Usinor has manufacturing, distribution, and sales facilities worldwide. Earlier this year, Usinor merged with two other European steel manufacturers -- Arbed (of Luxembourg) and Aceralia (of Spain) -- to form Arcelor. Arcelor produces carbon and stainless steel for the automotive, construction, packaging, appliance, and mechanical engineering industries. Arcelor has annual sales of $24 billion and produces approximately 50 million metric tons of steel each year, making it the largest steel company in the world.

The Ohio patent cases involved six AK Steel patents which were purported to cover the Usinor AL409 product, as well as Usinor processes for making that product. When it learned that Usinor was trying to enter the U.S. market with its own patented product, AK and its predecessor Armco, another U.S. steel manufacturer, sued Sollac and Ugine for infringement of the six patents. Those lawsuits were filed in Cincinnati, Ohio, AK Steel's "home court," the day after the Firm took the first step on behalf of Sollac and Ugine by filing a Declaratory Judgment Action against AK Steel in Delaware Federal District Court (which the Delaware Court eventually transferred to Ohio). In the Ohio lawsuits, AK and Armco alleged that the Usinor entities infringed every single claim of the six patents -- a total of 48 claims in all.

The Oblon, Spivak Firm aggressively litigated the Ohio cases for Usinor. After an intensive discovery period and a December 1999 plant inspection initiated by the Firm at the France facility of Sollac, where the accused process was being practiced, the Firm filed 3 motions that sought summary judgments of noninfringement and invalidity of the 48 claims. The Court subsequently appointed a Special Patent Master to assist in deciding the motions, including AK Steel's cross-motions. In January 2002, the Special Master issued a 96-page Report and Recommendation granting Usinor's motions and denying AK's cross-motions. The Special Patent Master stated that each of the six patents was invalid or not infringed. AK Steel objected to the Special Master's recommendations, and an oral argument on AK's objections was held in the District Court in June 2002. After conducting an independent review of the record, District Judge Susan Dlott rejected all of AK Steel's arguments and issued her July 30th Order granting Usinor's motions. The Court agreed that AK Steel's 48 patent claims were either not infringed or invalid. Significantly, by succeeding on all of the summary judgment motions, Usinor also avoided the expense and time-consuming nature of a jury trial.

In the related antitrust suit filed by Usinor, it is alleged, among other things, that AK Steel had monopolized the U.S. market for AL409 by procuring its patents through fraud on the United States PTO and by enforcing those patents against Usinor in bad faith through sham patent litigation in the patent cases. Usinor seeks treble damages and attorney fees from AK Steel. Discovery in Usinor's antitrust case is underway, and it is expected that a trial will be scheduled in early 2004. AK Steel's "retaliatory" antitrust case proceeds in parallel, although Usinor's recent motion to dismiss this latter case was granted in major part by the Court. As a result, all of the "antitrust" claims asserted by AK Steel were dismissed.

The Oblon, Spivak Firm has been and continues to be represented in the patent and antitrust cases by Jean-Paul Lavalleye (former Oblon Partner) and Stephen Baxter. The Firm has retained an Antitrust Law Firm on behalf of Usinor to work with the Firm on the latter cases.