Earlier this month, in Sherwin-Williams Co. v. PPG Industries, Inc., Special Master Henry M. Sneath issued a Report and Recommendation in the U.S. District Court for the Western District of Pennsylvania that a motion by Defendant PPG Industries, Inc. to partially exclude the opinions of Plaintiff Sherwin-Williams Co.'s expert witness should be granted.  In particular, the Special Master recommended that the opinions set forth in ¶¶ 94-117 of the expert's Rebuttal Report be excluded.

Sherwin-Williams initiated the dispute between the parties by filing suit against PPG for infringement of certain claims of U.S. Patent Nos. 8,617,663; 8,835,012; 9,242,763; 9,415,900; and 9,862,854.  The asserted claims are directed to "[a] coating composition for a food or beverage can" that is substantially free of bisphenol A ("BPA").  PPG retained two experts, including Dr. Leon Perez, to opine on the invalidity of the asserted patents, and Sherwin-Williams retained two experts of its own, including Dr. F. Joseph Schork, to rebut the opinions of PPG's experts.

PPG's experts opined that the asserted patents were invalid in view of U.S. Patent No. 5,714,539 (the '539 patent or Perez Patent).  In his Rebuttal Report, Dr. Schork opined that the '539 patent does not disclose a BPA-free coating, explaining that "Perez does not disclose a complete coating formulation," much less one that is BPA-free; that "Perez's lack of reference to BPA is not an affirmative disclosure of a composition that" is substantially free of BPA; that PPG did not to cite the '539 patent as prior art when prosecuting its own BPA-free coating patent; and that when PPG formulated the exemplary latexes disclosed in the '539 patent into coatings, PPG made coatings that contained BPA.

PPG moved to partially exclude the testimony of Dr. Schork -- in particular, ¶¶ 94-117 of Dr. Schork's Rebuttal Report -- arguing, in part, that Sherwin-Williams was bound by its admission to the U.S. Patent and Trademark Office that the '539 patent discloses a BPA-free coating.  The '539 patent had been earlier cited by PPG in its requests for reexamination of two other Sherwin-Williams patents, and in those reexamination proceedings, the Examiner agreed with PPG and issued a rejection based on the '539 patent, stating that "[s]ince Perez makes no teaching as to the presence of bisphenol A or aromatic glycidyl ethers, it is the position of the examiner that they are not present."  Sherwin-Williams responded at the time (in 2012) that "Perez . . . is a BPA-free coating . . . ."  In a footnote of his Report and Recommendation, the Special Master notes that because the asserted patents claim priority to one of the reexamined patents, the prosecution of that reexamined patent, including the reexamination proceedings, are "considered part of the prosecution history of the Asserted Patents" (citing as support Texas Instruments Inc. v. U.S. Int'l Trade Comm'n, 988 F.2d 1165, 1173-75 (Fed. Cir. 1993), wherein the Federal Circuit stated that the prosecution history of a grandparent application created an estoppel of claim in a continuation application).  In the instant case, PPG argues that Sherwin-Williams' admission in the reexamination proceedings "is binding on Sherwin, and therefore any testimony to the contrary is irrelevant, misleading, and unreliable."

Citing Procter & Gamble Co. v. Nabisco Brands, Inc., the Special Master notes that "[a] patentee's representations to the PTO during the prosecution of its patent application about the scope of the prior art is a binding admission and should 'be accepted at face value' during subsequent litigation over the patent."  711 F. Supp. 759, 770 (D. Del. 1989).  The Special Master also states that "[a]llowing Sherwin to change its position from August 2012 to Dr. Schork's opinions in February 2019 to the contrary would be severely prejudicial to PPG."  Sherwin-Williams countered that it should not be bound by the earlier admission regarding the '539 patent because it was relying, without the benefit of discovery, on PPG's representation during the reexamination that the '539 patent disclosed a BPA-free coating.  Sherwin-Williams also argued that the cases on which PPG relied in moving to exclude portions of Dr. Schork's Rebuttal Report "[do] not deal with a situation where the patentee's prosecution statement was based upon incomplete information and a misrepresentation by the accused infringer," explaining that "[w]ith the benefit of discovery, Sherwin now knows that PPG's statement to the Patent Office was at best misleading, and that Sherwin should not have relied on that statement."

Because the reexaminations in which the admission was made were ultimately vacated by the Federal Circuit, without the issuance of a reexamination certificate, the Special Master also considered the question of whether the statements that Sherwin-Williams made to the USPTO regarding the '539 patent could be used in the instant litigation.  PPG argued that "the Federal Circuit, when discussing the 'collateral effect' on future litigation, was focused on the preclusive effect of allowing the examiner's cancellation decision itself regarding the Reexam Patents to have legal effect -- not expungement of the entire underlying record."  Sherwin-Williams countered that "the plain language of [the Federal Circuit's opinion) demonstrates that the court vacated the entirety of the reexamination proceedings" (emphasis by Sherwin-Williams).  Sherwin-Williams therefore argued that "PPG's argument that Sherwin is 'estopped' based on the reexaminations is clearly inconsistent with the Federal Circuit's directive that the reexamination must have no 'collateral effect on other litigation.""

While suggesting that "neither party can rely on the interim and thus now vacated examiner's or PTAB's decisions from the reexaminations in the invalidity analysis," the Special Master explains that "[t]he statements made by each party in the reexaminations are part of the underlying facts of the reexamination," and that "[t]hose statements were made to the USPTO and can be relied upon in this litigation for any relevant and legal purpose."  Thus, the Special Master concludes "that Sherwin's statement to the Patent Office about the Perez Patent disclosing BPA-free coatings is a binding admission."  The Special Master also notes that "[b]ecause it was an unfettered statement about a reference and it was not couched in relation to any specific patent claim, it is immaterial whether that statement by Sherwin was ultimately relied upon by the USPTO examiner, the PTAB, or the Federal Circuit," adding that:

Sherwin's statement about the disclosure of the Perez Patent made to the USPTO in August 2012 is one that stands as an underlying fact from the reexamination proceedings.  Sherwin could have rejected or challenged the Patent Office's characterization of the Perez Patent's disclosure in 2012 during the reexaminations, but it did not.  Instead, it adopted the Patent Office's statements about the Perez Patent's disclosure - a fact that it admits was a mistake [citations omitted].

The Special Master also notes that:

It seems unfair that Sherwin gets another bite at characterizing the Perez Patent's disclosure over six years later in Dr. Schork's report, when it so clearly articulated its position in 2012 and PPG and its experts relied on that position from that point forward.  Just because the reexamination proceedings never ended in an adjudication one way or another on the parent patents' (in)validity, this statement was not erased by the mootness of the reexaminations.  Sherwin should be bound by its 2012 statement to the USPTO regarding the disclosure of the Perez Patent.  Dr. Schork's current opinions to the contrary would be unreliable, irrelevant, and confusing to the jury and highly prejudicial to PPG who has relied on that statement in the interim years.

The Special Master therefore recommended that PPG's motion to exclude the opinions set forth at ¶¶ 94-117 of Dr. Schork's Rebuttal Report be granted.

Sherwin-Williams Co. v. PPG Industries, Inc. (W.D. Pa. 2020)
Report and Recommendation of the Special Master on PPG's Motion to Partially Exclude Testimony of Plaintiff's Expert Witness Dr. F. Joseph Schork