Analytical Eng Inc v. Baldwin Filters Inc ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-1493
ANALYTICAL ENGINEERING, INCORPORATED,
Plaintiff-Appellee,
v.
BALDWIN FILTERS, INCORPORATED,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Central District of Illinois.
No. 02 C 2069—Harold A. Baker, Judge.
____________
ARGUED SEPTEMBER 21, 2004—DECIDED OCTOBER 3, 2005
____________
Before EASTERBROOK, RIPPLE, and WILLIAMS, Circuit
Judges.
WILLIAMS, Circuit Judge. This case reads like a man-
ual on how not to litigate a contractual dispute in federal
court authored by Baldwin Filters, Incorporated. Early
in this controversy, Baldwin won a significant battle
when the district court granted its motion for judgment
on the pleadings. Baldwin eventually lost the war, however,
when the district court issued its ruling on its motion that
favored Analytical Engineering, Incorporated (AEI).
Curiously, Baldwin failed to appeal the district court’s
ruling on the motion for judgment on the pleadings and also
2 No. 04-1493
failed to appeal the district court’s denial of its motion to
amend or alter the ruling. Instead, Baldwin appeals
the district court’s enforcement of its ruling, raising argu-
ments that should have been raised in an appeal of the
underlying judgment. We find no error in the district court’s
enforcement of its ruling and, therefore, affirm.
I. BACKGROUND
A. The Contractual Relationship Between AEI And
Baldwin
In September 1998, AEI and Baldwin entered into an
agreement to develop a machine that would filter soot out of
diesel-engine lubricating oil. The Development and License
Agreement (“Agreement”) sets out the parties’ desire to
engineer and develop this machine, called the “Extractor”;
provides for each sides’ respective responsibilities regarding
the engineering, design and manufacturing of the Extractor;
and arranges for the licensing of any patents, patent
applications, designs or other intellectual property resulting
from the engineering and design of the Extractor.
In Article One of the Agreement, AEI agrees to de-
velop and to deliver to Baldwin a prototype Extractor. AEI
takes full responsibility for the engineering and develop-
ment of the Extractor, and Baldwin promises to pro-
vide design requirements and specifications. In Article Two,
the Agreement grants Baldwin a worldwide license exclu-
sive to Baldwin and its sub-licensees to use the pertinent
inventions and designs disclosed in the “Patents1” and
1
The word “Patents” is specifically defined in Article Two as “any
issued United States or foreign patents, including any con-
tinuations [sic], continuation-in-part, divisional, reissued, renewal
or extension patent, any patent application or inventions,
(continued...)
No. 04-1493 3
any proprietary information regarding the Extractor. AEI
retains all remaining intellectual property rights to the
“Patents.” In consideration of the licenses, Baldwin agrees
to make certain royalty payments to AEI described in
Article Three of the Agreement.
In October of 1998, the two sides signed an Addendum
to the Agreement further agreeing to previously agreed
upon matters with one particular exception. The last
sentence of the addendum states: “If the contract is termi-
nated per Article Seven ‘Term and Termination,’ all patents
developed under the contract that pertain to the rotating
system ‘Extractor’ technology and any supporting hardware
necessary to allow the system to rotate and/or enhance
rotation capability will then be assigned to AEI.”
Baldwin ultimately terminated the contract in February
of 2002.
B. The Procedural History
Upon Baldwin’s termination, AEI filed an action for
declaratory judgment seeking clarification of each parties’
rights as a result of Baldwin’s termination of the Agree-
ment. AEI argued that a limited amount of extrinsic
evidence was needed to determine whether AEI or Baldwin
retained the patents and ancillary rights to the Extractor.
In response, Baldwin filed a motion for judgment on the
1
(...continued)
processes, methods, or designs, whether or not patentable, that
are owed by AEI or its employees, agents or affiliates relating
to the ‘Products.’ ” “Products” is defined as “the Extractor (in-
cluding the Turbine, the Pre-concentrator, the Centrifuge and
all other components thereof) and all improvements thereto,
derivative products and replacement parts which are based upon
or which utilize any technology embodied in the Extractor.”
4 No. 04-1493
pleadings arguing that the Agreement was unambiguous
and, therefore, extrinsic evidence was unnecessary to
determine the rights of the parties as to the Extractor and
related technology.
The district court found the Agreement to be clear and
unambiguous, granted the motion for judgment on the
pleadings, and held that: (1) Baldwin must assign to AEI all
rights to any and all “patents developed under the contract
that pertain to the rotating system ‘Extractor’ technology
and any supporting hardware necessary to allow the system
to rotate and/or enhance rotation capability”; and then (2)
Baldwin would retain all other rights described in Article
Two. Analytical Eng’g, Inc. v. Baldwin Filters, Inc., No. 02-
2069, slip op. at 7 (C.D. Ill. Sept. 19, 2002) (“Sept. 19th
Order”).
In interpreting the Agreement, the district court correctly
focused on Article Seven of the Agreement, which describes
the initial term of the contract, the circumstances under
which the contract may be terminated, and the conse-
quences to each party if the contract is terminated. The
district court found that Baldwin terminated the Agreement
pursuant to its unilateral right to terminate under Section
7.2(c), and that Section 7.3(c) governs the rights of the
parties upon termination pursuant to Section 7.2(c).
Section 7.3(c) of the Agreement sets out each party’s
rights as they relate to the licensing rights granted in
Article Two by first determining which party is the
“Non-Defaulting Party.” Neither Section 7.2(c) nor Section
7.3(c), however, defines which party is the “Non-Defaulting
Party” where Baldwin terminated the Agreement pur-
suant to Section 7.2(c).
Faced with this obvious ambiguity, the court turned to
the Addendum and found the last sentence of the Adden-
dum to be clear and without restriction. Following the
language of the last sentence of the Addendum, the dis-
trict court held that, upon termination of the Agreement,
No. 04-1493 5
Baldwin did not reserve any rights to “the rotating sys-
tem patents” and ordered Baldwin to assign to AEI all
rights to the “patents developed under the contract that
pertain to the rotating system ‘Extractor’ technology
and any supporting hardware necessary to allow the system
to rotate and/or enhance rotation capability,” so that AEI
would own the full “bundle of rights” inherent in ownership
of the rotating system patents. After the assignment, the
district court left to Baldwin all other rights described in
Article Two. (Sept. 19th Order at 7.)
In granting Baldwin’s motion for judgment on the plead-
ings, the district court committed two critical errors. First,
the district court found that the Agreement was unambigu-
ous, but in reality Article Seven of the Agreement was
indeed ambiguous. Second, the district court failed to
recognize that the patents described in Article Two of the
Agreement are one and the same as the rotating system
patents described in the last sentence of the Addendum.
The district court understood the Article Two patents to be
completely different than the rotating system patents. Both
errors, however, benefitted AEI, as the court clearly held
that any Article Two rights held by Baldwin as a result of
its termination were subject to the last sentence of the
addendum. (Sept. 19th Order at 7) (“When viewing the
Agreement and addendum in their entirety, it is clear that
the last sentence of the addendum alters Baldwin’s reten-
tion of rights pursuant to Section 7.3(c)(i), but only to the
extent specified in the last sentence.”). As a result, in
granting the motion for judgment on the pleadings, the
district court awarded AEI ownership of the full “bundle of
rights” in the rotating system patents, which included any
rights described in Article Two pertaining to the rotating
system patents.
Baldwin, having won its motion for judgment on the
pleadings but left holding no rights in any of the patents,
filed a timely motion to amend or alter judgment pursu-
6 No. 04-1493
ant to Fed. R. Civ. P. 59(e). In its motion to amend, Baldwin
failed to admit that the Agreement was ambiguous and
failed to advise the court that (1) there were only nine
patents at issue in this case, and that (2) both parties would
agree that the patents described in Article Two were one
and the same as the rotating system patents described
in the Addendum. Baldwin, instead, agreed with the
analysis of the court and sought to create Article Two rights
eliminated by the court’s September 19th Order. Specifi-
cally, in its Rule 59 motion, Baldwin asked the district court
to “clarify” and declare Baldwin’s assignment to AEI of the
rotating system patents subject to Baldwin’s exclusive
manufacturing license, and to limit Baldwin’s assignment
of the rotating system patents to AEI to only those patents
not jointly owned by both AEI and Baldwin.
In denying the Rule 59 motion, the district court reaf-
firmed its original order by stating that Baldwin was not to
retain any Article Two rights in the rotating system
patents. Analytical Eng’g, Inc. v. Baldwin Filters, Inc.,
No. 02-2069, slip op. at 3 (C.D. Ill. Nov. 22, 2002) (“Rule 59
Order”). The district court correctly identified Baldwin’s
arguments as arguments that should have been raised in its
motion for judgment on the pleadings, and aptly found that,
in pushing for an enlargement of its rights under Article
Two to include the rotating system patents, Baldwin was
attempting “to get another bite at the apple.” The court
noted that Baldwin gambled on how the district court would
determine the rights of the parties by employing a
“wait-and-see attitude” and moving for judgment on the
pleadings instead of going forward with discovery. As a
result of this gamble, the district court ruled that Baldwin
was precluded from arguing in a Rule 59 motion arguments
that should have been argued in its motion for judgment on
the pleadings. Neither side appealed the district court’s
grant of judgment on the pleadings or the district court’s
denial of Baldwin’s Rule 59(e) motion.
No. 04-1493 7
AEI then filed a motion to enforce judgment pursuant
to Fed. R. Civ. P. 70. In its motion, AEI requested that
the court determine whether: (1) all nine patents or pa-
tent applications derived as a result of the relationship
between AEI and Baldwin are rotating system patents;
(2) Baldwin retains any rights with respect to any of the
rotating system patents, regardless of ownership during the
term of the Agreement; (3) Baldwin must transfer
all physical hardware necessary to allow the system to
rotate and/or enhance rotation capability to AEI; and (4)
Baldwin retains any Article Two rights with respect to
proprietary information that pertains to the rotating
system.
This motion represented the first time either side high-
lighted to the district court that there were a total of nine
patents at issue and that all nine rotating system patents
as described in the Addendum were one in the same as the
patents described in Article Two. In light of the Rule 70
motion, the district court requested additional information
from the parties to assist the court in determining whether
Baldwin had complied with the district court’s orders. In
response, the parties stipulated to, among other things, the
fact that there were a total of nine patents at issue and that
all nine patents were both Article Two patents and rotating
system patents as described in the Addendum. On February
2, 2004, the district court issued an order granting in part
AEI’s motion to enforce judgment. In granting the Rule 70
motion, the district court correctly limited its inquiry to
whether the parties had complied with the court’s orig-
inal order and explicitly informed both sides that it would
not go behind its original judgment. See Analytical Eng’g,
Inc. v. Baldwin Filters, Inc., No. 02-2069, slip op. at 2 (C.D.
Ill. Feb. 2, 2004) (“Rule 70 Order”). The court accepted the
parties’ stipulation and found that, since its original order
of September 19th, Baldwin’s actions had been inconsistent
with AEI’s ownership of the full “bundle of rights” to the
8 No. 04-1493
rotating system patents. Id. at 2-3. Based on this finding,
the court stated, now for the third time, that Baldwin was
to retain no rights, including Article Two rights, to the
rotating system patents, and ordered Baldwin to execute
patent assignments on all nine patents in order to give AEI
the full “bundle of rights.” Id. at 3.
This appeal followed on February 27, 2004.
II. ANALYSIS
A. The District Court Possesses Limited Authority
Under Rule 70
On appeal, Baldwin argues that the district court ex-
ceeded its “limited jurisdiction” in granting AEI relief
pursuant to Rule 70. We find Baldwin’s conflation of the
district court’s authority under Rule 70 with the limits
of the district court’s jurisdiction both inaccurate and
distracting. Rule 70 does not establish jurisdiction or venue;
Rule 70 neither broadens nor contracts the district court’s
jurisdiction conferred under federal statute. Ga. Cent.
Credit Union v. Martin G.M.C. Trucks, Inc., 622 F.2d 137,
139 (5th Cir. 1980) (Rule 70 does not explicitly or implicitly
establish a basis for jurisdiction); see also 12 Charles Alan
Wright, Arthur R. Miller & Richard L. Marcus, Federal
Practice and Procedure § 3021 (1997). Rule 70 gives the
district court a discrete and limited power to deal with
parties who thwart final judgments by refusing to comply
with orders to perform specific acts.
B. Baldwin Did Not Comply With The District
Court’s Orders
The central issue in this case is whether the district court
properly granted Rule 70 relief to AEI. We review the
district court’s grant of relief under Rule 70 for an abuse of
No. 04-1493 9
discretion. Stotler and Co. v. Able, 870 F.2d 1158, 1163 (7th
Cir. 1989) (describing a district court’s decision on a
contempt petition under Federal Rules of Civil Procedure 70
and 71 as discretionary in character and reviewing for
abuse of discretion); see also Univ. of W. Va., Bd. of Trs. v.
VanVoorhies, 342 F.3d 1290, 1298 (Fed. Cir. 2003) (finding
the district court abused its discretion in granting relief
pursuant to Rule 70); Gates v. Collier, 616 F.2d 1268, 1271
(5th Cir. 1980) (Rule 70 orders reviewed for abuse of
discretion).
In its September 19, 2002 order, the district court entered
final judgment in favor of Baldwin and against AEI and
ordered the following:
Baldwin must assign to AEI all rights to any and all
“patents developed under the contract that pertain to
rotating system ‘Extractor’ technology and any support-
ing hardware necessary to allow the system to rotate or
enhance rotation capability.” Baldwin then retains all
other rights described in Article Two.
(Sept. 19th Order at 7.)
Because the district court entered final judgment in
this case and the judgment ordered Baldwin to perform
a specific act, if Baldwin was not in full compliance with the
district court’s order, then the district court properly
granted AEI’s Rule 70 motion where the motion only sought
to force compliance with the original order. Baldwin argues
that it was improper for the district court to grant Rule 70
relief because it complied with the district court’s orders.
Baldwin contends that it complied with the district court’s
order of September 19th when it executed patent assign-
ments for all the patents it owned and thereby placed AEI
in the position of “patentee,” or legal title holder of those
patents.
A closer look at what Baldwin assigned to AEI reveals
what it did not assign to AEI and how its actions, therefore,
fell short of full compliance with the district court’s Septem-
10 No. 04-1493
ber 19th order. The district court ordered Baldwin to assign
to AEI “all rights to any and all patents.” Baldwin made
AEI the legal title holder of the nine patents at issue, but
did not assign to AEI any of the licenses Baldwin held to
any of the nine patents. In assigning only legal title to AEI,
Baldwin must have overlooked both the district court’s
order to assign “all rights” to the patents in question and
the district court’s explanation in footnote 4 of its Septem-
ber order that “upon assignment of the patents to AEI,
[AEI] will own the full ‘bundle of rights’ inherent in owner-
ship of the rotating system patents.” (Sept. 19th Order at 6
n.4.)
Baldwin argues that the only logical interpretation of
the district court’s order is that Baldwin retained its Article
Two licenses for the five patents described in Article Two,
but had no Article Two license rights to the other four
patents at issue. Without commenting on whether
Baldwin’s interpretation is indeed logical, Baldwin’s
compliance with its own interpretation is not at issue in
this case. Instead, Baldwin’s strict compliance with the
letter of the district court’s order is the only issue of
consequence in this appeal. The district court’s order
directed Baldwin to first assign “all rights” to AEI and then
retain whatever Article Two rights remained. It is clear,
however, that Baldwin, by its actions and own admissions,
failed to assign to AEI “all rights.”
As a result, the district court, having found Baldwin in
noncompliance with its September 19th order, did not abuse
its discretion pursuant to Rule 70 when the district court
directed Baldwin to:
[R]elease any filings or claims that have been filed with
regard to the rotating system patents [and] execute
patent assignments on all nine patents as originally
tendered by AEI without “tuning” them [so as to] assign
the ‘full bundle of rights’ to AEI.
(Rule 70 Order at 3.)
No. 04-1493 11
C. The District Court Did Not Exceed Its Authority
Under Rule 70
Baldwin argues that the district court exceeded its
authority under Rule 70 by granting AEI additional relief
not granted in its original order of September 19th, con-
tending that in granting AEI’s Rule 70 motion the district
court extinguished rights Baldwin previously held under
the original order. Two sentences in the district court’s
September 19th order supply Baldwin with support for this
argument: a single sentence in footnote 4 and the final
sentence of the order. In footnote 4 the district court stated:
“In Article Two, Baldwin was granted certain licensing
rights to ‘Patents’ . . . . Baldwin retained those rights upon
termination of the contract pursuant to Section 7.3(c)(I).”
(Sept. 19th Order at 6 n.4). In the final sentence of the
same order, the district court stated “Baldwin then retains
all other rights described in Article Two.” Id. at 7.
Based on these two sentences, Baldwin contends that
the district court ruled that Baldwin was to retain its
Article Two licenses for the five patents described in Article
Two. As a result, so goes Baldwin’s argument, when the
district court directed Baldwin in its Rule 70 order that
“Baldwin retains no rights, including Article Two Rights,”
the district court extinguished Baldwin’s Article Two rights,
which it had previously granted. Baldwin maintains that if
the district court’s September 19th order meant that
Baldwin was not to retain any Article Two license rights,
then the order would have specifically said so.
The express language of Rule 70 establishes the ex-
tent of the district court’s limited post-judgment author-
ity: “If a judgment directs a party . . . to perform any other
specific act . . . and the party fails to comply within the time
specified, the court may direct the act to be done. . . .” FED.
R. CIV. P. 70. We recognize that a district court’s purview
under Rule 70 is limited to effectuating its final-judgment
12 No. 04-1493
orders, and that in granting relief under Rule 70, a district
court cannot grant new rights or extinguish previous rights
held by either party. Under Rule 70, therefore, a district
court may direct a party to complete a specific act where the
district court previously directed the same party to perform
the same act in its final judgment and that party has failed
to comply.
Reviewing both the district court’s final judgment and
its Rule 70 order, we find that the district court did
not exceed its authority in granting AEI Rule 70 relief.
Neither footnote 4 nor the last sentence of the district
court’s September 19th order carries the day for Baldwin.
Footnote 4 in its entirety states:
The assignment in the last sentence of the addendum is
without restriction and, upon assignment of the patents
to AEI, the plaintiff will own the full “bundle of rights”
inherent in the ownership of rotating systems patents.
See generally Intellectual Property Development, Inc. v.
TCI Cablevision, 248 F.3d 1333, 1342 (Fed. Cir. 2001)
(referring to a patent as a ‘bundle of rights’ which may
be divided and assigned, or retained in whole or in part)
(quoting Vaupel Textilmaschinen KG v. Meccania Euro
Italia S.P.A., 944 F.2d 870, 874 (Fed. Cir. 1991)). In
order to discern whether the parties intended the
assignment to contain all the rights in the “bundle,” the
courts looks to the assignment and surrounding circum-
stances. Vaupel, 944 F.2d at 874. In this case, the
answer is found by looking to the Agreement and
addendum. In Article Two, Baldwin was granted certain
licensing rights to “Patents,” defined as those “that are
owned by AEI” (in other words, owned by AEI during
the term of the Agreement) (emphasis added). Baldwin
retained those rights upon termination of the contract,
pursuant to Section 7.3(c)(I). But the rotating sys-
tems patents do not constitute a “Patent” as defined
No. 04-1493 13
in Article Two because Baldwin, and not AEI, appar-
ently owned the rotating system patents during the
term of the Agreement. And Baldwin did not reserve
any rights to those patents in the addendum. Therefore,
Baldwin does not retain any rights to the rotating
system patents and must assign all rights in those
patents to AEI.
More than anything, footnote 4 illustrates the district
court’s confusion in this case by highlighting its erroneous
assumption that there were two separate, non-overlapp-
ing groups of patents: “rotating system patents” and
“Article Two Patents.” It is clear, however, that footnote 4
neither supports any reservation, nor grants any rights
to Baldwin to the rotating system patents. The purpose
of footnote 4 is to explain and effectuate the last sentence
of the Addendum. Indeed, the sentence footnote 4 mod-
ifies states, “The last sentence of the addendum clearly
addresses only the rotating system patents and does not
alter any other patents or rights pertaining to other pat-
ents.” So in interpreting footnote 4, this Court must con-
clude that the district court meant what it said when it
stated in footnote 4 that “[t]he assignment in the last
sentence of the addendum is without restriction and, upon
assignment of the patents to AEI, the plaintiff will own
the full ‘bundle of rights’ inherent in the ownership of
rotating systems patents,” so that “Baldwin does not re-
tain any rights to the rotating system patents and must
assign all rights in those patents to AEI,” with full knowl-
edge and without qualification. Although the district court
recognized in footnote 4 that the Agreement granted
Baldwin certain licensing rights in Article Two, and
Baldwin retained those rights upon termination of the
contract pursuant to Section 7.3(c)(I), the district court
explicitly modified those retained rights in the text of its
September 19th order where it stated: “When viewing the
Agreement and addendum in their entirety, it is clear that
14 No. 04-1493
the last sentence of the addendum alters Baldwin’s reten-
tion of rights pursuant to Section 7.3(c)(I), but only to the
extent specified in the last sentence.” (Sept. 19th Order at
7.)
Contrary to Baldwin’s argument, the district court
explicitly modified Baldwin’s Article Two rights in its
September 19th order and made those “retained” rights
inferior to and subject to Baldwin’s assignment of all rights
in the rotating system patents to AEI. The district court
effectuated this modification by directing Baldwin to first
“assign to AEI all rights to any and all [rotating system
patents]” and “then [retain] all other rights described in
Article Two [not pertaining to the rotating system patents].”
Thus, the last sentence of the district court’s September
19th order is properly viewed as nothing more than a catch-
all statement allowing Baldwin to retain any other rights
described in Article Two not affected by its assignment of
all rights in the rotating system patents as directed by the
last sentence of the Addendum, but in no way granting
Baldwin any rights as to the rotating system patents. We
find that the district court knowingly left Baldwin with no
Article Two rights as to the rotating system patents. The
district court, therefore, did not exceed its authority under
Rule 70 in granting relief to AEI. After final judgment,
Baldwin was to retain no rights whatsoever in the rotating
system patents, and after the Rule 70 Motion, Baldwin still
retains no rights whatsoever in the rotating system patents.
D. The District Court Did Not Consider Improper
Evidence In Ruling On AEI’s Rule 70 Motion
In response to AEI’s Rule 70 motion, the district court
solicited additional information from the parties concerning
the nature of the patents at issue in order to assist the
district court in addressing AEI’s motion to enforce. In
No. 04-1493 15
response to this request for information, AEI and Baldwin
stipulated and agreed that, inter alia, there were a total
of nine patents at issue in the case and that all nine patents
were both “Article Two Patents” and “Rotating System
Patents.” After receiving the parties’ stipulation and
hearing oral argument from the attorneys, the district court
granted AEI’s motion to enforce in part and stated, “The
parties have since agreed that each of the patents developed
pursuant to their Agreement was a rotating system patent
as described in the addendum. This effectively extinguishes
all Article Two rights that Baldwin hoped to retain with
respect to all patents.”
On appeal, Baldwin now argues that the district court
erred in considering “extrinsic evidence,” specifically a
stipulation between the two parties, in ruling on the
Rule 70 motion. This argument begs a question, however: If
Baldwin did not want the district court to consider all nine
patents as both “Article Two Patents” and “Rotating System
Patents,” then why did Baldwin stipulate to that fact?
Stipulations by parties are nothing more than a con-
tract. See Tidemann v. Nadler Golf Car Sales, Inc., 224 F.3d
719, 723 (7th Cir. 2000). Since both parties contracted that
all nine patents at issue were rotating system patents,
Baldwin is bound by that contract and all the legal ramifi-
cations of that contract. Furthermore, although the parties
submitted this new contract to the district court for the
court to consider in granting relief under Rule 70, it was not
an abuse of discretion for the district court to consider the
separate contract in determining whether Baldwin complied
with its original order.
Furthermore, even if we were to find some error in the
district court’s consideration of the parties’ stipulation, that
error would be harmless as the district court’s consideration
of the parties’ stipulation in no way affected the relief
granted by the district court. In ruling on AEI’s Rule 70
motion, the district court granted the following relief: (1)
16 No. 04-1493
that “Baldwin retains no rights, including Article Two
rights, to the rotating system patents”; (2) that “Baldwin
shall release any filings or claims that have been filed with
regard to the rotating system patents”; and (3) that
“Baldwin shall execute patent assignments on all nine
patents as originally tendered by AEI without ‘tuning’
them, and in doing so, shall assign the full ‘bundle of rights’
to AEI.” Each element of relief flows directly from the
district court’s September 19th order as discussed in section
II.B above and is unaffected by whether the district court
considered all nine patents as both “Article Two Patents”
and “Rotating System Patents.” The only ramification of the
stipulation is, as the district court explained in dicta of its
Rule 70 order, “[The stipulation] effectively extinguishes all
Article Two rights that Baldwin hopes to retain with
respect to all patents.”
E. The District Court’s Rule 70 Order Is Not Barred
By Res Judicata
Baldwin next argues that the relief granted by the district
court in its Rule 70 order is precluded on res judicata
grounds. Specifically, Baldwin contends that where the
district court had already concluded in its final judgment
that Baldwin was to retain its Article Two rights, the
district court disturbed that finding by granting Rule 70
relief. In addition, Baldwin asserts that the district court’s
ruling that all nine patents at issue were both “Article Two
Patents” and “rotating system patents” is also barred as the
district court’s September 19th order was based upon two
separate non-overlapping groups of patents: “rotating
system patents” and “Article Two Patents.” Both arguments
are without merit.
Generally speaking, res judicata does not apply to a
court’s redetermination of rulings made earlier in the
same lawsuit. Res judicata requires: (1) a judgment on the
No. 04-1493 17
merits in an earlier suit; (2) the same parties in the present
suit and the earlier suit; and (3) the same causes of action
in both suits. Cent. States, Se. & Sw. Areas Pension Fund v.
Hunt, 296 F.3d 624, 628 (7th Cir. 2002) (emphasis added).
Instead, a better argument for Baldwin would be the law of
the case doctrine which limits a court’s redetermination of
rulings made earlier in the same lawsuit. Rekhi v.
Wildwood Indus., Inc., 61 F.3d 1313, 1317 (7th Cir. 1995)
(citing cases). The law of the case doctrine is a rule of
practice which recited that when an issue is once litigated
and decided, that should be the end of the matter. Creek v.
Vill. of Westhaven, 144 F.3d 441, 445 (7th Cir. 1998)
(quotations and citations omitted). The rule provides
consistency and protects parties from the expense and
vexation attending multiple lawsuits, conserves judicial
resources, and fosters reliance on judicial action, id., but
does not put a limit on the district court’s power to reopen
what has been already decided. See Menzer v. United States,
200 F.3d 1000, 1004 (7th Cir. 2000).
In this case, we find that nothing in the district court’s
order granting AEI’s Motion to Enforce the Judgment in
any way altered or changed the original judgment en-
tered by the district court. As we explained in section II.C
above, after final judgment, Baldwin was to retain no rights
whatsoever in the rotating system patents. After the Rule
70 motion, Baldwin still retains no rights whatsoever in the
rotating system patents. Furthermore, we find that the
district court did not make a finding that all nine patents at
issue were both “Article Two Patents” and “rotating system
patents.” Instead, as we explained in section II.D above, the
district court merely accepted the parties’ stipulation to
that fact and explained to both parties the legal ramifica-
tions of their stipulation.
18 No. 04-1493
F. Under No Circumstances Will Baldwin Be Al-
lowed To Appeal The Underlying Judgment In
This Case
In its last cry for help, Baldwin pleads that some-
where within its menagerie of arguments lies sufficient
grounds for this Court to now allow Baldwin to appeal the
underlying final judgment in this case. In a civil case, an
appeal from a district court may be taken within 30 days
after the judgment or order appealed from is entered. FED.
R. APP. P. 4(a)(1)(A). The test for when the period, under
which an appeal must be taken or a petition for certiorari
filed, begins to run anew is “whether the lower court, in its
second order, has disturbed or revised legal rights and
obligations which, by its prior judgment, had been plainly
and properly settled with finality.” Fed. Trade Comm’n
v. Minneapolis-Honeywell Regulator Co., 344 U.S. 206,
211-12 (1952). We find that the district court did not, by its
Rule 70 order, disturb, revise or alter the legal rights
or obligations plainly and properly settled in its final
judgment. As a result, the time to take an appeal of the
underlying judgment in this case does not run anew. See id.(holding that the judgment at issue did not meet the test for
whether the time to file a petition for certiorari ran anew as
the judgment at issue simply reiterated, without change,
everything which had been decided previously). We find,
therefore, that Baldwin will not be allowed to argue the
merits of the underlying judgment at any time or under any
circumstance. The time has long since passed to appeal any
errors made by the district court in the final judgment.
III. CONCLUSION
For all the foregoing reasons, the ruling of the district
court is AFFIRMED.
No. 04-1493 19
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—10-3-05