Compounding rivals LNP Engineering Plastics Inc. and RTP Co. each are claiming victory after a June 2 jury decision in U.S. District Court in Wilmington, Del. But the jury's verdict — and several other legal clashes between the two firms — could be eclipsed by a pending hearing in which RTP is accusing LNP of inequitable conduct by withholding information from patent examiners when the patents were re-examined in 1995 and 1996.
"If the judge rules in RTP's favor in that case, [LNP's] patents would be unenforceable," an RTP spokeswoman said.
The June 2 jury decision validated an LNP patent for thermoplastics with more than 30 percent long-glass-fiber content in pellet form. But the same jury invalidated a second LNP patent covering continuous structure-type production of those types of long-fiber-reinforced thermoplastics in tape, sheet and rods.
The jury also awarded damages to Exton, Pa.-based LNP for RTP patent violations from 1992- 1998, but ruled that RTP's infringement was not willful. If the jury had found willful infringement, LNP could have sought triple damages.
The verdict could take Winona, Minn.-based RTP out of the market for more-than 30 percent glass LFRTs, since those materials predominantly are sold in pellet form and because RTP has no tape-, sheet- or rod-making facilities, according to George Niznik, LNP's vice president of research and development and technology.
RTP Chief Executive Officer Hugh Miller did not see things in the same light. In a news release, Miller said he was "delighted with the jury's further vindication of RTP Co.'s good faith" and that RTP will "remain committed to offering a full range of long-fiber-reinforced thermoplastic products."
More-than 30 percent glass LFRTs make up a small portion of RTP's LFRT business; most of its business is in less-than 30 percent LFRTs. An LNP patent for those LFRTs was invalidated Dec. 17 in U.S. District Court in Wilmington. LNP plans to appeal that decision.
An RTP spokeswoman said the firm will challenge the pelletizing decision in a post-trial motion.
Court records reveal the jury awarded $13,322 in damages to LNP. Niznik estimated that RTP generated less than $300,000 in more-than 30 percent glass LFRT sales from 1992-1998.
LNP has filed a second lawsuit against RTP for damages from 1998 to the present. Damages in that case, which is awaiting a trial date, could be more substantial because RTP significantly has increased its LFRT production and sales since 1998, Niznik said.
On June 6, LNP also filed a request for an immediate injunction that would halt RTP's LFRT production. No ruling date had been set for that request.
Niznik added that he's not very concerned about the inequitable-conduct hearing.
"We're considering asking that [the inequitable-conduct charge] be thrown out as a frivolous claim," he said. "RTP is claiming we forgot one of our own previous patents when filing, even though doing so would have been of no benefit to us at all.
"To prove inequitable conduct, you have to prove there was a willful attempt to conceal information," Niznik added. "[The claim] is preposterous from our standpoint."
The two firms have traveled a long legal road since LNP first filed suit against RTP, DSM Engineering Plastics and Hoechst Celanese Corp.'s Polymer Composites Inc. unit in 1996. Since then, DSM has exited the market and Polymer Composites agreed to a cross-licensing deal with LNP, while RTP has continued to fight the issue in the courts.
RTP's determination has been somewhat surprising, particularly since LNP estimates that RTP has less than 5 percent of a global LFRT market with annual sales of $75 million. In North America, RTP trails LNP and Polymer Composites — which is now part of Celanese AG's Ticona business — in LFRT sales.
For its part, LNP has continued to fight because of the potential it sees in the LFRT market, according to Niznik.
"We view [LFRTs] as an expanding growth market that will be attractive to other companies who want to enter," he said. "That's why we have to defend our patents. We put in the effort to develop these markets and don't want to see others cashing in."
LFRTs are plastic compounds, usually made from nylon or polypropylene, that are filled with long strands of glass or similar additives. Most LFRTs to date have been used in the automotive and sporting-goods markets, in applications like bumper beams, dashboard panel supports, bicycle wheels and snowboards.
By sales, LNP and RTP rank among the 25 largest U.S. compounders. LNP posted global sales of about $260 million in 1998, about half of which was in North America. Privately held RTP's 1998 sales were estimated at $135 million, with about 80 percent in North America.