The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge
This matter comes before the Court on Plaintiff GSI Group, Inc.'s (GSI) Converted Motion for Partial Summary Judgment Against Sukup's Antitrust Counterclaims (d/e 174 and 227) (GSI Converted Motion). Defendant Sukup Manufacturing Company (Sukup) filed amended counterclaims against GSI alleging monopolization and attempted monopolization in violation of the Sherman Antitrust Act. 15 U.S.C. § 2. Defendant Sukup Manufacturing Co.'s First Amended Answer, Affirmative Defenses, and Counterclaims and Demand for Jury Trial in Response to Plaintiff's Third Amended Complaint (d/e 161), Sixth Counterclaim & Seventh Counterclaim. GSI moved to dismiss the counterclaims, but the Motion relied on matters outside the record. Motion to Dismiss (d/e 174), Attached Exhibits. The Court informed the parties that the Court would treat the Motion as a motion for summary judgment. Text Order entered March 6, 2007; Fed. R. Civ. P. 12(b)(6) & 56. The Court gave the parties time to file additional materials to support or oppose the Motion. Text Order entered March 6, 2007. The parties have done so. Upon review of the material submitted, the Court rules that the Converted Motion is allowed. Sukup has failed to present evidence that GSI has market power in the relevant market, except to the extent that its patents give it market power. Sukup fails to present evidence that GSI's market power based on its patents violates § 2 of the Sherman Antitrust Act. As a result of this decision, GSI's Motion and Memorandum to Dismiss Sukup's Antitrust Counterclaims as Being Barred by the Statute of Limitations (d/e 171), and GSI's Motion for Leave to File a Response to Sukup's Surreply to GSI's Motion to Dismiss Sukup's Antitrust Counterclaims as Being Barred by the Statute of Limitations (d/e 304) are moot.
GSI and Sukup build and sell large capacity tower grain dryers. These dryers are large cylinders eighteen to twenty-four feet in diameter. The dryer cylinder stands up vertically. The dryers have inner and outer perforated walls that are approximately twelve inches apart. The dryers have a heat source in the center of the cylinder. The grain is fed into the top of the cylinder and flows down in the space between the inner and outer walls. The heated air from the heat source in the center of the dryer cylinder passes through the perforated walls and dries the grain as it flows down between the inner and outer walls. The dried grain at the bottom is then unloaded from the dryer.
GSI holds U.S. Patent 6,076,276 ('276 Patent) for a sweep device that unloads the grain at the bottom of the dryer. Converted Motion, Exhibit 10, Patent 6,076,276. The '276 Patent was actually issued to a company called ffi, Inc. (ffi). GSI acquired ffi, and its patents, in 2001. In 2004, Sukup started building and selling tower grain dryers. GSI claims that Sukup's tower dryers infringe on the '276 Patent. Sukup has counterclaimed that GSI is illegally monopolizing or attempting to monopolize the market for large capacity tower dryers.
Sukup presents evidence that GSI controls between seventy to ninety -seven percent of the market for large capacity tower dryers.*fn1 GSI officials and former officials have testified that GSI and Sukup are now the only sellers in this market.*fn2 GSI acknowledges that it enjoys a strong reputation for performance, dependability, and serviceability in the large capacity tower dryer market. Sukup's Response in Opposition to GSI's Motion for Summary Judgment Regarding Sukup's Antitrust Counterclaims (d/e 239) (Sukup Response), Exhibit 11, Declaration of George Geoffrey Griffin (Griffin Declaration), ¶ 14.
GSI holds some thirty-one patents. Sukup Response, Exhibit 16, Declaration of Pamela Miller, ¶ 5. In addition to the sweep unloader, GSI's patents include a hopper system for unloading grain from the tower dryers. GSI does not use the hopper system for the large capacity dryers at this time because the sweep system is more effective. GSI refuses to license any of its patents on the tower dryers. Sukup Response, Exhibit 1, Report of Mark Hoffman, at 28.
In March of 1996, prior to filing the patent application for the sweep unloader, ffi sold a tower dryer to Archer Daniels Midland Company (ADM). The dryer sold had an auger unloader, which was the standard mechanism used by ffi at that time. Additional Brief of Sukup Manufacturing Co. Concerning GSI's Motion at Docket Entry 174 (d/e 272 & 273) (Sukup Additional Response), Exhibit 19, Deposition of Paul Peterson, at 130. The order form, however, contained a hand-written note that stated the dryer would include a prototype sweep unloader per the agreement of the parties. Sukup Additional Response, Exhibit 23, Order Form dated March 5, 1996. Ffi secured ADM's agreement to install the sweep unloader in order to test the mechanism. Paul Peterson of ffi supervised the installation and testing of the sweep unloader. Paul Peterson Deposition, at 133-36.
The auger unloader system was shipped to the site at State Line, Indiana, where the dryer was constructed. The auger system, however, was never installed. Instead, a sweep unloader was shipped separately in the fall of 1996 and installed. Once the sweep unloader was operational, the auger system was returned to ffi. Paul Peterson Deposition, at 135-36. Paul Peterson stated that no dollar amount was assigned to the prototype unloader, but the installation of the prototype was agreed upon by the parties as a basis for the purchase. Id., at 131. Once the auger unloader system was returned to ffi, however, ADM received a $6,600 prototype discount. Peterson stated in his deposition, "[W]e were going to discount them the auger unload once the--after we installed the prototype. We gave them a discount for allowing us to do prototype work." Id., at 135-36. ADM incurred no additional charge for the sweep unloader system. Id., at 136.
Ffi completed the testing on the State Line, Indiana, dryer in late 1996 or early 1997. Ffi made changes to the design of the sweep unloader based on these tests. Sukup Additional Response, Exhibit 18, Deposition of Wesley Peterson, at 95. ADM also used the dryer in its business, and so, used the sweep unloader as part of its operations. ADM was not limited in its used of the sweep unloader and was not subject to any confidentiality limitations regarding disclosure of information about the sweep unloader. Wesley Peterson Deposition, at 72.
Ffi filed a provisional patent application for the sweep unloader on July 30, 1997. Ffi subsequently filed four non-provisional patent applications thereafter. Converted Motion, Exhibits 8-11, Patent Applications. The applications named three ffi employees as the inventors of the sweep unloader, Terry McKenzie, Paul Peterson, and Wesley Peterson. Sukup Additional Response, Exhibit 20, Declaration and Power of Attorney (Declaration and Power of Attorney). The applications did not disclose to the Patent Office the fact that ffi had installed a sweep unloader in the tower dryer that it sold to ADM in March 1996 (hereinafter referred to as the State Line Transaction).
The ffi patent applications included a copy of a brochure of another grain dryer that had a sweep unloader. A company called Butler Manufacturing marketed a line of grain dryers under the name Kan-Sun. At least some of the Kan-Sun dryers had a sweep system for unloading grain. Some of the inventors went to see a Kan-Sun dryer as part of their work in developing the ffi sweep unloader. The inventors submitted a KanSun brochure to the Patent Office as part of each patent application. The brochure was all of the material in their possession that related to a KanSun dryer with a sweep unloader. Sukup Additional Response, Exhibit 18, McKenzie Deposition, at 39.
In filing the patent applications, the three inventors stated in the patent applications that "[w]e believe we are the original, first and joint inventors of the subject matter which is claimed and for which a patent is sought . . . ." Declaration and Power of Attorney. Paul Peterson stated that the sweep unloader was an improvement on the existing sweep or paddle systems because the system they designed worked in larger dryers. Paul Peterson Deposition, at 20.
In 2006, Sukup deposed the three inventors and ffi's patent attorney Paul Maginot who represented ffi in the prosecution of the '276 Patent applications. In the depositions, Paul Peterson, Wesley Peterson, and Maginot were asked to compare Claim 9 in the '276 Patent ...