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Highland Supply Co. v. Klerk's Flexible Packaging

September 27, 2007

HIGHLAND SUPPLY COMPANY, AN ILLINOIS CORPORATION, AND PRIMA TEK II, L.L.C., AN ILLINOIS LIMITED LIABILITY COMPANY, PLAINTIFFS,
v.
KLERK'S FLEXIBLE PACKAGING, B.V., A NETHERLANDS CORPORATION, F/K/A KLERK'S PLASTIC INDUSTRIE, B.V., DEFENDANT.



The opinion of the court was delivered by: Herndon, District Judge

MEMORANDUM AND ORDER

I. Introduction

Before the Court is a motion for summary judgment submitted by Defendant Klerk's Flexible Packaging, B.V. ("Defendant"). (Doc. 43.) Highland Supply Company and Prima Tek II, L.L.C. (together, "Plaintiffs") respond in opposition. (Doc. 60.) Defendant also submitted a reply. (Doc. 61.) For the following reasons, the Court denies Defendant's motion in part and grants in part.

II. Background

This case arises out of a business relationship between Plaintiffs, affiliated companies holding several patents related to plant covers, and Defendant, a manufacturer and distributor. Plaintiffs originally filed this case in the Circuit Court of Madison County, Illinois. (Doc. 2.) Defendant removed the matter to this Court on July 8, 2005. (Doc. 1.)

On May 15, 1998, the parties entered into an agreement (the "1998 Agreement" or "Agreement") pursuant to which Defendant was to sell plant covers manufactured using Plaintiffs' patented technology. Plaintiffs now allege that Defendant breached Article X of the Agreement ("Article X") by conceiving, developing, and then "manufactur[ing] and/or sell[ing]" certain types of plant covers. (Doc. 2, Pls. Compl., ¶¶ 13-17.) Plaintiffs further assert that Defendant violated Article X by failing to inform them of these activities.

In pertinent part, Article X states

10.1 As part of [Defendant's] duties and without further compensation, [Defendant] may conceive of new developments and/or innovations and/or improvements and/or works of authorship . . . in products covered by the LICENSED PATENT . . . and all such developments and/or inventions and/or improvements and/or works of authorship . . . conceived of by [Defendant], either alone or with others, shall be the property of [Plaintiff Highland] or their designee. This paragraph 10.1 applies to such developments and/or inventions and/or improvements and/or works of authorship made and/or authored after termination of this Agreement if conception by [Defendant] occurred prior to termination . . . .

10.2 [Defendant] shall disclose promptly and in writing to [Plaintiff Highland's] President or the President's designee all developments and/or inventions and/or improvements and/or and [sic] works of authorship referred to this Article X.

10.3 When requested to do so, whether during [Defendant's] engagement hereunder or after termination thereof, [Defendant] shall . . . assign and convey to [Plaintiff Highland] or their designee the entire right, title and interest in the developments and/or inventions and/or works of authorship and confidential property referred to in Article X.*fn1 (Doc. 20.) Due to Defendant's alleged violations, Plaintiffs request an order (1) commanding Defendant to assign and convey its entire "right, title and interest in and to" plant covers falling under the Agreement; (2) permanently enjoining Defendant from further manufacturing or selling the plant covers; (3) requiring Defendant to provide an accounting of all sales of such plant covers; (4) imposing a constructive trust over all proceeds obtained by Defendant by wrongfully selling the plant covers; (5) granting costs; and (6) providing other relief. (Doc. 2, Pls. Compl., ¶ 20.)

III. Analysis

Defendant offers four points in support of its Motion: 1) that its "Tylar Sleeve" is not "covered by" Plaintiffs' Patent Number 5,581,938 (the "'938 Patent"), and therefore Defendant has not violated Article X; 2) that the "Romance Heart Sleeve" was not manufactured, developed, or sold during the operation of the Agreement, and therefore Defendant has not violated Article X; 3) that Plaintiffs claims are res judicata due to a judgment rendered in an earlier case;*fn2 and/or 4) that Plaintiffs are collaterally estopped from asserting critical claims due to that prior judgment. (Doc. 51, pp. 3, 18, 19, 26.)

Defendant fails to show that summary judgment as to Plaintiffs' "Tylar Sleeve" claims is appropriate. However, because no genuine issue of material fact exists regarding Plaintiffs' claims to the "Romance Heart Sleeve," partial summary judgment is granted as to these claims. The Court further finds that neither Plaintiffs' cause of action nor any other critical issues presented by this suit is precluded by prior litigation. Therefore, ...


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