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GSI Group, Inc. v. Sukup Manufacturing Co.

September 17, 2008

THE GSI GROUP, INC., PLAINTIFF,
v.
SUKUP MANUFACTURING CO., DEFENDANT.



The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge

OPINION

This matter comes before the Court on Defendant Sukup Manufacturing Company's (Sukup) Motion for Summary Judgment Barring Plaintiff From the Recovery of Lost Profits, and Alternatively Under the Entire Market Value Rule, Regarding US Patent No. 5,135,271 (d/e 451) (Motion 451). For the reasons set forth below, the Motion is DENIED.

BACKGROUND

This Motion concerns the possible damages that Plaintiff GSI Group, Inc. (GSI) can prove for Sukup's alleged infringement of US Patent 5,135,271 (271Patent) held by GSI. This Court previously determined that issues of fact exist regarding whether the 271 Patent is valid and whether Sukup has infringed on the 271 Patent. Opinion entered September 11, 2008 (d/e 667) (271 Infringement Opinion), at 42, 50. As discussed in detail in the 271 Infringement Opinion, the 271 Patent covers the mechanism for latching and unlatching grain bin doors and an improved design for pins used to integrate the door into the wall of the grain bin. Id., at 2-15.

Sukup now asks the Court to enter partial summary judgment limiting the possible damages that GSI may recover, assuming liability is found. The Court, thus, assumes, for purposes of this Motion only, that Sukup would be found liable for infringement of the 271 Patent. If true, GSI seeks lost profits for the grain bins that Sukup sold using the infringing latching mechanism and pin design. GSI's expert Mark Hoffman puts this figure at $22,581,229.00 for the period from September 2002 to June 15, 2007. Defendant Sukup Manufacturing Co.'s Motion to Strike Portions of the October 3, 2007 Report of Mark E. Hoffman (d/e 370), Exhibit A, Supplemental Report of Mark E. Hoffman dated October 3, 2007 (Hoffman Supplemental Report), at 2. Sukup asks the Court to enter judgment that GSI should be limited to recovering a reasonable royalty for each latching mechanism and improved pin design sold by Sukup.

STATEMENT OF FACTS

The Court previously described in detail grain bin doors, the claimed invention covered by the 271 Patent, and the Sukup competing product. 271 Infringement Opinion, at 2-18. The Court will not repeat that discussion here.

From 1999 to 2007, GSI sold 26,203 grain bins containing the door latching mechanism and pins described in the 271 Patent (hereinafter GSI bins), for a total sales price of $261,585,474.00. Opposition to Defendant Sukup's Motion for Summary Judgment Barring Plaintiff from Recovery of Lost Profits and Alternatively Under Entire Market-Value Rule, d/e 451 (d/e 546) (Opposition), Exhibit 3, Declaration of Mark E. Hoffman Re: Defendant Sukup Manufacturing Company's (Sukup) Motion for Summary Judgment Barring Plaintiff From the Recovery of Lost Profits, and Alternatively Under the Entire Market Value Rule, Regarding US Patent No. 5,135,271 (d/e 451) (Hoffman Declaration), at 2. GSI sold 4,006 GSI bins in 2007. Id.

From 2001 to June 15, 2007, Sukup sold a total of 6,699 bins with the latching mechanism and pins accused of infringing on the 271 Patent (Sukup Bins), for a total sales price of $79,282,584.00. Of that total, Sukup sold 1,703 Sukup bins in 2006 and 933 Sukup bins from January 1, 2007, through June 15, 2007. Id., at 3.

Several other companies market grain bins, including Brock/CTB, MFS(Stormor), Chief, Sioux Steel, Scafco, Conrad, and Westeel. Sukup Unsealed Summary Judgment Exhibits (d/e 461) (Sukup Unsealed Exhibits), Exhibit 148, Deposition of Harmon Towne, at 161-63. GSI's expert Towne opined that the products of several of these companies do not infringe on the 271 Patent. Id. GSI's expert Hoffman opined that the bins and doors produced by these companies were not acceptable substitutes for the GSI bin. Sukup Sealed Summary Judgment Exhibits (d/e 460) (Sukup Sealed Exhibits), Exhibit 99, Preliminary Report of Michael Hoffman, at 13-14. Hoffman relied on the deposition testimony of Burl Shuler, GSI's Vice President-Sales and Administration, and an expert witness in this case, to reach this conclusion. Id. Shuler has opined that the bins and doors currently marketed by such companies are not substitutes for GSI bins because the latches used by these other manufacturers do not incorporate a cam to provide leverage to force open a closed bin door. Opposition, Exhibit 2, Declaration of Burl A. Shuler in Opposition to Sukup's Motion for Summary Judgment (d/e #451) Barring Plaintiff From Recovery of Lost Profits and Alternatively Under Entire Market-Value Rule (Shuler Declaration), ¶ 10.

Sukup also has submitted an e-mail dated February 22, 2006, sent by Brian Stahl, GSI's District Sales Manager in South Dakota (Stahl E-mail). The Stahl E-mail discussed lead times for filling orders for farm and commercial bins submitted to GSI. The e-mail states that new orders for farm bins, "will be scheduled after May 15th, 2006." Opposition, Exhibit 6, Declaration of Brian Stahl in Opposition to Sukup's Motion for Summary Judgment (d/e #451) Barring Plaintiff From Recovery of Lost Profits and Alternatively Under Entire Market-Value Rule, Exhibit A, Stahl E-mail, at 1-2. Later, the Stahl E-mail states, "Steel mill production/delivery to GSI facilities and GSI production capacities restrict us adding any new orders until that time." Id., at 2.*fn1 Shuler, however, stated in his Declaration, that GSI has the capacity to produce over 10,000 grain bins and doors per year, and that GSI has never been at the point of refusing new orders for bins.

Shuler Declaration, ¶¶ 7-8.

ANALYSIS

At summary judgment, Sukup must present evidence that demonstrates the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). The Court must consider the evidence presented in the light most favorable to GSI. Any doubt as to the existence of a genuine issue for trial must be resolved against Sukup. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Once Sukup has met its burden, GSI must present evidence to show that issues of fact remain with respect to an issue essential to its case, and on which it will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. at 322; Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 ...


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