The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge
This matter comes before the Court on the following Motions for Partial Summary Judgment:
1. Plaintiff GSI Group, Inc.'s (GSI) Motion for Partial Summary Judgment Against Defendant's Fourth Affirmative Defense of Patent Misuse (d/e 417) (Motion 417);
2. Plaintiff GSI's Motion for Partial Summary Judgment Against Defendant's Second Counterclaim of Tortious Interference with a Business Relationship (d/e 428) (Motion 428); and
3. Plaintiff GSI's Motion for Partial Summary Judgment Against Defendant's Fourth Counterclaim for Alleged Violation of the Lanham Act (d/e 429) (Motion 429).
GSI has alleged that Defendant Sukup Manufacturing Co. (Sukup) infringed on the following patents held by GSI: U.S. Patent 5,135,271 (271 Patent) covering a latching device with an improved pin design for grain bin doors, U.S. Patent 5,400,525 (525 Patent) covering a flame cone in a grain bin heater, U.S. Patent No. 6,076,276 (276 Patent), U.S. Patent No. 6,073,367 (367 Patent), U.S. Patent No. 6,073,364 (364 Patent), and U.S. Patent No. 6,233,843 (843 Patent) (collectively the Tower Dryer Patents) covering various aspects of a sweep grain unloading device (Sweep Unloader) used in GSI's tower grain dryers. Sukup's Fourth Affirmative Defense alleges patent misuse; Sukup's Second Counterclaim alleges tortious interference of business relationships; and, Sukup's Fourth Counterclaim alleges unfair competition in violation of the Lanham Act. 15 U.S.C. § 1051 et seq. 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). This Affirmative Defense and these two Counterclaims all relate to certain communications that GSI made to Sukup's distributors and customers during the pendency of this action. GSI asserted in these communications that Sukup was infringing on the Tower Dryer Patents.
GSI seeks partial summary judgment on Sukup's patent misuse defense and these two Counterclaims. For the reasons set forth below, GSI is entitled to summary judgment on the patent misuse defense, but not on the tortious interference and Lanham Act counterclaims. Sukup has presented sufficient evidence to demonstrate that issues of fact exist regarding whether GSI acted in bad faith in making the disputed communications, but Sukup has not presented admissible evidence necessary to create an issue of fact regarding its affirmative defense of patent misuse. Therefore, Motion 417 is ALLOWED and Motion 428 and Motion 429 are DENIED.
The Court previously described tower grain dryers and various offloading devices, including the Sweep Unloader. Opinion entered July 27, 2007 (d/e 311) (Opinion 311), at 2-3. The Court also discussed the development of the Sweep Unloader and the Tower Dryer Patents by a company known as ffi, Inc. (ffi). Id., at 5-6. In 2001, GSI acquired ffi, and with it, the Tower Dryer Patents. The Court set forth the facts concerning ffi's sale of a tower dryer to Archer Daniels Midland (ADM) in March 1996 at State Line, Indiana, and the subsequent installation of a sweep unloading device into that dryer later in 1996 (State Line Installation). Id., at 3-6. The Court also previously discussed the history of ffi's applications for the Tower Dryer Patents and the issuance of those patents. Opinion entered September 25, 2008 (d/e 678) (Opinion 678), at 5-8. Ffi filed a provisional application for these patents on July 30, 1997 (Provisional Filing), and subsequently filed four separate patent applications on July 29, 1998, that ultimately resulted in the issuance of the four Tower Dryer Patents. Id.
The 276 Patent covered the basic structure of the Sweep Unloader. The Sweep Unloader was at the bottom of a tower dryer used to dry grain for storage. See Opinion 311, at 2-3. The dried grain was unloaded from the dryer as it reached the bottom of the dryer. The Sweep Unloader used curved wipers to sweep the floor of the dryer to force the dried grain into a hopper in the center of the floor. A support framework, located above the wipers, held the wipers in place. The support framework was attached to a motor that spun the support framework and the attached wipers around a hub in the center of the dryer. Attached as Appendix A is a cut-away drawing of the bottom of a tower dryer with the Sweep Unloader.
The GSI Sweep Unloader had four curved blades extending from a hub in the center of the dryer. The support framework was a regular octagon with the hub at its center. The support framework was made up of support members that extended radially as spokes from the hub to each vertex of the octagon. Cross members were connected to the ends of the spokes to form the octagon. Additional cross members were connected between the spokes at a point approximately one-third of the distance from the hub to the end of the spokes. Another set of cross members connected between the spokes approximately two-thirds of the distance from the hub to the ends of the spokes. The effect was three concentric octagons. Every other spoke (for a total of four) was connected to the end of a wiper. Each of the other four spokes was connected to the middle of a wiper. The various interior cross members were also connected to the wipers at the points where the cross members passed over the wipers. Attached as Appendix B is a view of the wipers and octagonal support framework from above.
Claim 1 of the 276 Patent covered:
1. A floor sweep assembly for a grain dryer, comprising: a framework which is rotatable around a central axis, wherein said framework includes (i) a first primary support member which extends radially outwardly relative to said central axis, (ii) a second primary support member which extends radially outwardly relative to said central axis, and (iii) a first ancillary support member which is spaced apart from said central axis and extends between said first primary support member and said second primary support member; and a first wiper positioned relative to said framework such that, when said floor sweep assembly is viewed in a plan view, said framework and said first wiper define (i) a first primary intersection of said first wiper and said first primary support member, and (ii) a first ancillary intersection of said first wiper and said first ancillary support member.
Sukup Unsealed Exhibits (d/e 461), Exhibit 26, 276 Patent, at 17, Column 9. Claims 2 through 8 cross referenced the structure covered by Claim 1. Claim 9 of the 276 Patent covered:
9. A floor sweep assembly for a grain dryer, comprising: a framework which is rotatable around a central axis, wherein said framework includes (i) a first primary support member which extends radially outwardly relative to said central axis, and (ii) a second primary support member which extends radially outwardly relative to said central axis; and a first wiper positioned relative to said framework such that, when said floor sweep assembly is viewed in a plan view, said framework and said first wiper define (i) a first primary intersection of said first wiper and said first primary support member, and (ii) a second primary intersection of said first wiper and said second primary support member.
Id., at 17, Column 9-10. Claims 10 through 16 cross referenced the structure covered by Claim 9. Claim 15 covered:
15. The floor sweep assembly of Claim 9, further comprising: a second wiper positioned relative to said framework such that, when said floor sweep assembly is viewed in said plan view, said framework and said second wiper define a third primary intersection of said second wiper and said second primary support member.
Id., at 17-18, Columns 10-11.
The main distinction between the structure covered by Claim 1 (and the related claims cross-referencing Claim 1), and the structure covered by Claim 9 (and the related claims cross-referencing Claim 9, including Claim 15), was the fact that the support framework in Claim 9 did not include any cross members between the spokes radiating from the central hub.
The 367 Patent covered essentially the same invention as the 276 Patent; the only difference was that the 367 Patent added spacers between the wipers and the support framework. The spacers raised the support framework above the wipers to create a space between the wipers and the support framework. The space kept debris from building up in the support framework. See Opinion 678, at 4-5. The 364 Patent covered the ultra-high molecular weight resins that ffi used on the wipers, and the 843 Patent covered the method of advancing grain in a tower dryer using the resin wipers claimed in the 364 Patent. Opinion 678, at 6.
At some point, ffi failed to claim that the 276 Patent and the 367 Patent applications related back to the Provisional Filing. As a result, the effective date of those two patents was July 29, 1998, whereas the effective date of the 364 and 843 Patents was July 30, 1997. Id., at 6. This proved critical because ffi started marketing the Sweep Unloader in the spring of 1996. As a result, the 276 Patent and the 367 Patent were invalid because the covered invention was made available for commercial sale more that a year before the effective date of those patents. 35 U.S.C. § 102(b); Opinion 678, at 9.
Sukup began marketing its tower dryer with its sweep unloading device in 2004. The original design of the sweep unloading design (Design A) infringed on the 364 and 843 Patents because of the resins Sukup used in its wipers. Opinion 678, at 18. The Sukup Design A used four wipers. The support framework above the wipers consisted of four spokes that extended radially out from the center hub and attached to the end of each wiper. Design A also had one set of cross members between each spoke. Each cross member attached to the center of a wiper. Attached as Appendix C is a drawing of Design A. Design A also employed spacers between the wipers and the support framework. Sukup sold one dryer that used the Design A sweep unloading device (referred to by the parties as the Rosenwinkel Farm or Waterman, Illinois, Dryer) . See Opinion 678, at 7.
GSI filed this action on January 19, 2005. Shortly thereafter, GSI and Sukup began discussing the validity of GSI's various patents. Sukup asserted that the 276 Patent was anticipated by a sweep unloading system used in a dryer marketed under the name Kan-Sun since the late 1970s. On April 21, 2005, Charles Sukup, President of Sukup, sent a letter to GSI, stating in its first point:
1. Tower Dryer -- We will change design on both future units and units existing in the field to an alternative design. This alternate design is similar to that used by Kan-Sun about 30 years ago and clearly is prior art to the patents in question. The wiper is attached to a first primary support and a second primary support. There is no attachment to an ancillary support. A spacer is not used between the primary support and wiper.
Sukup Supplemental Unsealed Exhibits (d/e 547), Exhibit 191, Letter from Charles Sukup to GSI dated April 21, 2005.
On April 28, 2005, David Morrison, GSI's Tower Dryer Division Manager, responded that the proposed redesign would still infringe on some claims. Sukup Supplemental Unsealed Exhibits, Exhibit 193, Email from David Morrison to Charles Sukup dated April 28, 2005.
Charles Sukup replied on May 2, 2005, with an email in which he sent Morrison a copy of the revised design of the sweep unloading system (Design B). Attached hereto as Appendix D is a drawing of this design. Design B eliminated the resin on the wipers and the spacers between the support framework and the wipers. Design B added four shorter radial spoke supports, but did not eliminate the cross supports. Charles Sukup also stated in the May 2, 2005, email that:
Also attached are pictures of an older Kan-Sun dryer from the 1970's or early 1980's which is clearly prior art, showing a connection at both the first and second primary supports. We believe this should answer your concerns.
Sukup Supplemental Sealed Exhibits (d/e 543), Exhibit 194, Charles Sukup Email to David Morrison dated May 2, 2005. Attached as Appendix E is a copy of one of the photographs Charles Sukup sent to Morrison showing a wiper and support member in a Kan-Sun dryer. Sukup sold one dryer with the Design B sweep unloading system in May 2005, which was erected in Franklin Grove, Illinois.
On May 20, 2005, GSI filed a request for a Certificate of Correction with the Patent and Trademark Office (PTO). The purpose was to ask the PTO to reinstate the claim of priority of the 276 Patent to the Provisional Filing Date of July 30, 1997. Sukup Unsealed Exhibits (d/e 461), Exhibit 31, Request for Certificate of Correction. This matter was still pending before the PTO as of the filing of these motions.
On May 11, 2005, Morrison sent Charles Sukup an email in which he stated again that GSI believed that Design B still infringed on the 276 Patent. Sukup Supplemental Unsealed Exhibits, Exhibit 197, Email from David Morrison to Charles Sukup dated May 11, 2005.
On May 17, 2005, David Morrison sent Charles Sukup an email in which he discussed the differences of the Kan-Sun design and the GSI design. GSI marketed its tower dryer under the brand name Zimmerman. Morrison said:
I have attached another picture of the MC (Kan-Sun) dryer sweep in order to clarify our stance. The MC dryer uses a curved sweep to meter grain out of their dryer. You will notice that there are no liners attached to the sweeps, there are no spacers between the sweep and the supports, there are no tangential (ancillary) supports between the radial supports, and each sweep is fastened to only two radial supports.
All of your redesigns appear to be focused on keeping your design as close to the current Zimmerman design as possible while attempting to skirt some of the claims of our patent. Our stance has not changed. We do not want your new design to infringe on any of our patents. The patent reviewer was well aware of the MC (Kan-Sun) design and its prior art implications when allowing the Zimmerman patents.
We do not have a problem with Sukup using the MC (Kan-Sun) design as outlined above as long as our attorney is satisfied that you are not infringing our patents. We are also confident in our stance on the validity of our patents versus the prior art issues you have raised on the MC (Kan-Sun) design.
Sukup Supplemental Unsealed Exhibits, Exhibit 198, Email from David Morrison to Sukup dated May 17, 2005 (emphasis in original).
Morrison followed up this email with a letter dated May 23, 2005. The letter stated in part:
We have suggested several times that a design like the MC (Kan-Sun) would peacefully resolve the matter. Up to this point, everything you have suggested still contains a sweep support structure similar to our design in one way or another.
I have taken your drawing, and modified it to represent a sweep system similar to the KanSun sweep system. Although Bill has informed me that even this design may still contain some infringement issues, we would be willing to compromise in order to resolve the infringement lawsuit.
Sukup Supplemental Sealed Exhibits, Exhibit 200, Letter from David Morrison to Charles Sukup dated May 23, 2005. Attached as Appendix F is the drawing attached to Morrison's letter.
On June 3, 2005, attorney Zarley sent a letter to GSI's attorney Cunningham discussing Zarley's opinion that Claims 9 and 15 of the 276 Patent were anticipated by the Kan-Sun sweep unloading device. The letter included a drawing of the Kan-Sun design. Sukup Supplemental Unsealed Exhibits, Exhibit 202, Letter from Timothy Zarley to William Cunningham dated June 3, 2005. Attached as Appendix G is a copy of the drawing that accompanied this letter.
On June 23, 2005, Sukup sent a drawing of a new sweep unloading system design to GSI (Design C). Design C also had no spacers and did not use resins in the wipers. Design C still used four curved wipers and radial spoke supports, but eliminated all cross supports. Rather, Design C employed one set of four support spokes that extended from the hub to the end of each wiper. Another set of four, shorter supports extended radially from the hub to the middle of each wiper. Attached as Appendix H is a drawing of Design C sent to Morrison. Sukup implemented the use of the Design C sweep unloading ...