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GSI Group, Inc. v. Sukup Manufacturing Co.

October 28, 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 the Motion for Summary Judgment by Defendant Sukup Manufacturing Company (Sukup) on Plaintiff's Unfair Competition Counts (d/e 453) (Motion 453), and Plaintiff GSI Group, Inc.'s (GSI) Motion for Partial Summary Judgment as to GSI's Count IV for Sukup's Federal Deceptive Trade Practices (d/e 455) (Motion 455). GSI has alleged that Defendant Sukup infringed on several patents held by GSI, including patents on tower grain dryers. Third Amended Complaint for Patent Infringement and Unfair Competition (d/e 129) (Third Amended Complaint), Counts I-III. GSI also alleges in Counts IV through VII that Sukup engaged in deceptive business practices and unfair competition in connection with marketing tower grain dryers in violation of state and federal law. Id., Counts IV-VII (Unfair Competition Counts). Count IV alleges a violation of the Lanham Act. 15 U.S.C. § 1125(a). Count V alleges a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act). 815 ILCS 505/1 et seq. Count VI alleges a violation of the Illinois Uniform Deceptive Trade Practices Act (Uniform Act). 815 ILCS 510/1 et seq. Count VII alleges a violation of the Illinois common law of unfair competition.

Sukup seeks summary judgment on GSI's Unfair Competition Counts, and GSI seeks partial summary judgment on Count IV. For the reasons set forth below, Motion 453 and Motion 455 are ALLOWED in part. GSI has established that Sukup made literally false statements in its marketing materials and used those materials to tout its tower grain dryers in interstate commerce. Issues of fact, however, remain regarding other elements of GSI's claims in Counts IV, VI and VII. Sukup, however, is entitled to summary judgment on the Consumer Fraud Act claim in Count V. Sukup is also entitled to partial summary judgment on Counts IV, VI and VII to the extent that GSI's potential monetary claims under those Counts are limited to disgorgement of profits.

STATEMENT OF FACTS

GSI sells tower grain dryers. These dryers are large cylinders twelve to twenty-four feet in diameter and approximately fifty to one hundred fifty feet tall. A tower dryer cylinder stands up vertically. The dryer cylinder has inner and outer perforated walls that are approximately twelve inches apart. The dryer has 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. See Opinion entered July 27, 2007 (d/e 311) (Opinion 311), at 2-3.

GSI sold one type of tower dryer under the trade name Zimmerman (Zimmerman Dryer). In 2003, GSI produced a brochure for its Zimmerman Dryer (Zimmerman Brochure). Opposition to Sukup's Motion for Partial Summary Judgment as to GSI's Unfair Competition Counts (d/e 453) (d/e 513) (GSI Opposition 513), Exhibit 2 (d/e 515), Zimmerman Brochure. The back cover of the Zimmerman Brochure included a grid of statistics about the capabilities of the Zimmerman Dryers (Zimmerman Grid).

Attached as Appendix A is a copy of the Zimmerman Grid. Each column in the Zimmerman Grid contained one of fourteen statistics concerning either the dimensions or the capabilities of one of fourteen different models of Zimmerman Dryers. At the time that GSI produced the Zimmerman Brochure, Randy Coffee and George Geoffrey Griffin worked for GSI. Coffee was GSI's Vice President for Corporate Drying. Sukup Unsealed Exhibits (d/e 461), Exhibit 156, Declaration of Randy E. Coffee (Coffee Declaration), ¶ 6. Griffin was a sales representative for GSI. In 2003, Coffee and Griffin went to work for Sukup. Griffin sold tower dryers for Sukup. Sukup Unsealed Exhibits, Exhibit 53, Declaration of George Geoffrey Griffin, ¶ 2. Coffee became Sukup's Director of Marketing. Coffee Declaration, ¶ 8.

Sukup started developing grain dryers in 2003. Sukup started marketing tower grain dryers in 2004. Between November 2004 and January 2005, Sukup developed a specification sheet for its tower dryers (Sukup Spec Sheet). GSI Opposition 513 Exhibit 5 (d/e 516), Sukup Spec Sheet. The specifications on the Sukup Spec Sheet were copied by Coffee from the Zimmerman Grid, except for three categories. GSI Opposition 513, Exhibit 3, Deposition of Randy Coffee, at 60-61. The three categories that were different were "Heat Holding Bushels," "Cool Holding Bushels," and "Total Holding Bushels." Attached as Appendix B is a copy of the Sukup Spec Sheet. The Sukup Spec Sheet had a footnote that said, "Dimensions are subject to change."

The three categories that varied from the Zimmerman Grid all concerned the volume of grain that could be held in the dryer. The "Heat Holding Capacity" referred to the volume of grain that could be held in the heated section of the dryer. The "Cool Holding Capacity" referred to the volume of grain that could be held in the cooling section of the dryer. The "Total Holding Capacity" referred to the total volume of grain that could be held in the dryer. Motion 455, Exhibit 1, Declaration of David Morrison in Support of GSI's Motion for Partial Summary Judgment (Morrison Declaration), ¶¶ 18-20.

The Sukup Spec Sheet stated that each Sukup dryer had a larger Heat Holding Capacity, Cool Holding Capacity, and Total Holding Capacity than a comparable GSI dryer of the same size. Sukup employee Kevin Janssen stated that inadvertently he miscalculated the Heat Holding Capacity, Cool Holding Capacity, and Total Holding Capacity figures. He incorrectly included the volume in the unloading section of the dryer as part of the holding capacity. Sukup Sealed Exhibits (d/e 460), Exhibit 103, Deposition of Kevin Janssen, at 134-35.

The Sukup Spec Sheet also listed thirteen different models of Sukup dryers ranging from 12 feet in diameter to 18 feet in diameter. In 2004, however, Sukup designed only one dryer. That dryer was 18 feet in diameter. One such dryer was sold in 2004 and erected at the Rosenwinkel Farm in Waterman, Illinois. Motion 455, Exhibit 6, Deposition of George Geoffrey Griffin (Griffin Deposition), at 125.

Sukup did no testing or analysis to determine whether the Sukup dryers performed similarly to the Zimmerman Dryers. Rather, Coffee states that he prepared the Sukup Spec Sheet based on his personal historical knowledge of dryer performance and his experience in selling tower dryers, including the Zimmerman tower dryer specifications and literature. Coffee Declaration, ¶ 27. Coffee had worked in the tower dryer and grain dryer industry for over thirty years. Id., ¶ 2. Coffee states that he knew from his experience that the statistics in the Zimmerman Brochure were a reasonable estimate of a tower dryer's performance. Id., ¶ 31. Coffee states that the drying rate statistics are standard in the tower dryer industry and are estimates. Other tower dryer manufacturers used the same estimates. At the same time, however, Coffee states that he is not aware of any industry standards used to measure the drying rate performance of a tower dryer. Id., ¶¶ 23-26, 42. Coffee also included Janssen's inaccurate calculations of the holding capacities in the Sukup Spec Sheet.

Sukup distributed the Sukup Spec Sheet to sales representatives with instructions not to distribute it to customers. Coffee Declaration, ¶ 36. However, GSI presents evidence that Sukup personnel, including Coffee and Griffin, distributed the Sukup Spec Sheet to customers. Griffin Deposition, at 111-122; GSI Opposition 513, Exhibit 8, Sukup Price Quotations sent by Randy Coffee to Customers with Sukup Spec Sheet Attached.

In December 2005, Sukup published a sales brochure for its tower dryers (Sukup Brochure). GSI Opposition 513 Exhibit 19 (d/e 518), Sukup Brochure. The Sukup Brochure also contained a grid of specifications for its tower dryers. Attached as Appendix C is a copy of the grid from the Sukup Brochure (Sukup Brochure Grid). As with the Sukup Spec Sheet, almost all of the numbers on the grid in the Sukup Brochure were copied from the Zimmerman Grid. The only exceptions were categories, "Heat Holding Bushels," "Cool Holding ...


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