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Cummins, Inc. v. TAS Distributing Co.

November 30, 2009

CUMMINS, INC., PLAINTIFF,
v.
TAS DISTRIBUTING COMPANY, INC., DEFENDANT.



The opinion of the court was delivered by: Joe Billy McDADE United States District Judge

ORDER & OPINION

This matter is before the Court on TAS'*fn1 Motion for Summary Judgment under the Doctrine of Res Judicata (Doc. 18). Cummins has responded in opposition to this Motion (Doc. 20), and TAS has replied to this Response (Doc. 22). Cummins has also filed a Motion for Leave to File a Surreply to Defendant's Reply (Doc. 23), which TAS has opposed (Doc. 24). In addition, TAS has filed a Motion to Stay Discovery Pending Resolution of the instant Motion for Summary Judgment. (Doc. 26). For the reasons stated below, TAS' Motion for Summary Judgment is granted, Cummins' Motion for Leave to File a Surreply is denied, and TAS' Motion to Stay Discovery is denied as moot.

BACKGROUND

In 1997, TAS and Cummins entered into a License Agreement, a Master Agreement, and a Consulting Services Agreement. The License Agreement granted Cummins a license to use certain TAS technology, subject to certain reserved rights, and set out royalty and payment terms. This TAS technology included two technologies that are patented as U.S. Patent No. 5,072,703 (the "'703 Patent") which issued on December 17, 1991, and is entitled "Apparatus For The Automatic Starting, Running, And Stopping Of An Internal Combustion Engine," and U.S. Patent No. 5,222,469 (the "'469 Patent") which issued on June 29, 1993, and is entitled "Apparatus For Monitoring An Internal Combustion Engine Of A Vehicle." TAS' Temp-a-Start and Temp-a-Stop systems incorporate these technologies.

In 2003, TAS filed suit against Cummins, alleging that Cummins had violated the License Agreement by failing to adequately market the technologies as required in the License Agreement; this case has become known as TAS I. (Case No. 03-cv-1026). Cummins counterclaimed, alleging that its obligation to pay royalties under the License Agreement expired on March 31, 2003. This Court, on January 21, 2005, granted Cummins' Motion for Summary Judgment, finding that, though genuine issues of material fact existed as to whether Cummins performed its obligations under the License Agreement, TAS had failed to prove damages. (TAS I, 03-cv-1026, Doc. 36). In that same Opinion, the Court partially granted and partially denied TAS' Motion for Partial Summary Judgment, in ruling that Cummins had an obligation extending beyond March 31, 2003, to make per-unit royalty payments for sales of products embodying TAS technology. (TAS I, 03-cv-1026, Doc. 36). These determinations were affirmed by the Seventh Circuit. TAS Distributing Company, Inc. v. Cummins Engine Company, Inc., 491 F.3d 625 (7th Cir. 2007).

A second case was filed against Cummins by TAS on May 31, 2007, in this Court; it is known as TAS II. (Case No. 07-cv-1141). This suit, which is currently pending, alleges that Cummins has breached the License Agreement, in that it allegedly "failed to pay royalties to TAS" for TAS technology allegedly embodied in Cummins' products, and "has further failed.to provide TAS with the monthly reports of sales of products called for in the License Agreement." (TAS II, 07-cv-1141, Doc. 205 at 3). Alternatively, TAS asserts that Cummins has put its own "ISF Plus System" on its products, rather than TAS' licensed system, and owes royalties to TAS under the License Agreement for the TAS technology that was thus not used. (TAS II, 07-cv-1141, Doc. 205 at 13-16).

On March 18, 2009, Cummins filed the instant suit, seeking to have this Court: (1) dismiss TAS' suit in TAS II, (2) declare that the '703 and '469 patents are invalid, (3) declare the License Agreement void for patent misuse, (4) declare that TAS has engaged in patent misuse,*fn2 (5) declare that the '703 and '469 patents are unenforceable based on inequitable conduct, and (6) rescind the License Agreement and the Master Agreement. (Doc. 1 at 23-24). The basis of Cummins' suit is the allegation that three alleged facts render the '703 and '469 patents invalid: products embodying the Temp-a-Start and/or Temp-a-Stop technologies were sold as early as 1986, more than one year prior to the 1991 and 1993 issuance of the '703 and '469 patents; the wrong inventor was named on the '469 patent;*fn3 and there is a gap in the chain of title between the inventor of the '703 patent's technology and TAS.*fn4

Each of these facts is alleged to have occurred prior to or during the process of obtaining the patents, which was prior to TAS I.

TAS opposes Cummins' claims on their merits, but also filed the instant Motion for Summary Judgment under the Doctrine of Res Judicata on May 12, 2009. (Doc. 19). TAS alleges that the doctrine of res judicata bars Cummins' suit, as Cummins could have raised these patent and contract issues in TAS I, as a defense or counterclaim.

MOTION FOR LEAVE TO FILE SURREPLY

On September 4, 2009, Cummins filed a Motion for Leave to File a surreply to TAS' Reply to Cummins' Opposition to its Motion for Summary Judgment. (Doc. 23). TAS opposed this Motion. (Doc. 24). Cummins argues that it should be allowed to file a surreply because, in its Reply to Cummins' Opposition to its Motion for Summary Judgment, TAS made "significant misstatements regarding the appropriate legal standard for res judicata, inappropriately relied on dicta from otherwise irrelevant case law, and failed to acknowledge the importance of policy considerations when applying res judicata in Illinois courts. Additionally, TAS' Reply failed to provide any reasoning as to why a majority of Cummins' claims were barred by res judicata, and made inaccurate representations of United States Patent Law."*fn5 (Doc. 23 at 2).

The Motion for Leave to File a surreply is denied. In its support, Cummins argues that TAS has made legal mistakes in its Reply that Cummins must address. The Court is quite capable of determining the effect of these supposed misstatements of law on its own and does not require the assistance of Cummins' surreply in doing so. Moreover, unlike some other courts,*fn6 this Court's Local Rules do not provide for the filing of a surreply in the summary judgment context. See Ripmax Ltd. v. Horizon Hobby, Inc., 07-cv-2133, 2008 WL 4534068, *2-3 (C.D. Ill. Oct. 7, 2008). Typically, a surreply is allowed where the moving party raises new factual or legal issues in its reply brief, in order to ensure that the non-moving party has an adequate chance to respond to the new issues. Here, Cummins does not allege that new issues were raised that it seeks to respond to, but only that it objects to TAS' characterization of the law. The Court finds that a surreply is not necessary in this case; Cummins' Motion for Leave to File is denied.

LEGAL STANDARD

I. Summary Judgment

Summary judgment should be granted where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In ruling on a motion for summary judgment, the court must view the evidence on record in the light most favorable to the non-moving party. SMS Demag Aktiengesellschaft v. Material Sciences Corp., 565 F.3d 365, 368 (7th Cir. 2009). All inferences drawn from the facts must be construed in favor of the non-movant; however, the court is not required to draw every conceivable inference from the record. Smith v. Hope School, 560 F.3d 694, 699 (7th Cir. 2009). The court draws only reasonable inferences. Id. If the evidence on record could not lead a reasonable jury to find for the non-movant, then no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. McClendon v. Indiana Sugars, Inc., 108 F.3d 789, 796 (7th Cir. 1997).

II. Res Judicata

Res judicata, modernly known as claim preclusion, prevents a party from bringing a suit to resolve a claim that could have been decided in a prior action between the same parties or their privies. The res judicata effect of a prior judgment by a federal court sitting in diversity is governed by "federal common law," which provides for the application of the law of the state in which the federal court sits. Semtek International Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001). Therefore, Illinois' res judicata law will apply, unless it "is incompatible with federal interests." Id. at 509.

ANALYSIS

I. Applicability of Res ...


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