The opinion of the court was delivered by: Joe Billy Mcdade Senior United States District Judge
Before the Court are the Cross Motions for Summary Judgment filed by the parties (Docs. 211 and 221). For the reasons set forth below, Plaintiff's Motion is DENIED (Doc. 211) and Defendant's Motion is GRANTED IN PART and TAKEN UNDER ADVISEMENT IN PART (Doc. 221).
This lawsuit has resulted in numerous Orders that have attempted to outline the dispute between the parties. In lieu of generating another extensive outline of the parties' dispute, the Court assumes familiarity with the claims in this case, the various Orders, and the documents filed in two other cases involving these parties, TAS Distributing Co. v. Cummins Engine Co., 1:03-cv-1026 (hereinafter "TAS I") and Cummins, Inc. v. TAS Distributing Company, Inc., 1:09-cv-1096 (hereinafter "TAS III"). This case is, of course, TAS II.
The Court notes that both parties have already filed motions for summary judgment (Docs. 36 and 54) on a previous incarnation of Count I (which were denied, Doc. 146) for substantially the same reasons: TAS claims that its technology is located in engine ECMs manufactured by Cummins and that it is therefore owed a royalty on each such engine; and, Cummins claims that TAS' claims are barred by res judicata and that its claims fail on the merits regardless. This Court previously found that a question of fact existed with respect to Count I that precluded summary judgment for either party. This question of fact was related to what the Court considered the focus of the briefs: competing arguments that TAS technology resident in an ECM (i.e. ICON) is either "active" or "dead" and related arguments that it could or could not be accessed through Pin 35. This question of fact further drove this Court's conclusion on the res judicata argument: that TAS was not aware in TAS I, through affirmative statements made by Cummins, of access to ICON through Pin 35.
As is par for the course in this case, the current briefing has focused the Court's attention on the relevant issues -- a focus that the Court did not achieve in the first round of briefing. Therefore, notwithstanding the substantially similar arguments, the Court will consider the arguments made in the current briefs anew.*fn1
A. Merits of TAS' Count I*fn2
The License Agreement between the parties states that Cummins shall pay a royalty to TAS for every "Original ECM Product" sold by Cummins (License Agreement ¶ 5(b)). The Master Agreement defines Original ECM Product as: "any Product which incorporates programming in the engine ECM at the time of vehicle assembly by the original equipment manufacturer" (Id. ¶ 1(k)). "Product" is defined as: "any product, including any component or subassembly of the product, manufactured with or incorporating all or a substantial part of the Subject Technology" (Id. ¶1(n)). "Subject Technology," in turn, is defined as
Any and all technology owned or licensed by TAS relating to the TEMP-A-START and TEMP-A-STOP systems, or any component or subassembly thereof, except the Excluded Technology, including without limitation: (i) patents... (ii) design, development, and manufacturing information... (iii) testing information... (iv) computer or other apparatus programs relating to design, development, or manufacturing... (v) any form of information related to applications of the above-described technology, including information relating to the installation of the Products on trucks, tractors and other vehicles. (Id. ¶ 1(r)). As provided by the License Agreement, Temp-A-Start is an "engine control system" that can "automatically start and stop an engine," among other things, based on various conditions like engine temperature and battery condition; and, Temp-A-Stop is also an "engine control system" that can, in part, "stop the engine by overriding the ignition key if the vehicle is parked or not moving and idling for a predetermined time" (License Agreement ¶ 2(a) and (b)).
The embodiment of these agreements is a product known as ICON.*fn3
In its memorandum in support of its Motion for Summary Judgment (Doc. 212), TAS asserts that the CM 570 model ECM, located in Cummins' ISX and ISM engines, contains "active ICON computer programming code" (TAS Statement of Material Facts, Doc. 212, p. 5 ¶ 15)*fn4. This programming could be "enabled by Cummins' Original Equipment Manufacturers ("OEMs") through software furnished by Cummins to its OEMs or through software obtainable from third parties" (Doc. 212, p. 5, ¶ 16). The "engine mode"*fn5 of ICON could then be used (or activated) if various switches, an assembly, and relays are installed including "the hood tilt switch, the neutral position switch, the lamp assembly, the parking brake switch, the ignition bus relay, and the starter relay" (Doc. 212, pp. 5-6, ¶¶ 18, 20, 21). These switches, relays, and assembly*fn6 are also available from third parties (Doc. 212, p. 5, ¶ 19). Thus, TAS argues that because the CM 570 ECM located in these engines contains ICON code, which can be enabled through software and the installation of some hardware, the engines are an "Original ECM Product" and Cummins owes royalties for every such engine sold.*fn7 Similarly, TAS argues that it is irrelevant whether ICON code is actually enabled or connected to the hardware required for it to work. For TAS, it is sufficient that Cummins' engines contain "enableable" ICON software. By TAS' estimation, Cummins sold 193,198 such engines and consequently owes $9,909,900.00 in royalties.
In support of these facts, TAS relies almost exclusively on Cummins' first supplement response to TAS' third set of interrogatories (Doc. 212-2, Ex. H, pp. 45-49 (hereinafter "interrogatory response")) and an internal memorandum dated January 19, 1999 from Tom Kieffer to OEMs (Doc. 212-2, Ex. J, pp. 54-68 (hereinafter "Kieffer memo")). In the interrogatory response, Cummins states:
Three programs, namely CALTERM, VEPS, and INSITE, can activate or turn on the computer code associated with Cummins' Integrated or 'one-box' ICON system in its CM570 ECMs. However, this alone, without the installation of the corresponding Integrated ICON sensors, is insufficient to 'enable' Cummins' 'one-box ICON system.' Neither the required sensors nor the method of installation were known to the general public, and Cummins provided no kit that included all sensors used by Integrated ICON. As such, if only the Integrated ICON software is enabled and none of the additional hardware elements of the Integrated ICON system are installed, then the Integrated ICON Engine and Cab Comfort modes of ICON will not operate. (Doc. 212-2, p. 46). The Kieffer memo contains a chart which includes the hardware listed above, the prices of these components (for OEMs), and whether or not they must be purchased from Cummins (Doc. 212-2, p. 57-58). In a column entitled "[m]ust purchase from Cummins," the chart lists "no" for the rows containing the specific hardware identified above (Doc. 212-2, p. 58).
In its response (Docs. 222 and 224 (which is a sealed version)), Cummins basically argues that the "few lines of code" contained in the CM 570 ECM do not constitute "'all or a substantial part' of the TAS technology" (Doc. 224, p. 1). In contesting TAS' facts, Cummins first states that the CM 570 ECM contains "disabled Integrated ICON code" and refers to the interrogatory response highlighted above.*fn8 Cummins further states that in addition to the hardware indicated above, an Engine Start Alarm also must be installed which can only be purchased from Cummins (Doc. 224, p. 7, response to ¶ 19). Cummins then states that each of the additional facts highlighted above are immaterial (Doc. 224, pp 7-8, referring to TAS' SMF 16, 19, 20, and 21).
As additional facts, Cummins states that its "CM570 ISX and ISM engines contain thousands of lines of computer code; only a small portion of this code is related to Integrated ICON" (Doc. 224, p. 11, ¶ 13).*fn9 Only an OEM can "enable" the ICON code and this can only be accomplished using Cummins' "INSITE software tool" or a "third-party software tool" called VEPS (Doc. 224, p. 11, ¶¶17-18). In addition, to "enable" the ICON code, an OEM must install the hardware listed above in addition to a "CC/PTO On/Off Switch" (Doc. 224, p. 12, ¶ 21). Cummins states that the installation instructions are contained in an Application Engineering Bulletin, to which it restricts access (Doc. 24, p. 13, ¶¶ 22-23). Cummins states that it is not aware of any OEM that has "installed Integrated ICON without notifying Cummins" (Doc. 224, p. 13, ¶ 29). To support these statements of fact, Cummins relies exclusively on the Declaration of Rich Thielmeyer, an Electronics Controls Leader who worked on the CM 570 ECM (Doc. 225, hereinafter "Thielmeyer Declaration"), and the declaration of Jeffrey D. Jones, a Vice President of Sales and Market Communication (Doc. 231-1, hereinafter "Jones Declaration").
In its reply brief (Doc. 239), TAS agrees that the ICON computer code can only be enabled via INSITE and VEPS (although it asserts that INSITE is publicly available and that "downstream customers" could also use INSITE to enable the ICON computer code). TAS also necessarily agrees that ICON cannot be used by an end-user unless the hardware also is installed. Nonetheless, TAS asserts that facts related to installation of hardware in order to use ICON are immaterial. Importantly, TAS asserts that "[d]elivery of an engine by Cummins to an OEM with enableable ICON code is the royalty triggering event" (Doc. 239, pp. 12, 13, 15, responses to ¶¶ 21, 23, and 29).
Despite the parties' wrangling about various terms and their significance, it is clear that the parties agree on the following set of facts: The CM 570 ECM located in ISX and ISM engines contains ICON computer programming which incorporates TAS technology. The ICON computer programming has been included in CM 570 ECMs from 2000 to the present (although data is only available through October, 2009). The software is "inactive" but can be activated through the use of computer programs that are available to Cummins and OEMs, and perhaps third parties. This activated ICON can then be utilized by consumers if certain hardware is installed. This hardware is available to OEMs through Cummins or through third parties. ICON cannot be used if it is not "activated" or "enabled" and if it is not connected to hardware.
Cummins argues that TAS' claims in Count I are barred by res judicata because they could have been brought in TAS I. In making this argument, Cummins states that TAS knew, in TAS 1, that the CM 570 ECM contained integrated ICON computer programming code and could have, and should have, raised claims related to CM 570 ECM in that lawsuit. Cummins also argues that TAS knew, or should have known, that it had an accessory shutdown feature contained in its engines (the "ISF Plus System"). As such, TAS should have brought any claim related to Cummins' ISF Plus System in TAS I. As indicated above, this Order only concerns TAS' claim with respect to ICON; ...