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Holdt v. A-1 Tool Corp.

May 17, 2010


The opinion of the court was delivered by: Judge Blanche M. Manning


John W. von Holdt, Jr., Janice Anderson, and Plas-Tool Company (collectively "the plaintiffs") filed a complaint against A-1 Tool Corporation, Triangle Tool Corporation, Alfonso Arciniegas, Geoffrey Luther, and LeRoy Luther (collectively, "the defendants"), alleging patent infringement (Count I), a claim under the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 et seq. (Count II), and various state law claims including violations of the Illinois Trade Secrets Act ("ITSA") (Count III), breach of fiduciary duty (Count IV), inducement to breach fiduciary duty (Count VII), tortious interference with business expectancies (Count VIII), and conspiracy to tortiously interfere with business expectations (Count IX). The defendants have filed two motions for summary judgment: one seeks judgment as to the patent infringement claim and the other as to the remaining claims. For the reasons stated below, the court grants the motion for summary judgment as to the patent infringement and CFAA claims and declines to exercise jurisdiction over the remaining state law claims.

I. Summary Judgment Standard

Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48. Federal Rule of Civil Procedure 56(c) ("Rule 56(c)") requires the nonmoving party to go beyond the pleadings and designate specific facts-by affidavits, depositions, answers to interrogatories, and admissions on file-showing that there is a genuine issue of material fact for trial. Celotex, 477 U.S. at 324. The mere allegation of a factual dispute does not defeat a properly submitted motion for summary judgment; the standard is a genuine issue of material fact. Anderson, 477 U.S. at 247-48. "If the evidence is merely colorable . . . or is not significantly probative, summary judgment may be granted." Id. at 249-50.

A genuine issue of material fact exists if the evidence is such that a reasonable jury could find for the nonmoving party. Id. at 248. "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 574 (1986). However, "[t]he district court must view the evidence in a light most favorable to the non-movant and draw all reasonable inferences in its favor." SRI Int'l v. Matsushita Elec. Corp. of Am., 775 F.2d 1107, 1116 (Fed. Cir. 1985) (en banc).

II. Patent Infringement Claim

The plaintiffs allege that the defendants infringed U.S. Patent No. 4,512,493 ("the '493 patent"), which is entitled "Molded Bucket And Lid Having High Stack Strength." The defendants have moved for summary judgment on the patent infringement claim, on the ground, among others, that the plaintiffs failed to provide proper notice of infringement pursuant to 35 U.S.C. § 287(a).

A. Facts

i. Background

Plas-Tool designs and manufactures plastic injection molds for use in the manufacture of plastic industrial pails. John von Holdt, Sr. ("von Holdt, Sr.") founded Plas-Tool in 1952, and he is the named inventor of the '493 Patent, which was filed on August 1, 1983. The patent issued on April 23, 1985, and expired on April 23, 2002. Von Holdt, Sr. assigned the '493 patent to John von Holdt, Jr. ("von Holdt, Jr.") and Janice Anderson who, together, are the majority shareholders of Plas-Tool. Plas-Tool was not an owner of the '493 patent, but rather a non-exclusive licensee. The plaintiffs filed this patent infringement action against the defendants on June 18, 2004, alleging infringement of claims 5, 6, and 7 of the '493 patent.

ii. Actual Notice

Alfonso Arciniegas was an employee, a vice president, and a shareholder of Plas-Tool prior to late 1997, at which time he left to work for A-1 (it is disputed whether Arciniegas was employed by Triangle). The plaintiffs assert that Arciniegas knew of the '493 patent, knew what acts constituted infringement of the '493 patent, and was assigned the responsibility of helping to enforce the '493 patent while at Plas-Tool. As discussed on more detail later, the defendants dispute this contention on the grounds that it is irrelevant whether Arciniegas knew of the patent and, in any event, is merely speculative. The plaintiffs also assert that A-1 and Triangle had not sold an industrial pail mold in over twenty years prior to Arciniegas' employment with A-1, and that within weeks of such employment, A-1 was actively designing and selling molds that made the allegedly infringing pails. The defendants again dispute this as irrelevant.

The plaintiffs also offer a declaration by von Holdt, Jr. stating that, a few days before Arciniegas left Plas-Tool in 1997, von Holdt, Sr., Arciniegas, and von Holdt, Jr. met in a conference room at Plas-Tool where von Holdt, Sr. told Arciniegas: "I think that you are planning to steal our designs and patents. If you or A-1 infringe any Plas-Tool patents or steal any designs of patented features, we will sue you." The von Holdt, Jr. declaration further states that, two weeks later, Arciniegas told von Holdt, Jr.: "I know there is concern that I am going to disclose what I learned about pails and lids at Plas-Tool. I told those guys [Geoffrey and LeRoy Luther] that I would not help make, design or sell pail molds because that would be wrong. . . . I am still a shareholder of Plas-Tool. If any customers want molds that produce Plas-Tool's patented products, I will refer them to Plas-Tool." Lastly, the von Holdt, Jr. declaration asserts that, shortly after Arciniegas left Plas-Tool, von Holdt, Sr. called Geoffrey Luther and expressed concern that the defendants were planning to steal the plaintiffs' designs and stated that, if they did steal any Plas-Tool design, he would bring a lawsuit for patent infringement. Again, the defendants contend that these statements are irrelevant and, in any event, constitute hearsay and lack foundation.*fn1 The court discusses the objections later in this order.

iii. Constructive Notice

Von Holdt, Jr. testified in his 30(b)(6) deposition that Plas-Tool's company policy and practice required that pails sold in the United States that had patented features be marked with the applicable patent. He also testified that two molds sold to a third-party manufacturer, Beres Industries ("Beres"), and shipped on April 2, 2001, were marked with the '493 patent number. It is disputed when or whether buckets were made from these molds or sold to customers. Von Holdt, Jr. further testified in his 30(b)(6) deposition that when the Beres molds in question were returned to Plas-Tool, one of the marks had been filled in with a solder and "blitzed off." There is no evidence from either party as to when this removal of the marking occurred, or whether Beres actually used the marked or unmarked mold, or both, to make and sell buckets.

Furthermore, von Holdt, Jr. testified in his 30(b)(6) deposition that he does not have a specific recollection of each individual job, but has no reason to believe that any jobs, except for a few molds sold to another third-party manufacturer, Morris Enterprises ("Morris"), in the 1980s were not marked in accordance with Plas-Tool's policy. During the deposition, von Holdt, Jr. estimated that Morris produced 400,000 to 500,000 buckets allegedly covered by the '493 patent. The plaintiffs object to this estimate as inadmissible speculation.

In response to the question at his deposition, "Do you know the last time [Morris] used one of [Plas-Tool's] molds?", von Holdt, Jr. replied, "I have no idea." The plaintiffs, however, offer a subsequent declaration by von Holdt, Jr. stating that Morris would have stopped producing unmarked buckets covered by the '493 patent before the defendants' alleged infringement began in 1998. The defendants move to exclude this declaration on the grounds that it contradicts von Holdt, Jr.'s prior testimony. Furthermore, von Holdt, Jr. was unable to confirm any other specific examples of marking with regards to other United States Plas-Tool customers, including Leaktite, Polyethylene Containers, and Protector Products.

B. The Marking Statute - § 287(a)

i. In General

35 U.S.C. § 287(a) provides in relevant part:

Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them. . . may give notice to the public that the same is patented, either by fixing thereon the word 'patent' or the abbreviation 'pat.', together with the number of the patent, . . . . In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

35 U.S.C. § 287(a)(2006) (emphasis added).

When a patentee, or any licensee of the patentee, makes offers for sale, or sells a patented product, § 287(a) of the Patent Act limits the time period for which a plaintiff can recover damages for infringement to the time that the accused infringer was put on notice of infringement. See Am. Med. Sys., Inc. ("AMS") v. Med. Eng'g Corp., 6 F.3d 1523, 1537 (Fed. Cir. 1993); Lampi Corp. v. Am. Power Prods., Inc., No. 93-C-1225, 2004 U.S. Dist. LEXIS 14049, at *10-11 (N.D. Ill., Jul. 22, 2004) ("When a patentee, or its licensee, manufactures a patented product but does not prove that the product was marked with the patent number, § 287 bars any recovery of damages prior to the date the infringer was 'notified of the infringement.'"). Notice under § 287(a) can be either constructive or actual. See Gart v. Logitech, Inc., 254 F.3d 1334, 1345 (Fed. Cir. 2001). A patentee provides constructive notice by marking the product with "the word 'patent' or the abbreviation 'pat.', together with the number of the patent." 35 U.S.C. ยง 287(a). A patentee ...

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