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Snap-On Incorporated v. Robert Bosch, LLC

United States District Court, Seventh Circuit

September 26, 2013



CHARLES P. KOCORAS, District Judge.

Now before the Court is Defendant Beissbarth GmbH's ("Beissbarth") motion to dismiss under Federal Rule of Civil Procedure 12(b)(2). For the following reasons Beissbarth's motion is denied.


Snap-On Inc. ("Snap-On") is incorporated under the laws of Delaware with its principal place of business in Kenosha, Wisconsin. On November 3, 2009, Snap-On filed a complaint against Robert Bosch, LLC ("Bosch USA"), alleging that Bosch USA infringed on several of its patents relating to an optical wheel alignment system. On August 18, 2011, Snap-On filed an amended complaint, which added Bosch GmbH and Beissbarth as defendants. Bosch GmbH and Beissbarth are corporations organized under the laws of Germany. Bosch GmbH is comprised of 350 subsidiaries and regional companies, including Beissbarth and Bosch USA.

In October 2007, the manager of Bosch GmbH's Automotive Aftermarket Division Robert Hanser ("Hanser") issued a memorandum entitled "Strategy for the Success and Growth of the Bosch Automotive Aftermarket division." The memorandum stated that "the greatest opportunities in our market lie in the field of diagnostics." In an attempt to reach Bosch GmbH's goal of "developing Bosch Diagnostics as a global player and [t]o become the global market leader, " Hanser announced a "significant step forward" to achieving its objective through the acquisition of Beissbarth in 2007. Hanser noted that Beissbarth's "key focus is on chassis and axle alignment as well as brake test stands and test lines." According to Hanser, Beissbarth's acquisition meant a "significant expansion for our product range in the area of non-contact, optical axle alignment technology." Bosch GmbH's 2007 Annual Report recognized the United States as the company's "most important market outside Germany." Beissbarth manufactures the FWA 4630 optical wheel alignment system, also known as the Easy 3D, in Germany. The Easy 3D wheel alignment system was developed by Beissbarth after the company was acquired by Bosch GmbH.

In December 2008, Beissbarth announced a cross-company meeting to discuss the international needs for "wheel aligners and brake testers" to take place the following month at Beissbarth's Munich, Germany headquarters. Bosch GmbH employee Klaus Michael-Koch instructed several Bosch USA representatives to attend the "international meeting." Bosch USA's David Scribner ("Scribner") attended the meeting.

On February 5, 2009 a meeting was held at Bosch USA's Broadview, Illinois corporate headquarters. Although a Beissbarth representative was not in attendance, the meeting minutes reflect that Beissbarth was working in conjunction with Bosch USA and Bosch GmbH on a detailed project plan for the launch of the Easy 3D. The pricing of the Easy 3D aligner was also discussed in the context of long term and short term profitability. Bosch USA acknowledged that any incurrence of short term losses had to be compensated with the support of Beissbarth.

To coincide with the internal time lines established by Bosch GmbH, testing of the Easy 3D in the United States was to commence in the spring of 2009. In the early stages of the Easy 3D testing, the shipment of the Easy 3D from Munich, Germany (Beissbarth facility) to Ashland, Virginia (Bosch USA facility) was performed by Beissbarth. A May 2009 project goal chart formulated by Bosch GmbH highlighted major project milestones pertaining to the launch of the Easy 3D aligner. Beissbarth's Regional Marketing and Sales Manager for Beissbarth's International Sales Department Ricardo Chueca ("Chueca") was designated as the individual responsible for shipping the Easy 3D test aligner to Bosch USA in March 2009. In a March 31, 2009 email sent from Bosch USA's Scribner to Beissbarth's Chueca, Scribner informed Chueca that they were running behind schedule on the testing of the Easy 3D aligner. Scribner questioned Chueca about the "status of the urgent air shipment to [Bosch USA's facility in] Ashland."

After the March 2009 shipment of aligner, the transfer pricing of the Easy 3D aligner again came up as an issue. In June 2009, Bosch USA's James Frazer ("Frazer") sent an email to Beissbarth's Richard Wagner ("Wagner"), inquiring about the prospect of lowering the cost of the aligner that Bosch USA had to pay. Wagner responded that the current price Bosch USA was paying for the aligner was "357-[Euros] lower than its minimum price." However Wagner invited Frazer to have a teleconference to determine if compensation for the Easy 3D could be obtained through other Beissbarth products where there may be more of a reserve to cut costs. It was determined that to save on the transfer price between companies Frazer and Wagner discussed future purchases of the Easy 3D aligner being made directly from Beissbarth's Munich factory. Subsequently Beissbarth sold all units to Bosch USA at its Munich factory and Bosch USA was responsible for shipping the aligners to the United States. Beissbarth sent the invoices for the purchases to Bosch USA's Carol Stream, Illinois corporate mailing location.

As the Easy 3D alignment system was prepared for its launch in the United States, technical difficulties necessitated Beissbarth to assist Bosch USA in its resolution. In July 2009, email communications between employees of Bosch USA and Beissbarth indicate that Bosch USA employees were "on line" with three Beissbarth employees "conducting live tests" on the Easy 3D aligner in Bosch USA's Ashland, Virginia facility. When the performance of the aligner was not satisfactory, Beissbarth technicians attempted to provide technical support for the aligner. After these attempts failed, Beissbarth's Wheel Alignment Product Manager Tobias Wirbser ("Wirbser"), traveled to Ashland to work "side by side" with members of Bosch USA's team in an effort to resolve all technical issues before the fall 2009 launch of the alignment system. Wirbser "provide[d] training on the Easy 3D product to [Bosch USA]." Beissbarth rendered further assistance to Bosch USA by sending Witold Janus, a service technician, to Virginia to assist with the Easy 3D in 2009.

On August 5, 2009 Ulrich Thiele ("Thiele"), the Vice President of Finance and Controlling for Bosch GmbH, emailed representatives from Beissbarth and Bosch USA. Thiele disclosed that the current pricing of the Easy 3D would result in a "continuous loss situation" and if nothing changed the project should be stopped. Thiele instructed Beissbarth's Marco Kempin ("Kempin") and Bosch USA representatives to provide consolidated financial reports concerning the pricing of the alignment system. Following Thiele's instruction, Beissbarth and Bosch USA conducted a detailed financial analysis of the Easy 3D and together set the transfer price.

In an August 11, 2009 e-mail from Bosch USA Senior Account Manager Steve Jordan ("Jordan") to Bosch GmbH and Beissbarth representatives, Jordan highlighted the main points of a previous inter-company conference call, which crystalized the decision to launch the Easy 3D aligner with a "negative profit outlook." Thereafter the companies would "work together to understand the Easy 3D market price" and collaborate with Thiele to "achieve acceptable profits, while considering Bosch Diagnostics as a whole." Beissbarth was given several tasks in the email concerning forwarding warranty definitions to Bosch USA and providing assurance plans for compliance with NAFTA. On August 14, 2009 Beissbarth's Chueca emailed Bosch GmbH and Bosch USA representatives to inform them that the previously agreed upon transfer price was determined using the wrong discount percentage.

On September 4, 2009 Bosch USA's Scribner emailed Silke Spitzer ("Spitzer") of Beissbarth's Research and Development division to obtain his assistance in translating the Easy 3D performance instructions from German to English. Spitzer provided input on the translation in question and further suggested terms which could be used to ensure the directions were clear. Translations of marketing materials were also the subject of correspondence between Beissbarth and Bosch USA.

The Easy 3D aligner was field tested at eight preselected locations in the United States. A May 2009 Bosch GmbH presentation titled "NAFTA Easy 3D Aligner" laid out time tables for different facets of the alignment project. The presentation highlighted that the field testing was scheduled to begin in February 2009 and was to conclude in September 2009. Four of the eight testing locations were located in Illinois and the remaining four locations were in Virginia. The Easy 3D testing locations in Illinois were described as performing a high volume of sales and/or automotive repair work. In September 2009, as the field tests were being performed, technicians in both Illinois and Virginia encountered system errors with the aligner which inhibited the Easy 3D's performance. Bosch USA's Scribner expressed concern in an email carbon copied to Beissbarth's Wagner that testing errors may "become problematic now that we are into the product release stages of the product launch." Scribner also highlighted that the testing at the Arlington Heights, Illinois location would be subject to scrutiny as "this is [a] ...

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