Air Turbine Technology, Inc. v. Atlas Copco Ab

• Decision Date: 23 September 2003
• Docket Number: No. 01-8288-CIV.,01-8288-CIV.
• Court: U.S. District Court — Southern District of Florida
• Parties: AIR TURBINE TECHNOLOGY, INC., Plaintiff, v. ATLAS COPCO AB, Atlas Copco Tools AB, Atlas Copco North America, Inc. and Atlas Copco Tools, Inc., Defendants.

295 F.Supp.2d 1334

AIR TURBINE TECHNOLOGY, INC., Plaintiff, v. ATLAS COPCO AB, Atlas Copco Tools AB, Atlas Copco North America, Inc. and Atlas Copco Tools, Inc., Defendants.

No. 01-8288-CIV.

United States District Court, S.D. Florida.

September 23, 2003.

COPYRIGHT MATERIAL OMITTED

Ned Roger Nashban, Quarles & Brady, Boca Raton, FL, Richard L. Horn, Gregory M. Smith, Quarles & Brady, Chicago, IL, Casey Keeler Weidenmiller, Ka'imi Lani Jones, Quarles & Brady, Fort Lauderdale, FL, for plaintiff.

Susan Kohlmann, Brett Lewis, Pillsbury Winthrop, New York City, William Atkins, Guillermo E. Baeza, Scott J. Pivnick, Benjamin L. Kiersz, Pillsbury Winthrop, McLean, VA, Paul R. Griffin, Pillsbury Winthrop, San Francisco, CA, John C. Dotterrer, Palm Beach, FL, for defendants.

ORDER GRANTING IN PART MOTIONS FOR SUMMARY JUDGMENT

MARRA, District Judge.

THIS CAUSE is before the Court upon Defendants' Motion for Summary Judgment regarding breach of confidential relationship and fraud claims [DE 91], Defendants' Motion to Partially Dismiss Plaintiff's Lanham Act and Florida Unfair Competition Claims Under Rule 12(b)(1) [DE 245] and Defendants' Consolidated Motion for Summary Judgment [DE 250]. The Court has carefully considered the motions, responses, replies, and the arguments of counsel made at a hearing before the undersigned on September 11, 2003, and is otherwise fully advised in the premises.¹

I. BACKGROUND

The dispute between Air Turbine Technology, Inc. ("Plaintiff" or "ATT") and Defendants Atlas Copco AB,² Atlas Copco Tools AB, Atlas Copco North America, Inc., and Atlas Copco Tools, Inc. (hereinafter "Atlas Copco," unless specified) arose out of a Private Brand Agreement between ATT and Atlas Copco Tools AB ("ACTAB"), the worldwide tool distribution subsidiary of Atlas Copco AB. See Exhibit A to First Amended Complaint [DE 8] (hereinafter, "Agreement"). In this Agreement, dated May 1, 1992, ACTAB was to sell Plaintiff's Model 201A grinder throughout the world except for the United States and Canada. Id., ¶¶ 2, 3. Defendants referred to its product as TSF 06. The Agreement was terminated by ATT in March of 1993. The grinder tool that was the subject of the Agreement is an industrial strength hand-held turbine that contained patented technology, particularly a governor of the speed of the turbine that enhanced efficiency of the product. The Agreement stated that: "AC[TAB] will not exploit ATT's technology covered by ATT's patents. ATT will inform AC[TAB] well in advance before implementing any modifications or improvements of the Product. This provision is valid for the life of the patent (including applicable application periods)." Agreement, ¶ 6.

On September 16, 1993, ATT filed a patent application for a braking mechanism for the grinder tool. The United Stated Patent & Trademark Office ("PTO") issued a Patent Number 5,439,346 ("'346 patent'") on August 8, 1995 to inventor Gregory Bowser and ATT as the assignee of the patent. In October 1999, Defendants entered into a private brand agreement with a German company to sell their hand held turbine grinder tool under the Atlas Copco brand name. This product was labeled the TSF 07, and was sold from October 1999 through May of 2001. ATT gave notice of alleged infringement of its '346 patent to the German company on April 3, 2001, and filed this lawsuit against Defendants on April 6, 2001.

ATT's First Amended Complaint alleges several claims. Plaintiff alleges in Count I that all Defendants infringed the '346 patent. In Count II, Plaintiff alleges that the Defendants violated the Lanham Act, 15 U.S.C. § 1125(a), by falsely advertising the features of the TSF 07 grinder, causing consumer confusion resulting in lost sales by ATT. First Amended Complaint, ¶¶ 28-30. In Count III, Plaintiff alleges that ACTAB breached the Agreement by manufacturing and selling competing products exploiting Plaintiff's technology. Id. at ¶ 36. Plaintiff brings a claim for fraud, alleging in Count IV that ACTAB fraudulently represented the purpose for which it entered into the Agreement with Plaintiff by intending to induce Plaintiff to divulge its proprietary information. Id. at ¶ 39. In Count V, Plaintiff alleges breach of a confidential relationship against ACTAB, by using its contractual relationship to obtain Plaintiff's confidential information and then using and disclosing that information to others. Id. at ¶ 43-44. Finally, Plaintiff alleges a common law unfair competition claim in Count VI. Here, Plaintiff states that Defendants have misappropriated ATT's technology and falsely represented the governor and braking attributes of its own tools to create consumer confusion as to the source of the tool. Id. at ¶¶ 48-49.

II. DISCUSSION

A. Summary Judgment Standard

The Court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The stringent burden of establishing the absence of a genuine issue of material fact lies with the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986). The Court should not grant summary judgment unless it is clear that a trial is unnecessary, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and any doubts in this regard should be resolved against the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

The movant "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. To discharge this burden, the movant must point out to the Court that there is an absence of evidence to support the nonmoving party's case. Id. at 325, 106 S.Ct. 2548.

After the movant has met its burden under Rule 56(c), the burden of production shifts and the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). According to the plain language of Fed. R.Civ.P. 56(e), the non-moving party "may not rest upon the mere allegations or denials of the adverse party's pleadings," but instead must come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Matsushita, 475 U.S. at 587, 106 S.Ct. 1348.

Essentially, so long as the non-moving party has had an ample opportunity to conduct discovery, it must come forward with affirmative evidence to support its claim. Anderson, 477 U.S. at 257, 106 S.Ct. 2505. "A mere `scintilla' of evidence supporting the opposing party's position will not suffice; there must be a sufficient showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990). If the evidence advanced by the non-moving party "is merely colorable, or is not significantly probative, then summary judgment may be granted." Anderson, 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202.

B. Patent Infringement

Defendants make several arguments in support of their motion on the patent infringement issues, including that there was no infringement, that even if there was infringement it was not willful, that ATT failed to mark its product with the patent number, that Defendants made no offer to sell after filing of the lawsuit, and that the inventor failed to disclose the best mode during the patent prosecution process.

1. Infringement

The Court recently construed the claims of the '346 patent. See Amended Claim Construction Order [DE 403]. The Court stated in part that: "A device that has a braking mechanism responsive to exhaust pressure falls within the '346 patent, whether or not such braking mechanism is responsive to something else at the same time." Following this claim construction, Defendant argues that its expert, Dr. Lee Swanger, concluded that the TSF 07 grinder is only responsive to intake pressure. However, ATT has submitted evidence in the record to create an issue of fact as to whether the TSF 07 infringes the '346 patent due to its use of exhaust pressure to activate the brake. See, e.g. Deposition of Dr. Jerome Catz at pp. 98-102 [DE 295]; Deposition of Gregory Bowser at pp. 265-271 [sealed at DE 292]; and Deposition of Kemma Dodds, Vol. I, at pp. 32-33 [sealed at DE 292]. Upon reviewing this testimony, the Court concludes that summary judgment on the claim of infringement must be denied, as there are genuine issues of material fact as to whether the brake in Defendants' grinder is "responsive to exhaust pressure" as that phrase has been construed by this Court.³

2. Marking of ATT's Patented Product

A patentee cannot recover damages for infringement occurring prior to notice to the infringer of the infringement. 35 U.S.C. § 287(a). Constructive notice to the infringer is sufficient if the patentee can satisfy the marking statute. Id. A patentee must prove by a preponderance of the evidence that "substantially all of [its products] were marked, and that once marking was begun, the marking was substantially consistent and continuous." Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1446 (Fed.Cir.1998), cert den., 528 U.S. 946, 120 S.Ct. 363, 145 L.Ed.2d 284 (1999). Plaintiff argues in opposition to Defendant's motion for summary judgment on this issue, that consideration of this damages issue must occur after resolution of infringement. The Court disagrees. There is no legal reason why the Court cannot conclude the absence of marking as a matter of law before the issue of infringement is resolved. See Cybiotronics, Ltd. v....