Cal. Expanded Metal Prods. Co. v. Klein
| Decision Date | 10 December 2021 |
| Docket Number | 18-cv-00659-JLR |
| Court | U.S. District Court — Western District of Washington |
| Parties | CALIFORNIA EXPANDED METAL PRODUCTS COMPANY, a California corporation; and CLARKWESTERN DIETRICH BUILDING SYSTEMS LLC, dba CLARKDIETRICH BUILDING SYSTEMS, an Ohio limited liability company, Plaintiffs, v. JAMES A. KLEIN, an individual; BLAZEFRAME INDUSTRIES, LTD., a Washington company; and SAFTI-SEAL, INC., a Washington company, Defendants. |
(PROVISIONALLY FILED UNDER SEAL)
REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION FOR CONTEMPT
THIS MATTER is before the Special Master on Plaintiffs' California Expanded Metal Company (“CEMCO”) and Clarkwestern Dietrich Building Systems, LLC (“ClarkDietrich”) (collectively, “Plaintiffs”), Motion for Contempt. Plaintiffs moved to reopen this case for patent infringement and breach of contract on June 22, 2020 (Dkt. No. 166), alleging violation by Defendants and several non-parties of a permanent injunction entered by consent on January 3, 2020 (Dkt. No. 164).
Defendants are James A. Klein (“Klein”), BlazeFrame Industries, Ltd. (“BlazeFrame”), and Safti-Seal, Inc. (“Safti-Seal”). BlazeFrame and Safti-Seal were founded by defendant Klein; both are now “defunct.” (Decl. of James Klein, signed 10/11/21 (“Klein Decl.”), ¶2.) Plaintiffs' motion to reopen the case alleged contempt by all defendants and non-parties Seal4Safti, Inc. (“S4S”), SteelTec Supply, Inc. (“SteelTec”), Jaroslaw Sydry (“Sydry”), and Leszek Orszulak (“Orszulak”) and sought discovery related to the allegations of contempt. (Dkt. Nos. 166 and 167.)
On October 5, 2020, the court granted Plaintiffs' motions in-part. (Dkt. No. 190.) The case was reopened for the initiation of contempt proceedings and discovery against Defendants. (Id.) Plaintiffs were also permitted to conduct additional discovery as to the non-parties as well as an opportunity to file a renewed motion to initiate contempt proceedings against the non-parties following discovery. (Id.)
On February 8, 2021, the undersigned Special Master was appointed pursuant to Fed. R. of Civ. P. 53 “to assist with the impending contempt proceedings and any related discovery issues that may arise.” (Dkt. No. 208.) Following discovery, Plaintiffs renewed their motion to add the non-parties to these contempt proceedings and the Special Master recommended that the court grant the motion in-part to add S4S, finding S4S “legally identified” with defendant Safti-Seal. (Dkt. No. 220 (filed under seal).) Following objections filed by both parties, the court adopted the recommendation and added S4S to these contempt proceedings. (Dkt. No. 251.) Plaintiffs' motion for contempt was fully briefed by October 15, 2021, and hearing was held on November 30, 2021.[1] NOW, THEREFORE, being fully advised of the matter, the Special Master hereby makes the following report and recommendation pursuant to Fed. R. of Civ. P. 53. For the reasons explained below, the Special Master recommends that Plaintiff's Motion for Contempt be GRANTED IN-PART and DENIED IN-PART. The Special Master recommends an order finding S4S and Defendant Klein in contempt for inducing infringement in violation of the agreed injunction through sales of the FRG Strip, which the undersigned finds no more than colorably different from the enjoined Safti-Strip product when applied to the outer surface of the sidewall of a U-shaped track. The recommended finding of contempt by inducement is based on S4S's and Klein's advertising, promotion, instructions, and engineering judgments, recommending use of the FRG Strip by placing it on the outer surface of the sidewall of a U-Shaped track.
Insofar as Plaintiffs' motion for contempt requests a finding of contempt based on direct infringement by Defendants and S4S, the motion is denied for a failure of proof by clear and convincing evidence that Defendants or S4S sold or offered for sale U-Shaped track products with the FRG Strip applied in an infringing manner. Additionally, Plaintiffs' motion alleging contributory infringement is also denied for a failure of proof by clear and convincing evidence that the FRG Strip sold in roll form, or the sale of U-shaped track products sold without the FRG Strip applied at the factory, are incapable of substantial noninfringing use.
This case involves claims for infringement of U.S. Patent Nos. 7, 681, 365 (“the '365 patent”), 7, 814, 718 (“the '718 patent”), 8, 136, 314 (“the '314 patent”), and 8, 151, 526 (“the '526 patent”) (collectively, “the Asserted Patents”) and breach of contract. The Asserted Patents relate to head-of-wall assemblies that are used in commercial construction to prevent the spread of smoke and fire. (Dkt. No. 190, 5-6.)
In May 2012, Mr. Klein assigned the Asserted Patents to BlazeFrame. (Id., 3 (citations omitted).) In 2012, CEMCO sued Mr. Klein and Clarkwestern in the Central District of California. See Cal. Expanded Metal Prods. Co. v. Clarkwestern Dietrich Bldg. Sys., LLC, No. CV12-10791-DDP-MRW (C.D. Cal.). The parties settled in October 2015, with Mr. Klein and BlazeFrame selling the Asserted Patents to CEMCO in exchange for a license. (Dkt. No. 103, ¶7, Ex. 6.)
In August 2016, a second suit was filed against Klein and BlazeFrame, claiming breach of the settlement agreement and infringement of the Asserted Patents. See Cal. Expanded Metal Prods. Co. v. Klein, No. CV16-5968-DDP-MRW (C.D. Cal.). That suit settled in June 2017 and CEMCO remained the owner of the Asserted Patents with ClarkDietrich as the Asserted Patents' exclusive licensee. (Dkt. No. 1, ¶84.)
On January 10, 2018, Klein, Safti-Seal, and Blazeframe were sued in a case eventually transferred to this court. (Dkt. No. 1.) This case is the third involving the Asserted Patents and Mr. Klein. It was terminated on January 3, 2020, pursuant to a stipulated consent judgment and permanent injunction. (Dkt. No. 164.) The parties also consented to this court's continuing jurisdiction for purposes of enforcing the consent judgment and injunction. (Id., 3.)
Under the terms of the injunction, effective April 1, 2020, Defendants and “such other persons who are in active concert or participation or in privity” with any defendant were enjoined from “infringing the Asserted Patents, by any means, directly or indirectly, by making, having made, advertising, having advertised, marketing, having marketed, offering for sale, having offered for sale, selling or having offered for sale, any Accused Product.” (Id., ¶1(a).) The enjoined parties are similarly prohibited from inducing others to “make, have made, advertise, have advertised, market, have marketed, offer for sale, have offered for sale, [or] . . . sell any Accused Products.” (Id., ¶1(b).) Finally, the enjoined parties are prohibited from “contributorily infringing the Asserted Patents by providing Accused Products to others or by assisting third parties in providing Accused Products to others.” (Id., ¶1(c).)
The Accused Products were defined as “(i) Safti-Frame with an intumescent strip on the surface of a sidewall of a U-shaped track, and (ii) Safti-Strip if applied to the outer surface of a sidewall of a U-shaped track.” (Id., 2.) The injunction was originally filed under seal by agreement and later unsealed on October 5, 2020. (Dkt. No.189.)
Plaintiffs assert that Klein, Safti-Seal, and S4S violated the injunction by making and selling “Fire Rated Gasket (FRG) products” that are no more than colorably different from the enjoined Safti-Strip and Safti-Frame products. (Motion, 1.) Plaintiffs use the term “FRG Strip” to refer to the FRG intumescent strip, which they allege is no more than colorably different from the enjoined “Safti-Strip.” (Id., n1.) Plaintiffs use the term “FRG Frame” to refer to metal tracks that have “factory applied” FRG Strip, which they allege is no more than colorably different from the enjoined “Safti-Frame.” (Id.) While this is the terminology used in Plaintiffs' motion relating to claims of direct infringement against Klein, Safti-Seal, and S4S, Plaintiffs also allege inducement under 35 U.S.C. § 271(b) and contributory infringement under § 271(c) against these parties for their making and selling of the FRG Strip and FRG Frame without the FRG Strip applied to the FRG Frame at the factory. (Motion, 32-50.)
Prior to entry of the injunction, defendant Safti-Seal sold Safti-Strip in a roll form “consisting of three primary layers, ” (1) an intumescent layer, (2) a foam thermal barrier, and (3) an adhesive. (Decl. of Jaroslaw Sydry in Support of Contempt Opp. (“Sydry Decl.”) ¶3; Motion, 4, 20.) Safti-Strip was marketed by Safti-Seal from 2017 until the end of March 2020. (Sydry Decl., ¶3.) Prior to the injunction, Safti-Seal sold “a variety of common and custom metal track profiles” with Safti-Strip “factory applied” to them. (Id.; Motion, 4.) Plaintiffs' allegations of contempt target the FRG Strip sold in roll form as applied in the field according to advertisements, instructions, and engineering judgments provided by S4S and according to specifications published by Underwriters Laboratories (“UL”)[2]that were prepared, at least in-part, by Defendant Klein. (Motion, 9-14.) Plaintiffs also allege that S4S violated the injunction by selling a variety of metal track profiles with FRG Strip applied at the factory. (Id., 12.) S4S admits that it made and sold the FRG Strip in roll form and continues to do so, but it denies that “Plaintiffs have . . . shown that FRG [Strip] was ever factory-applied by S4S to an actual ‘U-shaped track.'” (S4S Resp. in Opp. to Motion, 34.) S4S also contends that “[w]hile S4S's product catalogue . . ....
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