Copperhead Agric. Prods. v. KB AG Corp.

• Decision Date: 24 September 2019
• Docket Number: CIV. 18-4127
• Parties: COPPERHEAD AGRICULTURAL PRODUCTS, LLC, a South Dakota Limited Liability Company, and COPPERHEAD CONCAVE LLC, a South Dakota Limited Liability Company, Plaintiffs, v. KB AG CORPORATION, LLC, KIMBER MITCHELL, and BRIAN ROBERTSON, Defendants.
• Court: U.S. District Court — District of South Dakota

COPPERHEAD AGRICULTURAL PRODUCTS, LLC, a South Dakota Limited Liability Company,and COPPERHEAD CONCAVE LLC, a South Dakota Limited Liability Company, Plaintiffs, v. KB AG CORPORATION, LLC, KIMBER MITCHELL, and BRIAN ROBERTSON, Defendants.

CIV. 18-4127

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA SOUTHERN DIVISION

September 24, 2019

(REDACTED)

MEMORDANDUM OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION; DENYING PLAINTIFFS' MOTION FOR PRELIMINARY AND DECLARATORY RELIEF; DENYING DEFNDANTS' MOTION TO STAY

Copperhead Agricultural Products, LLC and Copperhead Concave LLC (collectively referred to as, "Copperhead") are the plaintiffs in this matter and KB Ag Corporation, LLC, Kimber Mitchell, and Brian Robertson are the defendants in this matter ("Defendants"). Pending before the Court are the following motions: (1) Defendants' Motion to Dismiss, Doc. 14; (2) Copperhead's motion to set hearing for preliminary injunctive relief, Doc. 23; (3) Copperhead's motion for preliminary and declaratory relief, Doc. 26; (4) Mitchell and Robertson's motion for joinder, Doc. 42; (5) Copperhead's motion to compel discovery, Doc. 43; and (6) Defendants' motion to stay, Doc. 66.

For the forgoing reasons Defendants' motion to dismiss for lack of personal jurisdiction is denied; Copperhead's motion to set hearing for preliminary injunctive relief is denied; Copperhead's motion for preliminary and declaratory relief is denied; Mitchell and Robertson's motion for joinder is granted; and Defendants' motion to stay is denied. The Court will address the remaining claims in Defendants' motion to dismiss in a separate memorandum opinion and order. Copperhead's motion to compel discovery has been referred to Magistrate Judge Veronica Duffy.

BACKGROUND

I. Don Estes Joins CM Welding From March 1, 1960 until 2003, Don Estes owned a business named Estes Manufacturing in Flanagan, Illinois. Doc 21, ¶ 2.

Don Estes is the patent holder of certain concave technologies that, it is alleged, are affiliated with his name in the agricultural machinery industry. Doc. 1, ¶10. The patents cover certain concave products that attach to farm machinery such as combines and are used to secure a more efficient harvesting process. Doc. 1, ¶10.

The patents that are registered in Don Estes's name that are the subject of this action are the following: (1) US 8,454,416 B1; (2) US 8,690,652 B1; and (3) a reissue of patent US 8,690,652 B1 as US RE46,401 E. Doc. 1, ¶ 14.

Beginning in as early as February 7, 2011, Don Estes began working for CM Welding, Inc. ("CM Welding"), a company in Frankfurt, Indiana, owned by Carolyn Mitchell Estes. Doc. 63-5. A screenshot from CM Welding's website, dated February 7, 2011, states as follows:

Home of the Disrupter.

Meet Don Estes, the inventor of "The Disrupter," a tool designed to reduce rotor loss in corn and roping green stem soybeans on modern combines.

Don Estes owned & operated Estes Mfg. Co. in Flanagan, IL for 43 years. He retired in 2003 and has recently been involved in a new business located in Frankfurt In. as a consultant. C M Welding is now taking on all of Don's products and services. You may call Don any time for a free consultation about anything involving combines and thrashing. He has had a lot of experience in this field and would be happy to talk to you.

Doc. 63-5. Although CM Welding indicated on its website that Don Estes was acting as a "consultant" for CM Welding, CM Welding argues that Don Estes was, in-fact, an employee of CM Welding. Doc. 67 at 2. CM Welding points to W-2 forms of Don Estes from CM Welding for the years 2012 to 2018 to support it contention that Don Estes was an employee. Doc. 63-1. Don Estes states that distributions from CM Welding went into a joint account owned by he and Carolyn Estes and that they both used the money from that account. Doc. 71, ¶5.

A screenshot of the CM Welding website dated May 31, 2013, reiterated Don Estes's biography in full, that CM Welding was taking on Don's products and services, and that Don was available for a consultation about anything involving combines and thrashing. Doc. 63-6. Thistime, however, CM Welding was advertising a different product—the RPR Thrashing/Seperating (sic) Concave System Estes Disrupter Kit. Doc. 63-6. Specifically, the website stated, in part:

CM Welding Inc introduced "The Disrupter" . . . in the summer of 2010 and the response was tremendous. . . . We have over 1700 sets in operation, but the rotor loss problem still exists with all STS & new S series machines when ground speed is increased. The rear concave in John Deere Rotor machines is not large enough nor open enough to get crop through without sacrificing a lot of ground speed. Corn, soybeans and wheat thrash completely over the first 1 & 1/2 round bar concaves, but very little separation will happen over the back half of the concave sections due to the small space (5/8") between the remaining round bars.

CM Welding Inc. has designed a concave/grate that has 1/2" sq bars with 1 ¼" opening between. The new concave/grate will replace the rear concave on all of the STS & S series machines. The ½" Square bars plus the 11/4 space between the bars will increase material flow by 68%. The more crop volume you can get out of the concave section, the less has to be separated over the grate section. SO SLOW DOWN TO KEEP CROP IN OR ADD THE ESTES ROTOR LOSS KIT & GO!

Doc. 63-6.

While at CM Welding, Don Estes communicated with customers and potential customers about CM Welding products and services and was interviewed by multiple media outlets to promote CM Welding products. Doc. 21, ¶¶ 7-8, Exs. A, B. Don Estes stated that he authorized CM Welding to use his name on its website and Facebook pages because he was married to the owner, Carolyn Estes. Doc. 21, ¶ 5. Don and Carolyn Estes are currently in divorce proceedings. Doc. 15, ¶ 6.

[Redacted]

The "Estes RPR Concave Systems" appeared in advertising as of 2014. Doc. 52-7. In the 2015 fall/winter edition of Western Farm, Ranch & Dairy Magazine, CM Welding placed an add for "Estes RPR Concave Systems." Doc. 52-7. In the advertisement, there was no mention of Don Estes other than directing potential customers to call "Donnie" at CM Welding Inc. Doc. 52-7.

People in the industry knew that certain products sold by CM Welding were designed by Don Estes. An online post from "The Combine Forum" on July 9, 2013, stated that a person inthe industry "was thinking about trying the rpr concaves with disrupters from c&m welding. I talked with Donnie Estes and he gave me some customers's numbers and they all liked them. Had anyone tried them in a system?" Doc. 63-11. On July 11, 2013, a poster stated that he had "not run the RPR concaves, but have run the 5/8" square bar concave (1 ¼" openings) and disrupters from Donnie in 9870s and s680s" This looks like his 3^rd concave in the RPR system, but the brochure talks about round bars; so I guess I'm not sure." Doc. 63-11. That same day, another poster stated that "[i]n soybeans, we ran a normal large wire in position one and two and Donnie's square bar in position three and [p]ulled the Disrupters square bar in position three. . . . If Donnie would build a front square bar, I'd run three squares in corn and never look back." Doc. 63-11.

On July 28, 2016, Carolyn Estes registered the domain names: rprperformanceconcaves.com and estesperformanceconcaves.com. Doc. 63-7.

Formation of KB Ag, Corp. and Actual Confusion and Likelihood of Confusion

In mid-August 2017, just prior to KB Ag's formation, Mitchell and Robertson were marketing RPR Concaves on behalf of CM Welding at DakotaFest, held over two days in Mitchell, South Dakota, under the brand name "Estes Performance Concaves," and encouraged attendees to "see us in the Ag Tent - Booth 3304." Doc. 20-12.

On August 24, 2017, Mitchell filed an application with the U.S. Patent and Trademark Office, seeking to register the "RPR Concaves" trademark as the first to use in commerce. Doc. 1, ¶ 30. An assignment of the "RPR Concaves" trademark to CM Welding Inc. was recorded with the United States Patent and Trademark Office ("USPTO") on May 20, 2018. Doc. 58-1. On September 10, 2019, the USPTO registered the mark "RPR" in association with agricultural machinery, namely harvesters. Doc. 74. This is a registration on the Principal Register in favor of owner CM Welding. Docs. 74; 74-1.

On September 5, 2017, KB Ag was organized and registered in Texas. Doc. 15, ¶ 8. KB Ag's principal place of business is in Frisco, Texas. Doc. 15, ¶ 3. Mitchell and Robertson are the owners and Carolyn Estes is the director of KB Ag. Doc. 15, ¶¶ 1, 10. [Redacted] In mid-September 2017, Don Estes appeared with Mitchell and Robertson on behalf of CM Welding in a publicity session with American Farmer to discuss "Estes Performance Concaves." Doc. 21-6.

Whereas the agricultural products online forums in 2015 referred to RPR Concaves as "CM Welding RPR Concaves," Doc. 63-11, in 2017, online forums began referring to them as Estes RPR Concaves. Doc. 21-3; 21-4; 21-5.

In late October 2017, Don Estes left Indiana to spend time in Florida during the cold season and returned to Indiana in early 2018. Doc. 21, ¶ 12. In March 2018, a customer in Perryville, Missouri, Timothy Gremaud ("Gremaud"), who had purchased a RPR Concave in late 2017, decided to purchase another RPR Concave. Doc. 22 ¶¶ 3-4. Gremaud called Estes Performance Concaves utilizing the information packets that were sent with the first RPR Concave that he purchased believing that he was purchasing the same RPR Concave he already owned directly from Don Estes. Doc. 22, ¶ 5. Gremaud discovered that the concave product that he had been sold was not the same as the RPR Concave that he had purchased earlier. Doc. 22, ¶ 10. The company referenced on the invoice enclosed with the concave product he received was KB Ag. Doc. 22, ¶ 11.

Gremaud called Don Estes's personal number to explain the...