Dorr-Oliver Inc. v. Fluid-Quip, Inc., 93 C 0842.

• Decision Date: 17 August 1995
• Docket Number: No. 93 C 0842.,93 C 0842.
• Citation: 894 F. Supp. 1190
• Court: U.S. District Court — Northern District of Illinois
• Parties: DORR-OLIVER INCORPORATED, Plaintiff, v. FLUID-QUIP, INC., Andrew Franko, and Pic Tek, Inc., Defendants.

894 F. Supp. 1190

DORR-OLIVER INCORPORATED, Plaintiff, v. FLUID-QUIP, INC., Andrew Franko, and Pic Tek, Inc., Defendants.

No. 93 C 0842.

United States District Court, N.D. Illinois, Eastern Division.

August 17, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

William Terry Rifkin, Mary Spaulding Burns, Rockey, Rifkin and Ryther, Chicago, IL, John P. Luther, Andrew L. Tiajoloff, Alfred H. Hemingway, Jr., Edward P. Kelly, John E. Lynch, Felfe & Lynch, New York City, for Dorr-Oliver Inc.

Thomas W. Flynn, Thomas & Buckley, Chicago, IL, Bruce E. Peacock, Thomas W. Flynn, Matthew R. Jenkins, Biebel & French, Dayton, OH, Patricia Susan Smart, John Bostjancich, Smart & Bostjancich, Chicago, IL, for Fluid-Quip Inc., Andrew Franko, Pic Tek Inc.

MEMORANDUM OPINION AND ORDER

I. Introduction¹

GETTLEMAN, District Judge.

This is a case about corn, clams, copying and confusion. The story begins decades ago, when plaintiff Dorr-Oliver Incorporated ("Dorr-Oliver")² invented a new way to process corn using centrifugal force. Prior to these inventions, the corn wet milling industry separated the germ, fiber, starch and gluten (protein) from corn kernels through a time-consuming settling process.

In the 1950s Dorr-Oliver introduced a number of new devices, including the hydrocyclone starch washer, into which the "slurry" (the mixture of water and processed corn) was passed to separate the starch from the gluten in the final stages of the separation process. This "starch washing" procedure employed great numbers of small hydrocyclones arranged inside a series of machines known as "clamshells," the machines at issue in this litigation. The slurry is injected into the machine at high pressure, and passes through as many as 480 stationary hydrocyclones known as "cyclonettes." The centrifugal force thus created inside the cyclonettes separates the starch and the gluten, the former directed to an "underflow" chamber and the latter to an "overflow" chamber. The separated starch and gluten are then sent to the next stage in the process.

Because Dorr-Oliver is claiming that defendants infringed an alleged trademark right to the name "clamshell" and to Dorr-Oliver's alleged trade dress in the outer design of the "clamshell," it is necessary to understand the appearance of the machine. For those readers who are not using computers to access this opinion, a picture of a clamshell taken from Defendants' Exhibit 339 and 340 (drawings of defendant Fluid-Quip, Inc.'s machine) is attached as Appendix A. For the rest of the readers, the court will attempt to describe the device.

The clamshell starch washer comes in two sizes, the smaller holding 280 cyclonettes and the larger holding 480. Since the larger unit was displayed by both Dorr-Oliver and defendants at the trial, this description will relate to that size. The machine is made of stainless steel, is generally round in shape, and is approximately forty inches in diameter. To the court's eye, it more closely resembles a bagel or an inflated inner tube than it does a clam in outward appearance. Each side is identical and bolted to a center core. If one pictures a forty inch metallic bagel sliced in half, each half attached to a cylindrical core of approximately the same diameter, with a spoked or ribbed hatch in the middle, all supported by two large feet, with various pipe fittings sticking out the sides, one could picture this machine.

The clamshell starch washer is one of several designs manufactured by Dorr-Oliver under the registered trademark "DorrClone." It is sometimes referred to by Dorr-Oliver in its commercial communications as a "DorrClone Type C" or "DorrClone Clamshell starch washing system design." The other types of DorrClone starch washers, including the "RC" and "TM" models,³ do not look anything like the clamshell, although they perform the same function, using the same general technology.

The word "clamshell" was and is not registered by Dorr-Oliver or anyone else as a trademark for that particular type of starch washing machine. There is no evidence in the record indicating how the name "clamshell" came to be used to describe the Dorr-Oliver machine, although the court infers that, despite the court's observation that the machine looks more like a bagel than a clam, at least some people in the corn wet milling industry felt otherwise.

For a number of years, even after its patents had expired on its clamshell starch washer, Dorr-Oliver was the only manufacturer and supplier of this device. In the United States, there are only twelve customers with twenty-seven corn wet milling plants in this market. Each of these customers owns and uses Dorr-Oliver clamshell starch washers, more than 600 of which had been sold prior to 1991. The nature of these machines, which have no moving parts, is such that they appear to last almost forever; it is uncontested that all of the machines sold by Dorr-Oliver, even those manufactured as early as the 1950s, are still in use.

Defendant Fluid-Quip, Inc. ("Fluid-Quip"), an Ohio corporation with its principal place of business in Springfield, Ohio, was founded in 1987 and originally manufactured equipment for the paper and pulp industry. In 1991, Fluid-Quip entered the corn wet milling market, first with replacement parts and later with its own clamshell starch washer. Fluid-Quip's clamshell was admittedly copied from Dorr-Oliver's. Fluid-Quip's president and part owner, defendant Andrew Franko ("Franko"),⁴ admits that he and employees of one of Fluid-Quip's manufacturer's representatives, defendant Pic Tek, Inc. ("Pic Tek"),⁵ measured Dorr-Oliver clamshells and conformed Fluid-Quip's model to the exact dimensions of Dorr-Oliver's. Fluid-Quip says it did so as a response to requests by customers that Fluid-Quip build a clamshell that was fully interchangeable with Dorr-Oliver's. In fact, one of those customers, Cargill, delivered the smaller model of a Dorr-Oliver clamshell to Fluid-Quip to assist with the measurements.

According to Fluid-Quip, these customers believed that they were being overcharged by Dorr-Oliver, which exercised de facto monopoly power and charged up to $40,000 for a clamshell. (Fluid-Quip's price for the identical machine turned out to be between $20,000 and $25,000.) From a maintenance standpoint, while the outer housing of the clamshells will last indefinitely and rarely need repair, the inner cyclonettes need to be replaced every two to three years. The cyclonettes also periodically get plugged up or possibly broken and need to be replaced.

Because clamshells were generally arranged in series of twelve, when they are disassembled for maintenance and repair the customer's practice is to do so with a number of units at the same time. Parts from one unit (e.g., the large outer housing or the hatch cover) might well be reattached to another unit. Thus, the parts from a given unit must be interchangeable with the parts of every other.

Although to the untrained eye Fluid-Quip's clamshell looks identical to Dorr-Oliver's, Mr. Franko pointed out a number of subtle differences which he believes are "improvements" over the Dorr-Oliver model. For example: Fluid-Quip's clamshell uses studs rather than bolts to attach the outer housing to the core; Fluid-Quip's clamshell attaches its supporting feet by flat footpads affixed to the core, rather than by bolting the feet to the core itself; Fluid-Quip's feet are somewhat different and heavier than those of the Dorr-Oliver unit; the drain plugs on Fluid-Quip's machine are more numerous and placed in different positions than Dorr-Oliver's; the lifting rings on Fluid-Quip's model were larger than Dorr-Oliver's; and Fluid-Quip's name is cast onto each removable part of its clamshell, while Dorr-Oliver's name appears on only several of the larger parts. (Both Fluid-Quip and Dorr-Oliver affix nameplates to their machines which bear their respective corporate names. Dorr-Oliver's nameplate also bears its registered trademark "DorrClone.")⁶

The interior of Fluid-Quip's clamshell is identical to Dorr-Oliver's, consisting of two large round center plates with holes for each of the cyclonettes (480 or 280, depending on the model), spacing pins to separate the two center plates to create the center chamber into which the slurry is pumped, and the interior of the outer housing that creates the overflow and underflow chambers for the separated gluten and starch, respectively. (See Appendix B hereto, Def.Ex. 340.) Also, the center bolt that fastens the outer housing through the center hatches on each side of the machine is identical in both models, and the ribbed center hatch itself is identical.

Prior to developing Fluid-Quip's clamshell starch washer, its president, Mr. Franko, consulted his corporate attorney and an intellectual property lawyer. Franko had a few short conversations with his corporate attorney in which he asked the lawyer if it would be proper to manufacture a piece of equipment that would have interchangeable parts with the Dorr Oliver clamshells so that it could replace the existing units. The attorney, who had never seen the product, asked if the item was patented. Franko briefly explained what part a clamshell played in the corn refinery business. After being told that Franko did not think there was an active patent, the corporate attorney briefly opined that his client could probably produce its own clamshell so long as he was not creating confusion in the marketplace, and advised Mr. Franko to consult counsel more experienced with intellectual property issues.

Following these conversations, Franko met with his intellectual property attorney on a different matter. Franko briefly discussed producing a cyclone separator that was similar to the one made by Dorr-Oliver, how long the Dorr-Oliver product had been on the market, the patent numbers on the name plate and the terms DorrClone and cyclonettes. The lawyer did not have a picture of the...