Engineered Products Co. v. Donaldson Co., Inc.

• Citation: 165 F.Supp.2d 836
• Decision Date: 27 March 2001
• Docket Number: No. C98-2106 MJM.,C98-2106 MJM.
• Parties: ENGINEERED PRODUCTS CO., Plaintiff, v. DONALDSON COMPANY, INC., Defendant.
• Court: U.S. District Court — Northern District of Iowa

165 F.Supp.2d 836

ENGINEERED PRODUCTS CO., Plaintiff, v. DONALDSON COMPANY, INC., Defendant.

No. C98-2106 MJM.

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

March 27, 2001.

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Richard S. Fry, Shuttleworth & Ingersoll, Cedar Rapids, IA, Edward M. Laine, Craig J. Lervick, Bridget A. Sullivan, Oppenheimer, Wolff & Donnelly, Minneapolis, MN, for Plaintiff.

Robert J. Tansey, Jr., Annamarie A. Daley, Ken R. Hall, Robins, Kaplan, Miller, Ciresi, Minneapolis, MN, Stephen J. Holtman, Simmons, Perrine, Albright, Ellwood, Cedar Rapids, IA, for Defendant.

OPINION and ORDER

MELLOY, District Judge.

In this patent infringement action, the plaintiff, Engineered Products Company ("EPC"), asserts patent and trade dress claims against the defendant, Donaldson Company ("Donaldson"), arising from Donaldson's creation and sale of two air filter indicator devices — the Air Alert, sold from 1997 to 1999, and the NG Air Alert, sold from 1999 through the present.¹ (Doc. no. 1). EPC claims that both devices infringe its patent, U.S. Patent Number 4,445,456 ("the '456 patent"). Donaldson concedes that the Air Alert infringed the '456 patent, but, as to that claim, asserts affirmative defenses of estoppel, waiver, laches, and patent invalidity. As to the newer device, the NG Air Alert, Donaldson disputes EPC's allegation of patent infringement, arguing that its device falls outside the scope of the patent, and, alternatively, asserting the affirmative defense of patent invalidity.

Currently before this Court are the parties' cross motions for summary judgment as to the following: 1) Donaldson's asserted equitable defenses of estoppel and laches; 2) the validity of EPC's patent; and 3) infringement of EPC's patent by Donaldson's original Air Alert and the NG Air Alert. (Doc. nos. 69 and 74). Also before the Court is Donaldson's motion for summary judgment on EPC's trade dress claim, (doc. no. 74), and EPC's motion for summary judgment on Donaldson's false advertising and unfair competition counterclaims based on alleged misrepresentations by EPC in publications and product demonstrations (doc. nos. 8 and 69). Both parties have filed opposition and reply briefs on the relevant issues. (Doc. nos. 80, 83, 89, 92, and 94). On September 21, 2000, a Markman hearing was conducted and oral arguments were heard on the summary judgment motions. (Doc. no. 106).

Part One of this opinion addresses those issues as to which construction of the patent claim is not essential, namely: equitable estoppel and laches; invalidity of the patent; trade dress violations; and false advertising and unfair competition. In Part Two, the Court construes the patent claim and addresses the cross-motions on infringement. Summary Judgment Standard

The standard for granting summary judgment is well-established. A motion for summary judgment may be granted only if, after examining all of the evidence in the light most favorable to the nonmoving party, the court finds that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Montgomery v. John Deere & Co., 169 F.3d 556, 559 (1999); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material if it might affect the outcome of the suit under the governing substantive law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The party moving for summary judgment bears the "initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show lack of genuine issue." Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once the moving party has carried its burden, the opponent must go beyond the pleadings and designate specific facts-by such methods as affidavits, depositions, answers to interrogatories, and admissions on file-that show that there is a genuine issue for trial. See Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. 2548. The evidence of the nonmoving party is to be considered as true, and justifiable inferences arising from the evidence are to be drawn in his or her favor. See Anderson, 477 U.S. at 255, 106 S.Ct. 2505. If the evidence of the nonmoving party is "merely colorable," or is "not significantly probative," summary judgment may be granted. Id. at 249-50, 106 S.Ct. 2505. Thus, the nonmoving party does not have to provide direct proof that genuine issues of fact exist for trial; rather, the facts and circumstances that the nonmoving party relies upon must "attain the dignity of substantial evidence and must not be such as merely to create a suspicion." Metge v. Baehler, 762 F.2d 621, 625 (8th Cir.1985), cert. denied, 474 U.S. 1057, 106 S.Ct. 798, 88 L.Ed.2d 774 (1986). In essence, the evidence must be "such that a reasonable jury could find a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

Where the litigants concurrently pursue summary judgment, each summary judgment motion must be evaluated independently to determine whether there exists a genuine dispute of material fact and whether the movant is entitled to judgment as a matter of law. See, e.g., Wermager v. Cormorant Township Bd., 716 F.2d 1211, 1214 (8th Cir.1983) ("[T]he filing of cross motions for summary judgment does not necessarily indicate that there is no dispute as to a material fact, or have the effect of submitting the cause to a plenary decision on the merits."); A. Brod, Inc. v. SK & I Co., L.L.C., 998 F.Supp. 314, 320 (S.D.N.Y.1998) (when faced with cross-motions, court must consider each motion independently of other, must in each instance view facts and draw all reasonable inferences in favor of nonmoving party, and is not required to grant summary judgment for either side); see generally, 11 James Wm. Moore et al., Moore's Federal Practice ¶ 56.10[6] (3d ed.1997). Thus, a cross-motion for summary judgment operates exactly like a single summary judgment motion.²

Background

EPC and Donaldson are the only domestic manufacturers of graduated or progressive air filter restriction indicators,³ and, therefore, the companies are generally aware of each other's products and position in the industry. The disputed facts will be discussed as relevant to the various claims, and this brief background section serves only to give a general context to the current action.

A. EPC's Filter Minder: a progressive air restriction indicator with lock-up feature

In the mid-1970s, Joseph Nelson, of Waterloo, Iowa, invented a device to indicate the level of restriction, i.e., the amount of clogging, in the air filter of a combustion engine, and inform the vehicle operator how soon the air filter would need to be changed. Mr. Nelson sought to invent a device that would indicate the progressive levels of air restriction that occurred, rather than a gauge that merely indicated when it was time to change the filter, i.e., a "go/no go" or "single position" gauge. In the late 1970s, Mr. Nelson added a "lock-up" feature to his graduated air restriction gauge, which would indicate the highest level of air restriction attained even after the engine is turned off. The lock-up feature locks the moving indicator part at a point corresponding to the level of air restriction that occurs while the engine is running. Thus, Mr. Nelson's invention allows the operator to see how much restriction is present in the air filter without having to operate the vehicle at the same time. Mr. Nelson named the product that incorporated his lock-up invention the "Filter Minder."

In November of 1977, Mr. Nelson and Ike Leighty incorporated EPC, which worked to further develop Mr. Nelson's ideas and sell his inventions to original equipment manufacturers ("OEMs"), such as John Deere, CAT, Mack, International Harvester, etc. After four years, EPC was selling indicators to most of the OEMs in the United States. Mr. Nelson was issued U.S. Patent Number 4,445,446 ("the '456 patent") for his mechanical air restriction indicator with the lock-up feature on May 1, 1984.

Mr. Nelson died in 1984, and his wife retired from the company in 1987. In 1997, Mr. Leighty, over eighty years old, sold the assets of EPC and its name to a group of the employees and a private investment group. That sale was completed in February of 1998. EPC is still located in Waterloo, Iowa, and Mr. Nelson's Filter Minder remains the company's best-selling product.

B. Donaldson develops progressive air filter indicators with lock-up feature

In the late 1970s, Donaldson began manufacturing and selling a line of air restriction indicators, including a progressive indicator with a lock-up feature sold under the trade name "Informer." The Informer competed directly with, but was consistently outsold by, EPC's Filter Minder. EPC considered the Donaldson Informer indicator to be an inferior product and not a substantial threat to EPC in the marketplace.

In the mid-1990s, General Motors ("GM") decided to add a progressive air restriction indicator to its light truck platform (the "GMT-800 platform"), which includes large passenger vehicles typically with four-wheel drive, such as sport utility vehicles ("SUVs"). This platform was expected to become the largest platform in the history of the auto industry, and represented a unique opportunity to manufacturers of progressive air restriction indicators, such as Donaldson and EPC.

In 1995, concurrent with the industry's growing awareness of the significant opportunity with GM, key Donaldson personnel, including vice president Nick Priadka, had a lunch meeting with EPC's Mr. Leighty, during which Mr. Leighty was informed that Donaldson would be interested in purchasing EPC should Mr. Leighty...