Fieldturf v. Southwest Recreational Industries
| Decision Date | 21 November 2002 |
| Docket Number | No. CIV.A. 00-12-JMH.,CIV.A. 00-12-JMH. |
| Parties | FIELDTURF, INC. and Fieldturf International, Inc., Plaintiffs, v. SOUTHWEST RECREATIONAL INDUSTRIES, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Kentucky |
Susan J. Mohler, Frost Brown Todd LLC, Lexington, KY, Arthur S. Beeman, W. Bruce Baird, Frost Brown Todd LLC, Louisville, KY, Susan L. Williams, Frost Brown Todd LLC, New Albany, IN, for Plaintiffs.
P. Douglas Barr, William L. Montague, Jr., Richard B. Warne, Joanne Richards, Stoll, Keenon & Park, LLP, Lexington, KY, Michael A. Piazza, Richard Levin, Amy K. Bock, Lisa S. Gallerano, Scott T. Williams, Akin, Gump, Strauss, Hauer & Feld, L.L.P., Dallas, TX, Raymond E. White, Chris P. Perque, Richard A. Fordyce, Gregory C. Mathis, Adam D. Sheehan, Akin, Gump, Strauss, Hauer & Feld, Austin, TX, for Defendant.
This action is before the Court on Defendant's motions. First, the Court will consider the defendant's Renewed Motion for Partial Summary Judgment Regarding Claims Accruing Before May 20, 1999 [Record No. 342]. Plaintiffs have responded [Record No. 363], to which Defendant has replied [Record No. 365]. The Court will also consider Defendant's Motion for Summary Judgment [Record No. 350]. Plaintiffs have responded [Record No. 363] and Defendant has replied [Record No. 365]. These matters are now ripe for decision.
Plaintiffs FieldTurf, Inc. and FieldTurf International, Inc. ("FieldTurf") and Defendant Southwest Recreational Industries, Inc. ("Southwest") are competitors in the artificial turf market. The artificial, carpet-like surfaces made by these parties and other competitors have shown themselves to be useful alternatives to natural grass surfaces and include both "conventional" (knitted nylon surfaces) and "filled" turf systems (tufted polyolefin surfaces with granular top-dressing). These systems are used in a variety of settings in the sporting world, including golf, soccer, football, and baseball facilities.
Plaintiffs manufacture a product called FieldTurf®.1 Defendant Southwest Recreational Industries, Inc. ("Southwest") manufactures, sells, and installs several artificial turf systems, including AstroPlay®.2 Both of these products are filled turf systems.
In the early 1970s, a professional golfer-turned-inventor, Frederick T. Haas, developed a product he called "Mod-Sod," a "filled" turf system using an infill of sand and cork and a pile fabric available in the market at that time. This combination of goods was later patented as U.S. Patent No. 4,337,283 (the "'283 Patent").
The patent application for the invention that would eventually be embodied in the '283 Patent was filed on September 11, 1980, by Haas, for a "synthetic turf playing surface with [a] resilient top-dressing."3 On December 29, 1980, Haas assigned the patent to "Mod-Sod Sports Surfaces, a partnership consisting of Frederick T. Haas, Jr., Rebecca Ann Bain[,] Haas Cloudman, Frederck T. Haas, III, and Michael Howard Haas" ("Mod-Sod"). The assignment was recorded at the U.S. Patent and Trademark Office ("USPTO") on January 2, 1981. From December 29, 1980, until the expiration of the '283 Patent on September 11, 2000, there were no further conveyances recorded in the USPTO to any person or entity of any rights in the '283 Patent. Specifically, there are no records of any rights conveyed back to Haas as an individual or to the corporation called Mod-Sod Sports Surfaces, Inc. ("Mod-Sod Corp."), formed on April 4, 1982.
However, Haas has stated in deposition testimony in an action in the Covington Division of this District (discussed below) that he assigned the title and rights to the '283 patent to Mod-Sod Corp. Plaintiffs refer to an exhibit to that deposition entitled "Patents Issued to MSSS, Inc." and listing the '283 Patent along with Haas's testimony to demonstrate a binding and legal conveyance rights to that patent. Haas, reviewing the document contained in that exhibit, stated:
These [the patents] were issued, I think first to me and I assigned them at a later date to Mud-Sod [sic] Sports Surfaces, Inc.
[Haas Covington Depo. at 13:12-14:6.] In response to a question about whether the "form of business had gone from [himself] individually to the Mud-Sod [sic] Sports Surfaces partnership all of the way to Mod-Sod Sports Surfaces the corporation. ...," Haas replied, "Yes." [Id.]
The preamble to the 1994 "Exclusive License Agreement" signed by SynTenniCo, Prevost, Mod-Sod, Inc., and Haas, as a representative of Mod-Sod Corp., provided that the:
Licensor has the sole right to grant for the United States its territories and possessions and for the entire World (collectively, the "Territory"), licenses under the Inventions, of the scope hereinafter granted ...
[Exclusive License Agreement at Preamble.] Further, the agreement provided that "[l]icensor hereby grants to Licensee the exclusive and irrevocable (except as otherwise reserved and provided for herein) right and license to make, have made, use sell and otherwise commercialize and exploit, through the Territory, products embodying the inventions..." [Id. at ¶ 1.]
However, there exists a subsequent "letter agreement", dated June 19, 1998 and apparently still in force, stating that it "cancels and replaces the exclusive license agreement" signed by the parties in 1994. The letter, written to Mod-Sod Sports Surfaces, Inc., and Haas, states that "[SynTenniCo] will continue to be the exclusive licensee of your U.S. patent, number 4,337,283 except for golf products." [Letter Agreement at ¶ 3 (emphasis added).]
When FieldTurf's predecessor-in-interest, SynTenniCo, began marketing its filled products in 1997, most artificial turf surfaces were the relatively more expensive conventional systems. The new filled turf systems would prove to be significantly less expensive than their conventional counterparts, including Defendant's AstroTurf product, as a result of the less expensive raw materials and the lowered expense associated with the manufacturing process. Additionally, the amount of raw material needed to produce similarly sized fields was significantly lower for the filled turf systems.4
With the popularity of these filled systems, the number of customers has risen dramatically every year since 1998 and the market has seen the ascendancy of the filled field over the traditional conventional systems. FieldTurf's sales increased significantly during that time, and the number of fields sold went from 22 in 1998 to 43 in 1999, 118 in 2000, and a projected 135 (in 2001). That said, Plaintiffs allege that Defendant still holds a 90% market share for the artificial turf market when all conventional and filled systems are included. Defendant alleges and Plaintiffs do not dispute that if the filled system submarket is examined, the reality is that both parties have relatively equal market share. In any event, Gilman has boasted that FieldTurf became Southwest's major competitor, taking substantial market share from Southwest in 2000, decreasing Southwest's sales and reducing its profits.
Over the years, the parties (or their predecessors-in-interest) have competed for contracts on hundreds of artificial turf fields. Some of those contracts have been awarded to Plaintiffs; some have been awarded to Defendant.
In the fall of 1998, Southwest installed an AstroPlay® system (constructed with sand and rubber infill) at the Town and Country soccer complex in Northern Kentucky. At that time, SynTenniCo instituted suit against Southwest and its parent company, American Sports Products Group, Inc. ("ASPG"), in the Covington Division of the Eastern District of Kentucky (the "Covington Action") alleging violations of the Lanham Act and patent infringement.5
On May 20, 1999, the parties entered into a settlement agreement to resolve the matter ("Settlement Agreement"), releasing Southwest "from any and all claims, demands, and causes of action, known and unknown, which accrued or are alleged to have accrued up to the date of this Agreement, including the claims in the [Covington] Action." [Settlement Agreement, at 2, ¶ 1(c).] SynTenniCo stated that it had no cause of action against Southwest for the "manufacture and sale" of the AstroPlay® product having an infill composed entirely of resilient particles, including rubber crumb, and expressly waived and released any such action. Further, SynTenniCo agreed that after the expiration of the '283 Patent, AstroPlay® would not be subject to an action for infringement under any patent relating to a filled turf system containing both sand and a resilient particle infill. It is notable that, even while defending the Covington Action, Southwest was changing its AstroPlay® specifications to provide and market allrubber infill to its customers worldwide, although specifically in the United States, with the option of a pad under the infill.
In a subsequent jury trial in Austin, Texas (the "Austin Action"), litigation wherein Southwest sued FieldTurf for breach of the Settlement Agreement, FieldTurf raised as a defense that Southwest had admittedly marketed and sold AstroPlay® with a rubber and sand infill outside of the United States after the Settlement Agreement was enacted.6 Upon testimony indicating that the Settlement Agreement was intended to apply only in the United States and did not extend to foreign instalations, the jury determined that Southwest had not failed to comply with a material obligation of the Settlement Agreement by marketing and selling AstroPlay® with a...
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