Indiana Mills & Mfg. Inc. v. Dorel Industries Inc.
| Decision Date | 25 August 2006 |
| Docket Number | No. 104-CV-1102-LJM-WTL.,104-CV-1102-LJM-WTL. |
| Citation | 458 F.Supp.2d 890 |
| Parties | INDIANA MILLS & MANUFACTURING, INC., Plaintiff, v. DOREL INDUSTRIES INC. and Dorel Juvenile Group, Inc., Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
Daymon L. Ruttenberg, Samuel Ellet Shehadeh, Timothy Quinn Delaney, Brinks Hofer Gilson & Lione, Chicago, IL, A. James Richardson, Lawrence A. Steward, Sanders N. Hillis, Brinks Hofer Gilson & Lione, Indianapolis, IN, for Plaintiff.
Gregory Andrew Duff, Jay G. Taylor, John F. Prescott, Jr., Michael A. Swift, Ice Miller LLP, Indianapolis, IN, for Defendants.
ORDER ON DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT
This cause is now before the Court on defendants', Dorel Industries, Inc. ("DII") and Dorel Juvenile Group, Inc. ("Dorel Juvenile") (defendants collectively, "Dorel"), Motion for Summary Judgment of Invalidity and Motion for Summary Judgment of Noninfringement, and DII's Motion for Summary Judgment challenging parent liability and induced infringement.1 Plaintiff, Indiana Mills & Manufacturing, Inc. ("IMMI"), opposes each of the motions.
For the reasons discussed herein the Court DENIES DII's Motion for Summary Judgment, GRANTS Dorel's Motion for Summary Judgment of Noninfringement, and DENIES Dorel's Motion for Summary Judgment on Invalidity. The Court also DENIES as MOOT Dorel's Motion for Summary Judgment on IMMI's Claim of Willful Infringement, DENIES as MOOT IMMI's Motion for Reconsideration, and DENIES as MOOT Dorel's Motion for In Camera Review of Schiff Hardin Work Product to the extent such motion remains under advisement.
IMMI is an Indiana corporation with its principal place of business in Westfield, Indiana. Compl. ¶ 2. IMMI owns the patent at issue in this case, U.S. Patent No. 4,660,889 (the " '889 patent").
DII is a Canadian corporation with its principal place of business in Montreal, Canada. Lisio Decl. ¶3. Although DII's divisions and subsidiaries employ approximately 5,000 employees worldwide, all of DII's employees reside in Canada. Id. ¶ 5. In Security and Exchange Commission ("SEC") filings DII refers to itself and its subsidiaries as "Dorel." Pl's DII Part. Mot. for Summ. J. Exh. 9, Dorel Indus. Inc. 2003 Annual Renewal Form ("PL's DII Exh. 9").
DII does not pay the salaries of employees of its subsidiaries. Lisio Decl. ¶ 8. Nor does DII exercise any day-to-day control over the design, manufacturing or distribution practices of its subsidiaries located in the United States. Id. ¶ 5; Rana Decl. ¶ 7. However, DII press releases stress its overall commitment to cost reduction in its operations so that it can become "more efficient, rais[e] margins, cut[ ] operating expenses [and] lower[ ] purchasing costs...." Pl.'s DII Exh. 1, DII Press Release, May 30, 2002. Likewise, in 2003 and 2004 DII made numerous public statements that emphasized its strategy or "strategic plan" to use Asian manufacturers or Asian supply sources, including Chinese companies. Pl.'s DII Exh. 8, DII Press Release, Mar. 4, 2003; PL's DII Exh. 33, DII Press Release, May 28, 2003; Pl.'s DII Exh. 3, E-Mail, From J. Segal, Subj.: Goodbaby, Jan. 9, 2004.
During the relevant time period and until the end of 2004, Pierre Dupuis ("Dupuis") was the Vice President and Chief Operating Officer of DII. Dupuis Dep. at 14. Jeff Segal ("Segal") was the Corporate Vice President of Sales and Marketing for DII. Mitchell Dep. at 65. Ed Wyse ("Wyse") was Executive Vice President of Procurement for DII during the relevant time period. Dupuis Dep. at 94-95. And, Camillo Lisio ("Lisio") was DII's Chief Operating Officer for the remaining relevant time period. Pl.'s DII Exh. 15, DII Press Release, Nov. 23, 2005.
Dorel Juvenile is a Massachusetts corporation with its principal place of business in Columbus, Indiana. Dorel Juvenile is a wholly owned subsidiary of Dorel U.S.A., Inc., a Delaware Corporation. Dorel U.S.A., Inc., is a wholly owned subsidiary of DII. In other words, Dorel Juvenile is a separate corporation with its own officers, board of directors, and stationery. Lisio Decl. ¶ 9. Dorel Juvenile trains its own employees, publishes its own sales and marketing literature, sets its own prices, issues its own warranties, has its own bank accounts, and sets its own operational policies. Id. ¶ 6. Day-to-day oversight of the inventory, accounting system, and public relations of Dorel Juvenile occur only at the subsidiary level. Id.
But, there is evidence that Segal of DII worked with all of DII's divisions to "encourage, and motivate ... people" to "push[ ] the envelope of product development and marketing" and to act "as an animator, a guru of product development and marketing...." Dupuis Dep. at 51-52. Moreover, in 2002, DII held a "Procurement Conference" where the theme was "Maximum Resistance to Price Increases" and where DII instructed its divisions to use "Group Purchasing" to resist price increases and to change suppliers if necessary. PL's DII Exh. 34, E-Mail, From Ed Wyse, To bcazenave@djgusa. com, Subj.: Action Plan 8th Procurement Conf. May 14th/15th, June 3, 2002, & Attachments. Further, Wyse tracked commodity pricing globally, and used the information to check on whether or not its subsidiaries, like Dorel Juvenile, would seek cost adjustments from their suppliers. Dupuis Dep. at 94-95; Pl.'s DII Exh. 31, E-Mail, From Jeff Hale, To Pierre Dupuis, Subj.: Goodbaby, Feb. 13, 2005. The evidence suggests also that DII's Edward J. Kelley ("Kelley") would act as a sales consultant for Dorel Juvenile, and was involved with "point of sale" issues. Bimschleger Dep. at 34-35. Similarly, DII negotiated with mass merchants such as Wal-Mart and Kmart on behalf of Dorel Juvenile. Pl.'s DII Exh. 20, E-Mail String, From Don March, To, inter alia, *Executive, Subj.: FW:Kmart, Feb. 1, 2002. In fact, in April 2004, DIFs Cathy Carter ("Carter") stated that DII and Dorel Juvenile "need[ed] a PLAN fast!" to stay competitive with other car seat manufacturers at Kmart. Pl.'s DII Exh. 21, Mail, From Cathy Carter, To Bruce Cazenave, Subj.: Kmart, Apr. 29, 2004.
Furthermore, both Dupuis and Lisio had executive positions at both DII and Dorel Juvenile. Pl.'s DII Exh. 13, Dorel Juvenile Exec. Staff Org. Chart. In early 2002, Dupuis was "interim President" of Dorel Juvenile and it was during Dupuis' interim presidencey that Dorel Juvenile began development of the accused products. PL's DII Exh. 3, DII Press Release, Feb. 26, 2002; Pl.'s DII Exh. 39, Adjustor Mtg., Mar. 13, 2002. Donald Mitchell ("Mitchell") was Executive Vice President, Sales and Marketing for Dorel Juvenile, and later Executive Vice President of Marketing and Design and Development Center for Dorel Juvenile. Mitchell Dep. at 14, 17. In September 2003, Dorel Juvenile implemented a design change in some of its car seats to utilize an up front center adjustor designed by Richard Glover ("Glover"), Vice President of Applied Technology, Dorel Juvenile, instead of using IMMI's Lok adjustor. Glover Dep. at 52. Dorel Juvenile purchased the newly designed adjustor from Goodbaby Group ("Goodbaby"), apparently a Chinese manufacturer, for use in car seats manufactured by Dorel Juvenile. Cartwright Dep. at 41-42. Mitchell provided no information to Dupuis or Segal regarding the implementation of the Goodbaby adjustor to the United States consumer market. Mitchell Dep. at 66.
However, there is evidence that suggests that DII executives were involved in decisions to implement the new adjustor. For example, Dorel Juvenile sought approval from Dupuis before signing a supplier agreement with IMMI in 2002. Pl's DII Exh. 34, E-Mail, From Jeff Hale, To Pierre Dupuis, Subj.: Dorel/IMMI Supplier Agreement & Quotation, Jan. 31, 2002, & Attachments. Dupuis admitted that DII would have the power to control the suppliers used by Dorel Juvenile although he described what DII actually does as "nudging ... suggesting, encouraging, [and] promoting...." Dupuis Dep. at 65-66. In addition, Glover kept DIFs Dupuis informed about the reasons why alternative adjusters would not work. Pl.'s DII Exh. 7, E-Mail, From Richard Glover, To, inter alia, Pierre Dupuis, Subj.: Adjuster [sic] Design, July 22, 2002. In fact, Dorel Juvenile kept DII abreast of its new adjustor design project at DIFs request, and DII knew replacement of the IMMI adjustor with one from Goodbaby would be a large cost savings for Dorel Juvenile, if Dorel Juvenile could work around IMMI's patents. Pl.'s DII Exh. 35, E-Mail, From Jeff Hale, To Martin Schwartz, Subj.: FW: Project Updates, Nov. 8, 2002. Furthermore, DII's Wyse was "in constant communication with Jeff Cartwright re [sic] Global Dorel Action Plan on Buckles and Harnesses." PL's DII Exh. 4, E-Mail String, From Ed Wyse, To Pierre Dupuis, Subj.: Harness Cost Breakdown, Sept. 2, 2003. See also, Pl.'s DII Exh. 5, E-Mail, From Jeff Hale, To Ed Wyse, Subj.: FW: Project Updates—Buckle/Harness Sys., Dec. 10, 2002, & Attachments; Glover Dep. 194-95 (). DII's Vice President of International Operations, Hani Basile ("Basile"), worked with Goodbaby to resolve certain manufacturing issues with the new adjustor. Pl.'s DII Exh. 37, Mail, From Jeff Cartwright, To Bruce Cazenave, Subj.: RE: Another Front Adjuster [sic] Unqualified/Unapproved Change, Oct. 21, 2003.
B. THE '889 PATENT
Prior to the '889 patented invention, car seat manufacturers used a three-bar slide to adjust the harness; the ends were threaded through the slide to adjust the harness size. H. Wallen Decl. ¶ 4. James R. Anthony ("Anthony") and Allan R. Lortz ("Lortz"), the inventors named on the '889 patent, U.S. Patent No. 4,660,889, Apr. 28, 1987 ("'889 Patent"), recognized a need for a child restraint seat that had a quick and easy means for adjusting the harness web. Their efforts to solve this problem resulted in the '889 patented invention. Lortz Mar. 29, 2005, D...
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