Insituform Techs., LLC v. Cosmic Tophat, LLC

• Decision Date: 09 August 2013
• Docket Number: Civil Action No. 1:08–CV–333–TCB.
• Citation: 959 F.Supp.2d 1335
• Parties: INSITUFORM TECHNOLOGIES, LLC, et al., Plaintiffs, v. COSMIC TOPHAT, LLC, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

959 F.Supp.2d 1335

INSITUFORM TECHNOLOGIES, LLC, et al., Plaintiffs,

v.COSMIC TOPHAT, LLC, et al., Defendants.

Civil Action No. 1:08–CV–333–TCB.

United States District Court,

N.D. Georgia,

Atlanta Division.

Aug. 9, 2013.

Alan H. Norman, Dean L. Franklin, Matthew Arthur Braunel, Michael L. Nepple, Thompson Coburn, LLP, St. Louis, MO, Jeffrey C. Morgan, Barnes & Thornburg LLP, Puja R. Patel, Troutman Sanders, LLP, Atlanta, GA, for Plaintiff.

Daniel Arthur Kent, Kent Law, P.C., Alpharetta, GA, Matthew Mahoney Lubozynski, William Henry Boice, Kilpatrick Townsend & Stockton, LLP, Steven D. Moore, Kilpatrick Stockton, Atlanta, GA, for Defendant.

ORDER

TIMOTHY C. BATTEN, SR., District Judge.

This case is before the Court on the motion for summary judgment [862] filed by Plaintiffs Insituform Technologies, LLC and INA Acquisition Corp.

I. Background

This is a patent-infringement suit that began in the U.S. District Court for the Eastern District of Virginia in November 2007. The original Plaintiffs were Insituform Technologies, Inc. and Insituform (Netherlands), B.V., Inc. Insituform (Netherlands), B.V., Inc. has assigned its rights in the patents-in-suit to INA Acquisition Corp., and Insituform Technologies, Inc. has converted to a limited liability company. Thus, the current Plaintiffs are INA Acquisition Corp. and Insituform Technologies, LLC. In any event, Plaintiffs will be referred to collectively as “Insituform.”

Insituform holds several patents relating to a process it developed to repair sewage pipelines without incurring the expenses normally associated with such repair. In particular, Insituform's process allows pipelines to be repaired without the expense or inconvenience of digging into the ground. This is accomplished by installing a “cured-in-place pipeline” or “CIPP.” A CIPP is a flexible liner that is soaked in resin and inserted into an existing pipeline. When the resin cures, the CIPP hardens to form a “pipe within a pipe,” thus restoring the structural integrity of the pipeline.

Defendant Cosmic–Sondermaschinenbau, GmbH (“Cosmic–Austria”) is an Austrian corporation that formerly manufactured a competing CIPP product known as the Cosmic TopHat. The claims in this action arise out of Insituform's allegation that the Cosmic TopHat infringes its patents. Defendant Johann Kübel is Cosmic–Austria's owner and president, and Defendant Cosmic TopHat, LLC is a California limited liability company that is also owned and controlled by Kübel.

After being added as a Defendant, Cosmic–Austria (at Kübel's direction) actively defended against Insituform's claims by, inter alia, participating in discovery, responding to Insituform's motion for a more definite statement on Cosmic–Austria's counterclaims, responding to Insituform's infringement contentions pursuant to Patent Local Rule 4.2, serving a disclosure of invalidity contentions pursuant to Patent Local Rule 4.3, filing a claim-construction brief, responding to Insituform's claim-construction brief, participating in a claim-construction hearing, and filing a post-hearing brief.

On August 26, 2009, Insituform moved for entry of default judgment against Cosmic–Austria as a sanction for discovery misconduct. The motion argued that an entry of default was appropriate because, inter alia, Cosmic–Austria had not permitted Insituform to fully inspect its Austrian facilities despite being ordered to do so and had withheld information in response to an interrogatory that the Court had ordered it to answer.

On February 19, 2010, after extensive briefing, the Court denied Insituform's motion for entry of default. The Court found that Cosmic–Austria was guilty of bad-faith discovery misconduct but concluded that lesser sanctions would suffice. Specifically, the Court ordered Cosmic–Austria to pay the attorneys' fees Insituform incurred as a result of its discovery misconduct.

On May 28, 2010, Insituform moved for reconsideration of the Court's February 19, 2010 order based on Cosmic–Austria's failure to pay any of its attorneys' fees. On November 22, 2010, the Court granted Insituform's motion for reconsideration. The Court found that although Cosmic–Austria had ample opportunity, it failed to make any payment toward Insituform's attorneys' fees or to demonstrate its inability to pay. As a result, the Court found it necessary to impose a more severe sanction and entered default against Cosmic–Austria on Insituform's second amended complaint.

When the Court entered default against Cosmic–Austria, it also directed the parties to brief and submit evidence on damages. On June 8, 2011, after extensive briefing and a hearing, the Court issued an order in which it calculated a reasonable royalty of $136 per TopHat sold by Cosmic–Austria. The Court then multiplied that royalty by 29,516 sales, subtracted $51,600 for royalties already paid to Insituform, and entered a default judgment in the amount of $3,962,576.

On July 11, 2011, Cosmic–Austria filed a motion for reconsideration of the Court's June 8, 2011 order on damages. On March 29, 2012, 850 F.Supp.2d 1336 (N.D.Ga.2012), the Court denied that motion, and on August 9, 2012, the Court directed the clerk to enter final judgment against Cosmic–Austria and in favor of Insituform based upon the $136 reasonable royalty it had previously calculated.

In the present motion, Insituform seeks summary judgment on its inducement claim against Kübel. It also seeks summary judgment on the issue of whether Cosmic TopHat is merely the alter ego of Kübel such that piercing the corporate veil is appropriate.

II. Discussion

Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). There is a “genuine” disputeas to a material fact if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” FindWhat Investor Grp. v. FindWhat.com, 658 F.3d 1282, 1307 (11th Cir.2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In making this determination, however, “a court may not weigh conflicting evidence or make credibility determinations of its own.” Id. Instead, the court must “view all of the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor.” Id.

“The moving party bears the initial burden of demonstrating the absence of a genuine dispute of material fact.” Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). If the moving party would have the burden of proof at trial, that party “must show affirmatively the absence of a genuine issue of material fact: it ‘must support its motion with credible evidence ... that would entitle it to a directed verdict if not controverted at trial.’ ” United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1438 (11th Cir.1991) (quoting Celotex, 477 U.S. at 331, 106 S.Ct. 2548). “If the moving party makes such an affirmative showing, it is entitled to summary judgment unless the nonmoving party, in response, ‘come[s] forward with significant, probative evidence demonstrating the existence of a triable issue of fact.’ ” Id. (quoting Celotex, 477 U.S. at 331, 106 S.Ct. 2548).

A. Kübel's Liability for Inducement

Under 35 U.S.C. § 271(b), “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” In count IX of the corrected third amended complaint, Insituform claims that Kübel actively induced Cosmic–Austria's infringement of Insituform's patents. In order to prevail on that claim, Insituform must first show that Cosmic–Austria actually infringed its patents. See Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1308 (Fed.Cir.2012) (“[I]nducement gives rise to liability only if the inducement leads to actual infringement.”). In addition, Insituform must show that Kübel knew that Cosmic–Austria's acts constituted patent infringement. See Global–Tech Appliances, Inc. v. SEB S.A., ––– U.S. ––––, 131 S.Ct. 2060, 2068, 179 L.Ed.2d 1167 (2011) (“[I]nduced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.”).

1. Cosmic–Austria's Infringement

Insituform contends that the default judgment entered against Cosmic–Austria establishes Cosmic–Austria's infringement for purposes of its inducement claims against Kübel. This is the only “evidence” relied upon by Insituform to establish Cosmic–Austria's actual infringement. In its reply brief, Insituform acknowledges that “[t]his is analogous to a collateral estoppel argument.” Curiously, however, Insituform “is not arguing that the ‘estoppel’ is preclusive—just that it is admissible evidence for purposes of a summary judgment motion.”

Insituform has failed to cite any authority for the proposition that a default judgment may be used as evidence of its underlying allegations even if the judgment has no preclusive effect. Therefore, the Court declines to consider the default judgment entered against Cosmic–Austria in this case as “evidence.” Either the judgment has preclusive effect as to Kübel or it does not, and it is to that issue that the Court now turns.

“Res judicata comes in two forms: claim preclusion (traditional ‘res judicata’) and issue preclusion (also known as ‘collateral estoppel’).” Cmty. State Bank v. Strong, 651 F.3d 1241, 1263 (11th Cir.2011). Issue preclusion or collateral estoppel forecloses the relitigation of issues that have been previously litigated and decided. CSX Transp., Inc. v. Bhd. of Maint. of Way Emps., 327 F.3d 1309, 1316 (11th Cir.2003). When the prior decision was made by a federal court, federal preclusion principles apply. Id. And when the prior decision was made by the same court, the court may apply preclusion principles sua sponte. See Shurick v. Boeing Co., 623 F.3d 1114, 1116 n. 2 (11th Cir.2010). In this case, the relevant prior decision...