Kenall Mfg. Co. v. Cooper Lighting, LLC

• Citation: 354 F.Supp.3d 877
• Decision Date: 10 December 2018
• Docket Number: 17 C 4575
• Parties: KENALL MANUFACTURING COMPANY, Plaintiff, v. COOPER LIGHTING, LLC, and Eaton Corporation, Defendants.
• Court: U.S. District Court — Northern District of Illinois

354 F.Supp.3d 877

KENALL MANUFACTURING COMPANY, Plaintiff,

v.COOPER LIGHTING, LLC, and Eaton Corporation, Defendants.

17 C 4575

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

Signed December 10, 2018

Peter N. Jansson, Eric V.C. Jansson, Jansson Munger McKinley & Kirby Ltd., Racine, WI, Molly H. McKinley, Jansson Munger McKinley and Shape Ltd., Lake Forest, IL, for Plaintiff.

Kalpesh K. Shah, Lowell Daniel Jacobson, Rebecca L. Dircks, Zaiba Baig, Benesch, Friedlander, Coplan & Aronoff LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Gary Feinerman, United States District JudgeKenall Manufacturing Company brought this suit against Cooper Lighting, LLC and Eaton Corporation (together, "Cooper"), alleging patent infringement and breach of contract. Doc. 1. The court granted Kenall's unopposed motion under Civil Rule 12(f) to strike Cooper's affirmative defenses, but gave Cooper leave to file amended affirmative defenses. Doc. 67. The court then granted in part Cooper's motion for judgment on the pleadings under Civil Rule 12(c), dismissing Kenall's patent infringement claims except insofar as they pertain to Subject Single Products that Cooper sold after April 1, 2008. Docs. 86-87 (reported at 338 F.Supp.3d 841 (N.D. Ill. 2018) ). At the same time, the court denied Kenall's Rule 12(c) motions for judgment as to liability without prejudice to renewal after Cooper repleaded its affirmative defenses. Ibid.

Cooper filed an amended answer and affirmative defenses, Doc. 93, and Kenall now moves under Rule 12(f) to strike the affirmative defenses, Doc. 95, and under Rule 12(c) for partial judgment as to liability, Docs. 98, 101. The Rule 12(f) motion is granted in part and the Rule 12(c) motions are denied.

Background

In resolving Kenall's Rule 12(c) and Rule 12(f) motions, the court assumes the truth of the well-pleaded factual allegations in Cooper's pleadings, though not their legal conclusions, and draws all reasonable inferences in Cooper's favor. See Adams v. City of Indianapolis , 742 F.3d 720, 727-28 (7th Cir. 2014) ; United States v. 416.81 Acres of Land , 514 F.2d 627, 631 (7th Cir. 1975) (Clark, J.). The court must also consider "documents attached to the [pleadings], documents that are critical to the [pleadings] and referred to in [them], and information that is subject to proper judicial notice," along with additional facts set forth in Cooper's opposition briefs, so long as those facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am. , 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted). The facts are set forth as favorably to Cooper as those materials allow. See Meade v. Moraine Valley Cmty. Coll. , 770 F.3d 680, 682 (7th Cir. 2014). In setting forth those facts, the court does not vouch for their accuracy. See Goldberg v. United States , 881 F.3d 529, 531 (7th Cir. 2018).

Cooper is a commercial lighting manufacturer. Doc. 93 at ¶ 20. In February 2005, Cooper launched its Fail-Safe Harmony VR Linear Series lighting fixtures. Id. at ¶ 26. On January 10, 2006, Kenall was issued U.S. Patent No. 6,984,055 ("the '055 patent"), which covers a "modular lighting fixture adaptable for being implemented in various shapes and configurations." Doc. 1-2 at 11; Doc. 93 at ¶ 21. The next week, Kenall informed Cooper of its newly issued patent. Doc. 93 at ¶ 27.

Just over a year later, Kenall filed a patent infringement suit against Cooper. Kenall Mfg. Co. v. Cooper Lighting, Inc. , No. 07 C 603 (N.D. Ill. filed Jan. 31, 2007). The parties resolved that suit pursuant to a Settlement Agreement that incorporated a Confidential License Agreement. Doc. 1-1; Doc. 93 at ¶ 29. The Settlement Agreement provides: "Subject to full compliance by Cooper with this Agreement and with the terms of the Confidential License Agreement, Kenall waives ... its claims against Cooper for patent infringement damages with respect to manufacture and sale occurring before the date of this Agreement...." Doc. 1-1 at p. 3, ¶ 3. The Settlement Agreement also provides that "[f]ailure by Cooper to meet any payment or other obligation of the License Agreement shall be deemed a breach of" both agreements. Id. at p. 3, ¶ 2.

The License Agreement granted Cooper "a worldwide, nonexclusive license" under the '055 patent and any patents stemming from it (collectively, the "Subject Patents") and "[s]ubject to the terms, conditions and limitations in th[e] Agreement," to manufacture and sell Cooper's "Linear Continuous" and "Linear Single" products, which the Agreement refers to as the "Subject Continuous Products" and "Subject Single Products," respectively, and collectively as the "Subject Products." Id. at pp. 35-36, § 1. In return, Cooper agreed to place a patent notice on every licensed product starting no later than December 31, 2007; to make a one-time payment of $ 30,000 within seven days of executing the License Agreement; and to make quarterly royalty payments of five percent of net sales of the Subject Continuous Products starting on January 1, 2008 and continuing through the expiration of the last Subject Patent. Id. at pp. 37-39, §§ 5.A, 5.B, 9. Cooper also agreed to redesign its Subject Single Product "to have a one-piece end unit instead of the current two-piece end unit, such re-designed product being referred to ... as the ‘Re-Designed Single Product,’ " by January 1, 2008. Id. at p. 36, § 2. If Cooper needed additional time for the redesign, it could continue to sell the Subject Single Product until April 1, 2008, subject to a five percent royalty. Id. at pp. 36-37, §§ 2, 5.C.

The License Agreement includes a "No Challenge Clause," which provides:

Cooper does not admit infringement, validity or enforceability of the Subject Patents, and reserves all defenses to any allegation of infringement related thereto; provided, however, that Cooper shall refrain from contesting the validity, enforceability, or infringement of the Subject Patents in any court of law or other forum unless Kenall asserts the Subject Patents against Cooper products other than the Subject Products.

Id. at pp. 41-42, § 15. The Agreement also includes an Illinois choice-of-law provision. Id. at p. 41, § 14.

After Kenall and Cooper executed the Settlement Agreement, Kenall obtained additional patents for modular lighting technology stemming from the '055 patent, including U.S. Patent No. 7,494,241 ("the '241 patent"), issued on February 24, 2009, Doc. 1-4 at 2; Doc. 93 at ¶ 21; and U.S. Patent No. 8,550,656 ("the '656 patent"), issued on October 8, 2013, Doc. 1-6 at 2; Doc. 93 at ¶ 21. The '241 patent was reissued as U.S. Patent No. RE45,563 ("the '563 patent") on June 16, 2015, Doc. 1-5 at 2; Doc. 93 at ¶ 21; and the '055 patent was reissued as U.S. Patent No. RE45,591 ("the '591 patent") on June 30, 2015, Doc. 1-3 at 2; Doc. 93 at ¶ 21.

In this suit, Kenall alleges that, beginning in 2008, Cooper breached the License Agreement by failing to make royalty payments, failing to place the required patent notices on its products, and failing to redesign the Subject Single Product to have a one-piece end unit. Doc. 1 at ¶¶ 48-53. Kenall also alleges that Cooper infringed its patents by continuing to sell Subject Single Products after April 1, 2008. Doc. 1 at ¶¶ 48, 71-76; 338 F.Supp.3d at 851 (limiting Kenall's patent infringement claim to Subject Single Products sold after April 1, 2008). Kenall first brought the alleged violations to Cooper's attention in 2015, Doc. 93 at ¶ 96, and filed this suit in June 2017, Doc. 1.

In its answer, Cooper admits that it "inadvertently continued to sell limited quantities of the Subject Single Products ... until about mid-2016" and that it "initially inadvertently left off" the required patent notices until it was notified of the issue. Doc. 93 at ¶¶ 48, 51. Cooper claims that it attempted to make royalty payments but that Kenall refused to accept them. Id. at ¶¶ 50, 53. Cooper also asserts thirteen affirmative defenses. Id. at ¶¶ 89-107.

Discussion

I. Motion to Strike Affirmative Defenses

Under Rule 12(f), a court may "strike from a pleading an insufficient defense." Fed. R. Civ. P. 12(f). "Affirmative defenses will be stricken only when they are insufficient on the face of the pleadings." Heller Fin., Inc. v. Midwhey Powder Co. , 883 F.2d 1286, 1294 (7th Cir. 1989).

A. Noninfringement

The first affirmative defense, directed against Kenall's patent infringement claims, alleges that Cooper has not infringed Kenall's patents. Doc. 93 at ¶ 89 ("Defendants have not infringed, either literally or under the doctrine of equivalents, any valid and enforceable claims of the Subject Patents."). Kenall argues that the License Agreement's No Challenge Clause—which, as noted, provides in part that "Cooper shall refrain from contesting the validity, enforceability, or infringement of the Subject Patents in any court of law or other forum unless Kenall asserts the Subject Patents against Cooper products other than the Subject Products," Doc. 1-1 at pp. 41-42, § 15—prohibits Cooper from raising this defense because Kenall's suit asserts Subject Patents against Subject Products. Doc. 97 at 4. Cooper responds that the No Challenge Clause does not bar its noninfringement defense. Doc. 108 at 7 & n.1; Doc. 109 at 7; Doc. 117 at 7-11.

Cooper does not dispute Kenall's submission that the asserted patents are all Subject Patents, thus forfeiting the point. See Firestone Fin. Corp. v. Meyer , 796 F.3d 822, 825 (7th Cir. 2015) ("[A] party generally forfeits an argument or issue not raised in response to a motion to dismiss...."); G & S Holdings LLC v. Cont'l Cas. Co. , 697 F.3d 534, 538 (7th Cir. 2012) ("We have repeatedly held that a party waives an argument by failing to make it before the district court."); Alioto v. Town of Lisbon , 651 F.3d 715, 721 (7th Cir. 2011) ("We apply [the forfeiture] rule where a party fails to develop arguments related to a discrete issue...."). Even setting aside forfeiture,...