Sabasta v. Buckaroos, Inc.

• Decision Date: 31 August 2007
• Docket Number: No. 4:06-cv-180.,4:06-cv-180.
• Citation: 507 F.Supp.2d 986
• Parties: Steven W. SABASTA and Sioux Falls Insulation Supply, Inc., a South Dakota corporation, d/b/a Sioux City Insulation & Supply, Inc., Plaintiffs, v. BUCKAROOS, INC., Defendant.
• Court: U.S. District Court — Southern District of Iowa

Page 986

507 F.Supp.2d 986

Steven W. SABASTA and Sioux Falls Insulation Supply, Inc., a South Dakota corporation, d/b/a Sioux City Insulation & Supply, Inc., Plaintiffs, v. BUCKAROOS, INC., Defendant.

No. 4:06-cv-180.

United States District Court, S.D. Iowa, Central Division.

August 31, 2007.

Charles Johnson Meyer, Woodard Emhardt Moriarty McNett & Henry LLP, Indianapolis, IN, James S. Zmuda, Califf & Harper, Moline, IL, for Defendant.

Debra Lynne Hulett, Nyemaster Goode West Hansell & O'Brien, PC, Des Moines, IA, Sander J. Morehead, Tim R. Shattuck, Woods Fuller Shultz & Smith PC, Sioux Falls, SD, for Plaintiffs.

ORDER

ROBERT W. PRATT, Chief Judge.

Before the Court is Defendant, Buckaroos, Inc.'s Motion for Summary Judgment of Invalidity and Non-Infringement (Clerk's No. 26), filed on November 6, 2006. Plaintiffs, Steven W. Sabasta and Sioux Falls Insulation Supply, Inc. ("Plaintiffs" or "Sabasta"), filed a response to the motion on March 9, 2007 (Clerk's No. 62), and Defendant replied on March 15, 2007 (Clerk's No. 64). Plaintiffs filed a Cross Motion for Summary Judgment (Clerk's No. 48) on February 23, 2007. Defendant filed a resistance to the motion on March 9, 2007 (Clerk's No. 64) and Plaintiffs replied on March 23, 2007 (Clerk's No. 66). A hearing was held on the cross-motions for summary judgment on August 2, 2007. Clerk's No. 76. The matters are fully submitted.

I. FACTUAL BACKGROUND

Plaintiffs filed the present action for patent infringement on April 17, 2006. Clerk's No. 1. Plaintiffs' Complaint alleges that Sabasta is the original inventor of a roll-bending die used to make saddles for pipe insulation. Compl. ¶ 2. Sabasta was granted United States Patent No. 6,751,995 ("the '995 Patent") on June 22, 2004. According to the Complaint, Defendant has commercially exploited Sabasta's invention since March 2005 "by manufacturing and selling certain pipe insulation saddles that were made with a process that infringes upon the '995 Patent." Id. ¶ 7. Jurisdiction is proper in this Court pursuant to 28 U.S.C. §§ 1331 and 1338(a). Venue is proper in the Southern District of Iowa under 28 U.S.C. § 1400(b).

Pipe saddles are essentially bent or curved pieces of metal designed to support hanging pipes, with or without insulation. The metal saddle shape is commonly produced using a "roll-bending" process, whereby a blank piece of metal is run through a machine that forms the metal into an arcuate shape. Pipe saddles often have flared ends, and some pipe saddles have radial "ribs" in them, intended to strengthen the saddle and inhibit the hanger from sliding. Ribbed saddles, as end products, have been publically known and sold from at least as far back as 1993. Def.'s Statement of Material Facts ¶ 2.

Steven Sabasta is the founder and owner of Sioux Falls Insulation, Inc., which does business as Sioux City Insulation in Sioux City, Iowa. Pl.'s Statement of Material Facts ¶ 1. Sioux City Insulation is in the business of selling roofing materials, mechanical insulation, and tools related to these trades. Id. As part of its mechanical insulation business, Plaintiffs manufacture and sell pipe saddles. Id. ¶ 2. Plaintiffs claim that they first started making and selling pipe saddles under the trade name Centerline Saddles, in approximately May 2000. Id. ¶ 3.

Buckaroos, owned and operated by Jeff Rebholz, and co-founded by Mack Deichman, also manufactures and sells pipe saddles. Id. ¶¶ 22, 28. As early as April 1994, Buckaroos began purchasing roll-bending machines from a company called Acrotech. Def.'s Statement of Material Facts ¶ 7. Shortly thereafter, Buckaroos began making flared pipe saddles. Id. Buckaroos has always used a roll-bending process in manufacturing its pipe saddles, and makes and uses its own dies for use in the roll-bending machines. Id. ¶¶ 8-9. Indeed, on June 14, 1999, Buckaroos purchased a Cincinnati lathe to make dies for its Acrotech roll-bending machines. Id. ¶ 11.

In mid-2000, one of Plaintiffs' customers requested an enhanced product, and in response, Sabasta claims to have designed a prototype saddle with flared ends and two ribs in the center. Pl.'s Statement of Material Facts ¶ 4. Since Plaintiffs could not mass produce the prototype saddle with its current equipment, Sabasta began searching for a company that could manufacture a machine to mass produce the product. Id. ¶ 5. In approximately March 2001, Sabasta was told that Acrotech made a machine that might work for the production of his prototype pipe saddles. Id. ¶ 6. Sabasta viewed the Acrotech Model 1618 on an internet site and claims to have conceived the idea of fabricating the top roll, or die, of the Acrotech 1618, so that the machine could mass produce his prototype pipe saddle. Id. Specifically, Sabasta claims to have come up with the idea of putting ridges in the center of the die so that when metal blanks were rolled between the die and the urethane roll of the roll-bending machine, ridges would be pressed into the metal blanks. Id. ¶ 7. Sabasta further believed that if the die was designed to have flared ridges on the ends, the ends of the metal blanks would, flare downward when fed between the die and the urethane roll. Id. Sabasta claims to have communicated the details of his idea to Larry Aakhus ("Aakhus") at the time he came up with the idea. Id. ¶ 8.¹

On May 23, 2001, Sabasta and Aakhus visited Acrotech and presented Sabasta's prototype saddle, along with the specifications for the dies that would be needed to mass produce them. Id. ¶ 10. Sabasta claims that, during his visit to Acrotech, he used a modified die to press a rib into a saddle rolled through the Acrotech machine. Id. ¶ 11. On June 4, 2001, Acrotech prepared a written quotation for an Acrotech Model 1618 machine and for the various shafts and tubes to be fabricated in accordance with the specifications Plaintiffs had provided. Id. ¶ 12. Acrotech presented Plaintiffs with a second quotation for additional shafts and tubes on June 21, 2001. Id. ¶ 13. On June 22, 2001, Sabasta sent a Confidential Disclosure Agreement to Acrotech, which Acrotech executed and returned to Sabasta. Id. ¶ 14. On June 25, 2001, Plaintiffs ordered the Acrotech Model 1618 and the shafts and tubes as quoted by Acrotech. Id. ¶ 15. The dies for the machine were manufactured by Acrotech in July and August 2001, and the machine and dies were shipped to Plaintiffs on September 4, 2001. Id. ¶¶ 16-17. Plaintiffs immediately put the equipment into service, and first sold ribbed saddles with flared ends made with the specially fabricated dies on October 9, 2001. Id. ¶ 17. Sabasta, then, claims to have conceived of the device to make ribbed/flared pipe saddles in March 2001, and to have reduced his activity to practice "at least as early as May 23, 2001." Pl.'s Response to Def.'s Statement of Material Facts ¶¶ 4-5.

In late 2001 or early 2002, Sabasta contacted an attorney regarding the patentability of his invention. Pl.'s Statement of Material Facts ¶ 18. A patent application was filed with the United States Patent and Trademark Office (the "PTO") on August 9, 2002, and Sabasta was granted the '995 Patent on June 22, 2004. Id. ¶¶ 20-21. The abstract of the '995 Patent provides that the patented item is a "roll-bending die for bending metal into an arc with reinforcing ribs and tapered ends." Sioux City Insulation first advertised its "Center-Lok Flared Saddles," made with the specially designed die used in the Acrotech machine, in the January 2002 issue of Insulation Outlook. Id. ¶ 19.

Buckaroos claims that, as early as the fourth quarter of 1999, it conceived of and began exploring the concept of using its roll-bending machines to make ribbed saddles, referred to by Buckaroos as the "Rib-Eye" saddle. Def.'s Statement of Material Facts ¶ 10. Buckaroos claims that it began making ribbed dies for its roll-bending machines shortly after purchasing a Cincinnati lathe in June 1999, and that the ribbed die design it produced before the end of 1999 is substantially similar to the ribbed die design Buckaroos still uses today. Id. ¶ 12. Indeed, Buckaroos claims that in the last half of 1999, it made at least 1000 ribbed saddles with its roll-bending machines and self-designed ribbed die. Id. ¶ 13. These ribbed saddles were intended to be sent out as samples and, in fact, Buckaroos sent out samples of the ribbed saddles in the beginning of 2000. Id. ¶ 14. By July 1, 2000, Buckaroos had prepared a data sheet offering its ribbed saddles for sale, and in September 2000, ran an advertisement in Insulation Outlook for its "WRAPAROOS" hanger cover assembly, which included a ribbed pipe saddle. Id. ¶¶ 15-16. Buckaroos undertook more marketing and sales of products containing the ribbed saddle in the subsequent months, and claims to have finalized its die design for the ribbed saddles by April 9, 2001. Id. ¶ 21. Buckaroos claims that it used its self-designed ribbed die in making ribbed pipe saddles, and has used this method continuously since at least 2001. Id. ¶ 24.

II. STANDARD FOR SUMMARY JUDGMENT

Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material if the dispute over it might affect the outcome of the suit under the governing law. Id. The moving party has the burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson, 477 U.S. at 248, 106 S.Ct. 2505. In meeting its burden, the moving party...