Simpson Strong-Tie Co. v. MiTek Inc.

• Docket Number: 20-cv-06957-VKD
• Decision Date: 15 December 2023
• Parties: SIMPSON STRONG-TIE COMPANY INC., Plaintiff, v. MITEK INC., Defendant.
• Court: U.S. District Court — Northern District of California

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SIMPSON STRONG-TIE COMPANY INC., Plaintiff, v. MITEK INC., Defendant.

No. 20-cv-06957-VKD

United States District Court, N.D. California, San Jose Division

December 15, 2023

FINDINGS OF FACT AND CONCLUSIONS OF LAW

VIRGINIA K. DEMARCHI UNITED STATES MAGISTRATE JUDGE

I. INTRODUCTION

In this action, plaintiff Simpson Strong-Tie Company Inc. (“Simpson”) asserts the following claims against defendant Mitek Inc. (“MiTek”):

1. false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) (claim 1);

2. false advertising under California Business &amp Professions Code § 17500 (claim 2);

3. passing off under the Lanham Act, 15 U.S.C. § 1125(a)(1)(A) (claim 3);

4. unfair competition under California Business & Professions Code § 17200 (claim 4); and

5. copyright infringement under 17 U.S.C. § 106 (claim 5).

Dkt. No. 1; Dkt. No. 133 at 1. Simpson seeks only injunctive relief against MiTek. Dkt. No. 1 ¶ 86. MiTek asserts several defenses and affirmative defenses, of which the following remained for trial:

1. laches (as to claims 1, 2, 3, 4);

2. statute of limitations (as to claims 1, 2, 3, 4);

3. estoppel, waiver, or acquiescence (as to all claims); 4. fair use (as to claims 1, 3, 5);

5. lack of inherent distinctiveness (as to claims 1, 3);

6. functionality (as to claims 1, 3, 5);

7. genericism (as to claims 1, 3);

8. copyright misuse (as to claim 5);

9. non-protectable product names (as to claim 5); and

10. merger (as to claim 5).

Dkt. No. 133 at 2.^[1]

The action was tried to the Court without a jury over nine days beginning on February 6, 2023. Dkt. Nos. 153, 155, 158, 159, 160, 161, 162, 163, 165; Dkt. Nos. 179-191 (trial transcripts). The following witnesses testified live and/or by deposition:

1. Steven Brekke, MiTek's Senior Engineer/Product Scientist;

2. Kristi Campbell, MiTek's Executive Director of Corporate Accounts;

3. Roger Dankel, Simpson's Executive Vice President of North American Sales;

4. David Franklyn, MiTek's survey expert;

5. Todd Grevious, MiTek's Director of Engineering;

6. Sam Hensen, Simpson's Vice President and Branch Manager, Northwest Region, North America;

7. Douglas Hohbach, Simpson's structural engineering expert;

8. Mark Jensen, President, Advanced Connector Systems (“ACS”);

9. Chris Mellott, President and General Counsel, Quick-Tie Products;

10. Emory Montague, Simpson's Director of Engineering;

11. Scott Morton, retired, formerly with P.H. Bowman Company;

12. Keith Rabenberg, MiTek's former outside counsel;

13. Stephen Rotzin, Simpson's Director of Legal Operations and Intellectual Property Management;

14. Daniel Runde, Principal, Runde Engineering; and

15. Robert Wallace, Simpson's survey expert.

The parties filed proposed findings of fact and conclusions of law on March 9, 2023. Dkt. Nos. 170, 171. Having considered the evidence presented, the Court now makes the following findings of fact and conclusions of law pursuant to Rule 52(a)(1) of the Federal Rules of Civil Procedure.

As explained in further detail below, the Court finds in favor of MiTek on Simpson's claims of false advertising, passing off, unfair competition, and copyright infringement.

II. FINDINGS OF FACT

A. The Parties

1. Simpson is a California corporation with its principal place of business in Pleasanton, California. Simpson designs, manufactures, and sells structural connectors, fasteners, and other products for use in the construction industry. Dkt. No. 125-1 ¶¶ 1, 2.

2. MiTek is a Missouri corporation with its principal place of business in Chesterfield, Missouri. MiTek also designs, manufactures, and sells structural connectors and other products for use in the construction industry. Dkt. No. 125-1 ¶¶ 3, 5; Dkt. No. 168-17, Brekke dep. 11:1221.

3. Simpson and MiTek are direct competitors with respect to providing structural connectors for use in the construction industry. Dkt. No. 125-1 ¶ 5.

B. Structural Connectors

4. Structural connectors are pre-engineered products used in the construction of wood framed and cold-formed steel-framed homes, commercial properties, and multi-unit residential properties. Dkt. No. 125-1 ¶ 8.

5. Structural connectors are used to join, and transfer the load between, different structural members, including vertical members like studs and posts, horizontal members like floor joists and roof trusses, and foundations. Dkt. No. 125-1 ¶ 9.

6. “Load” may refer to the anticipated maximum weight of the structure, the anticipated maximum weight of occupants and movable or stationary objects, and other external forces on the structure, such as soil, flood, earthquakes, wind, snow and ice. Loads can be in one direction, multiple directions from a single source, or a combination of loads from various forces in multiple directions. Dkt. No. 125-1 ¶ 10.

7. Douglas Hohbach testified on behalf of Simpson as an expert in the field of structural engineering, including the specification of connectors for wood frame construction. Tr. 199:25-200:3, 200:22-201:3.^[2] The Court finds his testimony persuasive and helpful and gives it significant weight.

8. On a building construction project, the “engineer of record” is responsible for the structural design of the building, including ensuring that the structure complies with applicable building codes. Tr. 198:20-199:2, 235:25-236:4.

9. The engineer of record must indicate on the construction drawings the specific structural connectors that will be used on the project. Tr. 233:15-234:2, 234:23-235:6. The engineer may design a custom connector to join and transfer the load between members or he or she may specify a pre-engineered connector. Dkt. No. 125-1 ¶ 11. Virtually all modern wood-frame buildings use pre-engineered connectors. Tr. 230:8-18.

10. Generally, the two most important considerations for selecting a connector are geometry-i.e. whether the connector is configured to fit the particular application-and load capacity or strength-i.e. whether a connector is of adequate strength to resist the applicable load. Tr. 231:3-14, 233:2-11, 237:21-238:10, 252:11-253:7. Other considerations include aesthetics, treatment, and cost. Tr. 231:15-232:12, 252:5-7. For some customers, the cost of the connector is among the most important considerations. Tr. 361:17-362:1, 362:7-16.

11. Typically, the engineer of record specifies a connector noting both its part name and manufacturer (e.g. Simpson or MiTek) on the construction documents. Tr. 233:25-234:22, 237:21-238:18, 253:8-17, 1026:22-25; see also Dkt. No. 168-2, Hohbach demonstrative, slide 8.

12. The contractor, or a subcontractor, typically is responsible for purchasing the structural connectors for a building construction project. Tr. 204:24-205:3, 239:22-240:13.

13. In the United States, Simpson's structural connectors are specified on most construction drawings. Tr. 89:25-90:4; see also Tr. 54:21-23, 159:16-160:3 (discussing Simpson market share).

14. MiTek encourages engineers to specify MiTek's own connectors instead of Simpson's in the first instance, or to specify both Simpson and MiTek connectors, a practice known as “dual specification.” Dkt. No. 168-17, Brekke dep. 41:19-42:20; Dkt. No. 168-19, Grevious Rule 30(b)(6) dep. 72:8-23; Tr. 1029:25-1030:16.

15. If MiTek's connectors are not specified on the construction drawings, MiTek encourages the substitution of its connectors in place of the Simpson connectors that are specified. Dkt. No. 168-17, Brekke dep. 42:21-43:2; Dkt. No. 169-19, Grevious Rule 30(b)(6) dep. 72:8-13.

16. The contractor on a building construction project is required to build all of the structural elements of the building to conform to the construction documents prepared by the engineer of record, including using the specified structural connectors. Tr. 235:11-21. The contractor may request that a different connector be used in place of the connector specified by the engineer, but may not use a different connector or otherwise deviate from the construction documents without the engineer's approval. Dkt. No. 125-1 ¶ 12; Tr. 236:5-18, 241:23-242:22.

17. Following an evaluation of a proposed substitute connector, the engineer of record may approve the substitution. Tr. 241:10-22, 485:8-486:4.

18. The engineer of record typically confirms that the specified connectors have been installed for a given building project. Tr. 240:15-21.

19. When a building inspector from the relevant jurisdiction inspects the building, the inspector typically confirms that the specified connectors have been installed as part of the inspection. Tr. 240:25-241:3.

C. Simpson's Structural Connector Business

20. Simpson began selling structural connectors in 1956. Tr. 54:17-22.

21. Simpson invests substantial time and resources in educating architects, engineers, contractors, and others in the construction industry about Simpson's structural connectors and how to use them. Tr. 64:5-19, 132:19-133:12.

22. Simpson currently is the overall market leader in the structural connector industry in North America. Tr. 54:21-23. Its market share for the North American market for structural connectors has exceeded 75 percent for the past several years. Tr. 159:16-160:3, 378:9-19.

D. MiTek's Structural Connector Business

23. MiTek entered the structural connector market in 2011 when it acquired USP Structural Connectors (“USP”) in 2011. Dkt. No. 125-1 ¶ 6; Tr. 90:16-91:5, 467:23-468:2.

24. MiTek traces its history back through USP to a company called TECO, founded in 1933, as well as to several other structural connector companies that USP acquired directly or indirectly over many years. Ex. 109; Tr. 178:18-179:25, 363:1-19, 1210:13-1211:18.

25. MiTek's predecessors include USP (which used the Kant-Sag and USP trade names), TECO, Lumberlok, TECO/Lumberlok, Silver Metal...