Warming Trends LLC v. Stone
| Decision Date | 30 March 2023 |
| Docket Number | CIVIL 19-cv-03027-PAB-STV |
| Parties | WARMING TRENDS, LLC f/k/a FLAHERTY HOLDINGS, LLC, a Delaware limited liability company, Plaintiff, v. RAY STONE, an individual, FIREFLY PATIO & HEARTH, LLC, a Colorado limited liability company, BSG, LLC HOLDINGS d/b/a BSG HOLDINGS, LLC and FIREFLY PATIO & HEARTH, a Colorado limited liability company, and AMD DIRECT, INC. d/b/a SUMMERSET PROFESSIONAL GRILLS and FIREGEAR OUTDOORS, a California limited liability company, Defendants. |
| Court | U.S. District Court — District of Colorado |
This matter is before the Court on Firefly Defendants' Motion for Summary Judgment [Docket No. 274] and Plaintiff Warming Trends, LLC's Motion for Summary Judgment [Docket No 276]. The Court has jurisdiction under 28 U.S.C. § 1331.
Defendant Ray Stone has over forty years of experience working with gas pipes and systems. Docket No. 274 at 5, ¶ 19. Mr. Stone initially worked as a plumber and later in his career began building outdoor gas fireplaces. Id. In 2007, Mr Stone acquired a company that manufactured gas burners and he began operating the company, Rock Enterprises (“Rock”). Id., ¶ 20. On August 24, 2015, Mr. Stone transferred 40 percent ownership of Rock to Mike Windemuller. Docket No. 276 at 4, ¶ 1. After the transfer, Mr. Stone assumed the role of president at Rock through an employment agreement. Id., ¶ 2. By December 2015, Rock had three co-owners: Mr. Stone, Mr. Windemuller and Divo Catozzo. Docket No. 274 at 5, ¶ 21. On December 28, 2015, Mr. Stone signed a Confidentiality Agreement and Non-Disclosure Agreement (“2015 Agreement”) regarding his employment with Rock. Docket No. 276 at 4, ¶ 3. The 2015 Agreement contains a non-compete and non-solicitation provision. Id., ¶ 5. On January 11, 2017, Mr. Stone entered into a Settlement Agreement (“2017 Agreement”) and sold his remaining shares in Rock to Mr. Windemuller and Mr. Catozzo. Docket No. 274 at 5, ¶ 25. In the 2017 Agreement, Mr. Stone agreed that the non-solicitation and non-compete provision of the 2015 Agreement would expire on January 11, 2019. Id., ¶ 26. After the 2017 Agreement was signed, a dispute arose, with each side believing the other had breached the agreement. Id. at 6, ¶ 28. On April 2, 2018, plaintiff Warming Trends, LLC acquired Rock. Docket No. 276 at 5, ¶ 7. In May 2018, without either side admitting liability, Mr. Stone entered into a settlement agreement with Warming Trends (“2018 Agreement”). Docket No. 274 at 6, ¶ 29. The 2018 Agreement extended the non-compete provision from January 11, 2019 to April 2, 2019. Docket No. 276 at 5, ¶ 11.
Beginning in late 2018, Mr. Stone began preparing to enter the marketplace once his restricted period ended. Docket No. 293 at 9, ¶ 10. In November 2018, Mr. Stone requested quotes from manufacturers of brass parts, commissioned drawings of brass burner designs, and sent drawings of brass burner components to potential manufacturers. Docket No. 301 at 11, ¶ 3; Docket No. 321 at 3. By September 2018, Mr. Stone was manufacturing and offering steel log sets for sale. Docket No. 276 at 6, ¶ 16.[1] Warming Trends offered for sale and sold steel log sets during Mr. Stone's employment with the company through the present day, and Mr. Stone was aware of these facts. Id. at 6-7, ¶ 17. On or around September 2018, Mr. Stone told Chad Hetherington that he had a non-compete agreement with Warming Trends. Id. at 7, ¶ 18. Before April 2, 2019, Mr. Stone designed brass burners, sought out potential partners and funding, and secured equipment to manufacture brass burners to compete with Warming Trends. Docket No. 301 at 11, ¶ 7; Docket No. 321 at 3.
Mr. Stone is the owner of Firefly Patio & Hearth, LLC (“Firefly”), and he is the majority owner and principal of BSG, LLC, Holdings (“BSG”) (collectively, the “Firefly defendants”). Docket No. 276 at 7, ¶ 24. Firefly and BSG conduct business using the tradename “Firefly Patio.” Id. at 8, ¶ 25. On June 19, 2019, Mr. Stone filed a new patent application for a “Brass Burner System and Method” (“the '968 application”). Id., ¶ 27. By September 6, 2019, the Firefly defendants launched a new Firefly Patio website, advertising “Firefly's patented SEALTITE Jets.” Id., ¶ 28. By October 2019, the Firefly defendants began offering their new brass burners for sale. Id. at 9, ¶ 36. The 2019 Hardscape North America Exposition (the “HNA Expo”), one of the largest trade shows in the fire features industry, occurred on October 16-18, 2019 and was attended by many of Warming Trends' customers and distributors. Id. at 8, ¶ 29. The Firefly defendants prepared materials for the HNA Expo, advertising Firefly Patio's new brass burners with “Patented Sealtite Jets.” Id., ¶ 30. At the HNA Expo, the Firefly defendants had a booth, displaying that their products had “Patented Sealtite Jets.” Id., ¶ 31. At the time of the HNA Expo, the Firefly defendants had a patent pending on the jets of the burners. Docket No. 274 at 7, ¶ 38; Docket No. 301 at 7, ¶ 38; Docket No. 321 at 2, ¶ 38. To date, the '968 application remains unpublished. Docket No. 276 at 9, ¶ 39.
Id. at 3-4, ¶ 11. Claim 1 of the '117 patent application initially stated that “the first end, second end, and side wall of the nipple are one piece.” Id. at 4, ¶ 12.[2]To overcome an initial rejection on the grounds of obviousness in view of prior art, Warming Trends added the underlined language: “the first end, second end, and side wall of the nipple are of integral, one piece, construction.” Id., ¶ 13. In response to another rejection, Warming Trends added the underlined language: “the first end, second end, and side wall of the nipple are of integral, one piece, construction free of joints.” Id., ¶ 15. In its interview with the United States Patent and Trademark Office, Warming Trends conceded that a burner with a welded end cap includes a joint. Id., ¶ 16.
The '117 patent cites two problems with prior art, including scarring and marring on the pipe surface and unreliable seals at the joints. Id. at 3, ¶ 7; Docket No. 301 at 3, ¶ 7. One of the ways that the '117 patent purports to solve these two problems is by using a pipe (“nipple”) with one end that is threaded and open, and a second end that is closed (“blind”). Docket No. 274 at 3, ¶ 8.[3]Using a “blind nipple” has the following advantages over end caps: (1) it reduces, if not eliminates, problems with creating sealed connections as it avoids creating a joint through which gas could leak and (2) it allows for the connection of the nipple to the threaded section without marring or scratching the surface of the nipple. Id., ¶ 9.
The '670 patent is a continuation of the same application as the '117 patent and purports to solve the same problems as the '117 patent. Id. at 4, ¶ 17. The '670 patent contains two independent claims, each of which also include the following limitation:
“the first end, second end, and side wall of the nipple are of integral, one piece, construction free of joints.” Id., ¶ 18.
By October 2019, the Firefly defendants began offering their new brass burners for sale. Docket No. 276 at 9, ¶ 36. The nipples on the Firefly burners do not use threads, but rather use press fit connections, meaning the nipple is pushed into the connecting piece using force. Docket No. 274 at 6, ¶ 34.[4] Press-fit technology has been used in the automotive and other industries for decades. Id. at 6-7, ¶ 35. Some of the Firefly defendants' burners used “blank end nipples” and other burners used “end caps.” Id. at 7, ¶ 36.[5]Warming Trends would not permit Mr. Stone to view the '117 patent before it was issued. Id., ¶ 42. In January 2021, the Firefly defendants began selling the burners with the end caps and brazed connections to defendant AMD Direct. Id. at 8, ¶ 47. All of the accused burners are made of UNS C36000 brass. Id., ¶ 49. UNS C36000 brass is referred to as cutting brass and is commonly used in the plumbing and gas industries because it is cost-effective and suitable for cutting or machining. Id., ¶ 52.[6] The jets on the accused burners are threaded. Id., ¶ 54.
Twenty-seven threads per inch is a common thread density. Id. at 9, ¶ 57.[7]
Summary judgment is warranted under Federal Rule of Civil Procedure 56 when the “movant shows that 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); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242 248-50 (1986). A disputed fact is “material” if, under the relevant substantive law, it is essential to proper disposition...
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