Wiley v. Rocktenn CP, LLC
| Decision Date | 09 October 2013 |
| Docket Number | CASE NO. 4:12-cv-00226-KGB |
| Parties | TED WILEY PLAINTIFF v. ROCKTENN CP, LLC DEFENDANT ROCKTENN CP, LLC COUNTER-PLAINTIFF v. TED WILEY COUNTER-DEFENDANT |
| Court | U.S. District Court — Eastern District of Arkansas |
Plaintiff Ted Wiley brings this action against defendant RockTenn CP, LLC ("RockTenn") alleging two causes of action against RockTenn. Mr. Wiley alleges infringement of U.S. Patent No. 7,328,833 and alleges breach of contract based on a license agreement that the parties executed on April 1, 2006. RockTenn has counterclaimed for declaratory judgment and for attorney's fees and costs pursuant to 35 U.S.C. § 285.
Before the Court is RockTenn's motion for summary judgment (Dkt. No. 51). RockTenn asks the Court to grant it summary judgment on Mr. Wiley's alleged infringement claim and find that it either (1) has not breached the license agreement or (2) that Mr. Wiley is only owed $9,613.87 for a partial breach of the license agreement. Mr. Wiley has responded (Dkt. No. 63). Mr. Wiley contends that RockTenn has admitted to a breach of the license agreement but maintains the amount of damages due as a result of the breach is in dispute. Mr. Wiley also contends that RockTenn infringed upon his patent by selling his product after April 1, 2012.RockTenn has replied (Dkt. No. 66). For the reasons that follow, RockTenn's motion for summary judgment is granted in part and denied in part (Dkt. No. 51).
Mr. Wiley is the inventor and owner of U.S. Patent No. 7,328,833 ("the '833 patent"), which issued on February 12, 2008 (Dkt. Nos. 18-2, 43-1, 52-3). The '833 patent issued from U.S. Patent Application No. 10/857,077 ("the '077 application"), which Mr. Wiley filed on May 28, 2004. The '833 patent discloses and claims a "heavy-duty, knock-down container" that can be stored flat and quickly erected from a folded state (Dkt. No. 52, ¶ 6). Each claim of the '833 patent is limited to a container "formed from a pair of substantially identical complementary blanks" (Id., ¶ 6; '833 patent, at 8:31-32, 9:12-141).
RockTenn, which is headquartered in Norcross, Georgia, is one of North America's leading producers of corrugated and consumer packaging products (Dkt. No. 52-1). The products designed and manufactured by RockTenn include large corrugated bulk bins that can hold up to 2,000 pounds of product (Dkt. No. 52-2). RockTenn manufactures and sells bulk bins under its AutoBin® trademark.
In 2006, Mr. Wiley and the Smurfit-Stone Container Enterprises, Inc. ("Smurfit") negotiated the terms of a license agreement and entered into a written "Exclusive License Agreement" on April 1, 2006 (Dkt. Nos. 18-1, 52-4). RockTenn acquired Smurfit after the execution of the license agreement and is the successor-in-interest to Smurfit (Dkt. No. 23, ¶ 13). Under the terms of the license agreement, Mr. Wiley granted to Smurfit the exclusive rights tomanufacture and sell bulk bins of the type described in the '077 application, which issued as the '833 patent (Dkt. No. 18-1, ¶ 1). Smurfit agreed to pay Mr. Wiley a royalty of 1.25 percent of net sales (total invoice less shipping, taxes, rebates, and returns) of the licensed bulk bins (Id., ¶ 2).
The license agreement provides that it would continue in effect for a period of six years and that it would automatically renew for two additional terms of six years each, "unless either party provides notice to the other of their intention not to renew not less than 180 days prior to the expiration of the current term" (Dkt. No. 18-1, ¶ 3). The license agreement further provides that, if Smurfit fails to render statements or to make payments of royalties as required by the agreement, Mr. Wiley may on 30 days written notice terminate the license agreement (Id.). The license agreement provides that it shall be terminated 30 days from the date of delivery of the notice of default to Smurfit / RockTenn if the default is not cured within the 30 days (Id.).
On October 26, 2011, Mr. Wiley sent to RockTenn a letter stating, (Dkt. No. 52-5). Mr. Wiley agrees that his termination letter did not mention default or any failure of performance by RockTenn and that he sent the letter less than 180 days before the expiration of the initial term of the agreement on March 31, 2012 (See Dkt. No. 52, ¶¶ 21-22 and Dkt. No. 65, ¶ 3; see also Dkt. No. 52-6, at 69, 166).
Mr. Wiley, in his response to RockTenn's statement of facts, disputes RockTenn's assertion that he testified that his termination letter of October 26, 2011, did not comply with and was not effective under the terms of the license agreement (Dkt. No. 52, ¶¶ 24-25; Dkt. No. 65, ¶ 3-4). At his deposition, Mr. Wiley was asked, "But you would agree with me that yourtermination in [the letter of October 26, 2011] doesn't abide by the terms of the license?" Mr. Wiley responded, "It looks that way." (Dkt. No. 52-6, at 71). Mr. Wiley was then asked, "[S]o you agree with me that your termination that you sent in [the letter of October 26, 2011] wasn't effective under the terms of the contract, correct?" Mr. Wiley responded, "Yes." (Id.). However, Mr. Wiley also testified that he suspected that RockTenn agreed that the license agreement had been canceled because RockTenn had ceased paying him royalties (Dkt. No. 52-6, at 70).
RockTenn manufactures and sells bulk bin containers under its AutoBin® trademark. One type of container sold under the AutoBin® trademark is a container formed from a single-blank (the "One-Piece Bin") (Dkt. No. 52-7). Another type of container sold under the AutoBin® trademark is a container manufactured in Sioux City, Iowa, that is formed from two blanks of different shapes (the "Sioux City Bin") (Dkt. Nos. 52-8, 52-9). Over the course of the license agreement with Mr. Wiley, RockTenn manufactured and sold under the AutoBin® trademark a bulk bin formed from a pair of substantially identical complementary blanks ("the Wiley Bin"), which is of the type claimed in the '833 patent and covered by the parties' license agreement (Dkt. No. 52-10).
Mr. Wiley in his complaint claims that RockTenn has continued since the termination of the license agreement to make and sell self-erecting, six-sided pallet containers under the brand name AutoBin® that embody the invention of the '833 patent. Mr. Wiley's amended complaint accuses all containers "offered for sale and sold under the brand name AutoBin®" of patent infringement (Dkt. No. 18, ¶¶ 27, 30). Later, in subsequent briefing, Mr. Wiley states that his "patent infringement claim rests exclusively on whether any of Wiley's patented AutoBins (the'833 patent) were sold by defendant RockTenn after April 1, 2012, the date upon which an Exclusive Licensing Agreement expired" (Dkt. No. 44). The parties then submitted a joint pleading stating that Mr. Wiley's patent infringement claims "are limited to RockTenn's one-piece product" (Dkt. No. 46, ¶ 3). However, the parties later indicated to the Court that Mr. Wiley claimed at his deposition that one of RockTenn's products infringes upon the '833 patent (Dkt. No. 55; Dkt. No. 52, ¶ 34).
Mr. Wiley stated in his deposition and in response to RockTenn's requests for admission that he does not accuse RockTenn's One-Piece Bin of infringing the '833 patent ). Mr. Wiley's testimony indicates that he only claims that the Sioux City Bin infringes the '833 patent and not any other product of RockTenn's (Dkt. No. 52-6, at 90-91, 144). Therefore, Mr. Wiley's patent infringement claims are based on all sales of the Sioux City Bins and on sales of the Wiley Bins after the purported termination of the license agreement (Id.; see Dkt. No. 52, ¶ 35 and Dkt. No. 65, ¶ 6).
As to the Sioux City Bin, Mr. Wiley testified that he agreed that every one of the claims of his '833 patent includes the limitation that the container be formed from a pair of substantially identical complimentary blanks, meaning that the box has to be made from a pair of blanks that are substantially identical (Dkt. No. 52-6, at 99-100). In addition, Mr. Wiley agreed that the two blanks from which the Sioux City Bin is formed are not substantially identical (Id. at 100). However, Mr. Wiley also testified that whether the Sioux City Bin is made from two identical blanks is not determinative on the issue of infringement because the '833 patent "sayssubstantially identical, or substantially the same, which is not the same thing as identical." (Dkt. No. 52-6, at 98).2
As to alleged sales of the Wiley Bins after the purported termination of the license agreement, Mr. Wiley in his complaint claims that he has discovered that RockTenn "has entered into nationwide contracts with companies such as Conagra, and others, to whom the licensed product has been sold and for which [Mr. Wiley] has received no royalty." (Dkt. No. 18, ¶ 23). Mr. Wiley admitted in response to RockTenn's requests for admission that he has "no documentary evidence that RockTenn has 'entered into nationwide contracts with ConAgra, and others' for the sale of a two-piece AutoBin® container," but stated that he had verbal evidence he was attempting to verify at the time . Mr. Wiley testified that his information regarding manufacture and sales in violation of the agreement comprises reports from others in the industry (Dkt. No. 52, ¶ 38). Some of the information on which Mr. Wiley bases his claims of manufacture and sales in violation of the agreement was given to him by his "agent," who purportedly heard it from others (Dkt. No. 52, ¶ 39). In his discovery responses, Mr. Wiley describes some of the information on which he bases his claims...
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