Opinion
CASE NO. 5:06CV01768.
January 23, 2008
MEMORANDUM OPINION AND ORDER
This matter came before the Court upon multiple motions for summary judgment, as follows:
(1) The motion of Defendant Amarr Company ("Amarr") for summary judgment as to the false advertising claim asserted by Plaintiff Wayne-Dalton Corp. ("Wayne-Dalton") (Doc. No. 48);
(2) Wayne-Dalton's cross-motion for summary judgment on the issue of the literal falsity of Amarr's advertisements (Doc. No. 134);
(3) Amarr's motion for summary judgment as to Wayne-Dalton's ability to recover damages for its false advertising claim (Doc. No. 128);
(4) Wayne-Dalton's motion for summary judgment on the issue of patent infringement (Doc. No. 126);
(5) Amarr's motion for summary judgment on the issue of patent infringement (Doc. No. 131); and
(6) Amarr's motion to stay the patent infringement claim pending the outcome of the PTO reexamination proceeding (Doc. No. 149).
Upon review of the memoranda and evidence submitted, the Court finds as follows:
(1) Amarr's Motion for Summary Judgment on the False Advertising claim is GRANTED, in part;
(2) Amarr's motion for Summary Judgment on Wayne-Dalton's inability to recover damages for its false advertising claim is GRANTED;
(3) Wayne-Dalton's Motion for Summary Judgment as to literal falsity is DENIED;
(4) Amarr's motion to stay the patent infringement claim is GRANTED; and
(5) Both parties' motions for summary judgment as to the patent infringement claim are DENIED WITHOUT PREJUDICE.
I. Factual and Procedural Background
Wayne-Dalton and Amarr both manufacture garage doors. Both are members of the Door and Access Systems Manufacturers Association ("DASMA"). DASMA adopts voluntary safety standards "as a guide to aid the manufacturer, the consumer and the general public." (Standard for Section Interfaces on Residential Garage Door Systems, Doc. 134, Ex. C, Ex. 2.) One such standard, DASMA 116, attempts to test whether a garage door is "pinch resistant."
Typically, when garage doors open and close, the section "interfaces" of the door rest together when the door is in either the vertical closed position or the horizontal open position, but separate from one another during the process of opening and closing due to the rounded turn. In the late 1990s, garage door manufacturers, including Wayne-Dalton and Amarr, researched ways to minimize the possibility of an individual's fingers becoming pinched between the interfaces of a garage door when those interfaces came apart and then together during the door's opening and closing. This research resulted, generally, in placing the interfaces closer together during angular articulation, such that fingers normally could not fit between the interfaces. Thereafter, Amarr and Wayne-Dalton began advertising their doors as "pinch-resistant."
Manufacturers seeking to mimimize finger pinching were faced with the challenge, though, of doing so while also avoiding the binding and popping that occurred when garage door panels were designed in a way which held them together without any clearance between the panels during opening and closing the door. One solution manufacturers discovered was to offset the center hinges from the side hinges of the door.
Wayne-Dalton owns a patent to a sectional door with such offset hinges (although it does not manufacture a door using the patented technology), and it has brought this suit claiming that Amarr's WeatherGuard Plus door infringes its patent. Amarr maintains that its doors do not infringe Wayne-Dalton's patent, and that Wayne-Dalton's patent is invalid.
The Court held a Markman hearing on July 12, 2007, and then issued an opinion regarding the construction of the patent's claims. Further discovery was exchanged between the parties and the motions for summary judgment at issue were filed. During this period of time, the United States Patent Office ("PTO") granted Amarr's request for a reexamination of Wayne-Dalton's patent. The PTO has communicated its initial position that the claims at issue in this case are invalid. Amarr has since moved to stay Wayne-Dalton's patent claim in this Court pending the outcome of the PTO proceeding. Wayne-Dalton also asserts a separate claim that Amarr has falsely advertised its popular garage door models, including the WeatherGuard Plus, the Heritage, the Stratford, and the Classica doors, as "pinch-resistant" when they do not meet DASMA's alleged standard for pinch resistance. (Complaint, Doc. No. 1, 4.)
II. Law Analysis
A. Standard of Review
This Court's consideration of the motion for summary judgment is governed by Rule 56 of the Federal Rules of Civil Procedure:
(c) The judgment sought 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 judgment as a matter of law.Id. The party opposing a motion for summary judgment made according to Rule 56 "may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).
In reviewing summary judgment motions, this Court must view the evidence in a light most favorable to the non-moving party to determine whether a genuine issue of material fact exists. Adickes v. S.H. Kress Co., 398 U.S. 144 (1970); White v. Turfway Park Racing Ass'n, 909 F.2d 941, 943-44 (6th Cir. 1990). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Determination of whether a factual issue is "genuine" requires consideration of the applicable evidentiary standards. Thus, in most cases the Court must decide "whether reasonable jurors could find by a preponderance of the evidence that the [non-moving party] is entitled to a verdict." Id. at 252. Moreover, the non-movant must show more than a scintilla of evidence to overcome summary judgment. Id. In light of this standard, the Court considers the dispositive motions.
B. Choice of Law
Federal Circuit law applies to Wayne-Dalton's claim for patent infringement, while Sixth Circuit law applies to its claim for false advertising. Optivus Tech., Inc. v. Ion Beam Applications, 469 F.3d 978, 984 (Fed Cir. 2002) (applying law of the regional circuit in which the district court sits where the claim is not unique to the Federal Circuit's exclusive jurisdiction).
C. Lanham Act Claims
In its claim for false advertising, Wayne-Dalton alleges that Amarr falsely described its doors as "pinch resistant." According to Wayne-Dalton, "pinch resistant" means that a door complies with DASMA 116, a standard which calls for doors to either contain suitable handles or comply with certain tests to illustrate that a "finger probe" is unlikely to be pinched by the garage door as it moves on its track. In support of its position, Wayne-Dalton notes that DASMA's website claims that "A door qualifying as `pinch resistant' is a door that conforms to the requirements of DASMA 116." (Doc. No. 134, Ex. C., Ex. 3.)
The DASMA test to be conducted, if the door lacks adequate handles, requires one to first "insert" the finger probe beyond a depth of .25 inches. Insertion is defined as "a minimum of .25 inches oriented as shown in Figure 1, moving the finger joints through their full range of articulations." Figure 1 fails to show what reference plane should be used to determine whether a finger probe has been inserted .25 inches. If the probe can be inserted beyond that depth, however, "the area(s) shall be subject to testing in Section 6.2. Section 6.2.2 then explains
If the area(s) identified by [the finger probe] admits the full diameter of both Probe #2a [a metal rod measuring 0.35 inches in diameter] and Probe #2b [a metal rod measuring 1 inch in diameter], or rejects both Probe #2a and Probe #2b, at the position and orientation identified by [the finger probe], such area(s) shall be deemed compliant with this section and no further testing is required.
Thus, if the "area(s) identified" by the finger probe admit(s) or reject(s) only one of Probe #2a and #2b, but not the other, then the area is subject to the testing in Section 6.3. Section 6.3 requires a tester to hold different probes ranging from 3/8 inch to 1 inch in diameter in the area defined by the finger probe, and move the door into a position where the probe is most difficult to remove. The tester must then determine, using a pull force scale, the amount of force required to remove each probe. If the force required to remove each probe is more than 35 pounds, then the interface fails the test.
In response, Amarr has presented evidence that garage door dealers and consumers, Amarr's customers, do not understand "pinch-resistant" to mean "complies with DASMA 116." This is supported by the fact that most consumers are unaware of the standards established by the manufacturers' association. (Declaration of Michael Miller, Doc. No. 32, ¶ 5; Declaration of Tony Price, Doc. No. 30, at ¶ 5.) Additionally, the Court notes that the definition of pinch resistant set forth in the patent differs from the DASMA 116 standard, and the patent makes no reference to DASMA 116 (or to any provision of DASMA for that matter). (Doc. No. 142, Ex. 1, cl 2, ln 10-15.) Further, Wayne-Dalton tested Amarr's doors in 1999 and believed they complied with DASMA 116, but now Wayne-Dalton asserts that Amarr's doors do not meet the standard.
The patent at issue in this case defines pinch resisitant as "maintaining a clearance or gap of less than 9 millimeters at all times during door movement."
Even if DASMA 116 does control, the parties disagree as to the standard called for by DASMA 116. The dispute centers around what reference plane should be used when determining whether a probe is "admitted" or "rejected." Tellingly, DASMA has recently investigated the possibility of clarifying the DASMA 116 standard, and a proposal which would include a graphic illustration of the reference plane to be used is currently under consideration.
i. Lack of Proof of Actual Deception
Wayne-Dalton's claim for false advertising arises under 15 U.S.C. § 1125, enacted as part of the Lanham Act. The statute provides, in relevant part:
(a)(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or fase or misleading representation of fact, which —
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities
Shall be liable in a civil action by any person who believes that he or she is or is likely to be damages by such act. 15 U.S.C. § 1125(a)(1) (a)(1)(B) (1994).
The Sixth Circuit has set forth five elements that Wayne-Dalton must establish to prove a violation of this statute: (1) Amarr has made false or misleading statements of fact concerning its own product or another's; (2) the statement actually or tends to deceive a substantial portion of the intended audience; (3) the statement is material in that it will likely influence the deceived consumer's purchasing decisions; (4) the advertisements were introduced into interstate commerce; and (5) there is some causal link between the challenged statements and harm to Wayne-Dalton. American Council of Certified Podiatric Physicians and Surgeons v. American Board of Podiatric Surgery, Inc., 185 F.3d 606, 613 (6th Cir. 1999) (hereinafter "Podiatric Physicians").
To meet the first element, Wayne-Dalton must show that Amarr's advertisement was either literally false or that it is true yet misleading. Id. at 614. If statements are literally false, a violation may be established without evidence that the statements actually misled customers. Id. In such circumstances, actual deception is presumed. By contrast, "[w]here statements are literally true, yet deceptive, or too ambiguous to support a finding of literal falsity, a violation can only be established by proof of actual deception (i.e., evidence that individual customers perceived the advertisement in a way that misled them about the plaintiff's product)." Id. Proof of actual deception requires demonstrating that a significant portion of the consumer population was actually deceived by the ambiguous or true-but-misleading statements. Id at 616.
Subsequent to Podiatric Physicians, the Sixth Circuit explained, "While literal falsehood or the likelihood of deception may be sufficient to entitle [plaintiff] to injunctive relief or reimbursement for responsive advertising, it should not permit [plaintiff] to recover for injuries to goodwill in the absence of some more substantial indication that these injuries actually occurred." Balance Dynamics Corp. v. Schmitt Industries, 204 F.3d 683, 694 (6th Cir. 2000). The Court need not determine whether Wayne-Dalton provides this "more substantial indication," as the Court finds the statements incapable of literal falsity and Wayne-Dalton's claim thus fails even under the Podiatric standard upon which it relies.
A different standard is used to evaluate a claim for injunctive relief. In such circumstances, a plaintiff may satisfy the second element of the Sixth Circuit's test by "showing only that the defendant's representations about its product have a tendency to deceive consumers." Balance Dynamics, 204 F.3d at 690.
Cognizant of this standard, both parties have moved for summary judgment on Wayne-Dalton's claim for damages. Wayne-Dalton does not dispute that it offers no evidence that individual customers were misled by Amarr's advertisements. Instead, it claims the ads were literally false, so it need not show actual deception. Amarr argues that the ads were not literally false, and further that Wayne-Dalton cannot meet the corresponding higher standard for "true but misleading" because it has failed to produce any consumer surveys or other evidence to show that a substantial portion of the intended audience was deceived.
The Court must first determine whether the statements at issue may be determined literally false by a factfinder. Podiatric Physicians, 185 F.3d at 615 n. 2 ("[T]he initial determination concerning whether a statement is ambiguous is a matter of law, while the determination as to whether facts exist so as to justify the statement is a question of fact"). If the statements are ambiguous, they can be true but misleading, but cannot be literally false. Id. Accordingly, if the statements are determined to be ambiguous, Amarr is entitled to summary judgment because Wayne-Dalton has not offered any evidence of actual deception. The Court considers statements in light of the intended audience, garage door dealers and consumers. Id. at 616.
Wayne-Dalton argues, citing DASMA's website as evidence, that the industry considers "pinch-resistant" doors to mean those doors that comply with DASMA 116. (Doc. No. 134, Ex. C, Ex. 3). In response, Amarr contends that (1) "pinch resistant" does not carry such a meaning to garage door dealers and consumers (Declaration of Michael Miller, Doc. No. 32, ¶ 5; Declaration of Tony Price, Doc. No. 30, at ¶ 5), (2) that both Amarr and Wayne-Dalton used the term "pinch resistant" in advertising in years prior to the development of DASMA 116 so the phrase does not (and cannot) only equate to DASMA 116 compliance (Doc. No. 140, Ex. C, 99-102; Ex. P), and (3) that DASMA 116 is susceptible to multiple expert interpretations and, therefore, is ambiguous. (Doc. No. 140, Ex. H, 13-17.)
The Sixth Circuit's opinion in Podiatric Physicians provides guidance in this area. In Podiatric Physicians, the Court examined a number of statements similar to the type at issue in this case and determined they were either ambiguous or true but misleading, such that the plaintiff was required to introduce evidence of actual deception to recover damages. Specifically, the Court found the statement that the American Board of Podiatric Surgery "is the only professionally recognized certifying board for podiatric surgery being recognized by the [Council on Podiatric Medical Education]" was one incapable of being literally false, explaining that "professionally recognized" was susceptible to multiple interpretations, and, therefore, was ambiguous. Podiatric Physicians, 185 F.3d at 615.
The Sixth Circuit also found the statement "there has been a proliferation of `self-designated' organizations purporting to have the authority to recognize and certify in podiatric surgery" to be ambiguous. Id. The court explained that the most reasonable interpretation of "self-designated" was "not approved by another body." Id. It then detailed how the statement was capable of multiple interpretations, as the plaintiff could have been approved by another body, depending on whether one viewed the corporation which had created and approved plaintiff as an entity separate from the plaintiff. Id. Accordingly, the court determined that the statement was ambiguous. Id.
The court further found the statement that the American Board of Podiatric Surgery is "the only approved certifying board for podiatric surgery" to be ambiguous or true but misleading, determining that it was unclear what it meant to be an "approved" board. Podiatric Physicians, 185 F.3d at 615.
Comparing the statements considered by the Sixth Circuit in Podiatric Physicians to the statements at issue herein, the rejects Wayne-Dalton's assertion that advertisements declaring garage doors "pinch resistant" unambiguously means compliance with DASMA 116. The uncontroverted evidence shows that most consumers and dealers know little of DASMA and its voluntary safety standards, and do not correlate "pinch resistant" with "DASMA 116 compliant." (Mullet Dep., Doc. No. 140, Ex. C, 109; Miller Aff., Doc. No. 32, ¶ 5, Price Aff., Doc. No. 30, ¶ 5.) Moreover, both Wayne-Dalton and Amarr advertised their doors as pinch resistant long before the establishment of DASMA 116, so it strains credulity to suggest, as Wayne-Dalton does, that the phrase "pinch resistant" suddenly gained its unambiguous meaning upon the creation of DASMA 116 in 2000. In addition, the patent at issue in this case provides its own separate definition of "pinch resistant:" "maintaining a clearance or gap of less than 9 millimeters at all times during door movement," which differs from the one set forth by DASMA 116. (Doc. No. 142, Ex. 1, cl 2, ln 10-15.) Accordingly, the Court finds that describing doors as "pinch resistant," is ambiguous as a matter of law, and Wayne-Dalton must demonstrate actual deception to sustain a claim for damages under 15 U.S.C. § 1125.
Although Wayne-Dalton spends nearly all of its briefing focused on Amarr describing its doors as "pinch resistant," Wayne-Dalton does also cite other Amarr advertisements as false, including (1) that Amarr's doors are "inspired by the little things . . . little hands," (2) that "neither fingers nor weather gets in," and (3) picturing a child or children in the proximity to the door along with one or more of the phrases Wayne-Dalton attacks. (Wayne-Dalton's motion for summary judgment on the issue of literal false advertising, Doc. 134, 8.) Similar to advertisements that the doors are "pinch resistant, these advertisements do not reference DASMA 116 and do not unambiguously state as a matter of law that the doors are DASMA 116 compliant. Therefore, a claim for damages based on these advertisements also requires proof of actual deception.
Even if the term "pinch resistant" clearly conveyed the meaning "DASMA 116 compliant," the phrase still would be too ambiguous to support a finding of literal falsity because the test itself is ambiguous. The parties use different reference planes in determining whether a probe can be inserted .25 inches before being "accepted" or "rejected." DASMA itself has determined that the test needs clarification and the association has proposed changes which are currently pending. Indeed, John Scates, Wayne-Dalton's own expert, helped spur this clarification when he responded to DASMA's request for comments on DASMA 116's effectiveness by stating
Section 6.2.2 of DASMA 116 testing guidelines needs further clarification to define what "rejects both [probes]" means. How far can a probe enter before it is no longer "rejected"? What reference planes are to be used to determine the depth of insertion? Is this a static measurement, done at a single (undefined) articulation of the door? Does "rejects" mean that it will be pushed out during door movement? Perhaps the entire section 6.2 is unnecessary and should be removed."
(Doc. No. 140, Ex. B.)
Wayne-Dalton submitted a subsequent affidavit from Mr. Scates claiming that when he advised DASMA of his concerns that he was contemplating "various joint configurations," including "PAC-MAN"-like construction and that the Amarr doors he tested for Wayne-Dalton were not the stimulus for his comments to DASMA. Whatever his stimulus, the comments illustrate the point which DASMA has recognized: its test is subject to multiple interpretations. Scates admitted as much in his deposition, when he stated, "It is unclear, also, with the pinch-resistant as to what the reference plane is." (Doc. No. 140, Ex. A., 62.)
Accordingly, because the term "pinch resistant" is ambiguous as a matter of law, Wayne-Dalton must present evidence that a significant portion of the consumer population perceived the advertisements in a way that misled them about Amarr's doors to sustain its claim for damages. Podiatric, 185 F.3d at 614. It is undisputed that Wayne-Dalton has failed to present any such evidence. Thus, Amarr is entitled to summary judgment on Wayne-Dalton's claim for damages.
ii. Laches
Even if Wayne-Dalton prevailed in proving literal falsity, its claim for damages accruing prior to the filing of this suit would still fail due to the equitable doctrine of laches. Unlike statutes of limitations, laches does not contemplate a concrete matter of time. It is instead a question of the inequity of allowing the claim to be enforced. Ford v. Catalanotte, 342 F.3d 543, 550 (6th Cir. 2003). A party asserting laches must show: (1) lack of diligence by the party against whom the defense is asserted, and (2) prejudice to the party asserting it. Nartron Corp. v. ST Microelectronics Inc., 305 F.3d 397, 408 (6th Cir. 2002). In the Sixth Circuit, a strong presumption exists that a plaintiff's delay in asserting its claims is reasonable as long as it has done so within the analogous statute of limitations. Elvis Presley Enters., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 894 (6th Cir. 1991). An action is presumed barred, however, if not brought within the statute of limitations. Tandy Corp. v. Malone Hyde, Inc., 769 F.2d 362, 365 (6th Cir. 1985). Under Ohio law, as both parties concede, the statute of limitations analogous to Lanham Act claims is two years. See Ameritech, Inc. v. Am. Info. Tech. Corp., 811 F.2d 960, 963 (6th Cir. 1987); Ohio Rev. Code § 2305.10. The period of delay begins to run when Wayne-Dalton had actual or constructive knowledge of the alleged infringing activity. Nartron, 305 F.3d. at 408.
As discussed infra, under Sixth Circuit law, laches does not apply to post-filing damages or injunctive relief.
In this case, Wayne-Dalton cannot show a genuine issue of material fact as to whether it lacked diligence in pursuing its rights or whether Amarr suffered prejudice. The record demonstrates that Amarr has been advertising its doors as "pinch-resistant" since 1999. From 2000 to the present, Wayne-Dalton has run its own advertisements in the same issues of the publications in which it claims Amarr made false advertisements. (Doc No. 50, Attach. 1, 2, 3.) Moreover, Wayne-Dalton personnel have testified that Wayne-Dalton commonly monitors its competitors advertisements and tests their products. (Doc. No. 42, Ex. C, ¶¶ 5, 6, 10.) Accordingly, Wayne-Dalton cannot claim that its alleged lack of actual knowledge prevents laches from acting as a bar to its claim.
Wayne-Dalton argues that it cannot be charged with constructive knowledge because, until December 2005, it had no knowledge of at least one of Amarr's doors, the Classica, which allegedly was falsely advertised. Wayne-Dalton's argument misapprehends the standard of constructive knowledge. Constructive knowledge is "imputed when one by exercise of reasonable care would have known a fact." Comerica Bank v. Suburban Trust Sav. Bank, No. 95-1551, 1996 U.S. App. LEXIS 26778, *20 (6th Cir. Oct. 10, 1996). Wayne-Dalton, pursuant to testimony from its own witnesses, had constructive knowledge of Amarr's alleged false advertising long before July of 2004 — two years prior to the filing of this lawsuit. Regardless of whether another falsely advertised door entered the market, Wayne-Dalton would have known through the exercise of reasonable care that Amarr was advertising its doors as "pinch resistant" in alleged non-compliance with DASMA 116 prior to July of 2004. In addition, Wayne-Dalton has failed to put forth any evidence to dispute Amarr's evidence that the Classica was advertised in early 2004. Because the undisputed evidence shows that the Classica door was advertised in early 2004 in a manner similar to that which gave Wayne-Dalton constructive knowledge of Amarr's other doors, Wayne-Dalton had constructive knowledge of the false advertisement of the Classica door more than two years prior to the filing of this lawsuit.
Because the Court finds that Wayne-Dalton failed to bring its claim for allegedly false advertising within the analogous two year statute of limitations, the delay is presumed unreasonable and prejudicial, and the claim is presumed barred. Tandy Corp. v. Malone Hyde, Inc., 769 F.2d 362, 366 (6th Cir. 1985). This presumption can be overcome by (1) rebutting the presumption of prejudice; (2) establishing a good excuse for the delay; or (3) showing that Amarr engaged in "particularly egregious conduct which would change the equities significantly in plaintiff's favor." Nartron Corp., 305 F.3d at 409. Wayne-Dalton has failed to overcome the presumption by any of these means.
Wayne-Dalton offers no evidence to overcome the presumption of prejudice, as Amarr's potential damages have increased during each year that the advertisement was used. See Nartron Corp., 305 F.3d at 411 (any prejudice is sufficient, including an increase in potential damages or a loss of evidence). Wayne-Dalton also failed to establish a good excuse for the delay. Wayne-Dalton claims that it tested Amarr's doors in 1999 and found that they passed the DASMA 116 test, so its delay in bringing suit was excusable. This argument is belied by the testimony of multiple Wayne-Dalton executives that they consistently test competitor's doors and monitor competitor's advertisements. Wayne-Dalton has not provided evidence suggesting that Amarr made changes to the design of the doors so they only began to fail DASMA 116 within the statute of limitations period. Instead, the record shows that Wayne-Dalton had constructive knowledge of the advertisements prior to July of 2004, and regularly checked competitors' doors for compliance.
At that time, DASMA 116 was merely a proposal and had not yet been adopted.
Wayne-Dalton merely cites Amarr's advertisements to speculate that Amarr changed the design of its doors. (Doc. 58, 8.) The advertisement Wayne-Dalton cites bears a date of 2003. Thus, Wayne-Dalton had notice of this alleged change prior to July 21, 2004, the effective date of the applicable two year statute of limitations.
Wayne-Dalton's claims that its delay is excused by the fact that Amarr's CEO served as President of DASMA from 2002 to 2004 is similarly unavailing. The position of Amarr's CEO is of little relevance to whether Wayne-Dalton had constructive knowledge of Amarr's false advertising. If anything, it only heightened the profile of Amarr's doors and encouraged Wayne-Dalton to continue to monitor Amarr's advertising.
The record also fails to reveal any "egregious conduct" on the part of Amarr. There is no evidence that Amarr tricked Wayne-Dalton into resting on its rights. Instead, both Amarr and Wayne-Dalton have advertised their doors as pinch resistant in the same publications for several years. Accordingly, Wayne-Dalton's claim for pre-filing damages fails for two independent reasons. In addition to failing due to a lack of evidence of actual deception, there is no genuine issue of material fact that Wayne-Dalton's claim for pre-filing damages is barred by the equitable doctrine of laches.
iii. Injunctive Relief
Wayne-Dalton argues that, even if laches applies to this case, it does not bar injunctive relief or for its claim for post-filing damages. The Court has already ruled that Wayne-Dalton's claim for damages is subject to summary judgment for lack of actual deception. The claim for injunctive relief, however, survives.
Because the sole remaining claim sounds in equity, not in law, it will be tried to the bench. See City of Monterey v. Del Monte Dunes, 526 U.S. 687, 713 (1999).
Amarr's only argument in support of summary judgment on the claim for injunctive relief is that it is barred by the doctrine of laches. In a recent case, like this one, involving claims under 15 U.S.C. § 1125, the Sixth Circuit held that, "Laches only bars damages that occurred before the filing date of the lawsuit. It does not prevent plaintiff from obtaining injunctive relief or post-filing damages." Nartron Corp. v. STMicroelectronics, 305 F.3d 397, 412 (6th Cir. 2002) (citing Kellogg Company v. Exxon Corp., 209 F.3d 562, 568 (6th Cir. 2000) (also a claim under the Lanham Act)). See also Morel Acoustic, LTD. V. Morel Acoustics USA, Inc., No. 04-CV-348, 2005 U.S. Dist. LEXIS 32864, at *8 (S.D. Ohio Sept. 7, 2005) ("Laches does not bar injunctive relief and does not bar damages that occur after the filing of the suit."); Freed v. Farag, 994 F. Supp. 887, 891 (N.D. Ohio 1997) (proclaiming in the context of a claim of trademark infringement under the Lanham Act, "Prospective relief in an infringement action is not barred by a finding of laches."). As other courts have recognized, the primary basis for the distinction is that "[l]aches stems from prejudice to the defendant occasioned by the plaintiff's past delay, but almost by definition, the plaintiff's past dilatoriness is unrelated to a defendant's ongoing behavior that threatens future harm." Jarrow Formulas, Inc. v. Nutrition Now, Inc. 304 F.3d 829, 840 (9th Cir. 2002).
Amarr cites to cases from the Ninth, Seventh, and Second Circuits for the proposition that laches can bar damages and equitable relief. Amarr's argument is foreclosed, however, by controlling Sixth Circuit precedent.
Amarr has represented in a footnote to one of its briefs that it has now voluntarily removed references to "pinch resistantce" from its advertising pending the adoption of the revised and clarified DASMA standard. (Doc. 140, 8 n7.) Thus, it would appear that Wayne-Dalton's claim for an injunction enjoining Amarr from distributing advertising relating to compliance with DASMA 116 would be moot. Wayne-Dalton, however, also prays for an order instructing Amarr to recall its advertising relating to DASMA 116 and an order instructing Amarr to publish corrective advertising. These claims are, therefore, not moot and may proceed.
D. Patent Infringement
Both parties have also moved for summary judgment on the patent infringement claim, and Amarr has moved for a stay. The patent at issue, U.S. Patent No. 6,640,872 B1 ("the `872 Patent") is one for a sectional door, ordinarily a garage door. Under Claims 1 and 25 of the patent, such a door has center hinges offset from the side hinges in order to maintain a clearance between adjacent panels.
Claim 1 states:
A sectional door movable between a closed vertical position and an open horizontal position comprising, a series of adjacent panels, each of said panels having an upper joint member and a lower joint member, said lower joint member having a configuration to establish a clearance with the configuration of the upper joint member of an adjacent panel during angular articulation of said adjacent panels in moving between the closed vertical position and the open horizontal position, end hinge assemblies located proximate the longitudinal ends of said panels and connecting said adjacent panels at a first pivot axis, and at least one center hinge assembly connecting said adjacent panels at a second pivot axis offset from said first pivot axis, whereby a portion of said clearance is maintained irrespective of variations in the deflection of said panels in moving between the closed vertical position and the open horizontal position.
As both parties and the Court have previously recognized, Claim 25 is not substantively different from Claim 1. (Memorandum Opinion and Order ("Markman Opinion"), Doc. No. 109.)
Wayne-Dalton is the patent's assignee, but the parties dispute who invented the subject matter of `872 Patent first. Amarr has produced evidence that it developed the method of offsetting the center hinges by May of 2001, and prepared and disseminated a formal instructional memorandum advising those in the field how to offset the hinges to create sustained clearance during angular articulation. Wayne-Dalton originally answered interrogatories claiming that its earliest date of invention was August of 2001 and that the invention was first disclosed on September 24, 2001. (Doc. No. 133, Ex. C.) Wayne-Dalton has since claimed that it invented the subject matter of the `872 Patent in February, 2001. (Doc. No. 143, 57-58; Doc. No. 143, Ex. 10, Ex. 3.) It is undisputed, however, that the `872 patent was issued on November 4, 2003.
After the Court held a Markman hearing and issued its decision, Amarr petitioned the United States Patent Office ("PTO") for a reexamination of the patent's validity. In the interim, the parties filed their respective motions for summary judgment. The patent office has since granted Amarr's reexamination request and has communicated its initial position that the claims at issue in this case are invalid due to obviousness under 35 U.S.C. 103(a). (Doc. No. 149, Ex. B, 4, 22.) After learning of the PTO's decision, Amarr immediately filed its motion to stay this litigation with regard to the patent infringement claim pending the outcome of the PTO proceeding. (Doc. No. 149.) Wayne-Dalton opposes the stay. (Doc. No. 153.)
Reexamination of patent validity is brought under 35 U.S.C. § 301 et seq. A reexamination may be requested by any person upon showing the existence of prior art, "consisting of patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent." 35 U.S.C. §§ 301, 302. The PTO must then determine within three months "whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request, with or without consideration of other patents or printed publications." 35 U.S.C. § 303(a). Reexamination, if granted, may result in an order cancelling the patent as unpatentable, amending the patent, or confirming the patent's validity. 35 U.S.C. § 282; Akzenta Paneele + Profile GmbH v. Unilin Flooring N.C., LLC, 464 F.Supp.2d 481, 483 (D. Md. 2006). The reexamination statute was enacted "to correct errors made by the government, to remedy defective governmental [] action, and if need be to remove patents that should never have been granted." Patlex Corp. v. Mossinghoff, 758 F.2d 594, 604 (Fed. Cir. 1985).
As the Federal Circuit has explained, Congress' intent in establishing the reexamination procedure was to provide a relatively quick and inexpensive resolution which would "allow courts to refer patent validity questions to the expertise of the Patent Office" and "reinforce investor confidence in the certainty of patent rights by affording the PTO a broader opportunity to review doubtful patents." Patlex Corp., 758 F.2d at 602. Reexamination proceedings "facilitate trial of [an] issue by providing the district court with the expert view of the PTO." Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983). Because of the "clear congressional intent to maximize efficiency and reduce cost in this regard; [] district courts often stay patent proceedings pending reexamination." Hewlett-Packard Co. v. Acuson Corp., No. C-93-0808 MHP, 1993 U.S. Dist. LEXIS 6449, at *4 (N.D. Cal. May 5, 1993). See also ASCII Corp. v. STD Ent. USA, Inc., 844 F. Supp. 1378, 1381 (N.D. Cal. 1994) ("[T]here is a liberal policy in favor of granting motions to stay proceedings pending the outcome of USPTO reexamination or reissuance proceedings.") This Court has "inherent power to manage [its] docket and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination." Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988.)
When deciding whether to issue a stay, Courts weigh multiple factors, including (1) whether a stay would unduly prejudice or present clear tactical disadvantage to the non-moving party; (2) whether a stay will simplify the issues in question and trial of the case; and (3) the stage of the litigation at which the stay is sought. Lincoln Elec. Co. v. Miller Elec. Mfg. Co., No 1:06CV2981, 2007 U.S. Dist. LEXIS 66340, at *3-4 (N.D. Ohio Sept. 7, 2007). A stay is justified when the "outcome of the reexamination would be likely to assist the court in determining patent validity and, if the claims were canceled in the reexamination, would eliminate the need to try the infringement issue." Slip Track Sys., Inc. v. Metal Lite, 159 F.3d 1337, 1341 (Fed. Cir. 1998).
In this case, the factors weigh in favor of a stay. The PTO has already expressed its view, subject to Wayne-Dalton's attempt to rebut that view, that the claims at issue in this case are invalid. A stay in this litigation will clearly simplify the issues in question. If the patent office affirms its rejection of the claims, there will be no need for a trial in this Court, as one cannot infringe an invalid patent. If the PTO proceeding results in an amendment of the claims, it could inform this Court's ruling on summary judgment as to infringement. Indeed, even if reexamination of the patent affirms its validity, Wayne-Dalton will incur a benefit, not "undue prejudice." As the Federal Circuit has noted, patentees benefit from the reexamination proceedings when the patent's validity is affirmed, as the jury may be instructed that the PTO has held the claims patentable, thereby raising the Defendant's burden of proving unpatentability at trial. Patlex Corp., 758 F.2d at 603 ("It is clearly appropriate that the jury be instructed that because the PTO has now held the claims in suit patentable in light of the additional art discovered by [Defendant], its burden of proof of unpatentability has become more difficult to sustain — a fact likewise to be taken into account by the trial judge."). A stay will also prevent the parties from being forced to prepare for and participate in a lengthy and expensive jury trial while simultaneously contesting these same issues in the PTO. Judicial economy also weighs against conducting such a trial, which could be simplified or eliminated by the pending PTO proceeding. See Tap Pharm. Prods. v. Atrix Labs., Inc., 2004 U.S. Dist. LEXIS 2684, at *2 (N.D. Ill. March 4, 2004) (citing the PTO's statistics on reexamination and explaining "There is a significant chance that the PTO will either invalidate this patent or drastically decrease its scope.").
Admittedly, the parties have completed discovery in this action, which normally might weigh in favor of proceeding to trial. Both sides have expended valuable resources on this litigation. This Court has not yet ruled, however, on summary judgment motions that may or may not resolve the case. The Court may benefit from the PTO's expert analysis. Gould, 705 F.2d at 1342. See also Softview Computer Prods. Corp. v. Haworth, Inc., 56 U.S.P.Q. 2d 1633, at *10 (S.D. N.Y. Aug. 9, 2000). In addition, this is not a case where a party has sought a stay after a trial was already held. See Viskase Corp. v. Am. Nat'l Can Co., 261 F.3d 1316, 1327-28 (Fed. Cir. 2001). While some courts have denied a stay based on the end of discovery and the proximity of trial, others have granted one. Ultimately, the determination is within the Court's discretion based on a weighing of the benefits and costs of issuing a stay. Compare Toro Co. v. L.R Nelson Corp., 223 U.S.P.Q. 636, (C.D. Ill. July 25, 1984) (denying motion to stay where case had been dismissed on summary judgment, remanded on appeal, and then second summary judgment motion dispositive of case was pending); with TDATA Inc. v. Aircraft Technical Publishers, No. 2:03cv264, 2008 U.S. Dist. LEXIS 298, at *11 (S.D Ohio Jan. 4, 2008) (granting stay despite arising at the end of discovery where the reexamination would streamline the issues for trial). See also Middleton, Inc. v. Minnesota Mining and Mfg. Co., No. 4:03CV40493, 2004 U.S. Dist. LEXIS 16812, at (S.D. Iowa Aug. 24, 2004) (granting motion to stay despite the fact that litigation had been pending for eight years because the scope of the reexamination and the technical expertise of the PTO indicated that the litigation would be aided by the PTO proceeding).
In addition, while some courts also look to whether the petition for reexamination was made for a dilatory purpose in assessing the propriety of a stay, the timing of Amarr's motion to stay in this case is not a result of such tactics. See Grayling Indus., Inc. v. Hittler, No. 1:89-cv-451-ODE, at *2-3 (N.D. Ga. March 25, 1991); Middleton, Inc., 2004 U.S. Dist. LEXIS 16812, at *26. Wayne-Dalton originally answered interrogatories claiming a date of conception of September, 2001. Amarr thus believed that its evidence that its date of conception in May, 2001, would invalidate Wayne-Dalton's patent as prior to Wayne-Dalton's claimed date of invention. Amarr learned later in discovery, however, that, despite its contrary answer to interrogatories, Wayne-Dalton was claiming a date of conception of February 2001. In addition, Amarr received the benefit of this Court's Markman opinion, which clarified that the patent's claims covered a broader range of subject matter than that being advanced by Amarr. This interpretation and the knowledge that Wayne-Dalton was now asserting a date of conception prior to Amarr's prompted Amarr to file its request for with the patent office on the ground that the patent was invalid. Immediately after learning of the PTO's decision, Amarr filed its motion to stay.
In the Markman opinion, this Court rejected Amarr's position that the term "one center hinge assembly connecting said adjacent panels at a second pivot axis offset from said first pivot axis" meant that a door's center hinges were only offset vertically below the pivot axis of the end hinges. Instead, the Court gave the referenced language its ordinary and customary meaning.
Wayne-Dalton attempts to argue that Amarr's position is undercut by the position Amarr's counsel took in an unrelated case with respect to the stay of a reexamination proceeding after the district court in the parallel litigation had already entered judgment. Aside from the fact that the facts of that case are readily distinguishable from this one (there the case had already gone to trial and judgment had been entered), Wayne-Dalton disregards the time-honored maxim that a lawyer advocates on behalf of a client, and the views he or she espouses do not necessarily represent his or her own.
Wayne-Dalton argues it will be unduly prejudiced by Amarr continuing to sell doors which allegedly infringe Wayne-Dalton's patent. There is no evidence to suggest, however, that Amarr does not have the financial resources to pay a judgment against it, even if that judgment includes damages that continue to accrue while the PTO proceeding is pending. Any detriment Wayne-Dalton suffers from the competition Amarr provides by allegedly infringing the patent can be remedied by money damages. Potential prejudice also is minimized by the fact that Wayne-Dalton does not sell doors under the patent at issue.
Wayne-Dalton further claims that this case is simple enough that the Court and the jury will not be aided by the technical expertise of the PTO. This assertion is belied by the complicated three-dimensional graphical images and engineering expert evidence currently in the record. Ultimately, the PTO proceeding can "provide valuable analysis to the district court which it could consider in reaching its determination" on the merits of this case, and the Court concludes that a stay is warranted. Ethicon, 849 F.2d at 1428. The Court will thus stay the patent infringement claim pending the outcome of the PTO proceeding, and deny the motions for summary judgment regarding the patent infringement claim without prejudice to refiling when the stay is lifted following the resolution of the PTO reexamination proceedings.
III. Conclusion
In light of the foregoing discussion, the Court rules on the respective motions as follows:
(1) Amarr's Motion for Summary Judgment (Doc. No. 48) is GRANTED, in part, and DENIED, in part and Amarr's Motion for Summary Judgment on plaintiff Wayne-Dalton Corp.'s inability to recover damages for its false and misleading advertising claim (Doc No. 128) is GRANTED. Specifically, summary judgment is granted as to Wayne-Dalton's claim for damages for false advertising. The claim for injunctive relief remains.
(2) Wayne-Dalton's motion for summary judgment on the issue of Amarr's liability for literal false advertising (Doc. No. 134) is DENIED.
(3) Amarr's motion for stay of Wayne-Dalton's patent claim (Doc. No. 149) is GRANTED.
(4) Amarr's Motion for summary judgment on Wayne-Dalton's Patent Claim (Doc. No. 131) and Wayne-Dalton's Motion for Summary Judgment of Infringement (Doc. No. 126) are DENIED WITHOUT PREJUDICE. These two motions relating to the patent infringement claim may be refiled when the stay is lifted following the resolution of the PTO reexamination proceedings.