Philippi-Hagenbuch Inc et al v. Western Technology Services International Inc

Filing 337

ORDER entered by Chief Judge James E. Shadid on 9/30/2015. Defendants Motion for Partial Summary Judgment to Limit Recovery of Damages for Alleged Infringement of the Water Tank Patents 125 is GRANTED IN PART and DENIED IN PART, and Plaintiffs Cross Motion for Partial Summary Judgment as to the Proper Damages Period for the Alleged Infringement of the Water Tank Patents 132 is GRANTED IN PART and DENIED IN PART. (RK, ilcd)

E-FILED

Wednesday, 30 September, 2015 11:12:35 AM
Clerk, U.S. District Court, ILCD

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PHILIPPI-HAGENBUCH, INC., and
LEROY HAGENBUCH,
Plaintiffs,
v.
WESTERN TECHNOLOGY SERVICES
INTERNATIONAL, INC., and WOTCO,
INC.,
Defendants.

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Case No. 12-1099

ORDER
This matter is now before the Court on Defendants’ Motion for Partial Summary Judgment
to Limit Recovery of Damages for Alleged Infringement of the Water Tank Patents and Plaintiffs’
Cross Motion for Partial Summary Judgment as to the Proper Damages Period for the Alleged
Infringement of the Water Tank Patents. The Motions have been fully briefed by the parties and are
now ready for resolution.
BACKGROUND
Both parties are competitors in the manufacture of off-highway truck bodies and water
tanks used in mining. This case arises out of a claim by Plaintiffs that Defendants have infringed
on its patents for designing and making these products. These Motions seek to define the time
period for which Plaintiffs could claim damages with respect to any acts of infringement by
Defendants with respect to the Water Tank patents, U.S. Patent No. 6,547,091 (the “‘091 patent”)
and U.S. Patent No. 7,735,507 (the “‘507 patent”). The Water Tank patents are owned by
Hagenbuch, and Philippi-Hagenbuch claims a right to make, use, and sell the inventions
protected by those patents.

LEGAL STANDARD
A motion for summary judgment will be granted where there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c). The moving party has the responsibility of informing the Court of portions of the record
or affidavits that demonstrate the absence of a triable issue. Celotex Corp. v. Catrett, 477 U.S.
317, 106 S.Ct. 2548, 2552 (1986). The moving party may meet its burden of showing an absence
of material facts by demonstrating "that there is an absence of evidence to support the nonmoving party's case." Id. at 2553. However, a plaintiff’s uncorroborated testimony or subjective
belief standing alone is insufficient to defeat a motion for summary judgment. Weeks v. Samsung
Heavy Indus. Co., Ltd., 126 F.3d 926, 939 (7th Cir. 1997); Chiaramonte v. Fashion Bed Group,
Inc., 129 F.3d 391, 401 (7th Cir. 1997). Any doubt as to the existence of a genuine issue for trial
is resolved against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106
S.Ct. 2505, 2513 (1986); Cain v. Lane, 857 F.2d 1139, 1142 (7th Cir. 1988).
If the moving party meets its burden, the non-moving party then has the burden of
presenting specific facts to show that there is a genuine issue of material fact. Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56 (1986).
Federal Rule of Civil Procedure 56(e) requires the non-moving party to go beyond the pleadings
and produce evidence of a genuine issue for trial. Celotex Corp., 106 S.Ct. at 2553. This Court
must then determine whether there is a need for trial -- whether, in other words, there are any
genuine factual issues that properly can be resolved only by a finder of fact because they may be
reasonably resolved in favor of either party. Anderson, 106 S.Ct. at 2511; Hedberg v. Indiana
Bell Tel. Co., 47 F.3d 928, 931 (7th Cir. 1995).

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ANALYSIS
Under the Patent Act, “no recovery shall be had for any infringement committed more
than six years prior to the filing of the complaint or counterclaim for infringement in the action.”
35 U.S.C. § 286. On March 30, 2012, Plaintiffs brought this action against Westech for patent
infringement of the Water Tank patents. An amended complaint was filed on April 22, 2013,
joining WOTCO as a defendant. Accordingly, the six-year period prescribed by § 286 would bar
any request for damages for any acts of alleged infringement occurring before March 30, 2006.
This finding is not disputed and warrants no further discussion.
With respect to the ‘901 and ‘507 patents, Defendants argue that Plaintiffs cannot recover
damages for water tanks made or sold before they accused Defendants of infringement. In
support of this argument, Defendants cite 35 U.S.C. § 287(a) for the proposition that when a
patented product is produced by or under the authority of a patentee, the patentee’s damages are
statutorily limited to infringing acts occurring after the patentee gives the alleged infringer
“notice of infringement.” Notice can be either constructive, by marking the article with the
patent number or the address of a website that provides the patent number, or actual. Id.
Pursuant to its grant of authority from Hagenbuch, Philippi-Hagenbuch has made and
sold Hi-Vol Water Tanks covered by the Water Tank patents. It is undisputed that the Hi-Vol
Water Tanks made and sold prior to this suit were not marked with either the ‘507 patent
number, the ‘901 patent number, or Philippi-Hagenbuch’s internet address. However, Plaintiffs
do not contend that they provided constructive notice of the alleged infringement. Rather, they
assert that they provided actual notice in the form of correspondence from their counsel.
The ‘091 patent, “Baffled Tank for a Vehicle,” issued to Plaintiff on April 15, 2003. On
May 20, 2004, Plaintiffs sent Defendants a letter that stated in relevant part:
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We have recently become aware that Westech is offering for sale
water tanks that may incorporate features similar to those found in
Philippi-Hagenbuch’s water tanks.
With this letter we are putting you on notice that PhilippiHagenbuch has intellectual property rights relating to its
proprietary water tank design. U.S. Patent 6,547,091 (“the ‘091
patent”) relates to some of the features incorporated in PhilippiHagenbuch’s water tanks. A copy of this ‘091 patent is enclosed
for your review.
Philippi-Hagenbuch also has patent applications pending in both
the U.S. and foreign countries covering additional features of its
water tanks. One of these applications has been published as U.S.
Patent Application Publication No. US-2003-0230585-A1. A copy
of this published application is also enclosed.
Philippi-Hagenbuch intends to enforce its patent rights and any
patent rights it obtains from pending U.S. and foreign patent
applications. You may want to consider carefully PhilippiHagenbuch’s patent rights in connection with your water tank
products. . . .
Please note that by providing you with actual notice of the
published application, Philippi-Hagenbuch gets provisional rights
to obtain damages if you make, use, sell, offer for sale, or import
into the United States the invention claimed in the published
application. In other words, after the date that a patent issues on
that application, you could be liable for your actions that occurred
before that date.
It is expected that Westech will ensure that its water tank products
are clear of any infringement from the ‘091 patent and all other
patents that may issue from the pending patent applications.
The ‘507 patent, “Baffled Tank for a Vehicle,” issued to Plaintiff on June 15, 2010. On
December 1, 2010, Plaintiffs sent Defendants a letter that stated in relevant part:
The following patents owned by Mr. Hagenbuch relate to features
of the water tanks manufactured by Philippi-Hagenbuch. . . .
From observation of one of Westech’s water trucks located at
Cloud Peak’s Antelope Coal Mine in Wyoming, it appears your
company’s water trucks have copied features of the Philippi4

Habenguch water tanks, including access hatches on the front and
rear walls of the tanks. These features are protected by one or
more of the above identified patents and pending applications.
We direct your attention, for example, to US Patent No. 7,735,507.
A copy is enclosed for your convenient reference. Claims 1 and 35
are reproduced below as illustrations of the features protected by
this US patent. . . .
Based on the information at hand, Westech is infringing at least
Mr. Hagenbuch’s ‘507 patent. To remedy this situation, we require
Westech to agree to immediately stop any future manufacture of
infringing tanks and agree to pay Mr. Hagenbuch damages of
$5,000.00 (USD) per unit for all water tanks already made that
infringe one or more of the patents. In this regard, we also require
Westech to provide an accounting of its water tanks sold in the last
six (6) years and their features relating to external access hatches
and personnel openings in the internal baffling. . . .
Mr. Hagenbuch is prepared to enforce his patent rights and will do
so if Westech appears to not consider this a serious matter
requiring immediate attention.
It is these two letters that forms the basis for Plaintiffs’ assertion of actual notice to Defendants.
Plaintiffs maintain that the May 20, 2004, letter constituted actual notice for both the ‘091
and ‘507 patents. Defendants do not dispute that the December 1, 2010, letter provided actual
notice of purported infringement with respect to the ‘507 patent but did not make any charge or
claims as to the ‘901 patent. They further argue that the May 20, 2004, letter did not specifically
charge Westech with infringement of any patent and, therefore, did not qualify as actual notice.
In Funai Electric Co. v. Daewoo Electronics Corp., 616 F.3d 1357, 1373 (Fed. Cir.
2010), the Federal Circuit addressed what was necessary for a communication to constitute actual
notice.
To serve as actual notice, a letter must be sufficiently specific to
support an objective understanding that the recipient may be an
infringer. Gart v. Logitech, Inc., 254 F.3d 1334, 1346 (Fed. Cir.
2001). The letter must communicate a charge of infringement of
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specific patents by a specific product or group of products. Amsted
Industries, Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187
(Fed. Cir 1994).
“[A]s long as the communication from the patentee provides sufficient specificity regarding its
belief that the recipient may be an infringer, the statutory requirement of actual notice is met.
Thus, the requirement of ‘a specific charge of infringement’ set forth in Amsted does not mean
the patentee must make an ‘unqualified charge of infringement.’” Gart, 254 F.3d at 1346.
However, the notice must “not merely [be] notice of the patent’s existence or ownership.”
Amsted, 24 F.3d at 187.
In Gart, the letter in question advised that Gart was the holder of a particular patent (the
“‘165 patent”), that the defendant was selling a product under a certain trademark, and that the
defendant may wish to have its patent counsel examine the enclosed patent to determine whether
a license was needed. Id., at 1337. A second letter sent another copy of the ‘165 patent and
indicated that the defendant may find the ‘165 patent particularly interesting relative to two of its
products. Id., at 1338. The Federal Circuit held that with respect to the first letter, the clear
inference from the 1995 letter’s reference to specific claims of the patent, a specific product, and
the suggestion that a license may be needed, when viewed objectively, is that Gart believed that
the defendant infringed its ‘165 patent. Id., at 1346. This was deemed sufficient to have
provided actual notice under § 287(a). Id. The court further held that the second letter, standing
alone, would not constitute actual notice, but that when read in conjunction with the first letter,
“reasonably apprised” the defendant that Gart believed that another trademark was infringing its
patent. Id., at 1346-47.
Similarly, in Amsted, the letter stated that Amsted had acquired a number of patents and
expected to enforce its rights pursuant to those patents, as well as that the defendant should
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acquaint itself with the patent and refrain from supplying or offering parts which would infringe
or contribute to the infringement of the patent. 24 F.3d at 186. A second letter three years later
referenced the first letter, identified one of defendant’s products, alleged infringement of the
patent referenced in the first letter, and demanded that the defendant cease and desist any further
production or sale of infringing products. Id. The first letter was found to be insufficient to
constitute actual notice for failure to affirmatively communicate a specific charge of
infringement. Id., at 187. The Federal Circuit held that “[t]he 1986 letter was merely
informational, of the kind that companies often send to others without intending to charge
infringement. Just as such letters tend not to be threats sufficient to justify a declaratory
judgment action, they also are not charges of infringement for ‘notice’ purposes.” Id.
Here, the May 2004 letter advises that Plaintiff is putting Westech on notice that it has
intellectual property rights in the ‘091 patent and has additional applications pending, indicates
that it has “recently become aware that Westech is offering for sale water tanks that may
incorporate features similar to those found in Philippi-Hagenbuch’s water tanks,” states that it
intends to enforce its patent rights, and that Westech “may want to consider carefully PhilippiHagenbuch’s patent rights in connection with your water tank products.” According to
Hagenbuch, the letter was not intended to be an direct charge of infringement, because he didn’t
have enough information to make a direct charge at that point. Rather, it was intended as more
of a “public service” to make Westech aware of a patent. That being said, the letter indicated an
expectation that Westech would ensure that its water tank products were clear of any
infringement of the ‘901 patent and any patents that could issue from the pending application,
which became the ‘507 patent.

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Guidance from Gart, Amsted, and SRI International, Inc. v. Advanced Technology
Laboratories, Inc. and ATL Washington, Inc., 127 F.3d 1462, 1469-70 (Fed. Cir. 1997),
establishes that there is no specific form or content required to constitute actual notice. That
being said, minimum requirements must still be met.
It is not controlling whether the patentee threatens suit, demands
cessation of infringement, or offers a license under the patent. . . .
the purpose of the actual notice requirement is met when the
recipient is notified, with sufficient specificity, that the patent
holder believes that the recipient of the notice may be an infringer.
Thus, the actual notice requirement of § 287(a) is satisfied when
the recipient is informed of the identity of the patent and the
activity that is believed to be an infringement, accompanied by a
proposal to abate the infringement, whether by license or
otherwise.
Id. When applied to the May 2004 letter, the first two requirements are satisfied by the
identification of the ‘091 patent, pending application, and the reference to Westech’s water tanks.
The satisfaction of the third requirement is a closer question, as there is no threatened suit or
offer of a license, and Hagenbuch’s deposition testimony suggests that this letter was not
intended to be an official accusation of infringement. See Amsted, 24 F.3d at 187 (noting that it
is the action of the patentee, not the knowledge or understanding of the alleged infringer that is
controlling.)
The statement of awareness that Westech is selling tanks that “may incorporate” protected
features and assertion of intellectual property rights standing alone bears similarity to the letters
found to be insufficient in Gart and Amsted. The letter then conveys a suspicion of infringement
rather than a direct accusation of infringement, stopping short of the language found to be
sufficient in Funai and Gart. 616 F.3d at 1372 (finding “We believe that your products infringe
one or more claims of the aforementioned patents . . .” to constitute actual notice); Gart, 254

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F.3d at 1346 (finding sufficient the assertion that defendant “may wish to have [its] patent
counsel examine the . . . patent . . . to determine whether a non-exclusive license under the patent
is needed”); see also, Jackson v. Intel Corp, 2009 WL 2851742, at *4 (N.D.Ill. Aug. 31, 2009)
(finding significant a statement by the patentee that he and counsel “have not yet analyzed any
Dialogic products to determine whether or not they infringe.”) Accordingly, this case falls within
the gray area that exists between communications that have found to be sufficient and
insufficient as a matter of law. When these facts are considered in the context of the case
precedent, the Court must conclude that the letter falls closer to the line of cases finding that
actual notice has been given and sufficiently conveys an objective understanding that Westech
may be infringing the ‘091 patent. Accordingly, the Court finds that the May 2004 letter was
sufficient to provide actual notice with respect to the ‘901 patent pursuant to § 287(a).
Therefore, any damages established with respect to the ‘091 patent may be recovered for a period
beginning March 30, 2006.
With respect to the reference to the pending application that later became the ‘507 patent,
Plaintiffs argue that the letter likewise gave actual notice to Westech that its water tank products
would be infringing the invention/process protected by the application when it matured into a
patent. Section 154(d) of the Patent Act provides for provisional damages where infringement
occurs before a patent actually issues as long as there is notice and the claims of the patent do not
change substantially during prosecution. 35 U.S.C. § 154(d). The record simply does not
support a conclusion that the claims in the patent application are substantially the same as the
claims that ultimately issued in the ‘507 patent. The Court therefore concludes that its findings
with respect to actual notice for the ‘091 patent do not carry over to apply to the pending

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application that became the ‘507 patent, and the May 2004 letter was insufficient to constitute
actual notice as to the ‘507 patent.
This brings us to the December 1, 2010, letter. Defendants concede that this letter
constituted actual notice with respect to the ‘507 patent. The Court therefore concludes that any
damages established for infringement of the ‘507 patents may not be recovered for any period
prior to December 1, 2010, the first time that Westech received actual notice pursuant to §
287(a).
CONCLUSION
For the reasons set forth above, Defendants’ Motion for Partial Summary Judgment to
Limit Recovery of Damages for Alleged Infringement of the Water Tank Patents [125] is
GRANTED IN PART and DENIED IN PART, and Plaintiffs’ Cross Motion for Partial Summary
Judgment as to the Proper Damages Period for the Alleged Infringement of the Water Tank
Patents [132] is GRANTED IN PART and DENIED IN PART.
ENTERED this 30th day of September, 2015.

s/ James E. Shadid
James E. Shadid
Chief United States District Judge

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