Heckmann Building Products, Inc. et al v. Hohmann & Barnard, Inc. et al
Filing
93
MEMORANDUM Opinion and Order Signed by the Honorable Morton Denlow on 6/1/2012.Mailed notice(ldg, )
IN THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
HECKMANN BUILDING PRODUCTS
)
INC. AND MASONRY TIE SYSTEM, INC., )
)
Plaintiffs,
)
)
v.
)
)
HOHMANN & BARNARD, INC.,
)
BLOK-LOK LIMITED, LIGHTHOUSE
)
MASONRY, INC. AND DRISCOLL SALES )
& DISTRIBUTING, LLC,
)
)
Defendants.
)
Case No. 10 C 4262
Magistrate Judge Morton Denlow
MEMORANDUM OPINION AND ORDER
This case is now before the Court on a motion for contempt brought by Plaintiff
Heckmann Building Products, Inc. (“Plaintiff” or “Heckmann”) against Defendant Hohmann
& Barnard, Inc. (“Defendant” or “Hohmann”). Plaintiff seeks to hold Defendant in contempt
for failure to comply with the Consent Decree entered by Judge William T. Hart on March
10, 2011 (“Consent Decree”). Under the terms of the Consent Decree, Defendant agreed not
to manufacture, market, use, sell or distribute the wing nut masonry anchor (“Hohmann #1)
which was the subject matter of this patent infringement lawsuit. Plaintiff contends that the
newly designed anchor that Defendant began selling in the spring of 2011 (“Hohmann #2)
violated the Consent Decree.
The Court held a two-day bench trial on April 26-27, 2012. The Court has carefully
considered the testimony of the five witnesses who testified in person, the two witnesses who
testified by means of video depositions, the parties’ trial exhibits, the parties’ proposed
findings of fact and conclusions of law, and the closing arguments of counsel. The following
constitute the Court’s findings of fact and conclusions of law pursuant to Rule 52(a) of the
Federal Rules of Civil Procedure. To the extent certain findings of fact may be deemed
conclusions of law, they shall also be considered conclusions. Similarly, to the extent
matters contained in the conclusions of law may be deemed findings of fact, they shall also
be considered findings.
FINDINGS OF FACT
A.
THE PARTIES AND THE WITNESSES.
1.
Plaintiff Heckmann manufactures masonry anchors and ties for the construction
industry. T. 50-52.1 The anchors and ties connect the backup wall to the outside brick wall,
passing through the insulation to hold the brick in place. T. 51. Terry M. Curtis is
Heckmann’s Chief Executive Officer. T. 50. He testified at the trial. Terry’s brother, Paul
Curtis, is Heckmann’s President and Chief Operating Officer. T. 89. He testified at the trial.
The business was founded by Terry and Paul’s grandfather and has been operated
continuously as a family business since 1923. T. 52.
2.
Plaintiff Masonry Tie Systems, Inc. (“MTS”) was the owner of United States
1
T. ___ refers to trial transcript page; Dkt. ___ refers to the court docket number in this
case; PX ___ refers to Plaintiff’s trial exhibits; DX ___ refers to Defendant’s trial exhibits;
Bronner dep.___ refers to the Joseph Bronner deposition at PX 47 and DX 37; Burkhardt dep.
___ refers to the Ronald Burkhardt deposition at PX 46.
2
Patent No. 7,415,803 (“the ‘803 patent” or “Pos-I-Tie” patent”) at the time the complaint was
filed and at the time the motion for contempt was filed. Heckmann began selling the Pos-ITie in 2006, even before the patent was issued. T. 108. On December 31, 2008, MTS
entered into an exclusive license with Heckmann to manufacture and market the ‘803 wing
nut anchor. PX 35, T. 54-55. MTS terminated the exclusive license effective February 26,
2012. Dkt. 43. MTS is owned by Joseph Bronner, the inventor of the ‘803 patent. T. 54,
PX1. Plaintiff MTS originally joined in this motion for contempt, but later withdrew its
participation after it terminated its exclusive license with Plaintiff Heckmann and entered
into an agreement with Defendant Hohmann by which MTS sold the ‘803 patent to
Hohmann. Dkt. 43, 52. Joseph Bronner testified by means of a video deposition. PX 47,
DX 37.
3.
Defendant Hohmann has been a long time competitor of Plaintiff Heckmann.
T. 62-63. Hohmann manufactures different components for masonry and stone exterior
support systems. T. 169. Ronald E. Hohmann, Jr. is Hohmann’s President. He testified at
the trial. Ronald Burkhardt is Hohmann’s Executive Vice-President and Chief Financial
Officer. He testified by means of a video deposition. Joseph C. Carr, Jr. is Hohmann’s VicePresident, Secretary and General Counsel. T. 212. He testified at the trial. Hohmann was
a family owned business until it was acquired by Mitek USA, Inc. in 2008. T. 242.
3
B.
THE FILING AND SETTLEMENT OF THE LAWSUIT.
4.
Plaintiffs filed this lawsuit on July 9, 2010 alleging that Hohmann was
infringing on the ‘803 patent when it began selling the Hohmann #1 wing nut anchor which
was called the Wing Nut 2 - Seal Tie. Dkt. 1, PX 13, DX 35.
5.
Plaintiff’s Pos-I-Tie was the first wing nut masonry anchor. T. 61. The
masonry anchors help to keep brick walls in place. T. 91.
6.
After service of process was made, the parties negotiated an early settlement
of the case. PX 3. The business portion of the settlement negotiations were conducted
between Terry Curtis on behalf of Plaintiffs and Ronald Burkhardt on behalf of Hohmann.
T. 66, Burkhardt Dep. 23-27. At the time, Plaintiff and Hohmann were the only two
companies selling wing nut type masonry anchors. T. 103-04. On November 1, 2010,
Burkhardt emailed Terry Curtis and offered to settle the lawsuit by, among other things,
accepting “a court injunction to cease manufacturing, marketing and selling the accused
product.” PX 39. In addition, Burkhardt offered to pay a royalty on past sales, offered to sell
its Hohmann #1 inventory to Plaintiffs or sell it as scrap, and also advised Plaintiffs that it
was “in the process of developing alternative products to the Pos-I-Tie which will not
infringe on the Pos-I-Tie patent.” Id. After receiving this email, Terry Curtis does not recall
any further discussion with Burkhardt about Hohmann’s alternative products. T. 73.
Plaintiffs did not ask for a sample of the redesign prior to the settlement of the lawsuit. T.
154.
7.
On November 2, 2010, Terry Curtis, acting on behalf of Plaintiffs, emailed
4
Burkhardt and accepted Hohmann’s offer to settle the lawsuit. DX 7. Plaintiff understood
that as part of the settlement, Hohmann would agree to cease manufacturing, marketing and
selling the accused product, the Hohmann #1. T. 153.
8.
After Plaintiffs accepted Hohmann’s settlement offer, counsel for the parties
began the process of drafting and negotiating the settlement documents. T. 72, 215-23, 24445.
9.
On November 18, 2010, Nicholas Schmidbauer, Plaintiffs’ counsel, emailed
a draft set of settlement documents, including a draft Consent Decree and Settlement
Agreement to Joseph C. Carr, Jr., Hohmann’s counsel. DX 8. Schmidbauer did not testify
at the trial. After receiving the drafts, Carr called Schmidbauer to express concerns regarding
three major issues: (a) the definition of the term “accused wing nut,” (b) the absence of a no
admission of liability provision, and (c) a definition of net sales rather than gross sales in
determining the royalty. T. 218-20, 244-47. Carr told Schmidbauer that the definition of the
accused product would have to be very specific and cover only the specific anchor (Hohmann
#1) that Hohmann was then manufacturing. T. 218-20.
10.
Paragraph 3 of the draft Consent Decree prepared by Mr. Schmidbauer stated:
Hohmann, their successors and assigns, and their officers, agents,
servants, representatives, and employees, and all persons in active
concert or participation with them who receive actual notice of this
Consent Decree by personal service or otherwise, are hereby enjoined,
directly or through any corporation, subsidiary, division, website, or
other device, from manufacturing, using, selling or distributing any
wing nut identified in the Amended Complaint in the United States,
or from importing or exporting any wing nut identified in the Amended
Complaint into or outside of the United States. (Emphasis added).
5
DX 8 (MLP 12).
11.
The amended complaint filed by Heckmann and MTS identified the following
wing nut products: (1) “Wing Nut 2-Seal Tie™”; (2) “2-Seal Wing Nut Anchor Body;” and
(3) “any other infringing wing nuts.” Dkt. 7. This language was too broad for Carr and he
so advised Schmidbauer. T. 218-220.
12.
On November 30, 2010, Carr revised and returned an edited version of the
settlement documents to Schmidbauer for his review. DX 9. Carr revised the Settlement
Agreement and Consent Decree to limit the scope of the injunction to the accused wing nut
specifically referenced in the amended complaint. DX 9, T. 221-28, 260-61. Of relevance
here, the revised Consent Decree sent by Carr provided:
3. Hohmann, their successors and assigns, and their officers, agents, servants,
representatives, and employees, and all persons in active concert or
participation with them who receive actual notice of this Consent Decree by
personal service or otherwise, are hereby enjoined, directly or through any
corporation, subsidiary, division, website, or other device, from
manufacturing, marketing, using, selling or distributing any masonry anchor
of the type heretofore marketed by Hohmann, as depicted in Figures 1-3 of
attached and incorporated Exhibit A hereto, which anchor includes, in
pertinent part, a wing nut 1 having a central hollow barrel 2 mounted on the
shaft 3 of a bolt, the nut 1 having two generally planar side wings 4, 5
extending laterally from the central barrel and being rotatable independently
of the shaft 3 in both clockwise and counterclockwise directions about the
shaft, or from importing or exporting any such masonry anchor into or outside
of the United States.
DX 9 (MLP 137).
13.
The revised Settlement Agreement also provided a new definition of “Accused
Double - Wing Nut Anchor:”
6
1.02.1 “Accused Double-Wing Nut Anchor” means a masonry
anchor of the type heretofore marketed by Hohmann, as
depicted in Figures 1-3 of attached and incorporated Exhibit A
hereto, which anchor includes in pertinent part, a wing nut 1
having a central hollow barrel 2 mounted on the shaft 3 of a
bolt, the nut 1 having to generally planar side wings 4, 5
extending laterally from the central barrel and being rotatable
independently of the shaft 3 in both clockwise and
counterclockwise directions about the shaft.
DX 9 (MLP 131-32).
14.
Schmidbauer agreed to the language proposed by Carr, and after making some
additional nonsubstantive edits, the parties finalized the Settlement Agreement and Consent
Decree. DX 10-13. There was never any discussion between the attorneys to bar Hohmann
from redesigning and manufacturing a different wing nut anchor. T. 226-27.
15.
The parties executed the Settlement Agreement on December 2, 2010. PX 3,
DX 3-5. The Consent Decree was later entered by Judge Hart on March 10, 2011. PX 4,
Dkt. 18.
16.
The Consent Decree provides that “[t]he Parties have agreed to settlement of
this action upon the following terms and conditions, without any adjudication of any issue
of fact or law.” PX 4.
17.
Paragraph 3 of the Consent Decree entered by the Court includes the language
proposed by Carr:
Hohmann, their successors and assigns, and their officers, agents, servants,
representatives, and employees, and all persons in active concert or
participation with them who receive actual notice of this Consent Decree by
personal service or otherwise, are hereby enjoined, directly or through any
corporation, subsidiary, division, website, or other device, from
7
manufacturing, marketing, using, selling or distributing any masonry anchor
of the type heretofore marketed by Hohmann, as depicted in Figures 1-3 of
attached and incorporated Exhibit A hereto, which anchor includes, in
pertinent part, a wing nut 1 having a central hollow barrel 2 mounted on the
shaft 3 of a bolt, the nut 1 having two generally planar side wings 4, 5
extending laterally from the central barrel and being rotatable independently
of the shaft 3 in both clockwise and counterclockwise directions about the
shaft, or from importing or exporting any such masonry anchor into or outside
of the United States.
PX 4.
18.
Hohmann manufactures a great number of anchors and Carr wanted to be
specific through words and pictures that Hohmann was committing not to manufacture only
the Hohmann #1. T. 232-237. The Court finds Carr’s explanation of the negotiations totally
credible and consistent with the documents that reflect the drafting process that took place.
19.
Figures 1-3 of the attached and incorporated Exhibit A to the Consent Decree
are reproduced below and depict the Hohmann #1, i.e. the particular device enjoined by the
Consent Decree:
8
EXHIBIT A
Accused Double Wing Nut Anchor
PX 4. The drawings depict the Hohmann #1, not the Hohmann #2. T. 155-56. The language
above the drawings makes it clear that the drawings relate only to the Hohmann #1, the
accused double wing nut anchor. T. 262. The drawings were made by a draftsman from an
actual model of the Hohmann #1. T. 255-57.
20.
The three figures in Exhibit A show that the wing nut of the accused device
rotates freely in both the clockwise and counterclockwise directions. PX 4, 13, 19. At no
time did the parties discuss or agree that Hohmann would not be free to develop a modified
wing nut anchor.
C.
THE DEVELOPMENT AND MANUFACTURE OF THE HOHMANN #2
WING NUT ANCHOR.
21.
After the Consent Decree was entered, Hohmann began marketing and selling
a redesigned Wing Nut 2-Seal Tie (“Hohmann #2”). PX7, 14, DX 18. Hohmann does not
manufacture the Hohmann #2. It is manufactured for it by another company. Ronald
9
Hohmann, Jr. designed the Hohmann #2. T. 194. The purpose of the redesign was to
manufacture a one-way spin wing nut anchor. DX 20-23. It was designed to only turn
counter-clockwise in normal use. T. 182-83. The redesign effort took place from August
2000 through Spring 2011. T. 177. The Hohmann #2 includes a spring and ratcheting
feature not present in the Hohmann #1. This ratcheting feature was specifically designed to
prevent the wing-nut of the Hohmann #2 from being rotated in a clockwise direction. T. 17477, 183-86, 195-98. When used as intended, the ratcheting feature successfully prevents the
wing-nut from rotating in a clockwise direction. The ratcheting feature of the Hohmann #2
also prevents the wing nut from rotating freely in either a clockwise or counterclockwise
direction independently of the shaft of the bolt. Id.
22.
Plaintiff became aware of the Hohmann #2 by means of an ad that appeared
in Masonry Magazine in January, 2011. PX 7, T. 75-76. The picture did not reveal the
spring or the ratchet teeth present in the Hohmann #2. PX 7. Terry Curtis contacted
Burkhardt on January 12, 2011 to complain and to request a sample. DX 14, PX 7, 10, 37.
T. 76-79. Burkhardt responded and agreed to change the ad, because it did not depict the
mechanisms which were included to prevent rotation of the wing nut in both directions. DX
15. Ronald Hohmann, Jr. took prompt steps to change the pictures in the ad to better show
the ratcheting mechanism. PX 45, DX 16.
23.
The Hohmann #2 is not the masonry anchor depicted in Exhibit A to the
Consent Decree.
24.
As Joseph Bronner, the owner and inventor of the ‘803 patent, recognized, only
10
by manipulating the Hohmann #2 can a user overcome the force applied by the spring and
ratcheting mechanism of the Hohmann #2 to turn it in both a clockwise and counterclockwise
direction. Bronner Dep. 44-49, 55-56. Although Bronner tested the Hohmann #2, he had no
opinion whether the Hohmann #2 violated the Consent Decree. Bronner Dep. 126-28.
D.
THE HOHMANN #2 WING NUT ANCHOR DOES NOT VIOLATE THE
CONSENT DECREE.
25.
The Hohmann #2 is not a masonry anchor “of the type heretofore marketed by
Hohmann” as contemplated by Paragraph 3 of the Consent Decree.
26.
Pursuant to the Court’s December 15, 2011 minute entry, the Consent Decree
expired on February 26, 2012. Dkt. 52.
27.
Hohmann did not manufacture, market, use, sell or distribute the Hohmann #1
between March 10, 2011 and February 26, 2012.
28.
Hohmann did not, between December 2, 2010 and February 26, 2012,
manufacture, market, use, sell or distribute any “masonry anchor of the type heretofore
marketed by Hohmann, as depicted in Figures 1-3 of attached and incorporated Exhibit
A[,]which anchor includes, in pertinent part, a wing nut 1 having a central hollow barrel 2
mounted on the shaft 3 of a bolt, the nut 1 having two generally planar side wings 4, 5
extending laterally from the central barrel and being rotatable independently of the shaft 3
in both clockwise and counterclockwise directions about the shaft.” Hohmann did not violate
the Consent Decree by the manufacture, marketing and sale of the Hohmann #2.
29.
Hohmann’s efforts in redesigning its product, and ceasing all sales and
11
marketing of the Hohmann #1, were a reasonable and diligent effort to comply with the
Consent Decree. The Consent Decree did not bar Hohmann from selling a redesigned wing
nut anchor.
CONCLUSIONS OF LAW
A.
JURISDICTION.
30.
Plaintiff’s original claim for patent infringement arose under the patent laws.
35 U.S.C. §§ 271, 281. The Consent Decree specifies that the Court retains jurisdiction for
purpose of the enforcement of compliance therewith, or for addressing violations thereof.
PX 4 ¶ 1. Pursuant to the Consent Decree, Heckmann has the right to seek enforcement of
the injunction contained in the Consent Decree with respect to Hohmann’s alleged violation
arising out of the manufacture and sale of the Hohmann #2 wing nut. The parties have
consented to this Court’s jurisdiction pursuant to 28 U.S.C. §636(c). Dkt. 83. Therefore, this
Court has jurisdiction to decide the motion for contempt.
B.
LEGAL STANDARDS.
31.
To prevail on a motion for contempt, the moving party must prove by clear and
convincing evidence that the respondent has “violated the express and unequivocal command
of a court order.” F.T.C. v. Trudeau, 579 F.3d 754, 763 (7th Cir. 2009) (quoting Autotech
Techs. LP v. Integral Research & Dev. Corp, 499 F.3d 737, 751 (7th Cir. 2007)).
32.
Heckmann carries the burden to show, by clear and convincing evidence, that:
(1) the Consent Decree sets forth an unambiguous command; (2) Hohmann violated that
command; (3) the violation was significant, meaning it did not substantially comply with the
12
Order; and (4) Hohmann failed to take steps to reasonably and diligently comply with the
Order. See id. (quoting Prima Tek II, L.L.C. v. Klerk’s Plastic Indus., B.V., 525 F.3d 533,
542 (7th Cir. 2008)).
33.
Plaintiff places great emphasis on the standard articulated in TiVo Inc. v.
Echostar Corp., 646 F.3d 869, 882 (Fed. Cir. 2011), and urges this Court to consider that
standard in determining whether there has been a violation of the Consent Decree. The TiVo
court held: “The criteria for adjudicating a violation of a prohibition against continued
infringement by a party whose products have already been adjudged to be infringing is a
matter of Federal Circuit law.... [T]he party seeking to enforce the injunction must prove both
that the newly accused product is not more than colorably different from the product found
to infringe and that the newly accused product actually infringes.” Id.
34.
In contrast to Tivo, where there is a finding of infringement, the Consent
Decree in the case at bar was entered “without any adjudication of any issue of fact or law.”
See id.; Aevoe Corp. v. AE Tech Co., No. 2:12-cv-00053-GMN-RJJ, 2012 U.S. Dist. LEXIS
61204, at *5-7 & n.1 (D. Nev. May 2, 2012) (hesitating to apply TiVo where only a
preliminary injunction in a patent infringement case was issued); Petter Invs., Inc. v. Hydro
Eng’g, Inc., No. 07 CV 1033, 2011 U.S. Dist. LEXIS 77646 (W.D. Mich. July 18, 2011)
(applying TiVo in a contempt motion where summary judgment of infringement was entered
in favor of the counter-plaintiffs and the parties entered a stipulated permanent injunction).
35.
The case at bar does not involve a case of adjudged patent infringement, an
entry of a preliminary injunction, or a case of agreed patent infringement. Because the
13
Consent Decree expressly provides that it was entered “without any adjudication of any issue
of fact or law,” the “colorable difference” standard announced by the Federal Circuit in Tivo
is inapplicable.
36.
While the settlement agreement contains an Illinois choice of law provision,
the Consent Decree does not incorporate the settlement agreement. PX 3 ¶ 6.07; PX 4. The
Court is asked to interpret the Consent Decree rather than the settlement agreement signed
by the parties. As the claim arose under federal law and the Consent Decree was entered in
the United States District Court for the Northern District of Illinois, federal common law
governs interpretation of the Consent Decree. See United States of America v. Volvo
Powertrain Corp., No. 98-2547, 2012 U.S. Dist. LEXIS 51951, at *8 n.1 (D. D.C. Apr. 13,
2012) (“A federal court interpreting its own consent decree applies the federal common law
of contracts.”); In re Harvey, 213 F.3d 318, 321-22 (7th Cir. 2000) (suggesting an analogy
between the federal nature of bankruptcy and the use of federal law to construe federal court
consent decrees).
37.
While consent orders have the force of a court order, they are a form of
contract to be construed according to the basic principles of contract interpretation. The
United States Supreme Court explains:
Consent decrees are entered into by parties to a case after careful negotiation
has produced agreement on their precise terms. The parties waive their right
to litigate the issues involved in the case and thus save themselves the time,
expense, and inevitable risk of litigation. Naturally, the agreement reached
normally embodies a compromise; in exchange for the saving of cost and
elimination of risk, the parties each give up something they might have won
had they proceeded with the litigation. Thus, the decree itself cannot be said
14
to have a purpose; rather the parties have purposes, generally opposed to each
other, and the resultant decree embodies as much of those opposing purposes
as the respective parties have the bargaining power and skill to achieve. For
these reasons, the scope of a consent decree must be discerned within its four
corners, and not by reference to what might satisfy the purposes of one of the
parties to it. Because the defendant has, by the decree, waived [its] right to
litigate the issues raised, a right guaranteed to him by the Due Process Clause,
the conditions upon which he has given that waiver must be respected, and the
instrument must be construed as it is written, and not as it might have been
written had the plaintiff established his factual claims and legal theories in
litigation.
United States v. Armour & Co., 402 U.S. 673, 681-82 (1971); see also Goluba v. Sch. Dist.
of Ripon, 45 F.3d 1035, 1038 (7th Cir. 1995) (citing Armour and holding that the explicit
terms of consent decree control unless the terms are facially ambiguous).
C.
HECKMANN HAS NOT PROVEN BY CLEAR AND CONVINCING
EVIDENCE THAT HOHMANN VIOLATED AN UNAMBIGUOUS
COMMAND CONTAINED IN THE CONSENT DECREE.
i.
The Consent Decree Contains an Unambiguous Command.
38.
The language of the Consent Decree is not ambiguous: Hohmann was enjoined
from manufacturing, marketing, using, selling or distributing the specific product that was
the subject of the lawsuit and depicted in Exhibit A—the Hohmann #1.
39.
The Consent Decree includes a detailed description, element by element, of that
product (“any masonry anchor of the type heretofore marketed by Hohmann, as depicted in
Figures 1-3...which anchor includes...”). Reference to the anchor “heretofore marketed by
Hohmann” and the list of specific elements which describe the Hohmann #1 makes it
unambiguously clear that only the Hohmann #1 was enjoined. The injunction in the case at
bar relates to a specific product: the list of relevant characteristics of that product makes the
15
language of the consent decree clear on its face. See, e.g., Panduit Corp. v. Hellermanntyton
Corp., 451 F.3d 819, 823-27 (Fed. Cir. 2006) (interpreting a settlement agreement under
Illinois law and finding that an agreement not to make or sell “Subject Products,” which was
defined with reference to a specific product, did not prohibit colorable changes,
modifications or variations).
40.
There is no language in the Consent Decree that could be construed to prevent
Hohmann from manufacturing, marketing, using, selling or distributing a wing nut that does
not have the explicit features identified in the Consent Decree. See, e.g., McGee v. Ill. Dept.
Of Trans., No. 02 C 0277, 2002 U.S. Dist. LEXIS 21463, at * 15-17 (N.D. Ill. Nov. 4, 2002)
(finding no language in a consent decree that reflected a resolution of issues other than those
in the original pleading).
41.
The Hohmann #2 wing nut is not the same as the Hohmann #1 wing nut.2 The
Hohmann #2 contains a ratchet and spring system that prevents the planar side wings from
rotating independently, without manipulation, in the clockwise direction. This modification
removes the Hohmann #2 from the clear language of the Consent Decree. Under the
unambiguous language of the Consent Decree, this element is required in order for
Heckmann to show a violation of the injunction. The Hohmann #2 is different from the
Hohmann #1 and not prohibited under the Consent Decree.
2
The Court notes that had Hohmann marketed a product that contained only changes
other than the specific elements described (changing the color, for example) the new product
would, in substance, have been equal to the original product and a potential violation of the
Consent Decree. That is simply not the case here.
16
ii.
Oral Testimony Confirms the Consent Decree Enjoined Hohmann from
Manufacturing, Marketing, Using, Selling, or Distributing Only the
Hohmann #1.
42.
In order to ensure a full understanding of the products and to provide a
complete record in the event of later review, the Court heard oral testimony and reviewed
exhibits on how the products function and on the formation of the settlement agreement. The
purpose was to determine whether the negotiations between the parties would confirm or
reject the Court’s understanding that the scope of “any masonry anchor of the type heretofore
marketed by Hohmann,” was limited to the Hohmann #1 wing nut.3
43.
The oral testimony and the related exhibits regarding the negotiation of the
terms of the Consent Decree confirms that the injunction of Paragraph 3 is limited to the
manufacturing, marketing, using, selling or distributing of the original anchor—the Hohmann
#1.
44.
First, Hohmann offered to settle the lawsuit by, among other things, accepting
“a court injunction to cease manufacturing, marketing, and selling the accused product.” The
accused product was the Hohmann #1. Heckmann accepted that offer on November 2, 2010.
45.
Second, counsel for Hohmann changed the language of paragraph 3 of the draft
consent decree from covering any product that “infringes” the claims of the ‘803 patent to
the specific device depicted in Figures 1-3 of the Consent Decree. That device was the
3
Had the Court found the language of the Consent Decree to be ambiguous, the first
requirement for a finding of contempt - that there be an unambiguous command - would not be
satisfied.
17
Hohmann #1, and was the only wing nut masonry anchor “heretofore marketed by
Hohmann.” These changes were accepted by Heckmann, through its counsel, and were
incorporated into the final version of the Consent Decree that was entered by the Court.
46.
Third, Hohmann informed Heckmann that they were in the process of
developing alternative products to the Pos-I-Tie that would not infringe on the patent.
47.
As the Hohmann #2 is not the same product as the Hohmann #1, Hohmann did
not manufacture, market, use, sell or distribute any enjoined product between the date the
Consent Decree was executed by the parties [December 2, 2010] and the expiration date of
the Consent Decree [February 26, 2012].
48.
In sum, Heckmann has failed to establish by clear and convincing evidence that
Hohmann violated the unambiguous command, specifically the injunction of Paragraph 3,
of the Consent Decree.
D.
HOHMANN TOOK REASONABLE AND DILIGENT STEPS TO COMPLY
WITH THE CONSENT DECREE.
49.
Hohmann took reasonable and diligent steps to comply with the Consent
Decree. The parties do not dispute that Hohmann did not manufacture, market, use, sell, or
distribute the Hohmann # 1 for the period of time between the execution of the Consent
Decree and the date the Consent Decree expired. Rather, Hohmann specifically redesigned
the Hohmann #1 to prevent the planar side wings of the wing nut from turning independently
of the shaft of the bolt in a clockwise direction.
50.
Communication between Ron Hohmann Jr. and the manufacturer of the product
18
show that Hohmann took diligent steps to ensure the planar wings did not rotate
independently of the shaft in the Hohmann #2. Upon inspection, Ron Hohmann Jr. deemed
that a sample was unacceptable because the wing nut could spin in both directions. DX 21.
He later approved an alternate steel material specifically recommend to rectify the problem.
DX 22. See, e.g., Prima Tek II, L.L.C. v. Klerk’s Plastic Industries, 525 F.3d 533, 542 (7th
Cir. 2008) (finding that a party took reasonable steps to comply with a court order where the
management team reviewed the order with legal counsel, informed employees of new
policies, and held quarterly meetings despite the fact that some of the defendant’s employees
were not aware of newly implemented policies.).
E.
GOOD CAUSE DOES NOT SUPPORT AN ENTRY OF JUDGMENT FOR
REASONABLE COUNSEL FEES BUT DEFENDANTS ARE AWARDED
COSTS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 54(d)(1).
51.
Pursuant to Local Rule 37.1, Hohmann asks the Court to enter judgment
against Heckmann for Hohmann’s costs and disbursements and a reasonable counsel fee.
Local Rule 37.1(d) provides that where a motion for contempt is denied, “[t]he court may in
its discretion for good cause shown enter judgment against the complainant and for the
alleged contemnor for the latter’s costs and disbursements and a reasonable counsel fee.”
Local Rule 37.1(d).
52.
The Court does not find good cause exists to exercise its discretion and enter
a judgment for reasonable counsel fees against Heckmann. Heckmann has the right to seek
enforcement of the Consent Decree where they have a legitimate belief that the agreement
has been violated. As detailed above, Hohmann redesigned the Hohmann #1 and began
19
marketing a new wing nut product that was, in several respects, similar to the Hohmann #1.
While ultimately not successful, Heckmann was justified in its filing. See Nav-Aids Ltd. V.
Nav-Aids USA, Inc., No. 01 C 0051, 2002 U.S. Dist. LEXIS 23024, at *16 n.10 (N.D. Ill.
Nov. 26, 2002) (denying a motion for an order of contempt brought pursuant to Local Rule
37.1 and holding “we find that both parties were justified in their filings and thus an award
of fees is not justified.”). Thus, the Court declines to award a reasonable counsel fee against
Heckmann and in favor of Hohmann.
53.
Federal Rule of Civil Procedure 54(d)(1) provides that unless a statute, the
Federal Rules, or a court order provides otherwise, a prevailing party may recover costs.
Fed. R. Civ. P. 54(d)(1). As Hohmann is the prevailing party in this motion for contempt and
no authority provides otherwise, the Court awards Hohmann court costs incurred in defense
of the motion.
CONCLUSION
For the reasons set forth in this opinion, the Court denies Plaintiffs’ Motion for
Contempt. The Court awards costs and disbursements in favor of Defendant Hohmann
& Barnard, Inc. pursuant to Federal Rule 54(d)(1) and against Plaintiff Heckmann
Building Products, Inc. Defendant is to submit a bill of costs on or before June 22,
2012. Plaintiff is to file its objections, if any, on or before July 13, 2012. The Court will
rule by mail on or before August 3, 2012.
SO ORDERED THIS 1ST DAY OF JUNE, 2012.
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_____________________________________
MORTON DENLOW
UNITED STATES MAGISTRATE JUDGE
Copies sent to:
Keith A. Rabenburg
Michael J. Hartley
Senniger Powers LLP
100 North Broadway
David C. McLauchlan
The McLauchlan Law Group LLC
401 North Michigan Avenue
Suite 1200
Chicago, Illinois 60611
17th Floor
Saint Louis, Missouri 63102
Jeffrey A. Pine
Dykema Gossett PLLC
10 South Wacker Drive
Suite 2300
Chicago, Illinois 60606
John B. Conklin
John K. Winn
Leydig, Voit & Mayer, Ltd.
Two Prudential Plaza
Suite 4900
180 North Stetson Avenue
Chicago, Illinois 60601
Counsel for Defendants
Counsel for Plaintiffs
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