Loggerhead Tools, LLC v. Sears Holdings Corporation

Filing 369

MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 9/20/2016. (bg, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LOGGERHEAD TOOLS, LLC,
Plaintiff,
v.
SEARS HOLDINGS CORPORATION
and APEX TOOL GROUP, LLC,
Defendants.

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Case No. 12-cv-9033
Judge John W. Darrah

MEMORANDUM OPINION AND ORDER
Plaintiff, LoggerHead Tools, LLC, filed a Second Amended Complaint against
Defendants Sears Holdings Corporation and Apex Tool Group, LLC. The Second Amended
Complaint alleges, inter alia, four counts of willful patent infringement of United States Patents
No. 6,889,579 (the “‘579 Patent”), in Counts I and II, and No. 7,992,470 (the “‘470 Patent”), in
Counts III and IV. Defendants filed a Motion for Summary Judgment of Noninfringement or
Invalidity [277]. For the reasons set forth more fully below, Defendants’ Motion for Summary
Judgment [277] is granted in part and denied in part.
LOCAL RULE 56.1
Local Rule 56.1(a)(3) requires the moving party to provide “a statement of material facts
as to which the party contends there is no genuine issue for trial.” Ammons v.
Aramark Uniform Servs., 368 F.3d 809, 817 (7th Cir. 2004). Local Rule 56.1(b)(3) requires the
nonmoving party to admit or deny every factual statement proffered by the moving party and to
concisely designate any material facts that establish a genuine dispute for trial. See Schrott v.
Bristol-Myers Squibb Co., 403 F.3d 940, 944 (7th Cir. 2005). A nonmovant’s “mere
disagreement with the movant’s asserted facts is inadequate if made without reference to specific

supporting material.” Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003). In the case of any
disagreement, the nonmoving party must reference affidavits, parts of the record, and other
materials that support his stance. Local Rule 56.1(b)(3)(B). To the extent that a response to a
statement of material fact provides only extraneous or argumentative information, this response
will not constitute a proper denial of the fact, and the fact is admitted. See Graziano v.
Vill. of Oak Park, 401 F. Supp. 2d 918, 936 (N.D. Ill. 2005). Similarly, to the extent that a
statement of fact contains a legal conclusion or otherwise unsupported statement, including a fact
that relies upon inadmissible hearsay, such a fact is disregarded. Eisenstadt v. Centel Corp., 113
F.3d 738, 742 (7th Cir. 1997). Pursuant to Local Rule 56.1(b)(3)(C), the nonmovant may submit
additional statements of material facts that “require the denial of summary judgment.”
BACKGROUND
The following facts are taken from the parties’ statements of undisputed material facts
submitted in accordance with Local Rule 56.1.
Plaintiff is an Illinois limited-liability company with its principal place of business in
Illinois. (DSOF ¶ 1.) Sears Holding Corporation is a Delaware corporation with its principal
place of business in Illinois. (Id. ¶ 2.) Apex Tool Group, LLC is a Delaware limited-liability
company with its principal place of business in Maryland. (Id. ¶ 3.)

The ‘579 Patent and the

‘470 Patent are titled “Adjustable Gripping Tool” and are assigned to Plaintiff. (Id. ¶ 9.)
Plaintiff asserts willful patent infringement of the ‘579 Patent and the ‘470 Patent against both
Defendants based on Defendants’ Max Axess Locking Wrench (the “MALW”) product. (Id.
¶ 7.) Plaintiff asserts claims 1, 2, 6, 9, 11, and 16-18 of the ‘579 Patent and claims 1, 9, 10, and
33-35 of the ‘470 Patent. (Id. ¶ 8.) Each of the asserted dependent claims depends from claim 1

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of the ’579 Patent or claim 1 of the ‘470 Patent. (Id. ¶ 20.) An embodiment of the claim
appears as set forth below:
Open Position

Closed Position

(Id. ¶ 10.) The asserted claims largely relate to a specific structure of the adjustable gripping tool
set, the gripping element, as set forth below:

Each of the claims requires a first element that includes a gripping element having a body
portion, an arm portion, and a force transfer element. (Id. ¶ 16.) The term “arm portion” was
construed as the “portion of the gripping element(s) configured to engage one of the guides and

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contiguous with a force transfer element. (Id. ¶ 17.) The gripping element of the MALW is
shown below, with identifications of portions by Loggerhead’s expert, Dr. Jonathan Cagan:

(Id. ¶ 21.) The second element requires an opening concentric with an opening on the first
element, an actuation portion and at least one slot. (Id. ¶ 19.) For the ‘470 Patent, those second
element features are formed within and integral to the tool head. (Id.)
The MALW is a patented hand tool that Apex designed and supplied to Sears. (Id. ¶ 28.)
The initial MALW design was meant to mimic prior art from the Buchanan patent, U.S. Patent
No. 2,787,925. (Id. ¶ 29; PSOF ¶ 6.) During the prosecution of the ‘470 patent, the claims were
initially rejected as anticipated by the prior art in the Buchanan patent. (DSOF ¶ 13.)
LEGAL STANDARD
Summary judgment is appropriate when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56. Courts deciding summary judgment motions must view facts “in the light most
favorable to the nonmoving party only if there is a ‘genuine’ dispute as to those facts.” Scott v.
Harris, 550 U.S. 372, 380 (2007). A genuine dispute as to any material fact exists if “the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party has the initial
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burden of establishing that there is no genuine dispute as to any material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this burden, “[t]he nonmoving
party must point to specific facts showing that there is a genuine issue for trial.” Stephens v.
Erickson, 569 F.3d 779, 786 (7th Cir. 2009). Factual disputes do “not preclude summary
judgment when the dispute does not involve a material fact.” Burton v. Downey, 805 F.3d 776,
783 (7th Cir. 2015). The evidence must be such “that a reasonable jury could return a verdict for
the nonmoving party.” Pugh v. City of Attica, Ind., 259 F.3d 619, 625 (7th Cir. 2001) (quoting
Anderson, 477 U.S. at 248).
ANALYSIS
Infringement
Defendants argue that Plaintiff cannot show that they infringed the ‘470 Patent and the
‘579 Patent. Patent infringement occurs when someone “without authority makes, uses, offers to
sell, or sells any patented invention, within the United States or imports into the United States
any patented invention during the term of the patent therefor, infringes the patent.” 35 U.S.C.
§ 271(a). “Patent infringement involves both claim construction and application of the claim to
the accused product.” Crystal Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc., 246
F.3d 1336, 1345 (Fed. Cir. 2001) (citing Markman v. Westview Instruments, Inc., 52 F.3d 967,
976 (Fed. Cir. 1996)). “The infringement inquiry remains focused at all times on the claim
language, as illuminated by the written description and the prosecution history.” Id. at 1345-46
(citing Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1309 (Fed. Cir. 1999)).
Whether the claim, as construed, matches the accused product is a question of fact.
ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312, 1319 (Fed. Cir. 2012).

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“The patentee has the burden of proving infringement by a preponderance of the
evidence.” Centricut, LLC v. Esab Grp., Inc., 390 F.3d 1361, 1367 (Fed. Cir. 2004). A patentee
must show that every limitation of the allegedly infringed patent claims exists in the accused
device in order to establish infringement. Neopost Industrie B.V. v. PFE Int’l, Inc., 403 F. Supp.
2d 669, 676 (N.D. Ill. 2005) (citing Oakley, Inc. v. Sunglass Hut Int’l, 316 F.3d 1331, 1339 (Fed.
Cir. 2003); Amazon.com, Inc. v. Barnesandnoble.com. Inc., 239 F.3d 1343, 1350 (Fed. Cir.
2001)). The failure to meet any limitation of a patent claim defeats an allegation of literal
infringement. Id. (citing Rohm & Haas Co. v. Brotech Corp., 127 F.3d 1089, 1092 (Fed. Cir.
1997); Laitram Corp. v. Rexnord, Inc., 939 F.2d 1533, 1535 (Fed. Cir. 1991)).
Defendants argue that Loggerhead has failed to identify an arm portion of the MALW
that is designed to engage a guide and contiguous with the force transfer element. The term “arm
portion” was construed as the “portion of the gripping element(s) configured to engage one of
the guides and contiguous with a force transfer element.” (DSOF ¶ 17.) Defendants argue that
the part of the gripping element Plaintiff’s expert identified as the arm portion is the side that the
force transfer element comes out of, and that arm portion side does not engage the guide.

(DSOF ¶ 35.)
Plaintiff argues that they have identified an arm portion of the gripping element which
engages with the guide.

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Plaintiff argues that this Court declined to read separate structure and projection limitations into
the claim during the claim construction, so a portion does not have to be a separate structure.
Further, Plaintiff argues that the arm portion is a three-dimensional volume which engages the
guide, not simply one face of the gripping element.

Plaintiff is correct. The claim construction identified the arm portion as a “portion of a
gripping element(s) configured to engage one of the guides and contiguous with a force transfer
element.” There was no limitation to the arm portion encompassing only a specific face or side
of the gripping element. The arm portion of the MALW’s gripping element has a portion of the
element which engages the guide and has a force transfer element. Defendants’ Motion for
Summary Judgment [271] is denied as to infringement.

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Willfulness
Defendants also argue that, even if infringement is found, Plaintiff cannot prove willful
infringement. Willfulness must be proven by clear and convincing evidence. E.I. du Pont de
Nemours & Co. v. Phillips Petroleum Co., 849 F.2d 1430, 1440 (Fed. Cir. 1988). The Supreme
Court has recently held that, “[t]he subjective willfulness of a patent infringer, intentional or
knowing, may warrant enhanced damages, without regard to whether his infringement was
objectively reckless.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1933 (2016). The
Supreme Court instructed that “courts should continue to take into account the particular
circumstances of each case in deciding whether to award damages, and in what amount.” Id.
Enhanced damages based on willfulness “should generally be reserved for egregious cases
typified by willful misconduct.” Id. at 1934.
One relevant consideration is that “[o]n-going consultation with a patent lawyer is highly
probative evidence of good faith.” Braun Inc. v. Dynamics Corp. of Am., 975 F.2d 815, 822
(Fed. Cir. 1992) (citing Radio Steel & Manufacturing Co. v. MTD Products, Inc., 788 F.2d 1554,
1559 (Fed. Cir. 1986)). Apex consulted with a patent attorney on several occasions throughout
the design process, and that counsel issued a noninfringement opinion before this litigation
began. (DSOF ¶ 30.) Plaintiff disputes this fact by stating that the opinions of the patent
attorney came before the MALW was finalized. However, there is no evidence that the design
the patent attorney signed off on and the final design were different in any material respect.
Disputes do “not preclude summary judgment when the dispute does not involve a material fact.”
Burton v. Downey, 805 F.3d 776, 783 (7th Cir. 2015). Plaintiff has not presented any facts
showing that Defendants’ conduct was “willful, wanton, malicious, bad-faith, deliberate,
consciously wrongful, flagrant, or ̶ indeed ̶ characteristic of a pirate.” Halo Elecs., Inc., 136 S.

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Ct. at 1932. The uncontested facts do not show that Defendants engaged in egregiously willful
misconduct. Defendants’ Motion for Summary Judgment [271] is granted as to willfulness.
Invalidity
In the alternative, Defendants argue that the patents are invalid because they are
anticipated by the prior art in the Buchanan patent. Plaintiff argues that Buchanan does not
invalidate the asserted claims because Buchanan does not have three features of the “second
element” as construed:
(1) the limitation requiring ‘at least one slot defined within one end of the second
grasping portion’ (‘579 claims); (2) the limitation requiring that the following be
‘formed within and integral to the tool head’: ‘an opening concentric with an
opening on one end of a first element, an actuation portion, and at least one slot’
(‘470 claims); and (3) the limitation requiring ‘an opening concentric with an
opening within one end of the first element.’ (‘579 and ‘470 claims).
(Dkt. 301, pps. 8-9.) A diagram of Buchanan is shown below:

(PSOF ¶10.)
As with infringement, “the first step in any validity analysis is to construe the claims of
the invention to determine the subject matter for which patent protection is sought.”

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Smiths Indus. Med. Sys., Inc. v. Vital Signs, Inc., 183 F.3d 1347, 1353 (Fed. Cir. 1999). “The
claims, properly interpreted, define the scope of the invention and allow the trial court to
determine whether the claimed invention would have been obvious in light of the prior art.” Id.
Loggerhead’s first asserted distinction of the ‘579 Patent from Buchanan is the limitation
requiring at least one slot defined within one end of the second grasping portion. Loggerhead
argues that slots are only present in the cam plates, Buchanan parts 27 and 28, and not the second
element, Buchanan part 14. Defendants argue that the cam plate, Buchanan part 27, is part of the
second element because it is bolted to and moves in unison with the second element. However,
the claims for the patents at issue construed “second element” as “a second grasping portion
containing an opening concentric with an opening within one end of a first element, and an
actuation portion, and at least one slot defined within one end of the second grasping portion.”
Further, “actuation portion” was construed as the “portion of second element that facilitates
movement of the gripping element.” The cam plates in Buchanan, which facilitate the movement
of the gripping element in that patent, are not a part or portion of the second element and are not
contained within the second element. They are a separate structure that is connected to the
second element.
Loggerhead’s first asserted distinction of the ‘470 Patent from Buchanan is the limitation
requiring that an opening concentric with an opening on one end of a first element, an actuation
portion, and at least one slot all must be formed within and integral to the tool head. For the ‘570
Patent, the phrase “second element” was construed as “a second part containing a grasping
portion and tool head at one end of the grasping portion, where formed within and integral to the
tool head is an opening concentric with an opening within one end of a first element, and an
actuation portion, and at least one slot.” Again, the Buchanan cam plate has the actuation

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portion and at least one slot and the cam plate is not formed within the tool head and is not
contained within the second element.
Loggerhead also asserts that the limitation requiring the second element to contain an
opening concentric with an opening within one end of the first element as a distinction between
the asserted patents and Buchanan. Loggerhead argues that Buchanan shows a first element with
a somewhat triangular opening, while the second element has a circular opening, and that a
person of ordinary skill in the art would recognize that the openings must be similar shapes.
Defendants respond that there is no such limitation and that concentric simply means that both
openings have the same center point, regardless of shape.

Similar shapes are not required in

order to have the same center point. Indeed, the crimpers of the Buchanan patent meet at the
same point as the opening of the second element, as well as the openings of the cam plates,
without all openings being the same shape. The asserted patents do not require similarly shaped
openings.
The facts do not show that the asserted patents were anticipated by Buchanan.
Defendants’ Motion for Summary Judgment [277] is denied as to invalidity.
CONCLUSION
For the reasons discussed above, Defendants’ Motion for Summary Judgment of
Noninfringement or Invalidity [277] is granted in part and denied in part. Defendants’ Motion is
denied as to invalidity and infringement. Defendants’ Motion is granted as to willfulness.

Date:

September 20, 2016

/s/
JOHN W. DARRAH
United States District Court Judge

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