Ford Motor Company et al v. Thermoanalytics, Inc.

Filing 60

OPINION AND ORDER DENYING DEFENDANTS MOTION FOR RECONSIDERATION AND DENYING DEFENDANTS REQUEST FOR CERTIFICATION PURSUANT TO 28 U.S.C. 1292(b) #48 . Signed by District Judge Gershwin A. Drain. (TBan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

FORD MOTOR COMPANY, a Delaware
corporation, and FORD GLOBAL TECHNOLOGIES
LLC, a Delaware Limited Liability Company,
Case No. 14-cv-13992
Plaintiffs,
v.

UNITED STATES DISTRICT COURT JUDGE
GERSHWIN A. DRAIN

THERMOANALYTICS, INC., a Michigan
corporation,

UNITED STATES MAGISTRATE JUDGE
R. STEVEN WHALEN

Defendant.
/
OPINION AND ORDER DENYING DEFENDANT’S MOTION FOR RECONSIDERATION AND DENYING
DEFENDANT’S REQUEST FOR CERTIFICATION PURSUANT TO 28 U.S.C. § 1292(b) [48]
I. INTRODUCTION
Ford Motor Company and Ford Global Technologies, LLC (collectively, “Plaintiffs”),
commenced this action on October 16, 2014 against ThermoAnalytics, Inc. (“Defendant”). See
Dkt. No. 1. On October 28, 2015, this Court granted Plaintiffs’ Motion for Partial Summary
Judgment. See Dkt. No. 47.
Presently before the Court is Defendant’s Motion for Reconsideration of the Court’s
Opinion and Order or, in the alternative, for certification pursuant to 28 U.S.C. § 1292(b). See
Dkt. No. 48. For the reasons discussed below, Defendant’s Motion for Reconsideration is
DENIED, and Defendant’s request for certification pursuant to 28 U.S.C. § 1292(b) is DENIED.
II. BACKGROUND
In October of 2014, Plaintiffs filed the instant action alleging, inter alia, false designation
of origin as well as breach of contract. In July of 2015, Plaintiffs filed a motion for Partial

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Summary Judgment on the breach of contract and false designation of origin claims. See Dkt.
No. 25. Plaintiffs argued that under the terms of a License Agreement (“the Agreement”)
between the parties, Plaintiffs were entitled to copyrights to the software code of a program,
RadTherm, and damages for trademark infringement. Defendant argued in response that the
source code sought by Plaintiffs was not covered under the Agreement, and further that Plaintiffs
rights to the trademark never existed, or in the alternative, had been terminated. See Dkt. No. 33
at 13, 22 (Pg. ID No. 617, 626).
The Court ultimately granted partial summary judgment, finding that Defendant had
infringed on the trademark, that Plaintiffs did have rights to the source code (“Disputed
Software” or “New Software”), and that Defendant had breached the contract by failing to give
the source code to Plaintiffs. See Dkt. No. 47.
III. LAW AND ANALYSIS
Motions for Reconsideration are governed by Local Rule 7.1(g)(3) of the Local Rules of
the United States District Court for the Eastern District of Michigan, which provides:
[M]otions for rehearing or reconsideration which merely present the same issues
ruled upon by the court, either expressly or by reasonable implication, shall not be
granted. The movant shall not only demonstrate a palpable defect by which the
court and the parties have been misled but also show that a different disposition of
the case must result from a correction thereof.
E.D. Mich. L.R. 7.1(g)(3). “A ‘palpable defect’ is ‘a defect that is obvious, clear, unmistakable,
manifest, or plain.’” United States v. Lockett, 328 F. Supp. 2d 682, 684 (E.D. Mich. 2004)
(quoting United States v. Cican, 156 F. Supp. 2d 661, 668 (E.D. Mich. 2001)).
A. Breach of Contract
Defendant advances three arguments in its motion for the Court to reconsider the claim
for breach of contract. The Defendant first argues that the Court imposed an unreasonable

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interpretation on the relevant language of the Agreement. Next, Defendant argues that under the
Court’s interpretation of the Agreement, the Defendant would not be liable for breach of
contract. Finally, the Defendant argues the breach of contract claim is barred by the statute of
limitations.
a. Defendant’s First Argument: The Court has Imposed an Unreasonable
Interpretation on the Relevant Language from the Agreement
Defendant first argues that the Court has committed a palpable error by ascribing an
“unreasonable” interpretation of the License Agreement. Dkt. No. 48 at 12 (Pg. ID No. 962).
But, in reality, the argument boils down to a disagreement with the Court’s interpretation of the
language of the Agreement. Defendant has not pointed to an “obvious, clear, unmistakable,
manifest, or plain” defect in the Opinion. Therefore, the motion will not be granted on this point.
Defendant then goes on to argue that the Disputed Software “was not created under the
Agreement but, instead, under contracts with the U.S. Army without any reference to Ford.” Id.
at 15 (Pg. ID No. 965). The Court heard this exact argument before. See Dkt. No. 33 at 15 (“As
previously explained, the New Software was not based on the Old Software but rather developed
independently.”). That argument was rejected then, it will not be considered now.
b. Defendant’s Second Argument: Under the Court’s Interpretation of The
Agreement, The Disputed Software is Not a Joint Work
Defendant next, albeit curiously, argues that the Court came to an incorrect result under
the Court’s interpretation of the Agreement. The Defendant argues that the Court’s interpretation
should be limited to “any brochures, web pages, manuals, and the like that TAI created to be
used with the Old Software. . .” Dkt. No. 48 at 17 (Pg. ID No. 967). The Defendant goes on to
explain why, under the Court’s interpretation of the Agreement, that the Court is wrong.

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None of the reasons proffered by Defendant on this issue point to a palpable defect in the
Court’s reasoning. Once again, Defendant merely demonstrates that the Defendant disagrees
with the outcome of the claim and rehashes some old arguments. As such, the argument fails.
c. Defendant’s Third Argument: Plaintiffs Lost Any Rights in the Disputed Software
By Failing to Bring Suit Within The Limitations Period
Defendant argues that Plaintiffs were “undeniably on notice that TAI considered itself to
be the sole owner of the copyright in the New Software,” but nevertheless “failed to bring suit to
enforce its supposed joint copyright in the New Software for seven more years.” Dkt. No. 48 at
22–23 (Pg. ID No. 972–73). Defendant argues that the delay prevents the Plaintiffs from
bringing an action to enforce copyright rights.
The statute of limitations period for a claim under the Copyright Act is three years. 17
U.S.C. § 507(b).1 The claim accrues “when a reasonably diligent plaintiff would have been put
on inquiry as to the existence of a right.” Kwan v. Schlein, 634 F.3d 224, 228 (2d Cir. 2011).
Defendant points to an email response to Plaintiffs’ request for source code from 2007,
specifically, the statement that “[Defendant] derived a new RadTherm solver from MuSES with
the only thing being retained was the name RadTherm,” put the Plaintiffs on notice of the
copyright issue. Id. The email was dated Tuesday, October 2, 2007, placing it outside of the
temporal limits of the limitations period. The lone issue is notice.
However, the referenced emails were not related to nor did they express ownership of the
source code copyrights. See Dkt. No. 33 (Exhibit 4). If anything, it brought attention to a
potential trademark issue as opposed to a copyright issue. Id. (“One solution to the source code
issue would be to . . . continue developing and licensing the MuSES derivative software under a
new brand name.”). As Plaintiffs point out, “TAI continued to pay royalties to Ford, TAI
1

Both parties seem to be in agreement that this is the controlling limitations period.

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continued to include Ford in the copyright notices displayed on the RadTherm Software, TAI
continued to deliver object code for Ford’s use without charge, and TAI ‘ratified and confirmed’
all provisions of the License Agreement in 2012.” Dkt. No. 50 at 20–21 (Pg. ID No. 1162).
A reasonably diligent Plaintiff would not have been put on notice that Defendant
intended to claim exclusive ownership of the copyright to the Disputed Software because of this
lone email. Accordingly, this argument fails.
B. False Designation of Origin
Defendant advances three principle arguments in its motion for the Court to reconsider
the claim for false designation of origin. The Defendant first argues that the Court committed a
palpable error in concluding that the agreement purported to transfer TAI’s trademark rights to
Ford. See Dkt. No. 48 at 24 (Pg. ID No. 974). Next, Defendant argues that even if the agreement
did purport to transfer trademark rights to Plaintiffs, the Court has committed a palpable error in
holding that such a transfer is valid in the absence of a transfer of goodwill. Id. at 25. Finally,
Defendant argues that even if the Agreement did transfer the rights to the RadTherm trademark
to Plaintiffs, their 12-year delay in protesting Defendant’s trademark registration should have
invalidated the claim. Id. at 27.
a. Defendant’s First Argument: The Agreement Did Not Purport to Transfer TAI’s
Trademark Rights to Ford
Defendant argues that the language of the Agreement is “notably devoid of anything
resembling language of transfer.” Id. at 24. However, this exact same argument has already been
raised by Defendant. See Dkt. No. 33 at 25 (Pg. ID No. 629) (“As stated in the Johnson
Declaration, TAI never assigned the RadTherm trademark and goodwill to Ford. Section 12, at
most, confirms Ford’s ownership of its then-existing intellectual property rights.”). The Court

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addressed this argument, and rejected it. See Dkt. No. 47 at 7–8 (Pg. ID No. 942–43). Defendant
does not point to any obvious or clear defect that misled the Court originally, the argument
merely disagrees with the way that the Court has interpreted the Agreement. Accordingly, this
argument will not be considered again.
b. Defendant’s Second Argument: The Agreement Did Not Validly Transfer Any
Trademark Rights Because It Failed to Transfer Goodwill
Defendant next argues that “[b]ecause the Agreement does not even purport to involve
goodwill, no trademark transfer can possibly occurred.” Dkt. No. 48 at 25 (Pg. ID No. 975).
Once again, this exact argument has already been made. See Dkt. No. 33 at 26 (Pg. ID No. 630)
(“In fact, even if the Agreement had purported to transfer TAI’s rights in the RadTherm
trademark to Ford, such a transfer would have been invalid.”). The Court addressed this
argument. See Dkt. No. 47 at 8–9 (Pg. ID No. 943–44) (“However, while goodwill may not be
explicitly spelled out within the terms of the Agreement, it is certainly captured impliedly by the
broad property grant of Section 8.”). The Court will not consider it again.
c. Defendant’s Third Argument: Ford’s 12-Year-Delay In Protesting TAI’s
Trademark Registration Invalidates Ford’s Current Claims
Defendant’s final argument with regard to the trademark states that “even if the
trademark rights and goodwill had somehow been transferred from TAI to Ford by the
Agreement in 1998, the Order does not address the effect of TAI’s registration of the RadTherm
trademark in 2002.” Dkt. No. 48 at 27 (Pg. ID No. 977). Further, Defendant argues that Ford did
not retain any quality control over the software quality under the Agreement, and thus “the mark
is deemed abandoned due to the ‘naked licensing.’ ” Id. (citing Yellowbook v. Brandeberry, 708
F.3d 837, 846 (6th Cir. 2013)).

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The Court can sum up the effect of Defendant’s registration of the trademark on
Plaintiff’s rights in one word: none. “A licensee’s use inures to the benefit of the licensor-owner
of the mark and the licensee acquires no ownership rights in the mark itself.” 3 McCarthy on
Trademarks and Unfair Competition § 18:52 (4th ed.). Defendant points to no law that concludes
that registration of a trademark by a licensee would cut off the owner’s rights. Therefore,
Defendant has failed to point to a palpable defect in this respect.
Regarding Ford’s purported abandonment of the mark, this was not an argument raised
on the initial motion. The Court refuses to consider the argument, as it does not point to a
palpable defect in the opinion. See Hayes v. Norfolk Southern Corp., 25 Fed. Appx. 308, 315
(6th Cir. 2001) (“It is well established . . . that a district court does not abuse its discretion in
denying a Rule 59 motion when it is premised on evidence that the party had in its control prior
to the original entry of judgment.”) (quoting Emmons v. McLaughlin, 874 F.2d 351, 358 (6th Cir.
1989)).
Accordingly, the Defendant has failed to point to a palpable defect in the Court’s opinion
with regard to the claim of false designation of origin.
C. Liability to Ford Motor Company
Defendant next argues that the Opinion improperly granted Summary Judgment to Ford
Motor Company because all of the claims are “based on the Agreement, to which only TAI and
FGTL are parties.” Dkt. No. 48 at 29 (Pg. ID No. 979). Defendant further argues that “even if
TAI were liable for the wrongdoing alleged, it would be liable only to FGTL and not to FMC.”
Dkt. No. 48 at 29 (Pg. ID No. 979).
Even if the judgment were limited to FGTL, it wouldn’t result in a different disposition of
the case. As Plaintiffs correctly point out, Ford and FGTL can only recover once from TAI on

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any judgment that results from this case. Dkt. No. 50 at 25 (Pg. ID No. 1166). The argument
fails.
D. Interlocutory Appeal
Defendant, in the alternative, moves for certification for interlocutory appeal pursuant to
28 U.S.C. § 1292(b). Dkt. No. 48 at 29 (Pg. ID No. 980).
A party seeking interlocutory appeal must demonstrate that “(1) the order involves a
controlling question of law, (2) a substantial ground for difference of opinion exists regarding the
correctness of the decision, and (3) an immediate appeal may materially advance the ultimate
termination of the litigation.” In re City of Memphis, 293 F.3d 345, 350 (6th Cir. 2002); see also
28 U.S.C. § 1292(b). Review under § 1292(b) is granted “sparingly and only in exceptional
cases.” Id. (citing Kraus v. Bd. Of County Rd. Comm’rs, 364 F.2d 919, 922 (6th Cir. 1966)). “It
is to be used only in exceptional cases where an immediate appeal may avoid protracted and
expensive litigation and is not intended to open the floodgates to a vast number of appeals from
interlocutory orders in ordinary litigation.” Kraus, 364. F.2d at 922.
Defendant has not demonstrated that an interlocutory appeal would materially advance
the litigation. Defendant argues essentially to have the appeal now would save time as opposed
to waiting to the final resolution of the case. Dkt. No. 48 at 31 (Pg. ID No. 981) (“Achieving a
final appellate decision on these issues now would greatly speed up the process and very likely
encourage the Parties to negotiate on the remaining claims afterward.). This argument is not
persuasive. There is nothing stopping the parties from negotiating the remaining claims right
now. The parties could resolve the issues then file a stipulation and order of dismissal of those
claims, resolving all issues and allowing Defendant to appeal as of right. Furthermore, allowing
an interlocutory appeal would be just as likely to prolong the litigation, as many months would

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be required before the case would be reached for argument, and depending on what happens over
the course of litigation, could lead to more issues. Instead it would be best to allow the Sixth
Circuit to confront all of these issues in “a unified package.” Solomon v. Aetna Life Ins. Co., 782
F.2d 58, 62 (6th Cir. 1986).
Moreover, Defendant has not demonstrated there is substantial ground for difference of
opinion. Defendant argues that because “the Court, Ford, and TAI have come to three different
conclusions on many of these issues,” that this element has been met. Dkt. No. 48 at 30 (Pg. ID
No. 980). This argument is insufficient.
A substantial ground for difference of opinion exists where “(1) the question is difficult,
novel and either a question on which there is little precedent or one whose correct resolution is
not substantially guided by previous decisions; (2) the question is difficult and of first
impression; (3) a difference of opinion exists within the controlling circuit; or (4) the circuits are
split on the question.” In re Miedzianowski, 735 F.3d 383, 384 (6th Cir. 2013) (internal quotation
marks and citations omitted). Defendant is correct that there is disagreement on the outcome of
the case. This is a common phenomenon in litigation. Whether the Plaintiff, Defendant, or the
Court agree on the outcome of the case is not relevant to the finding of a substantial ground for
difference of opinion.
Accordingly, the certification for interlocutory appeal will be denied.
IV. CONCLUSION
For the reasons discussed above, the Motion for Reconsideration is DENIED, and the
request for certification pursuant to 28 U.S.C. § 1292(b) is also DENIED.
IT IS SO ORDERED.
Dated: February 2, 2016
Detroit, MI

/s/Gershwin A Drain
HON. GERSHWIN A. DRAIN

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United States District Court Judge

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