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Wiley v. Rocktenn CP, LLC

United States District Court, E.D. Arkansas, Western Division

September 30, 2014

TED WILEY, Plaintiff,
v.
ROCKTENN CP, LLC, Defendant.

ORDER

KRISTINE G. BAKER, District Judge.

Before the Court is the motion for attorneys' fees filed by defendant RockTenn CP, LLC ("RockTenn") (Dkt. No. 88). RockTenn seeks fees pursuant to Section 285 of the Patent Act, 35 U.S.C. § 285, and sanctions pursuant to 28 U.S.C. § 1927. Plaintiff Ted Wiley has responded (Dkt. Nos. 93, 94), and RockTenn has replied (Dkt. No. 97). In addition, RockTenn has filed a notice of supplemental authority (Dkt. No. 98) and a notice of change in relevant authority (Dkt. No. 100), and Mr. Wiley has responded to both (Dkt. Nos. 99, 101). The Court denies RockTenn's motion.

I. Factual Background

Mr. Wiley is the inventor and owner of U.S. Patent No. 7, 328, 833 ("the 833 patent"), which discloses and claims a "heavy-duty, knock-down container" that can be stored flat and quickly erected from a folded state. Each claim of the 833 patent is limited to a container "formed from a pair of substantially identical complementary blanks" (833 patent, at 8:31-32, 9:12-14). RockTenn is a producer of corrugated and consumer packaging products, including large corrugated bulk bins. RockTenn manufactures and sells bulk bins under its AutoBin® trademark. On April 1, 2006, Mr. Wiley and Smurfit-Stone Container Enterprises, Inc. ("Smurfit") negotiated the terms of a license agreement and entered into a written "Exclusive License Agreement." Under the terms of the license agreement, Mr. Wiley granted to Smurfit the exclusive rights to manufacture and sell bulk bins of the type described in Mr. Wiley's U.S. Patent Application No. 10/857, 077 ("the 077 application"), which issued as the 833 patent. RockTenn acquired Smurfit after the execution of the license agreement and is the successor-in-interest to Smurfit.

One type of container RockTenn sells under the AutoBin® trademark is a container formed from a single blank (the "One-Piece Bin"). Another type of container sold under the AutoBin® trademark is a container manufactured in Sioux City, Iowa, that is formed from two blanks of different shapes (the "Sioux City Bin"). Over the course of the license agreement with Mr. Wiley, RockTenn manufactured and sold under the AutoBin® trademark a bulk bin formed from a pair of substantially identical complementary blanks ("the Wiley Bin"), which is of the type claimed in the 833 patent and covered by the parties' license agreement. On October 26, 2011, Mr. Wiley sent to RockTenn a letter purporting to terminate the agreement effective April 1, 2012.

On April 16, 2012, Mr. Wiley filed his original complaint asserting a claim for breach of contract for unpaid royalties; a claim for patent infringement for post-termination production and sales of "the licensed product"; and a claim for declaratory judgment for the invalidity of two of RockTenn's patents, U.S. Patent Numbers 7, 381, 176 ("the 176 patent") and 7, 682, 300 ("the 300 patent) (Dkt. No. 1). After RockTenn moved to dismiss, Mr. Wiley filed his first amended complaint on June 25, 2012 (Dkt. No. 18). In his first amended complaint, Mr. Wiley clarified his factual allegations to allege that Smurfit and RockTenn marked and sold "the licensed product under the brand name AutoBin®" ( Id., ¶ 14). He specifically referred to the statement on RockTenn's website that it "offers a line of bulk bins including the patented AutoBin®...." ( Id., ¶ 18). Mr. Wiley reasserted his claim for breach of contract, and in both complaints, he alleged that he had discovered that RockTenn "had entered into nationwide contracts with companies such as Conagra, and others, to whom the licensed product has been sold and for which Plaintiff has received no royalty" (Dkt. No. 1, ¶ 20; Dkt. No. 18, ¶ 23). Mr. Wiley also clarified his patent infringement claim to allege infringement for RockTenn's making, using, and selling of "six-sided, self-erecting pallet containers, including those offered and sold under the brand name AutoBin®" (Dkt. No. 18, ¶ ¶ 27, 30). Mr. Wiley's first amended complaint dropped his claim for declaratory judgment of invalidity of RockTenn's patents. RockTenn counterclaimed for non-infringement and invalidity of the 833 patent (Dkt. No. 23).

Mr. Wiley's claims of patent infringement have been unclear in this litigation. From the record before the Court, it appears that Mr. Wiley originally intended the reference in his first amended complaint to RockTenn's boxes sold under the AutoBin® brand name to refer to Wiley Bins. Mr. Wiley stated in his deposition that he called his box the AutoBin and was not aware prior to this litigation that RockTenn sold other products under the AutoBin® trademark. However, at different points in this litigation, Mr. Wiley has also asserted infringement claims directed at RockTenn's One-Piece and Sioux City Bins.

The sealed documents submitted to the Court show that RockTenn's counsel, Scott Eidson, informed Mr. Wiley's counsel, William Stanley, in May 2012 that RockTenn had moved to a new design, the One-Piece Bin, shortly after the license expired. Mr. Eidson insisted that the One-Piece Bin did not infringe Mr. Wiley's patent. In response, Mr. Stanley stated in correspondence in July and October 2012 that Mr. Wiley had information that RockTenn's Sioux City, Iowa, plant and others had sold Mr. Wiley's bins to national accounts and that Mr. Wiley had not been paid royalties he was owed for such sales. Further, Mr. Stanley explained that RockTenn's website implied that RockTenn still sold Mr. Wiley's bins. Mr. Stanley indicated that he felt that this information was sufficient to warrant discovery into which bins RockTenn sold to which customers during the license period and after.

Mr. Wiley then asserted infringement against the One-Piece Bin during claim construction in February and March 2013, although his position went back and forth on this issue. In his initial claim construction brief, Mr. Wiley proposed a construction of the 833 patent that would support a claim of infringement against the One-Piece Bin (Dkt. No. 42, at 13). However, in response to RockTenn's claim construction briefing, Mr. Wiley stated that his "patent infringement claim rests exclusively on whether any of Wiley's patented AutoBins (the 833 patent) were sold by defendant RockTenn after April 1, 2012, the date upon which an Exclusive Licensing Agreement expired" (Dkt. No. 44). Then, in a joint pleading submitted to cancel the claim construction hearing, the parties stated that Mr. Wiley's patent infringement claims "are limited to RockTenn's one-piece product" (Dkt. No. 46, ¶ 3).

The parties later indicated in an August 29, 2013, joint status report to the Court that Mr. Wiley claimed at his deposition that a different product of RockTenn's-the Sioux City Bin- infringes the 833 patent (Dkt. No. 55; Dkt. No. 52, ¶ 34). In his deposition and in response to RockTenn's requests for admission, Mr. Wiley admitted that the One-Piece Bin did not infringe. The case then proceeded to the summary judgment stage with Mr. Wiley's patent infringement claims based on post-termination sales of Wiley Bins and for all sales of Sioux City Bins, in addition to his contract claim based on unpaid royalties for sales of Wiley Bins.

The Court granted RockTenn's motion for summary judgment as to the Sioux City Bin, noting that Mr. Wiley agreed in his deposition that every one of the claims of the 833 patent included the limitation that the container be formed from a pair of substantially identical complementary blanks and that the two blanks from which the Sioux City Bin is formed are not substantially identical. The Court denied RockTenn's motion for summary judgment on Mr. Wiley's breach of contract claim and patent infringement claim for post-termination sales of Wiley Bins, based in part on finding a disputed issue of fact as to whether RockTenn sold any Wiley Bins after the termination of the license agreement. The parties resolved the remaining claims through a joint stipulation of dismissal and a motion for consent judgment (Dkt. Nos. 83, 84).

RockTenn now asks that the Court award it fees in the amount of $165, 737.85 and asks that the Court require Mr. Wiley and Mr. Stanley to reimburse those fees. RockTenn's motion originally requested $123, 574.35, but revised this number in its reply to include amounts incurred in preparing the instant motion. RockTenn represents that this amount includes fees for work relevant to the patent infringement allegations, not unrelated work, and that fees related to both the breach of contract claim and the patent claim were halved.

II. Patent Act 35 U.S.C. § 285

Section 285 of the Patent Act provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. An award of attorney fees under § 285 is governed by Federal Circuit law. See 28 U.S.C. § 1295(a)(1); Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 182 F.3d 1356, 1359 (Fed. Cir. 1999). The Court must first determine whether the prevailing party has proven that the case is exceptional. If the district court finds that the case is exceptional, it must then determine whether an award of attorney fees is justified. Id. at 1309 (citing Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1460 (Fed. Cir. 1998)). "[T]he decision whether or not to award fees is still committed to the discretion of the trial judge, and [e]ven an exceptional case does not require in all circumstances the award of attorney fees.'" Modine Mfg. Co. v. Allen Grp., Inc., 917 F.2d 538, 543 (Fed. Cir. 1990) (quoting S.C. Johnson ...


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