United States District Court, W.D. Arkansas, Hot Springs Division
BAXLEY EQUIPMENT COMPANY, LLC; PRICE LOGPRO, LLC; and TIMBER AUTOMATION, LLC PLAINTIFFS
HOGUE INDUSTRIES, LLC d/b/a HOGUE INDUSTRIES DEFENDANT
MEMORANDUM OPINION AND ORDER
O. Hickey United States District Judge.
the Court is a Motion to Dismiss Pursuant to Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6) filed by Defendant
Hogue Industries, LLC (“Hogue Industries”). ECF
No. 37. Plaintiffs Baxley Equipment Company, LLC; Price
LogPro, LLC; and Timber Automation, LLC, (collectively
“Baxley”) have filed a response in opposition to
the motion. ECF No. 42. The Court finds this matter
ripe for its consideration. For the reasons explained below,
Hogue Industries’ motion is granted.
a declaratory judgment action in which Baxley seeks a
declaration that it did not infringe two patents held by
Hogue Industries and that the patents are invalid. Baxley and
Hogue Industries are in the business of selling, marketing,
engineering, and manufacturing lumber stacking machinery. ECF
No. 1, ¶ 9. Hogue Industries produces a High Speed Dual
Fork Stacking Mechanical and Control System, which it claims
is represented by United States Patent Numbers 7,201,554 and
7,651,314 (collectively “the patents”).
Id. at ¶ 10. Baxley designed a dual stacking
machine (“Baxley Stacker”), which it alleges is
unlike Hogue Industries’ dual stacking machine.
Id. at ¶ 11. On or about May 30, 2014, Baxley
sold the Baxley Stacker to Georgia-Pacific for use in its
Gurdon, Arkansas facility. ECF No. 1, ¶ 15.
point, Hogue Industries became aware of Baxley’s intent
to build and install the Baxley Stacker for Georgia-Pacific.
On July 27, 2015, Gary Hogue of Hogue Industries emailed
Baxley regarding the Baxley Stacker, stating that he
“believe[d] the machine [was] in violation of our US
Patents.” ECF No. 31-1. Mr. Hogue’s email further
requested that Baxley cease shipment of the Baxley Stacker
until the infringement issue was resolved and asked Baxley to
“divulge any other Dual Fork Machines that you may have
sold so that we all have a total picture of the
parties exchanged numerous emails over the following weeks
regarding whether the Baxley Stacker violated Hogue
Industries’ patents. Although Georgia-Pacific did not
allow Mr. Hogue to physically inspect the Baxley Stacker at
its facility, Baxley supplied photographs of the stacker, as
well as a description of how it worked. ECF No. 36-1, pp.
107-03, 127. Based on this information, Mr. Hogue concluded
that the Baxley Stacker infringed the patents. Specifically,
Hogue Industries maintained that the Baxley Stacker violated
the patents because it utilized encoders which could be used
to control the speed, acceleration, and ramping of the
stacker’s arms. Conversely, Baxley took the position
that its stacker did not violate the patents because its
control system only knows the start/stop positions of the
stacker’s arms and does not control the speed and
acceleration of the arms.
September 1, 2015, Hogue Industries sent a letter detailing
its position that the Baxley Stacker was in direct violation
of the patents. ECF No. 31-12. The letter further requested
that Baxley take a license or refrain from manufacturing and
selling the Baxley Stacker. Id. In response, Baxley
insisted that its stacker did not infringe on the patents and
refused to take a license or refrain from selling the Baxley
Stacker to Georgia-Pacific. ECF No. 31-21. Mr. Hogue
subsequently contacted Georgia-Pacific and initiated
discussions to license the Baxley Stacker. Georgia-Pacific
eventually agreed to pay a licensing fee to Hogue Industries
in order to operate the Baxley Stacker under Hogue
commenced this action by filing a three-count complaint on
May 19, 2017, seeking declaratory judgment relief, pursuant
to 28 U.S.C. § 2201, with respect to United States
Patent Numbers 7,201,554 and 7,651,314. ECF No. 1. Baxley
specifically requests declarations of noninfringement and
invalidity of the patents. In addition, Baxley asserts a
state law claim of tortious interference with contractual
relationship and business expectancy.
9, 2017, Hogue Industries filed its Answer and asserted a
counterclaim of willful patent infringement against Baxley.
ECF No. 10. On October 31, 2017, Hogue Industries moved to
dismiss its patent infringement counterclaims against Baxley.
ECF No. 20. In its motion, Hogue Industries stated that
“Hogue Industries and Georgia Pacific entered a Patent
License Agreement through which the Baxley stacker installed
at Georgia Pacific’s Gurdon, Arkansas facility became
fully licensed under [Hogue Industries’]
asserted” patents. The Court granted Hogue’s
motion to dismiss its counterclaims with prejudice on
November 6, 2017. ECF No. 21.
16 Scheduling Conference was held on November 9, 2017, in
which Hogue Industries challenged the Court’s
subject-matter jurisdiction in this case. The Court
subsequently directed the parties to submit briefs addressing
whether the Court lacks subject-matter jurisdiction in this
action. ECF No. 24. Baxley submitted its brief asserting its
standing to pursue this action on January 8, 2018. ECF No.
February 19, 2018, Hogue Industries executed a covenant not
to sue with respect to “the specific design components
and features that are identified in Baxley’s Complaint
and supplemental evidence as being included in their proposed
stackers.” ECF No. 38, p. 2. Baxley was served with the
covenant not to sue on February 21, 2018. On the same day,
Hogue Industries filed its motion to dismiss pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6),
arguing, in part, that its proffered covenant not to sue
eliminates any controversy between the parties regarding the
Baxley stacker, thereby divesting the Court of subject-matter
jurisdiction. ECF No. 37.