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US District Court : CIVIL PROCEEDURE | PATENT | CONTRACT - R.50, 59 motions regarding concrete block patent, contract claims, fees

1
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Allan Block Corporation,
Plaintiff,
v. Civil No. 04-3511 (JNE/JJG)
ORDER
E. Dillon & Company,
Defendant.
Allan Block Corporation sued E. Dillon & Company (Dillon) for breach of contract and
patent infringement. After a jury trial, the Court entered judgment in favor of Allan Block in the
amount of 3,289. The case is before the Court on post-trial motions.
I. BACKGROUND
Allan Block is a Minnesota corporation involved in the development and licensing of a
cement block and related technology used in the construction of segmental retaining walls.
Allan Block owns United States Patent Nos. 4,909,010 (010 patent) and 5,484,236 (236
patent), titled Concrete Block for Retaining Walls and Method of Forming Concrete
Retaining Wall Block, respectively. In 1991, Allan Block and Dillon entered into a Production
Agreement (Agreement) that allowed Dillon to manufacture and sell Allan Block blocks in
return for royalty payments. During the course of the Agreement, Dillon developed a new block
called the StoneLoc block.
On August 2, 2004, Allan Block filed this action for breach of contract and patent
infringement against Dillon seeking monetary and injunctive relief. On July 1, 2005, the Court
granted in part Allan Blocks motion for a preliminary injunction, preliminarily enjoining Dillon
from manufacturing and selling the StoneLoc block. The Court did not reach Allan Blocks
2
patent infringement claims.
A jury trial began on May 8, 2007. During the trial, the Court granted Dillons motion
for judgment as a matter of law, holding that Dillons manufacture or sale of the StoneLoc block
did not literally infringe the 236 patent. On May 18, 2007, the jury returned a verdict. With
respect to Allan Blocks remaining patent infringement claims, the jury found that Dillons
manufacture or sale of the StoneLoc block did not literally infringe the 010 patent, but that it did
infringe the 010 patent under the doctrine of equivalents; that Dillons manufacture or sale of
the StoneLoc block infringed the 236 patent under the doctrine of equivalents; and that Dillons
manufacture or sale of Allan Block blocks after July 27, 2004, infringed the 010 and 236
patents literally and under the doctrine of equivalents. In addition, the jury found that Dillons
infringement was willful and awarded damages in the amount of 3,289. With respect to
Allan Blocks contract claims, the jury found that Dillon breached the Agreement by using Allan
Blocks Technology to develop the StoneLoc block, failing to return Molds to Allan Block, and
developing a Producers Improvement. The jury awarded contract damages to Allan Block in
the amount of 3,289. On May 23, 2007, the Court entered judgment against Dillon and in
favor of Allan Block in the amount of 3,289. The matter is before the Court on the parties
post-trial motions under Rules 50 and 59 of the Federal Rules of Civil Procedure.
II. DISCUSSION
A. Legal standard
Rule 50(a)(1) provides:
If a party has been fully heard on an issue during a jury trial and the court
finds that a reasonable jury would not have a legally sufficient evidentiary basis to
find for the party on that issue, the court may: (A) resolve the issue against the
party; and (B) grant a motion for judgment as a matter of law against the party on
a claim or defense that, under the controlling law, can be maintained or defeated
only with a favorable finding on that issue.
3
A party may renew a Rule 50 motion after trial. Fed. R. Civ. P. 50(b). In ruling on a renewed
motion when a verdict has been returned, the court may allow the judgment to stand, order a new
trial, or direct entry of judgment as a matter of law. Fed. R. Civ. P. 50(b)(1)(A)-(C). When
considering a post-trial motion for judgment as a matter of law, the court determines whether
the record contains sufficient evidence to support the jurys verdict. Bass v. Gen. Motors Corp.,
150 F.3d 842, 845 (8th Cir. 1998); Dana Corp. v. IPC Ltd., 860 F.2d 415, 417 (Fed. Cir. 1989).
The court views the evidence in the light most favorable to the non-moving party and grants the
non- moving party the benefit of all reasonable inferences. Canny v. Dr. Pepper/Seven-Up
Bottling Group, Inc., 439 F.3d 894, 899-900 (8th Cir. 2006); Dana Corp., 860 F.2d at 417. A
judgment as a matter of law is appropriate when there is no legally sufficient evidentiary basis
for a reasonable jury to find for the party on that issue. Fed. R. Civ. P. 50(a)(1); see also
Canny, 439 F.3d at 899-900.
Under Rule 59(a), [a] new trial may be granted to all or any of the parties and on all or
part of the issues . . . for any of the reasons for which new trials have heretofore been granted in
actions at law in the courts of the United States. A new trial is justified if the verdict is against
the great weight of the evidence. See Butler v. French, 83 F.3d 942, 944 (8th Cir. 1996). A
new trial should be granted only where it is necessary to prevent a miscarriage of justice. Bass,
150 F.3d at 845; McKnight v. Johnson Controls, Inc., 36 F.3d 1396, 1400 (8th Cir. 1994). In
determining whether a verdict is against the weight of the evidence, the court may weigh the
evidence, disbelieve witnesses, and grant a new trial even where there is substantial evidence to
sustain the verdict. White v. Pence, 961 F.2d 776, 780 (8th Cir. 1992). The court should reject
a jurys verdict only where, after a review of all the evidence giving full respect to the jurys
4
verdict, the court is left with a definite and firm conviction that the jury has erred. Ryan v.
McDonough Power Equip., Inc., 734 F.2d 385, 387 (8th Cir. 1984).
B. Post-trial motions on patent infringement claims 1
Claim 1 of the 010 patent reads:
A concrete block for use in construction of retaining walls and the like,
said block including:
a. bottom, top, rear, side and frontal surfaces,
b. said bottom, rear and side surfaces being generally planar and
arranged generally normal to one another;
c. said top including a first support area defined over a predetermined
area of said top for the support of additional blocks, a vertically
extending shoulder adjacent said frontal surface of said block and
extending entirely therealong to provide a continuous block
positioning member in close association to said frontal surface and
a second top surface at the uppermost end of said extending
shoulder;
d. said frontal surface defining a lower vertical portion normal to said
bottom and an upper, rearwardly inclined portion extending from
said vertical portion terminating at said second top surface;
e. said support area and said vertical shoulder providing a locating
surface to receive an additional vertically positioned block thereon
wherein the additional block is positioned rearwardly from the
front surface of the receiving and supporting block whereby a wall
of tiers of such blocks extend rearwardly and upwardly from a
support surface.
Claim 1 of the 236 patent reads:
A method of creating a construction block adapted to form retaining walls
or the like, comprising the steps of:
a. forming a member having a major upper surface and major lower
surface and a plurality of edges, said upper major surface having a
ridge extending laterally across a midsection thereof between an
opposed pair of said edges with said ridges extending upwardly
and away from said upper major surface by a predetermined first
dimension, said lower major surface having a notch extending
1 With the exception of Dillons motion on the issue of willfulness, the parties motions
regarding Allan Blocks patent infringement claims relate to Dillons manufacture or sale of the
StoneLoc block. Neither party takes issue with the jurys verdict insofar as it relates to Dillons
manufacture or sale of Allan Block blocks after July 27, 2004. Thus, that portion of the jurys
verdict stands.
5
laterally across a midsection thereof between said opposed pair of
edges with said notch extending upwardly from said lower major
surface by a dimension substantially equal to said predetermined
first dimension, wherein said laterally extending ridge is parallel to
and disposed vertically above said laterally extending notch; and
b. splitting said member along a center of both said ridge and said
notch to define a pair of said construction blocks, wherein each
said construction block has rough textured front surface defined by
splitting the member in half, a recess extending laterally
thereunder, and a lip extending laterally thereover wherein the
height of said lip is substantially equal to the depth of said recess.
1. Infringement claims010 patent
The jury determined that Dillons manufacture or sale of the StoneLoc block did not
literally infringe the 010 patent but did infringe under the doctrine of equivalents. Allan Block
now moves for a new trial and judgment as a matter of law on literal infringement of the 010
patent. Dillon moves for judgment as a matter of law on noninfringement of the 010 patent
under the doctrine of equivalents. In the alternative, Dillon moves for a new trial.
The Court first turns to literal infringement of the 010 patent. Allan Block contends that
the claim construction provided to the jury on the 010 patent was erroneous and that Allan
Block is therefore entitled to a new trial on literal infringement. See Cardiac Pacemakers, Inc. v.
St. Jude Med., Inc., 381 F.3d 1371, 1383 (Fed. Cir. 2004). Allan Block further argues that a
proper claim construction entitles it to judgment as a matter of law.
Patent claim construction is a matter of law for the court. Markman v. Westview
Instruments, Inc., 52 F.3d 967, 970-71 (Fed. Cir. 1995), affd, 517 U.S. 370 (1996). Proper
claim construction requires an examination of the intrinsic evidence of the record, including the
claims, the specification, and, if in evidence, the prosecution history. Vitronics Corp. v.
Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). The starting point for claim
construction is a review of the words of the claims themselves. Phillips v. AWH Corp., 415 F.3d
6
1303, 1312 (Fed. Cir. 2005) (en banc), cert. denied, 126 S. Ct. 1332 (2006); Vitronics, 90 F.3d at
1582. The words of a claim are generally given their ordinary and customary meaningthe
meaning that the term would have to a person of ordinary skill in the art at the time of the
invention. Phillips, 415 F.3d at 1312-13. The claims must be read in view of the specification,
which is always highly relevant to claim construction. Id. at 1315. The court may not, however,
import limitations found only in the specification. Id. at 1323; Electro Med. Sys. v. Cooper Life
Scis., Inc., 34 F.3d 1048, 1054 (Fed. Cir. 1994). The court should also consider the patents
prosecution history, and in its discretion, may also consider extrinsic evidence. Phillips, 415
F.3d at 1317-18.
The Court instructed the jury that [in] the 010 patent, the vertically extending
shoulder must extend higher than the first support area. Using the above standard, the Court
concludes that there was no error in its construction of vertically extending shoulder. Claim
1(c) recites a first support area, a vertically extending shoulder, and a second top surface at
the uppermost end of said extending shoulder. The claim language plainly differentiates
between the first support area and the second top surface, such that the second top surface
is not a support surface. Further, the claim language provides that the vertically extending
shoulder extends entirely along the frontal surface to provide a continuous block positioning
member and that said support area and said vertical shoulder [provide] a locating surface to
receive an additional vertically positioned block thereon. Thus, the vertically extending
shoulder along with the support area serve as a locating mechanism where a second block is
placed on top of the first block. The specification reinforces this notion:
The uppermost surface of all forms of the block 10, 11, and 12 is divided into two
distinct areas designated respectively 20a-20b with a vertical dividing shoulder
20c arranged therebetween. The area defined by a flat top surface 20a with
7
vertical shoulder 20c provides an interlock area for the next vertically oriented
block received thereon.
See 010 patent, col. 3, ll. 56-62. To serve as a locating mechanism, the vertically extending
shoulder must rise above the first support area. Thus, the Court discerns no error in its claim
construction. Allan Blocks motion for a new trial is denied.2
The Court turns next to the issue of infringement under the doctrine of equivalents. The
jury found that Dillons manufacture or sale of the StoneLoc block infringed the 010 patent
under the doctrine of equivalents. Dillon now moves for judgment as a matter of law or, in the
alternative, a new trial on this issue. In support, Dillon argues that Allan Block failed to prove
that the StoneLoc block contains an equivalent to the vertically extending shoulder and the
generally planar bottom surface elements of claim 1. One way Dillon can succeed on its
present motion is to demonstrate that there is no substantial evidence from which a jury could
find that a single element of claim 1 was met literally and there is no substantial evidence of
equivalents of this element. See Comark Commcns, Inc. v. Harris Corp., 156 F.3d 1182, 1188-
89 (Fed. Cir. 1998). Generally, a claim is literally infringed if each claim element reads on, or is
found in, the accused product or process. Allen Engg Corp. v. Bartell Indus. Inc., 299 F.3d
1336, 1345 (Fed. Cir. 2002). If one element is missing, there can be no literal infringement.
Mas-Hamilton Group v. LaGard, Inc., 156 F.3d 1206, 1211 (Fed. Cir. 1998). Even if there is no
literal infringement, the claim may still be infringed under the doctrine of equivalents. Allen
Engg, 299 F.3d at 1345. The test for equivalency is whether the difference between a claimed
element and an accused product or process is insubstantial to one of ordinary skill in the art.
Catalina Mktg. Intl, Inc. v. Coolsavings.com, Inc., 289 F.3d 801, 812 (Fed. Cir. 2002). An
2 Because the Court concludes that its claim construction was proper, Allan Blocks
motion for judgment as a matter of law is denied.
8
element in an accused product or process is equivalent to a claimed element if it performs
substantially the same function in substantially the same way to achieve substant ially the same
result as the claimed element. Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605,
608 (1950). For a process claim, each step must be performed either as claimed or by an
equivalent process. Canton BioMed., Inc. v. Integrated Liner Techs., Inc., 216 F.3d 1367, 1369-
70 (Fed. Cir. 2000).
Allan Blocks expert testified that the StoneLoc blocks vertically extending shoulder
is created by the rear surface of the front face of the block and two side channels on each side of
the top of the block. However, the top surface of the StoneLoc block lies on a single plane so
that the uppermost portion of the support area is at the same level as the top of the front portion
of the block that is adjacent to the two top-side channels. Therefore, the StoneLoc block lacks a
vertically extending shoulder that extends higher than the first support area. Based on the
evidence, the Court concludes as a matter of law that a vertically extending shoulder is not
literally present in the StoneLoc product.
Turning to the doctrine of equivalents, Allan Block argues that it provided sufficient
evidence that the StoneLoc blocks channels (recesses) worked in conjunction with the rear
surface of the front face to create a vertically extending shoulder that, regardless of whether it
[rises] above the entirety of the first support area, provides the same function, in the same way,
to obtain the same result, as the 010 patents vertically extending shoulder. The Court
disagrees. The function of the vertically extending shoulder element of the 010 patent is to
serve as a positioning mechanism. The vertically extending shoulder of the 010 patent
engages the front face of a second block that is stacked on top of the first block. In contrast, the
area of the StoneLoc block that Allan Block argues is equivalent to the vertically extending
9
shoulderthe rear surface of the front face in conjunction with the channelsonly serves as a
positioning mechanism for a second block because of wedges on the bottom of the second block.
Because the top of the StoneLoc block is on a single plane, a block without wedges placed on top
of the StoneLoc block would not lock into place. Further, Allan Blocks expert testified that the
StoneLoc blocks channels would only serve as a positioning mechanism when the blocks are
stacked directly on top of one another, but not when the StoneLoc blocks are placed in an offset
manner.3 When StoneLoc blocks are placed in an offset manner, the wedges do not descend
within the channels. This testimony underscores the conclusion that the rear surface of the front
face in conjunction with the channels of the StoneLoc block function differently than the 010
patents vertically extending shoulder. The Court concludes that there was insufficient
evidence for the jury to conclude that Dillons manufacture or sale of the StoneLoc block
infringed the 010 patent under the doctrine of equivalents. Accordingly, the Court grants
Dillons motion for judgment as a matter of law on noninfringement of the 010 patent under the
doctrine of equivalents.4 The Court also conditionally grants Dillons motion for a new trial on
the same issue because the jurys finding on this claim is against the great weight of evidence.
See Fed. R. Civ. P. 50(c).
2. Infringement claims236 patent
The Court granted Dillons motion for judgment as a matter of law, holding that Dillons
manufacture or sale of the StoneLoc block did not literally infringe the 236 patent. The jury
later returned a verdict finding that the manufacture or sale of the StoneLoc block infringed the
3 Evidence at trial shows that the StoneLoc block is customarily laid in an offset manner.
4 Because the Court concludes that the vertically extending shoulder is not present in the
StoneLoc block literally or through the doctrine of equivalents, it need not decide if the
generally planar element is present.
10
236 patent under the doctrine of equivalents. Allan Block moves for a new trial on literal
infringement of the 236 patent. Dillon moves for judgment as a matter of law or, in the
alternative, a new trial on the issue of infringement under the doctrine of equivalents.
The 236 patent recites a method for creating a block. Claim 1(a) recites the step of
forming a member having a major upper surface and major lower surface. The upper major
surface has a ridge extending laterally across a midsection thereof. The lower major
surface has a notch extending laterally across a midsection thereof. Claim 1(b) recites the
step of splitting said member along a center of both said ridge and said notch to define a pair of
said construction blocks, wherein each said construction block has . . . a recess extending
laterally thereunder, and a lip extending laterally thereover wherein the height of said lip is
substantially equal to the depth of said recess. With respect to the 236 patent, the Court
instructed the jury that the phrases major upper surface and major lower surface refer to the
orientation of the member.
Turning first to the question of literal infringement, Allan Block argues that the Courts
construction regarding the orientation of the member did not foreclose a jury finding of literal
infringement on the 236 patent. The Court disagrees. First, there was insufficient evidence to
allow a jury to conclude that the StoneLoc member, prior to being split into two construction
blocks, contains a ridge on the major upper surface. Instead, the evidence demonstrated that the
upper surface of the StoneLoc member, prior to being split into two blocks, contains four wedges
that stand out individually. Second, the StoneLoc member lacks a notch extending upwardly
from the lower major surface. Instead, its lower surface contains four individual channels. Thus,
there was insufficient evidence for a jury to find that Dillons manufacture or sale of the
StoneLoc block literally infringed the 236 patent. The Courts grant of judgment as a matter of
11
law on this issue was appropriate and Allan Blocks motion for a new trial on literal infringement
of the 236 patent is denied.
In support of its motion for judgment as a matter of law on noninfringement of the 236
patent under the doctrine of equivalents, Dillon argues that the process for creating the StoneLoc
block does not contain an equivalent to the ridge and notch elements of claim 1. At trial,
Allan Blocks expert testified that under the doctrine of equivalents, the lug [wedge] and the
recess [channel] [of the StoneLoc block] perform the same as the ridge and the notch [of the 236
patent.]
The doctrine of equivalents requires an element-by-element inquiry. Allen Engg, 299
F.3d at 1345 (this focus on individual limitations, rather than on the accused device as a whole,
aids the court in being specially vigilant against allowing the concept of equivalence to eliminate
any claim limitations completely). As discussed above, the StoneLoc member lacks a ridge on
its upper surface and a notch on its lower surface. Instead, four wedges are formed on the
StoneLoc members upper surface and channels are formed on the StoneLoc members lower
surface. There was insufficient evidence that the StoneLoc member has an equivalent of either
the ridge or notch elements. In particular, there was no evidence that the StoneLocs wedges
perform the same function as the 236 patents ridge or that the StoneLocs channels perform the
same function as the 236 patents notch. In addition, unlike the ridge and notch elements of the
236 patent, evidence at trial indicates that the height of the StoneLocs wedges is not related to
the depth of the channels. The Court therefore concludes that there was insufficient evidence
that would allow the jury to find that Dillons manufacture or sale of the StoneLoc block
infringes the 236 patent under the doctrine of equivalents. The Court grants Dillons motion for
judgment as a matter of law on noninfringement of the 236 patent under the doctrine of
12
equivalents with respect to the StoneLoc block. The Court also conditionally grants Dillons
motion for a new trial on the same issue because the jurys finding that the manufacture or sale
of the StoneLoc block infringed the 236 patent under the doctrine of equivalents is against the
great weight of evidence.
3. Willful infringement
The jury found that Dillons infringement of Allan Blocks patents was willful. Dillon
now moves for judgment as a matter of law or, in the alternative, a new trial on the issue of
willfulness. Willful infringement is determined from the totality of the circumstances. Knorr-
Bremse Systeme Fuer Nutzfahrzeuge Gmbh. v. Dana Corp., 383 F.3d 1337, 1343 (Fed. Cir.
2004). Willfulness must be established by clear and convincing evidence. Comark, 156 F.3d at
1190. In finding Dillons infringement was willful, the jury was required to find that Dillon
acted in disregard of the 010 and 236 patents and lacked a reasonable basis for believing it had
a right to act as it did. Am. Med. Sys., Inc. v. Med. Engg Corp., 6 F.3d 1523, 1530 (Fed. Cir.
1993). A jurys finding of willfulness is not supported by substantial evidence if [n]o
reasonable juror could find the asserted proof of willfulness rose to the quantum of clear and
convincing evidence. Read Corp. v. Portec, Inc., 970 F.2d 816, 829 (Fed. Cir. 1992) abrogated
on other grounds by Markman v. Westview Instruments, Inc., 52 F.3d 967, 975 (Fed. Cir. 1995).
Most evidence regarding willfulness related to Dillons development of the StoneLoc
block. As explained above, however, Dillons manufacture or sale of the StoneLoc block does
not infringe either the 010 or 236 patents literally or under the doctrine of equivalents. Thus,
the only portion of the jurys verdict regarding willful patent infringement that remains relates to
Dillons manufacture or sale of Allan Block blocks after July 27, 2004. The circumstances
surrounding the manufacture and sale of these blocks involve a dispute between the parties over
13
whether Allan Block gave proper notice allowing it to terminate the Agreement on July 27, 2004,
or whether the Agreement terminated in September 2004.5 Evidence at trial indicates that
Dillon could have had a reasonable (albeit incorrect) basis for believing it had a right to
manufacture and sell Allan Block blocks until September 2004. The Court concludes that no
reasonable juror could have found clear and convincing evidence of willfulness as to Dillons
post-July 27 manufacture and sale of Allan Block blocks. Dillons motion for judgment as a
matter of law on the issue of willfulness is granted. The Court also conditionally grants Dillons
motion for a new trial because the jurys verdict on willfulness is against the great weight of
evidence.
C. Post-trial motions on contract claims
1. Dillons motion regarding Producers Improvement
Dillon renews its motion for judgment as a matter of law and, in the alternative, moves
for a new trial on Allan Blocks claim that Dillon violated the Producers Improvement provision
of the Agreement. Paragraph 8.9 of the Agreement provides in part:
Producer shall promptly notify Licensor of any Improvement,
betterment or modification of the Block and/or the Technology of which
Producer is aware (Producers Improvement). Producer may utilize
Producers Improvement only with the prior written consent of Licensor
and at Producers expense. Licensor shall own the rights to and Licensor
may utilize Producers Improvement without any payment to Producer.
Dillon argues that this provision only applies to improvements made to proprietary material
because the Block and/or the Technology is limited to the Blocks unique locking mechanism
as protected by the 010 patent. Dillon also argues that Allan Block failed to meet its burden to
prove that the StoneLoc block embodies any proprietary material.
5 These circumstances are discussed in more detail in the Courts discussion of waiver
below.
14
The Court left the interpretation of Producers Improvement and Technology to the jury.
The Court concludes that there was ample evidence presented at trial to allow a reasonable juror
to conclude that Technology is not limited to proprietary material and that the Producers
Improvement provision encompasses more than proprietary material of Allan Block. For
example, Paragraph 3.1 of the Agreement defines the Block as a proprietary design cement
block and Technology as [t]he Molds, the application for the patent, the foregoing technology,
and all other unpatented, related know- how, trade secrets, processes, designs, technical data and
inventions, whether patentable or not, owned or used by Licensor in connection with the Block.
In addition, Robert Gravier, who negotiated the contract on Allan Blocks behalf, testified that
the definition of Technology covers [Allan Blocks] patented and unpatented and related knowhow
as part of [the] package of materials that [Allan Block] provide[s] on a steady and ongoing
basis under this contract. Similarly, Timothy Bott, Allan Blocks Vice President and Marketing
Director and former Allan Block producer, testified about the meaning of Technology. In
response to the question of whether Gravier expressed any of his understandings in paragraph
3.1, Bott answered:
Yes, in the conversations that we had, [Gravier] and I discussed the fact
that the technology that he was providing me was not just about a patented
product. It was all the details that would help me with the marketing and
engineering and, basically, the product that he had developed thus far to allow me
to get into this new market in a rather expedited fashion.
In addition, the jury was presented with sufficient evidence demonstrating that Dillon
used and modified Allan Blocks Technology and block to create the StoneLoc block. For
example, there was evidence that Dillon used and modified Allan Block drawings, Allan Block
molds, and an Allan Block block. In addition, Allan Blocks expert testified that the StoneLoc
block was a derivation of the Allan Block block. Thus, there was sufficient evidence for the
15
jury to decide that the StoneLoc block is a Producers Improvement. Accordingly, the Court
denies Dillons motion for judgment as a matter of law. The Court also concludes that the jurys
determination on this issue is not against the great weight of evidence. Accordingly, Dillons
motion for a new trial is denied.6
2. Dillons motion regarding Technology
Dillon moves for a new trial, arguing that the jurys finding that Dillon used Allan
Blocks Technology to develop the StoneLoc block was against the great weight of the evidence.
In particular, Dillon argues that the term Technology as used in the Agreement must be limited
to proprietary material and that Dillon did not use any proprietary material in the development of
the StoneLoc block. Dillon also argues that if Technology is more inclusive, then any alleged
breach for using such Technology is not central to the achievement of the Agreement. Finally,
Dillon argues that the amount of damages awarded is against the great weight of evidence.7
As discussed above with respect to the jurys finding on Producers Improvement, there
was ample evidence presented at trial to allow a reasonable juror to conclude that the definition
of Technology is not limited to proprietary material. Such evidence includes, for example, the
language of the Agreement itself and the testimony of Robert Gravier and Timothy Bott.
Further, for the reasons discussed above, the jurys determination that Dillon used Allan Blocks
Technology to develop the StoneLoc block is not against the great weight of evidence. In
addition, there was sufficient evidence to support a jurys finding that Dillons use of Allan
Blocks Technology was a material breach. Dillons motion for a new trial is denied.
6 Dillon also argues that it is entitled to a new trial on damages. Dillon has moved
separately for a new trial on damages. The Court considers all of Dillons arguments on
damages together below.
7 Again, the Court considers all of Dillons arguments on damages below.
16
3. Dillons motion regarding waiver
Dillon moves for judgment as a matter of law that Allan Block waived its right to
terminate the Agreement as of July 27, 2004, and therefore, there can be no infringement for
Dillons manufacture and sale of the Allan Block products from July 27, 2004, through
September 10, 2004. In the alternative, Dillon moves for a new trial. Specifically, Dillon argues
that a July 13, 2004, letter from Allan Block was insufficient to constitute proper notice under
the Agreement and that Allan Blocks acceptance of late payments over the years constitutes a
waiver of its right to terminate the Agreement for late payment. The Court instructed the jury as
follows:
One issue in this case is whether E. Dillon continued to manufacture Allan
Block product after the Production Agreement was terminated. In determining
whether the Production Agreement was terminated on the specific date, be aware
of the following law thats applicable to contracts. Parties to a contract may agree
to waive certain provisions of a contract. A waiver is the intentional
relinquishment of a known right. The party arguing waiver has the burden of
proof on that issue, on the issue of waiver.
Under the terms of the Agreement, Dillon was required to make royalty payme nts on the
fifteenth of each month for sales made during the preceding month. The parties agreed that a late
royalty payment would not be an event of default unless Dillon failed to cure the payment
within 10 days after receipt of written notice. Evidence at trial demonstrates that Allan Block
accepted late royalty payments from Dillon on numerous occasions.
On May 13, 2004, Allan Block served Dillon with notice of its intent to terminate the
Agreement. The notice triggered a 120-day expiration period, ending on or about September 10,
2004. On July 13, 2004, Allan Block sent Dillon a letter that read in part: In accordance with
our production agreement with E. Dillon, payment of royalties for May was due on June 15.
Please make payment immediately. As a reminder the June royalty payment is due on July
17
15th. On July 20, 2004, Allan Block sent another letter to Dillon, stating in part: In
accordance with our production agreement with E. Dillon, payment for royalties for May and
June were due on June 15th and July 15th. Please forward the June report and make payment
immediately. On July 27, 2004, Allan Block sent Dillon a letter declaring an Event of Default.
On July 29, 2004, Dillon sent a letter to Allan Block enclosing payment for May and June
royalties. Also in that letter, Dillon indicated its belief that it had until August 2, 2004, to cure
any alleged default.
Based on this evidence, the jury could reasonably have found that Allan Blocks July 13,
2004, letter constituted proper notice under the Agreement. In addition, the jury could
reasonably have found that Allan Block did not waive compliance with the notice provision of
the Agreement. Accordingly, Dillons motion for judgment as a matter of law is denied. The
Court also concludes that the jurys determination that the manufacture or sale of Allan Block
blocks after July 27, 2004, infringed Allan Blocks patents is not against the great weight of
evidence. Accordingly, Dillons motion for a new trial is denied.
D. Dillons motion for a new trial on damages
The Court turns to Dillons motion for a new trial on damages or, in the alternative,
remittitur. Dillon claims that if any of its post-trial motions on Technology, Producers
Improvement, or infringement of the 010 or 236 patents is granted, a new trial on damages is
warranted. Dillon also argues that Allan Block failed to produce evidence directly linking any of
Dillons contractual breaches or infringement allegations to damages experienced by Allan
Block.
The jury, following the Special Verdict Form, awarded damages for breach of contract
and patent infringement. Both amounts were 3,289. At trial, Allan Blocks damages expert
18
calculated a reasonable royalty rate for Dillons manufacture and/or sale of StoneLoc and Allan
Block products and determined that 3,289 was a reasonable calculation of Allan Blocks
damages. In doing so, he reviewed Dillons production, sales, inventory, and royalty
information. Allan Blocks expert showed the jury calculations for StoneLoc sales and royalties
and StoneLoc inventory and works- in progress. He also presented the jury with evidence
concerning Dillons production of Allan Block blocks after July 27, 2004, explaining that he
considered and reviewed updated sales, royalty, and inventory information on these blocks.
The Court concludes that there was sufficient evidence to allow a jury to find that Allan
Block was damaged in the amount of 3,289. Allan Bock is entitled to reasonably royalties
for Dillons manufacture or sale of (1) Allan Block blocks after July 27, 2004, as damages for
patent infringement; and (2) StoneLoc blocks, as damages stemming from Dillons breach of the
Agreement.8 The evidence supports the conclusion that 3,289 represents a reasonable royalty
for Dillons manufacture and/or sale of both StoneLoc blocks and Allan Block blocks. Thus, the
jurys damage award totaling 3,289 is not against the great weight of evidence and Dillons
motion for a new trial is denied.
8 The jury concluded that the StoneLoc block is a Producers Improvement. Under the
Agreement, Allan Block shall own the rights to and [Allan Block] may utilize Producers
Improvement without any payment to [Dillon]. Based on the language of the Agreement, the
jury could reasonably have concluded that Allan Block was entitled to royalties for Dillons
manufacture and sale of StoneLoc blocks.
19
E. Allan Blocks motion to amend the judgment to include attorney fees, enhanced
damages, and prejudgment interest
1. Attorney fees and prejudgment interest
Under Minnesota law, attorney fees are generally allowable if authorized by contract or
statute, or if a party acts in bad faith. Material Movers, Inc. v. Hill, 316 N.W.2d 13, 18 (Minn.
1982). Allan Block first argues that it is entitled to attorney fees under 35 U.S.C. 285.
Section 285 provides that [t]he court in exceptional cases may award reasonable attorney fees to
the prevailing party. The Court has granted Dillons motion for judgment as a matter of law on
the issue of willfulness. In light of that ruling and considering the circumstances of this case, the
Court declines to declare this an exceptional case and does not award attorney fees under section
285.
Allan Block also argues that it is entitled to attorney fees and prejudgment interest under
the terms of the Agreement. Paragraph 10.2 of the Agreement provides:
In case of any default by Producer as specified herein, Producer shall pay
all of Licensors costs of collecting any sums due to Licensor, including
reasonable attorneys fees actually incurred, and the lesser of 15% or the
maximum interest rate or rates charged permitted by law.
The United States District Court for the Western District of Wisconsin considered nearly
identical contract language under Minnesota law in Allan Block Corp. v. County Materials
Corp., 2007 U.S. Dist. LEXIS 30690 (W.D. Wis. April 23, 2007) (Wisconsin Action).9 In the
Wisconsin Action, Allan Block moved for an award of attorney fees and prejudgment interest
9 One of the contracts at issue in Allan Block v. County Materials states:
In the case of any default by Producer as specified herein, Producer shall
pay all of Licensors costs of collecting any sums due to Licensor, including
reasonable attorneys fees, and the lesser of 15% or the maximum interest rate or
rates charged permitted by law.
20
after prevailing at trial on a suit for breach of covenants not to compete. Allan Block, 2007 U.S.
Dist. LEXIS 30690, at *1,*26. The court in the Wisconsin Action explained tha t under the
relevant contract, Allan Block would be entitled to attorney fees if (1) there was a default and (2)
the action was brought in connection with collecting any sums due. Id. at *29. The court then
concluded that Allan Block did not bring the action for the purpose of collecting any sums due
and therefore was not entitled to attorney fees or prejudgment interest. Id. The court explained
that at the time Allan Block brought the action, it was uncertain whether the jury would award
damages and the specific amount of any damages was not known. Id. at *30.
Dillon argues that the courts ruling in the Wisconsin Action is binding here under the
doctrine of issue preclusion. Under that doctrine, parties are precluded from contesting matters
that they have had a full and fair opportunity to litigate. Simmons v. OBrien, 77 F.3d 1093,
1095 (8th Cir. 1996). Because the issue of preclusion was not thoroughly briefed by both
parties, the Court declines to decide whether the ruling in the Wisconsin Action is binding here.
Instead, the Court holds that Allan Block is not entitled to attorney fees or prejudgment interest
under the plain and ordinary meaning of Paragraph 10.2 of the Agreement.
Under Minnesota law, absent an ambiguity, contract terms are given their plain and
ordinary meaning. See Minneapolis Pub. Hous. Auth. v. Lor, 591 N.W.2d 700, 704 (Minn.
1999). Paragraph 10.2 provides for attorney fees and prejudgment interest in actions brought for
collecting any sums due. The plain meaning of due is immediately enforceable or
[o]wing or payable; constituting a debt. Blacks Law Dictionary 538 (8th ed. 2004). Allan
Block argues that this is an action for collecting any sums due because it is an action to collect
unpaid royalties. Cf. Allan Block, U.S. Dist. 2007 LEXIS 30690, at *30 (plaintiff failed to
allege that defendant owed a debt under the Agreement such as an unpaid royalty fee for sales of
21
Allan Block product). The Court disagrees. Allan Block brought this action for breach of
contract and patent infringement. While Allan Blocks Amended Complaint stated a breach of
contract claim for unpaid royalties, this claim was not submitted to the jury. The only contract
claims submitted to the jury related to Dillons development of the StoneLoc block. At the time
Allan Block filed this action, it was not certain whether Dillon infringed Allan Blocks patents or
that a jury would determine that Dillon breached the Agreement in developing the StoneLoc
block. In addition, the amount of damages was uncertain.10 The fact the damages in this case
were ultimately based on a reasonable royalty does not convert it into an action for collecting
any sums due. The Court concludes that Allan Block is not entitled to attorney fees or
prejudgment interest under the Agreement.
2. Enhanced damages
Allan Block seeks treble damages under 35 U.S.C. 284. The award of such damages is
within the discretion of the trial court. Read Corp., 970 F.2d at 826. Here, the Court has
determined that Dillons infringement was not willful. In addition, the Court does not find that
Dillon engaged in any misconduct during the litigation. The Court declines to award enhanced
damages. See id. at 830-31 (declining to award enhanced damages absent willful infringement).
F. Allan Blocks motion to amend the judgment to include orders for a permanent
injunction and specific performance
Allan Block moves to amend the judgment to include orders for a permanent injunction
and specific performance. In particular, Allan Block seeks a permanent injunction prohibiting
infringement of the 010 and 236 patents; specific performance barring use of Allan Blocks
Technology, including the manufacture of StoneLoc or Allan Block blocks; specific performance
10 In its Amended Complaint, Allan Block indicated that damages were to be proven at trial.
22
requiring return of the molds; and specific performance requiring assignment of U.S. Patent No.
7,185,470 (470 patent).
1. Permanent injunction
Under 35 U.S.C. 283, a court may grant injunctions in accordance with the principles
of equity to prevent the violation of any right secured by patent. The Court considers
(1) whether the plaintiff suffered an irreparable injury; (2) whether remedies available at law are
inadequate; (3) the balance of the hardships; and (4) the public interest. eBay, Inc. v.
MercExchange, L.L.C., 126 S. Ct. 1837, 1839 (2006). The decision whether or not to grant
permanent injunctive relief is within the discretion of the court. Id. Here, the Court has
determined that Dillons manufacture or sale of the StoneLoc block does not infringe the 010
patent or the 236 patent. Thus, the Court denies Allan Blocks motion for a permanent
injunction insofar as it seeks to enjoin Dillons sale of StoneLoc blocks under section 283. The
jury determined that Dillons manufacture or sale of Allan Block blocks after July 27, 2004,
infringed Allan Blocks patents. That determination stands. After considering the relevant
factors, the Court grants Allan Blocks motion for a permanent injunction prohibiting
infringement of the 010 and 236 patents through the future manufacture or sale of Allan Block
blocks. In short, Allan Block will be irreparably harmed if Dillon is not enjoined from
manufacturing or selling Allan Block blocks, monetary damages are inadequate to compensate
for any continued infringement, and the balance of the harms and public interest favor issuance
of an injunction. The Court, however, does not enjoin Dillon from selling its remaining
inventory of Allan Block blocks. The record indicates that the jurys damage award included a
reasonable royalty for all Allan Block blocks remaining in Dillons inventory. It would be
inequitable to prohibit Dillon from selling the blocks for which it must pay royalties.
23
2. Specific performance
Allan Block moves for an order requiring Dillon to specifically perform under the terms
of the Agreement. In particular, Allan Block seeks an order requiring Dillon (1) to return Allan
Block and StoneLoc molds and core forming bars; (2) to stop using Allan Block Technology,
including the manufacture of Allan Block or StoneLoc blocks; and (3) to transfer the title and
assign all rights and interest in the 470 Patent to Allan Block.
Specific performance is an equitable remedy within the sound discretion of the district
court. See Walser v. Toyota Motor Sales, U.S.A., Inc., 43 F.3d 396, 403 (8th Cir. 1994); Lilyerd
v. Carlson, 499 N.W.2d 803, 811 (Minn. 1993). In deciding whether to award specific
performance, the Court balances the equities in the case. Metro Motors v. Nissan Motor Corp.,
339 F.3d 746, 749 (8th Cir. 2003).11
The jury determined that Dillon breached the Agreement by using Allan Block
Technology to develop the StoneLoc block, failing to return Molds to Allan Block, and
developing a Producers Improvement.12 The jury also determined that the StoneLoc block is a
Producers Improvement. Under the Agreement, Allan Block owns the rights to and [] may
utilize Producers Improvement without any payments to [Dillon]. Therefore, Allan Block
11 Allan Blocks request for an order prohibiting the use of Allan Block Technology could
be considered a request for injunctive relief, not specific performance. With respect to that
request, the Court considers whether Allan Block will suffer irreparable harm if the injunction is
not granted. See United States v. Green Acres Enters., Inc., 86 F.3d 130, 132-33 (8th Cir. 1996);
see also Amoco Prod. Co. v. Village of Gambell, AK, 480 U.S. 531, 546 n.12 (1987) (standard
for preliminary and permanent injunction basically the same; party seeking permanent injunction
must show actual success on the merits).
12 In the event of termination, Paragraph 10.1 of the Agreement provides that Producer
shall: (i) immediately cease to use the Technology, including the Molds; (ii) immediately return
all Technology, including specifically Molds, to Licensor . . . and (iii) immediately cease
manufacture of the Block.
24
owns the rights to the StoneLoc block. In addition, evidence at trial established that Dillon
applied for and was granted a patentthe 470 patentthat covers the StoneLoc block.
The circumstances of this case make the jurys monetary award inadequate. It would be
inequitable and contrary to the purpose of the Agreement to allow Dillon to continue to
manufacture and sell the StoneLoc block (the rights to which Allan Block owns under the
Agreement), to retain possession of Allan Block molds or Technology, or to retain ownership of
the 470 patent. The Court therefore concludes that Allan Block is entitled to the following
equitable relief. First, Allan Block is entitled to an order requiring Dillon to stop manufacturing
or selling the Allan Block block and the StoneLoc block.13 Second, Allan Block is entitled to an
order requiring Dillon to return Allan Block molds and Technology. The Technology to be
returned includes any tangible Technology covered by Paragraph 3.1 of the Agreement. Third,
because the jury determined that the StoneLoc block is a Producers Improvement, equity
demands that Dillon be required to turn over to Allan Block the molds and core forming bars for
the StoneLoc block. Finally, because the 470 patent covers the StoneLoc block, Allan Block is
entitled to an order requiring Dillon to transfer title and to assign all rights and interests in that
patent to Allan Block.
III. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:
1. Allan Blocks motion for judgment as a matter of law on literal
infringement of the 010 patent [Docket No. 363] is DENIED.
13 Again, this injunction does not prohibit Dillon from selling its remaining inventory of
Allan Block blocks. Similarly, Dillon is not enjoined from selling its remaining inventory of
StoneLoc blocks. As with the Allan Block blocks, the record indicates that the jurys damage
award included a reasonable royalty for StoneLoc blocks remaining in Dillons inventory. It
would be inequitable to prohibit Dillon from selling the blocks for which it must pay royalties.
25
2. Allan Blocks motion for a new trial on literal infringement of the 010
patent [Docket No. 363] is DENIED.
3. Allan Blocks motion for a new trial on literal infringement of the 236
patent [Docket No. 363] is DENIED.
4. Allan Blocks motion to amend the judgment to include attorney fees,
enhanced damages, and prejudgment interest [Docket No. 361] is
DENIED.
5. Allan Blocks motion to amend judgment to include orders for a
permanent injunction and specific performance [Docket No. 362] is
GRANTED IN PART:
(a) Dillon and those in privity or acting in concert with Dillon are
permanently enjoined, in accordance with 35 U.S.C. 283, from
further infringement of the 010 patent and the 236 patent,
including but not limited to the manufacture or sale of Allan Block
blocks, during the remainder of the term for which such patents
have been granted. This injunction does not prohibit Dillon from
selling its remaining inventory of Allan Block blocks.
(b) Dillon and those in privity or acting in concert with Dillon shall
immediately: (1) cease manufacturing or selling Allan Block
blocks and StoneLoc blocks; (2) return to Allan Block all Allan
Block molds and tangible Technology covered by Paragraph 3.1 of
the Agreement; (3) turn over to Allan Block all molds and core
forming bars for the StoneLoc block; and (4) assign all rights and
interests in the 470 patent to Allan Block. This order does not
prohibit Dillon from selling its remaining inventory of Allan Block
blocks or StoneLoc blocks.
6. Dillons motion for judgment as a matter of law on noninfringement of the
010 patent under the doctrine of equivalents [Docket No. 345] is
GRANTED.
7. Dillons motion for a new trial on noninfringement of the 010 patent
under the doctrine of equivalents [Docket No. 345] is CONDITIONALLY
GRANTED.
8. Dillons motion for judgment as a matter of law on noninfringement of the
236 patent under the doctrine of equivalents [Docket No. 345] is
GRANTED.
9. Dillons motion for a new trial on noninfringement of the 236 patent
under the doctrine of equivalents [Docket No. 345] is CONDITIONALLY
GRANTED.
26
10. Dillons motion for judgment as a matter of law on willfulness [Docket
No. 345] is GRANTED.
11. Dillons motion for a new trial on the issue of willfulness [Docket
No. 345] is CONDITIONALLY GRANTED.
12. Dillons motion for judgment as a matter of law regarding Producers
Improvement [Docket No. 345] is DENIED.
13. Dillons motion for a new trial on issue of Producers Improvement
[Docket No. 345] is DENIED.
14. Dillons motion for a new trial regarding Technology [Docket No. 346] is
DENIED.
15. Dillons motion for judgment as a matter of law on waiver [Docket
No. 345] is DENIED.
16. Dillons motion for a new trial on waiver [Docket No. 345] is DENIED.
17. Dillons motion for a new trial on damages [Docket No. 346] is DENIED.
Dated: August 20, 2007
s/ Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge
 

 
 
 

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