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Skyline Steel, LLC v. Pilepro, LLC

United States District Court, S.D. New York

April 24, 2015

SKYLINE STEEL, LLC, Plaintiff,
v.
PILEPRO, LLC, Defendant

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[Copyrighted Material Omitted]

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For Skyline Steel, L.L.C., Plaintiff: Aldo A Badini, Susannah Providence Torpey, Winston & Strawn LLP (NY), New York, NY; Alexandra Bridget McTague, Winston & Strawn LLP, Palo Alto, CA; Jay Laurie Lazar, PRO HAC VICE, Law Office of Jay L. Lazar, Bethlehem, PA; Jenna Weis Logoluso, PRO HAC VICE, Winston & Strawn LLP (CA), Los Angeles, CA; Merritt Diane Westcott, Winston & Strawn LLP (TX), Houston, TX.

For Pilepro, L.L.C., Defendant: David R. Wright, LEAD ATTORNEY, Bret D Tingey, Larry R. Laycock, Tyson K Hottinger, Maschoff Brennan, Salt Lake City, UT; Michael C Van, PRO HAC VICE, Gregory W Schulz, Micah Frank McBride, Robert T Spjute, Shumway Van & Hansen, Salt Lake City, UT.

For Pilepro, L.L.C., Counter Claimant: David R. Wright, LEAD ATTORNEY, Bret D Tingey, Larry R. Laycock, Tyson K Hottinger, Maschoff Brennan, Salt Lake City, UT; Michael C Van, PRO HAC VICE, Micah Frank McBride, Shumway Van & Hansen, Salt Lake City, UT.

For Skyline Steel, L.L.C., Counter Defendant: Aldo A Badini, Susannah Providence Torpey, Winston & Strawn LLP (NY), New York, NY; Alexandra Bridget McTague, Winston & Strawn LLP, Palo Alto, CA; Jay Laurie Lazar, PRO HAC VICE, Law Office of Jay L. Lazar, Bethlehem, PA; Jenna Weis Logoluso, PRO HAC VICE, Winston & Strawn LLP (CA), Los Angeles, CA; Merritt Diane Westcott, Winston & Strawn LLP (TX), Houston, TX.

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OPINION AND ORDER

JESSE M. FURMAN, United States District Judge.

This bitter patent suit involves two manufacturers of sheet pile wall systems, which are often used to construct temporary walls to retain soil or water. Plaintiff Skyline Steel, LLC (" Skyline" ) sues Defendant PilePro, LLC (" PilePro" ), seeking a declaration that it has not infringed one of PilePro's patents and that the patent is invalid, as well as damages under the Lanham Act, 15 U.S.C. § 1051, et seq, and state law in connection with accusations PilePro made -- in letters to potential customers and on a website -- that Skyline was infringing its patent. Since October 23, 2014, the parties collectively have filed at least seven major substantive motions (and various other less substantial applications). This Opinion and Order addresses the final two: (1) Skyline's motion for partial summary judgment and (2) Skyline's motion for spoliation sanctions. In addition, both parties seek permission to file certain materials relating to the two motions under seal or in redacted form.

For the reasons explained below, Skyline's motion for partial summary judgment is GRANTED with respect to its noninfringement claim and DENIED as to its other claims, and its motion for spoliation sanctions is GRANTED. Further, although PilePro has not requested it, PilePro is GRANTED summary judgment on the question of bad faith with respect to most of Skyline's claims.

BACKGROUND

The following facts, drawn from the admissible materials submitted by the parties and materials of which the Court may take judicial notice, are undisputed except where noted. See Vermont Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004). This case concerns sheet pile wall systems. Sheet piles are " long structural wall sections with a vertical interlocking system that creates a continuous wall" that can be used to retain soil or water. (Pl. Skyline Steel, LLC's Statement Undisputed Material Facts Pursuant Local R. 56.1 (Docket No. 104) (" Pl.'s SUF" ) ¶ ¶ 3-4; Def.'s Responsive Claim Construction Br. (Docket No. 59) (" PilePro's Claim Constr. Br." ) 1, 5). The wall sections " are held together by longitudinal grooves called 'interlocks.'" (Pl.'s

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SUF ¶ ¶ 3-4). How well the interlocks function is critical; if the connections between sheet piles are too loose, for example, there may be " seepage" or forces may not be distributed evenly throughout the wall. (PilePro's Claim Constr. Br. 2-3).

Both Skyline and PilePro sell sheet pile components, including connectors. (Pl.'s SUF ¶ ¶ 8-10). PilePro owns United States Patent No. 8,556,543 (the " '543 Patent" ), which was issued on October 15, 2013. (Pl.'s SUF ¶ ¶ 11-12). That patent, which contains only method claims, covers a particular way of making sheet pile wall components with at least one interlock. (Pl.'s SUF ¶ ¶ 14-15). To the extent relevant here, the method consists of two steps: (1) " producing a preliminary product through forming, wherein a material accumulation is formed during the forming of the preliminary product at a section that is to be provided with the at least one interlock while the remaining section is free of material accumulation," and (2) " shape-cutting the at least one interlock at a section of the preliminary product that is to be provided with the at least one interlock." (Decl. Jenna Logoluso Supp. Skyline Steel, LLC's Mot. Partial Summary Judgment (Docket No. 105) (" Logoluso MSJ Decl." ), Ex. 4 (" '543 Patent" ), at 5-6).

Notably, to obtain the '543 Patent, PilePro had to distinguish an earlier patent, the " Hermes I Patent." That patent similarly covers a sheet pile wall component with material accumulation, but it describes an invention with material accumulation all along the flange, not just at " a section . . . that is to be provided with the . . . interlock." ('543 Patent 5-6). As discussed in more detail below, PilePro went back and forth with the United States Patent and Trademark Office (" PTO" ) several times in order to differentiate its proposed patent from Hermes I. As a result of that back and forth, PilePro added the phrase " while the remaining section is free of material accumulation" to its proposed claim description. (Logoluso MSJ Decl., Ex. 28, at 2). PilePro explained that its patent thus differentiated " between the interlock at the longitudinal edge and the remaining section." ( Id. at 8 (emphases added)).

Skyline is the distributor of a sheet piling system, called the " HZM System," which is manufactured by ArcelorMittal Commercial RPS (" ArcelorMittal" ). (Pl.'s SUF ¶ 8). ArcelorMittal is also the owner of the Hermes I Patent. (Pl.'s SUF ¶ 117). Just eight days after the '543 Patent issued, Skyline received a letter from PilePro stating that the '543 Patent " may cover" the HZM System. (Pl.'s SUF ¶ 50). PilePro sent similar letters to several of Skyline's potential customers -- including one contractor that had already entered into a contract with Skyline to purchase the HZM System -- warning them that PilePro would seek to hold them liable for any damages to which it may be entitled. (Pl.'s SUF ¶ ¶ 51-54, 56-57, 60-61). Further, from approximately mid-November 2013, through January 24, 2014, PilePro posted a warning on a public website that it operates, www.isheetpile.com (the " Website" ), stating that the HZM System " infringes a U.S. Patent owned by PilePro, LLC." (Pl.'s SUF ¶ ¶ 76-78, 81).

Skyline filed this action on November 15, 2013, seeking a declaration that the HZM System does not infringe the '543 Patent and that the '543 patent is invalid. (Docket No. 1). On December 20, 2013, it amended the Complaint to add Lanham Act and state law claims. (Docket No. 3). In July 2014, PilePro filed a motion to dismiss based on an unconditional covenant not to sue it had granted Skyline, which it argued deprived the Court of jurisdiction. (Docket No. 38; see Pilepro's Mem. Law Supp. Mot. To Dismiss Counts One & Two Skyline's First Am. Compl.

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(Docket No. 39) 1). In response, Skyline filed a Second Amended Complaint (Docket No. 58) (the " Complaint" ), and PilePro filed a second motion to dismiss (Docket No. 62). On September 23, 2014, after a claims construction hearing, the Court adopted Skyline's proposed definition of " material accumulation" as " material giving the sheet pile component a thickness greater than at its least thickness" (Docket No. 89 (" Hearing Tr." ), at 59-60; Opening Claim Constr. Br. Pl., Skyline Steel, LLC (Docket No. 54) (" Skyline's Claim Construction Br." ) 13), and PilePro's definition of " free of material accumulation" as the phrase's " plain and ordinary meaning" (Hearing Tr. 65-66; Def.'s Responsive Claim Construction Br. (Docket No. 59) (" PilePro's Claim Construction Br." ) 24). The Court also denied PilePro's motion to dismiss, and granted Skyline permission to file an early summary judgment motion. (Docket Nos. 83-84, 89).

Skyline filed its motion for partial summary judgment on October 23, 2014 (Docket No. 102), and its motion for spoliation sanctions on November 8, 2014 (Docket No. 169). The latter did not become fully submitted until March 26, 2015 (Docket No. 267); and on April 10, 2015, at the Court's direction, the parties filed supplemental memoranda of law with respect to both motions. (Docket Nos. 277, 280).

DISCUSSION

As noted, Skyline brings two motions. First, it seeks summary judgment with respect to its declaratory judgment claim of noninfringement and on the issue of bad faith, which is relevant to various claims. Second, it seeks spoliation sanctions for PilePro's alleged failure to preserve certain electronically stored information. The Court will begin with Skyline's motion for partial summary judgment, before turning to the motion for spoliation sanctions.

A. Skyline's Motion for Partial Summary Judgment

Summary judgment is appropriate where the admissible evidence and the pleadings demonstrate " 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(a). A dispute over an issue of material fact qualifies as genuine 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, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); accord Roe v. City of Waterbury, 542 F.3d 31, 35 (2d Cir. 2008). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In ruling on a motion for summary judgment, all evidence must be viewed " in the light most favorable to the non-moving party," Overton v. N.Y. State Div. of Military & Naval Affairs, 373 F.3d 83, 89 (2d Cir. 2004), and the court must " resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought," Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2d Cir. 2004). To defeat a motion for summary judgment, the non-moving party must advance more than a " scintilla of evidence," Anderson, 477 U.S. at 252, and demonstrate more than " some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The ...


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