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Hunter Douglas Inc. v. Great Lake Woods, Inc.

United States District Court, D. Colorado

March 27, 2019

HUNTER DOUGLAS INC., Plaintiff,
v.
GREAT LAKE WOODS, INC. and WATERS EDGE BLINDS AND WINDOW TREATMENTS, LLC, Defendants.

          FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDERS

          Robert E. Blackburn United States District Judge

         This matter came before me for a trial to the court on October 22, 2018. The plaintiff asserts in its complaint [#1][1] claims for direct patent infringement and active inducement of patent infringement. The patent at issue is U.S. Patent No. 8, 485, 242 (‘242 Patent) which is owned by the plaintiff. The defendants assert counterclaims for a declaration of non-infringement and a declaration that the ‘242 patent is invalid. The claims of the plaintiff and the defendants were as preserved in the Final Pretrial Order [#84].

         INTRODUCTION

         The plaintiff, Hunter Douglas, Inc. (Hunter Douglas), filed this patent infringement action against the defendants, Great Lake Woods, Inc. (Great Lake) and Waters Edge Blinds and Window Treatments, LLC (Waters Edge) to stop the defendants from making, using, selling and offering for sale blinds that infringe the claims of the ‘242 Patent. The patent is titled "Selective Tilting for Blinds Including Driven Drums." The '242 Patent reflects a new and improved window covering that allows the slats to nest together in pairs and provide twice the view of a standard blind in an open position while also allowing the slats to tilt from fully closed in one direction to fully closed in another direction. This novel blind was a significant improvement over the prior art. The blind is claimed in asserted claims 12-15 and 17 of the '242 Patent. Hunter Douglas seeks a permanent injunction against infringement by the defendants and an award of attorney fees.

         On October 22, 2018, this matter came before me for trial on the conflicting claims. The evidence at trial establishes that shortly after entering the window blind field, the defendants manufactured and sold their Doubleview Blind product. The Doubleview Blind is a blind product which also provides twice the view of a standard blind in an open position and allows the slats to tilt from fully closed in one direction to fully closed in another direction. Even after this lawsuit was filed, the defendants wanted to continue selling their Doubleview Blind product. The evidence establishes that the Doubleview Blind product infringes the ‘242 Patent owned by Hunter Douglas.

         The defendants argue that the asserted claims are not enabled because the specification uses the word "cable" and the claims use the word "cord." This argument ignores that the defendants did not seek construction of that term. Moreover, the explicit disclosure and teachings of the '242 Patent explain that "cord" and "cable" "are sometimes used interchangeably in this specification" and that the '242 Patent "will sometimes refer to the tilt cables when we mean the entire associated ladder tape including both the front and rear tilt cables . . . and this usage will be obvious within the context in which it used". [Trial Ex. 1 at 2:30- 32 and 9:65-10:3]. Use of the terms "cord" and "cable" in the ‘242 Patent is further consistent with how those terms are understood by Hunter Douglas and those of ordinary skill in the art. [Trial Tr. 39:22-25, 40:20 -41:9, 49:8-12].

         The defendants repeat their argument that the claims of the ‘242 Patent are limited to certain disclosed specific drum mechanisms. The defendants focus on the figures depicting the exemplary embodiments, arguing that because specific mechanisms for manipulating the ladder tapes are disclosed, the Doubleview Blind product must fall outside of the claims. This argument ignores the order [#65] construing disputed patent claim terms. Further, this argument ignores controlling law, which provides that it is impermissible to import limitations from the specification into the claims.

         Having judicially noticed all relevant adjudicative facts in the file and record of this case pro tanto; having considered the stipulations of the parties; having considered the evidence educed at trial in its various forms; having determined the credibility of the witnesses; having weighed the evidence; having considered all reasons stated, arguments advanced, and the authorities cited by the parties in written and oral form; and being otherwise sufficiently advised, the court enters the following findings of fact established by a preponderance of the evidence, conclusions of law, orders, and judgment.[2]

         JURISDICTION & CONTROLLING LAW

         This court has jurisdiction over this case under 35 U.S.C. §§ 1 et seq. (Patent Act), as well as 28 U.S.C. § 1331 (federal question) and 28 U.S.C. § 1338 (patent infringement).

         FINDINGS OF FACT

         The defendants stipulated to essentially all of the facts relevant to this case. These findings are based on the stipulated facts stated by the parties in the Final Pretrial Order [#84] entered October 4, 2018, and the exhibits and testimony received at trial on October 22, 2018.

         I. The Parties and Industry Overview

         1. The plaintiff, Hunter Douglas, Inc., is a Delaware corporation with its principal place of business in Pearl River, New York. [Trial Ex. 62].

         2. Hunter Douglas is a leader in the window covering industry with innovative new and proprietary window covering products. [Trial Exs. 1-2; Trial Tr. 21:8-13, 22:4-23:6]. Hunter Douglas holds many window-covering patents and other intellectual property rights. [Trial Tr. 25:2-15]. Hunter Douglas sells its window covering products to distributors in the industry. [Trial Tr. 25:16-19]. Among other products, Hunter Douglas sells a variety of horizontal and vertical blinds, in various materials (wood and fabric) and sizes. [Trial Ex. 82; Trial Tr. 23:7-10, 24:3-5, 25:11-15, and 32:22 - 34:25].

         3. Defendant, Great Lake Woods, Inc., is a Michigan corporation with its principal place of business in Holland, Michigan. [Trial Ex. 63]. Defendant, Waters Edge Blinds and Window Treatments, LLC, is a Michigan Limited Liability Company with its principal place of business in Holland, Michigan. [Trial Ex. 64]. Great Lake has 100 employees and is the parent, manager, and affiliate of Waters Edge. [Trial Ex. 63 and Trial Ex. 71 at 9:22-23]. Waters Edge is a wholly owned subsidiary of Great Lake. [Trial Ex. 71 at 6:17-18]. Keith Malmstadt is the President of Great Lake Woods; he owns 85 per cent of the company; and he has been with the company for more than 25 years. [Trial Ex. 71 at 4:8-11, 4:12-13, and 6:15-16]. With the exception of accounting functions, Great Lake and Waters Edge are treated as one company sharing offices. No. corporate agreements or documents between Great Lake and Waters Edge exist. [Trial Ex. 71 at 8:21-25, 9:1-5, and 154:5-14].

         4. Historically, Great Lake was in the business of manufacturing moldings and millwork for cabinets. [Trial Ex. 71 at 9:19-21 and 10:9-12]. However, Mr. Malmstadt wanted to get into the window treatment industry and created Waters Edge in 2012 to manufacture and distribute window treatment blinds. [Trial Ex. 71 at 10:1-3 and 11:1-3]. Mr. Malmstadt found that it was relatively easy to get into the window covering industry as there were no significant overhead costs and he was readily able to purchase or manufacture component parts and assemble its window covering products. [Trial Ex. 71 at 46:1-16 and 39:6-21].

         5. Waters Edge manufacturers one, two, and two and half inch horizontal blinds, in both wood and faux wood, as well as vertical blinds. [Trial Ex. 71 at 11:4-8]. Waters Edge sells its window covering products to its customers who are distributors in the industry. [Trial Ex. 71 at 11:9-10].

         II. Hunter Douglas Invents and Patents the Inventions Claimed in the '242 Patent

         6. Donald Fraser and his supervisor, Richard Anderson, in their positions with Hunter Douglas, invented a new and improved blind that allows the slats to nest together and provide twice the view of a traditional blind in an open position while also allowing the slats to tilt from fully closed in one direction to fully closed in the other direction. [Trial Ex. 2; Trial Tr. 25:20 - 26:17, 28:14-29:1].

         7. For this invention, Hunter Douglas was granted U.S. Patent No. 8, 485, 242 (the '242 Patent) entitled "Selective Tilting for Blinds Including Driven Drums" by the Commissioner for Patents with the United States Patent and Trademark Office. [Trial Exs. 1 and 65].

         8. Mr. Fraser and Mr. Anderson assigned their right and interest in and to the invention to their employer, Hunter Douglas, and that assignment is recorded at the United States Patent and Trademark Office. [Trial Ex. 2]. Thus, Hunter Douglas owns all rights in and to the '242 Patent. [Trial. Ex. 66].

         9. The '242 Patent describes a number of key innovations in the window treatment field - innovations that make the Hunter Douglas product more versatile and customizable in terms of privacy, glare elimination, and light control. [Trial Ex. 1; Trial Tr. 27:14 - 28:13].

         10. The relevant asserted inventions of the '242 Patent generally relate to blinds capable of different open or closed configurations, including a double pitch configuration. A double pitch configuration is highly desirable because it allows more light through the blind and an increased unhindered viewing area. [Trial Ex. 1 at 1:33-35; Trial Tr. 27:14 - 28:13]. The features, configurations, functions, operability, and exemplary embodiments of the inventions are described in detail in the '242 Patent. [Id.].

         11. Figure 1 of the '242 Patent discloses a blind 10 that "includes a head rail 12 and a plurality of slats 14 suspended from the head rail 12 by means of tilt cables 16 and their associated cross cords 16t (see FIG. 20), which together comprise the ladder tapes." [Trial Ex. 1 at 5:34-37; Trial Tr. 29:5 - 30:11, 35:5 - 36:22]. Moreover, "[l]ift cords 20 are fastened at the bottom of the bottom slat (or bottom rail) 18" and that "[t]ilt cords 24 operate a cord titer 26, which is used to rotate a tilt rod 28 about its longitudinal axis in order to actuate the tilt stations 30." [Trial Ex. 1 at 5:37-45; Trial Tr. 30:12-25].

         12. The specification further discloses that "16 is the generic designation for tilt cables . . . the suffix "a" is used for the first set and "b" is used for the second set of tilt cables . . . [and] the additional suffix "f" or "r" is used to indicate front (room side) or rear (wall side or window side). [Trial Ex. 1 at 5:45-52; Trial Tr. 31:22-25, 32:9-21].

         13. Figure 20 of the '242 Patent discloses that "[t]he top slat 14t of each pair of top and bottom slats 14t, 14b is supported by a cross cord 16t extending between the first set of front and rear tilt cables 16af, 16ar." [Trial Exs. 1 at 9:63-65 and 83 at 10-15; Trial Tr. 46:3-25]. For convention, the '242 Patent discloses that "a" is for the first set of tilt cables, "b" is for the second set of tilt cables" (supporting the top "t" or bottom "b" slats in each pair of top and bottom slats), "f" is for the front tilt cables and "r" is for the rear tilt cables. [Trial Exs. 1 at 9:16-28 and 83 at 10-15; Trial Tr. 46:3-25].

         14. Importantly, the '242 Patent explains that "cord" and "cable" "are sometimes used interchangeably in this specification" and that the '242 Patent "will sometimes refer to the tilt cables when we mean the entire associated ladder tape including both the front and rear tilt cables . . . and this usage will be obvious within the context in which it used". [Trial Ex. 1 at 2:30-32 and 9:65-10:3; Trial Tr. 42:16 - 43:9].

         15. The interchangeability of these terms is consistent with how Hunter Douglas treated these terms in related patent applications. For example, in an amendment submitted to the U.S. Patent and Trademark Office in connection with the prosecution of the parent application, Hunter Douglas remarked that "some of the existing claims have been amended . . . to change the word 'cable' to 'cord' to make the terminology consistent with claim 20." [Trial Ex. 4 at 2; Trial Tr. 37:17 - 40:16]. Hunter Douglas further explained "the words 'cable' and 'cord' are used interchangeably in the field of blinds, so this change in terminology is not intended to change the scope of the claims." [Id.]

         16. Consistent with the disclosure of the '242 Patent and the statements of Hunter Douglas to the PTO, one of ordinary skill in the art understands that the terms "cord" and "cable" are used interchangeably in the field of window blinds. [Trial Tr. 40:20 - 41:9 ("THE COURT: How would an ordinary person skilled in the art that's at issue here view those terms relationally? THE WITNESS: They're synonyms to each other. They're interchangeable") and 48:8-12 ("Q Now, do you believe that a person of ordinary skill in the field of window blind components would understand that the tilt cords recited in Claim 12 refer to a component of the ladder tape 16 shown in figures 1 and 20 of your patent? A Yes, I do."].

         17. The '242 Patent further teaches that the slats 14 are open in a double pitch configuration when each pair of adjacent slats (14t and 14b) "is stacked right up against each other" and that the large empty space between the pairs of adjacent slats is "approximately twice the standard distance, or double the pitch (dp) between slats of a conventional blind having evenly-spaced slats." [Trial Ex. 1 at 9:56 - 62; Trial Tr. 31:6 -15 and 43:10 - 45:9].

         18. Claim 12 recites a blind for selectively covering an architectural opening, comprising: a head rail (12), a plurality of slats (14) suspended from the head rail, including a plurality of pairs of upper and lower adjacent slats (14t and 14b); first and second ladder tapes (16af and 16ar and 16bf and 16br) extending downwardly from said head rail, each of said first and second ladder tapes including a front tilt cord (16af and 16bf) and a rear tilt cord (16ar, 16br), wherein the first ladder tape supports and is operatively connected to tilt the upper slats of each pair of upper and lower adjacent slats and the second ladder tape supports and is operatively connected to tilt the lower slats of each pair of upper and lower adjacent slats, each of said tilt cords having a first end; a tilt rod (28) in driving engagement with the first ends of the front and rear tilt cords of the first and second ladder tapes, wherein rotation of said tilt rod raises and lowers the front and rear tilt cords of the first and second ladder tapes to move the slats from a first position in which the upper and lower adjacent slats of each pair are stacked against each other in a double pitch open position (Fig. 20 "dp") to a second position in which the pairs of upper and lower slats are in a tilted closed position (Fig. 21). [Trial Ex. 1 and 83; Trial Tr. 45:10 - 49:14][3].

         III. The Person of Ordinary Skill in the Art

         19. Mr. Fraser, as a named inventor of the '242 Patent and having worked in the industry for more than 25 years, is an expert in the field of window blinds and he is at least a person of ordinary skill in the art. [Trial Tr. 21:8 - 13, 21:21 - 25:1, and 40:8 - 16].

         20. Based on his education, work experience, and interactions with engineers in the window blind industry, Mr. Fraser capably testified as to how a person of ordinary skill in the art would understand the disclosure of the '242 Patent and its claims. [Id., see also Trial Tr. 40:20 - 41:9 and 48:8 - 49:14].

         IV. The Defendants Made, Sold, and Offered for Sale Doubleview Blinds In the United States

         21. One window covering product produced by Waters Edge is called the Doubleview Blind. [Trial Exs. 67-70 and 71 at 11:4-8]. In some instances, the defendants use the term Broadview Blind to describe their Doubleview Blind. [Trial Ex. 71 at 88:4-9]. For convenience, this court will refer to both the Doubleview and Broadview Blind products as the "Doubleview Blind."

         22. The defendants obtained a license to use certain patents owned by Tony Lai. [Trial Ex. 7]. Mr. Lai owned certain patents in the window blind field. The plaintiff sought to use the Lai patents as part of the Doubleview Blind product of the defendants. The license agreement was effective January 1, 2014. The "Exploitation" section of the license explicitly states that the defendants “shall also have the right to conduct any litigation required to defend the Patent, including taking any action against Hunter Douglas." [Trial Ex. 7 at Section 1.3 (emphasis added) and Trial Ex. 71 at 151:11 (noting agreement was executed even though agreement produced was not counter-executed by defendants)].

         23. Waters Edge lined up one if its largest distributors, Mel Bakalar at Glider Blinds, to resell its Doubleview Blinds [Trial Exs. 67-70 and 71 at 12:10-15, 14:6-8 and 17:16-22]. Mr. Bakalar was to be the sole distributor for the Doubleview Blind. [Trial Ex. 71 at 51:13-14 and 51:16-17]. Mr. Bakalar negotiated a Sales, Marketing, and Manufacturing Agreement with Great Lake and Waters Edge whereby Mr. Bakalar would receive a 10% commission for his sales of the Broadview Blind and a 5% commission on all Broadview Blinds sold by others "to acknowledge Mel Bakalar's contribution to the development of the Broad View Blind." [Trial Ex. 60].

         24. The defendants promoted and marketed their Doubleview Blind at a trade show in January 2014. [Trial Ex. 71 at 64:22-65:5 and 70:15-17].

         25. The defendants do not dispute that Waters Edge sold Doubleview Blind products. [Trial Exs. 54, 59, 61, and 67-70]. In 2014, the defendants began manufacturing and selling their Doubleview Blind. [Trial Exs. 67-70 and 71 at 17:13- 15, 25:21-24, 51:13-14 and 51:16-17]. Glider Blinds purchased 58 Doubleview Blinds. [Trial Exs. 59, 61, and 71 at 52:1-2].

         26. The trade show and sales were enough for Hunter Douglas to discover that the manufacture and sale of the Doubleview Blind infringed its '242 Patent. On October 21, 2014, Hunter Douglas sent a letter to the defendants notifying them of their infringing activities. [Trial Ex. 10].

         27. Mr. Malmstadt received a copy of the Hunter Douglas letter of October 21, 2014. He forwarded it on to his business partners, Messrs. Bakalar and Lai, two days later and stated that "[he did] not want to stop production on a product that has such a good beginning." [Trial Exs. 10-11 and 71 at 105:20-22, 106:20-25].

         28. Even after Hunter Douglas filed its Complaint [#1] on January 15, 2015, Mr. Bakalar of Glider Blinds informed Mr. Lai, the supplier of Doubleview Blind components, that Glider Blinds wanted to keep selling the Doubleview Blind because he believed it could be a new trend in wood blinds. [Trial Ex. 71 at 128:20-23].

         29. Having sold about $350, 000 in all blind products in 2015, the defendants thought it was worthwhile to get approval to manufacture the Doubleview Blind to shore up the losses from their sales in 2014-2015. [Trial Ex. 71 at 32:19-21 and 129:9-16].

         30. After receiving the Hunter Douglas letter, Mr. Malmstadt still wanted to sell the Doubleview Blind. [Trial Ex. 71 at 112:18-20]. The defendants continued to sell the Doubleview Blind. [Trial Ex. 54 at 1-2 (Order Confirmation identifying the "Date Ordered: 01/09/2015" and "Likely Ship Dated: 01/23/2015) and Trial Ex. 61 at 22 (Invoice identifying "Invoice date 01/29/2015"). The sole distributor for the defendants, Glider Blinds, continued to prepare to market and promote the Doubleview Blind at a January 2015 trade show in Las Vegas. [Trial Ex. 71 at 123:22 - 124:2]. A desire to keep ...


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