Cargo Protectors, Inc. v. American Lock Co.

92 F. Supp. 2d 926, 2000 U.S. Dist. LEXIS 4907, 2000 WL 370504
CourtDistrict Court, D. Minnesota
DecidedApril 11, 2000
DocketCivil 00-284 ADM/AJB
StatusPublished
Cited by3 cases

This text of 92 F. Supp. 2d 926 (Cargo Protectors, Inc. v. American Lock Co.) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cargo Protectors, Inc. v. American Lock Co., 92 F. Supp. 2d 926, 2000 U.S. Dist. LEXIS 4907, 2000 WL 370504 (mnd 2000).

Opinion

MEMORANDUM OPINION AND ORDER

MONTGOMERY, District Judge.

I. INTRODUCTION

The above-titled matter came on for hearing before the undersigned United States District Judge on March 16, 2000, pursuant to Plaintiff Cargo Protectors, Inc.’s (“Cargo Protectors”) motion for a preliminary injunction [Doe. No. 7]. Cargo Protectors argues that Defendant American Lock Company’s (“American Lock”) sale of a “hockey puck” lock guard device violates a confidentiality agreement between the parties and infringes a patent held by Cargo Protectors. For the reasons set forth below, the motion is denied.

II. BACKGROUND 1

Cargo Protectors is a two-employee business based in Minneapolis, Minnesota, that designs, manufactures, and sells locks and lock-related equipment. The company holds an exclusive license for the rights to United States Patent No. 5,172,574 (the “ ’574 Patent”), which patents a round, metal guard to protect the hasps of “hockey puck” padlocks commonly used to secure commercial delivery van doors and other doors. Ralph J. Perfetto invented and patented the device and granted an exclusive license to Cargo Protectors. See Declaration of Avron Rosenberg, Ex. E.

In 1997, Cargo Protectors approached lock companies, including American Lock, in an effort to market customized padlock guards based on the ’574 Patent. American Lock, located in Illinois, is a lock device manufacturer with nationwide sales. American Lock expressed interest in the padlock guard and sent to Cargo Protectors on September 12, 1997 an Idea Submission Policy & Agreement (“Idea Submission Agreement” or “Agreement”). See Rosenberg Deck, Ex. B (hereinafter “Agreement”).

According to an internal memorandum dated September 22, 1997, American Lock had already tested a shrouded hasp presented by another company. See Affidavit of William F. Noone, Ex. 9. Regardless, American Lock entered into the Idea Submission Agreement with Cargo Protectors on October 1, 1997. See Agreement at 2. It is unclear whether American Lock had disclosed its knowledge of the other company’s hasp protector to Cargo Protectors before entering into the Agreement.

The parties moved forward with discussions about how to adapt the patented padlock guard to American Lock’s needs. Cargo Protectors submitted three padlock guard prototypes that would work with American Lock padlocks. See Noone Aff., Ex. 8. The initial prototypes were rejected by American Lock, but the parties continued to work together on a design that would be suitable for American Lock’s purposes. In December 1998, March 1999, and June 1999, Cargo Protectors submitted subsequent prototypes and drawings at American Lock’s request, some of which incorporated American Lock’s suggested modifications. See Rosenberg Decl. ¶ 14. All prototypes that American Lock considered were made and submitted by Cargo Protectors. See Declaration of Christopher Haczynski ¶¶ 6, 8, 9, 10; Rosenberg Deck ¶¶ 14, 15, 16; Affidavit of David Anderson *929 ¶¶ 8,17, 19; Affidavit of Steve Sjodin ¶¶ 6, 7 & Ex. A.

American Lock eventually adopted one of Cargo Protectors’ prototypes as the model for its padlock guard. See Haczyn-ski Decl. ¶ 10 & Ex. 1; Rosenberg Decl. ¶ 18. Cargo Protectors understood and American Lock reassured that Cargo Protectors would supply American Lock with padlock guards based on the accepted prototype. See Rosenberg Decl. ¶ 18.

Meanwhile, Cargo Protectors in or about January 1999 entered into an agreement with Master Lock Company, a large manufacturer of locks and an American Lock competitor, to produce and sell a version of the padlock guard based on the ’574 Patent and designed for Master Lock padlocks. Master Lock has since purchased more than 10,000 padlock guards from Cargo Protectors as a result of the sales relationship. See Rosenberg Decl. ¶ 12.

Despite Cargo Protectors’ understanding that it would also be the exclusive supplier for American Lock’s padlock guards, American Lock sent to Cargo Protectors and other potential suppliers on October 29, 1999, requests for competitive bids to make the proposed padlock guard. See Rosenberg Decl. ¶ 21. Cargo Protectors responded that the proposed product was based on its prototype and would infringe the ’574 Patent. Furthermore, Cargo Protectors contended that American Lock’s actions in sending the request for bids to Cargo Protectors’ potential competitors constituted a disclosure in violation of the Idea Submission Agreement. American Lock responded that its product fell outside the scope of the ’574 Patent and the Agreement. In January 2000, Cargo Protectors learned that American Lock planned to begin manufacturing and marketing of the padlock guard. -Advertisements for the device appeared in American Lock’s sales catalog in or about February 2000. See Rosenberg Decl. ¶¶ 23, 25 & Ex. F, ¶ 26 & Ex. G. Cargo Protectors now seeks to enjoin American Lock from selling its padlock guard.

III. DISCUSSION

A. Standard of Review

Whether the underlying claim is for patent infringement or breach of contract, four factors are evaluated in a request for preliminary injunction: (1) the probability of success on the merits; (2) the threat of irreparable harm to the movant; (3) the balance between this harm and the injury that granting the injunction will inflict on other interested parties; and (4) whether the issuance of an injunction is in the public interest. See Novo Nordisk of N. Am., Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed.Cir.1996); Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir.1981). The plaintiff bears the burden of proof on all four factors. See Gelco Corp. v. Coniston Partners, 811 F.2d 414, 418 (8th Cir.1987).

No one factor is dispositive; rather, each factor must be considered when weighing the balance of the equities. See Chrysler Motors Corp. v. Auto Body Panels of Ohio, Inc., 908 F.2d 951, 953 (Fed.Cir.1990); United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir.1998). However, a moving party is required to show threat of irreparable harm. See Modem Computer Sys., Inc. v. Modern Banking Sys., Inc., 871 F.2d 734, 737 (8th Cir.1989). In a patent case, the likelihood of success and irreparable harm factors play central roles. See Sofamor Danek Group, Inc. v. DePuy-Motech, Inc., 74 F.3d 1216, 1219 (Fed.Cir.1996).

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92 F. Supp. 2d 926, 2000 U.S. Dist. LEXIS 4907, 2000 WL 370504, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cargo-protectors-inc-v-american-lock-co-mnd-2000.