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Automotive Body Parts Association v. Ford Global Technologies, LLC

United States District Court, E.D. Michigan, Southern Division

February 20, 2018

AUTOMOTIVE BODY PARTS ASSOCIATION, Plaintiff,
v.
FORD GLOBAL TECHNOLOGIES, LLC, Defendant.

          OPINION AND ORDER DENYING FORD'S MOTION TO DISMISS THE CASE AS MOOT [61] AND DENYING THE ABPA'S MOTION FOR SUMMARY JUDGMENT [39]

          LAURIE J. MICHELSON U.S. DISTRICT JUDGE.

         The Automotive Body Parts Association effectively asks this Court to eliminate design patents on auto-body parts. Members of the ABPA import, make, and sell auto-body parts that are used to repair cars and trucks damaged in a collision. Ford Global Technologies, LLC holds a large portfolio of patents that protect the designs for body parts for Ford vehicles. The ABPA, on behalf of its members, filed this lawsuit asking this Court to declare that two of Ford's patents protecting the design of two F-150 body parts are either invalid or unenforceable. But the ABPA's arguments are not specific to those two patents. Instead, the ABPA argues that designs for auto-body parts are simply not eligible for patent protection because consumers seeking to repair their vehicles do not select body parts for their design and because the designs were dictated by the body parts' function. In the alternative, the ABPA says that patents protecting the designs of auto-body parts are unenforceable against its members because the patent rights are exhausted upon the first authorized sale of the vehicle.

         The ABPA now seeks summary judgment. (R. 39.) It asks this Court to declare as a matter of law that two of Ford's design patents are invalid or unenforceable. The Court has carefully considered the parties' arguments made not only in this case but in a related case presenting the same invalidity and unenforceability questions. Having done so, the Court finds that the ABPA has not shown that Ford's designs for an F-150 hood and headlamp are not eligible for design patent protection and has not shown that Ford's patent rights to those designs are exhausted when Ford sells an F-150 truck.

         I.

         A.

         Plaintiff Automotive Body Parts Association is an association of companies that distribute automotive body parts. (See R. 2, PID 10-11.) Members of the ABPA sell auto-body parts to collision repair shops or even directly to vehicle owners.

         Defendant Ford Global Technologies, LLC owns a portfolio of well over a hundred patents protecting the designs for auto-body parts. (See R. 62, PID 1253-1321.) Two are at issue in this case: U.S. Patent No. D489, 299 and U.S. Patent No. D501, 685. The '299 patent protects the design for a Ford F-150 hood and the '685 patent protects the design for an F-150 headlamp:

         (Image Omitted)

         B.

         It appears that the first significant dispute between Ford and the ABPA arose in 2005. That year, Ford filed an action with the United States International Trade Commission against seven members of the ABPA. (R. 68, PID 1453, 1585.) Ford initially accused these ABPA members of infringing 14 of its design patents for auto-body parts, including the two at issue in this case. (See R. 68, PID 1585.) Ford later dropped those two patents from the ITC action. The ITC action (and a second one) settled in 2009, with Ford granting a single ABPA member, LKQ Corporation, the exclusive right to sell auto-body parts protected by Ford's design patents. (See R. 62, PID 1329.)

         As relevant to this case, things between Ford and the ABPA remained relatively quiet until 2013, with Ford sending only two cease-and-desist letters to ABPA members in 2011 and 2012. (See R. 68, PID 1466, 1471.) But in 2013, the tension between Ford and ABPA member New World International, Inc. escalated. (R. 62, PID 1250.) Ford wrote to New World, “We purchased several articles from New World International that are covered by Ford design patents[.]” (R. 62, PID 1260.) Ford referenced one of the design patents at issue in this case, the '299 patent. (Id.) Ford asked New World to “refrain from importing or selling parts covered by Ford design patents.” (R. 62, PID 1251.) New World did not comply (or at least that is what Ford thought), so in November 2013, Ford sent New World another letter. The second letter warned that if New World did not stop offering certain auto-body parts on its website, Ford “w[ould] be forced to consider all avenues available to protect and enforce its intellectual property rights.” (R. 61, PID 1245.)

         Less than two weeks after Ford's November 2013 letter, the ABPA filed this lawsuit in the Eastern District of Texas. See Auto. Body Parts Assoc. v. Ford Global Techs., No. 13-00705 (E.D. Tex. filed Nov. 25, 2013.) The ABPA asked the federal court in Texas to declare six of Ford's design patents, including the '299 and the '685 patents, invalid or unenforceable.

         A few months later, Ford challenged the ABPA's standing to seek such relief. One way for an association to have standing to sue is for the association to satisfy the Hunt test: “(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.” Hunt v. Wash. State Apple Advertising Comm'n, 432 U.S. 333, 343 (1977). In September 2014, the federal court in Texas found that the ABPA had satisfied this test. Auto. Body Parts Ass'n v. Ford Glob. Techs., LLC, No. 4:13-CV-705, 2014 WL 4652123, at *8 (E.D. Tex. Sept. 17, 2014). As to the first Hunt requirement, the court found that “in its cease and desist letters, Ford accused New World of infringing the design patents, which is sufficient to establish that New World would have standing in its own right to bring an action for declaratory judgment against Ford.” Id. at *8.

         Following that determination, the ABPA amended its complaint. Instead of seeking a declaration that six of Ford's design patents for auto-body parts were invalid or unenforceable, it only sought that declaration as to the '299 and '685 patents. (See R. 2.)

         In January 2015, the federal court in Texas transferred the case to the Eastern District of Michigan and it was assigned to this Court's docket. (See R. 1.)

         Just two weeks later, Ford filed a separate lawsuit against New World in the Eastern District of Michigan. Ford Global Techs., LLC v. New World Int'l, Inc. et al., No. 15-10394 (E.D. Mich. filed Jan. 29, 2015). Ford initially accused New World of infringing the two patents at issue in this case along with several others. Like in the ITC action, Ford later dropped its claims that New World had infringed the two patents at issue here. Ford's case against New World was reassigned to this Court's docket as a companion to this case.

         C.

         In October 2016, the ABPA filed the motion for summary judgment now pending before this Court. (R. 39.) According to the ABPA, the '299 and '685 patents are invalid because they do not protect ornamental designs and they are unenforceable against ABPA members because when Ford sells an F-150 truck, its patent rights in the design of the truck's hood and headlamp are exhausted. (See R. 39, PID 566.)

         That same month, New World, which is represented by the same counsel as the ABPA, filed for summary judgment in the companion to this case. New World essentially made the same invalidity and unenforceability arguments as did the ABPA. Although New World subsequently withdrew that motion, Ford then filed a mirror-image motion for summary-judgment: it claimed that its design patents were not invalid for failing to protect ornamental designs and that they were not unenforceable under the doctrine of exhaustion. Given that ABPA's motion in this case and Ford's in the companion addressed the same two issues, the parties agreed that the Court should consider the arguments presented in all the briefs in both cases in deciding both motions.

         While this Court was in the midst of drafting its opinion on the two motions, a threshold issue arose in each case. The first was a result of TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017). There, the Supreme Court held that a corporation can be sued for patent infringement only in its state of incorporation. See Id. at 1517. New World's was Texas. So this question arose: should Ford's suit against New World remain in the Eastern District of Michigan?

         The other threshold issue involved this case. Although it had made similar statements earlier, in its summary-judgment briefing, Ford made clear that it was not accusing New World of infringing the two patents at issue in this case. (See R. 54.) As noted above, under Hunt, the ABPA's standing to seek a declaratory judgment was premised on New World's standing to do so. So the Court asked the parties to brief the issue of mootness. (See R. 54.) In that briefing, Ford went a step further: it offered a covenant never to sue New World (and a few others) for infringing the '299 and '685 patents. (See R. 61, PID 1104.) So this question arose: is this case moot?

         The Court has already answered one of the two threshold questions. In particular, the Court found that under TC Heartland, the Eastern District of Michigan was not the proper venue for Ford's suit against New World and that New World had not waived the defense of improper venue. See generally Ford Glob. Techs., LLC v. New World Int'l Inc., No. 2:15-CV-10394, 2017 WL 5635451 (E.D. Mich. Nov. 7, 2017). The Court thus transferred Ford's infringement case to the Northern District of Texas. See Ford Glob. Techs., LLC v. New World Int'l Inc., No. 3:17-cv-03201-N (N.D. Texas filed Nov. 22, 2017.) Ford's summary-judgment motion-the one that mirrors the one the ABPA asks this Court to decide-remains pending before the federal court in Texas.

         II.

         The Court now turns to the other threshold issue: whether this case is moot.

         On the surface, it seems so. Based on the covenant it has offered and associated representations it made at oral argument, Ford is willing to irrevocably commit to never suing New World (and three other entities) for infringing the two patents at issue in this case, the '299 and '685 patents. (See R. 63, PID 1104, 1348.) And, as explained, the federal court in Texas found that the ABPA had standing in this case because Ford had sent New World cease-and-desist letters. In other words, the ABPA's standing to seek a declaration that the two patents-in-suit are invalid or unenforceable was built ...


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