A, Likelihood of Success

1. Design Patent Infringement

To demonstrate a likelihood of success on the merits of its design patent infringement
claim, plaintiff must show that, in light of the presumptions and burdens that will inhere at a trial
on the merits, (1) plaintiff will likely prove that Toolz infringes the ‘506 patent, and (2)
plaintiff's infringement claim will likely withstand Toolz’ challenges to the validity of the ‘506
patent. Amazon.com, 239 F.3d at 1351. If Toolz raises a substantial question concerning either
infringement or invalidity by asserting an infringement or invalidity defense that plaintiff cannot
prove “lacks substantial merit,” the preliminary injunction should not issue. /d. at 1350-51.

Infringement of the ‘506 design patent requires a showing that the accused design is
“substantially the same” as the claimed design such that an ordinary purchaser — in this case,
professional builders, contractors and carpenters — would be deceived into thinking that one is
the other. Contessa Food Products, Inc. v. Conagra, Inc., 282 F.3d 1370, 1377 (Fed. Cir. 2002);
Payless Shoesource, Inc. v. Reebok International Limited, 998 F.2d 985, 990 (Fed. Cir. 1993).
Design patents only cover the novel features of the patented design; that is, “the novelty which
distinguishes the patented design from the prior art.” Contessa Food Products, 282 F.3d at 1377;
OddzOn Products, Inc. v. Just Toys, Inc., 122 F.3d 1396, 1404 (Fed. Cir. 1997). In addition,
design patents only protect the ornamental as opposed to the functional features of the patented
design. Unidynamics Corp. v. Automatic Products Int’l, Ltd., 157 F.3d 1311, 1323 (Fed. Cir.
1998); OddzOn, 122 F.3d at 1405 (“[t]he patentee must establish that an ordinary person would
be deceived by reason of the common features in the claimed and accused designs which are

ornamental”),


Inc., 98 F. Supp. 2d 988, 998 (N.D. Ill. 2000). There is a high degree of similarity in the overall
appearance of the levels manufactured by plaintiff and Toolz, and both parties are marketing to
the same consumers; indeed, they both attended the same trade shows in August and September
of this year. Dubrick Tr. 58-59, 61; Light Tr. 135-36; Hill Tr. 187-88.

However, the evidence indicates that those customers and potential customers are
sophisticated and that they exercise a significant degree of care in purchasing level products,
which cost between $225 and $425. Ellison Tr. 130-31; Def. Mem., pp. 22-23. In addition,
Toolz has prominently marked its products and the outer packaging with the RoboToolz and
Porter-Cable marks.’ DX 1, 2, 14, 15. These factors undermine any claim that Toolz is trying to
“palm off’ its products as those of plaintiff, and weigh against a finding of likely confusion. See,
e.g., Pampered Chef, Ltd. v. Magic Kitchen, Inc., 12 F. Supp. 2d 785, 795 (N.D. Ill. 1998)
(defendant’s use of its identifying mark “necessarily makes us seriously doubt whether it could
be accused of attempting to ‘palm off [the alleged infringing product] as [plaintiff's] or trying to
confuse the public into thinking that the latter company was the origin of its two [products]”);
Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 383 (7 Cir. 1996) (“in the case of a high-
priced, single-purchase product, there is generally no likelihood of confusion when the
manufacturer’s name is clearly displayed on the product”).

On balance, plaintiff has not presented sufficient evidence that the sophisticated

contractors, professional builders and carpenters who purchase its levels and level-transits will

4 Toolz and Porter-Cable have entered into a licensing agreement under which

Toolz may use the Porter-Cable mark on its products. Soucy Decl. 412.

9


to prevent puddling. Hill Tr. 158-60, 192. In addition, plaintiff's advertisements for the
automatic level state that the “[s]ighting scope and bubble vial are built into the housing for
greater durability.” PX G.

On the other hand, plaintiff presented Edward Ellison, Manager of David White Product
Integration, who testified that the rounded-delta shape around the recessed level bubble vial and
the rounded shape of the raised semi-cylindrical midsection housing the peep sight are both
ornamental, Ellison Tr. 85-88. However, Ellison is not an engineer or industrial designer and
did not design the product at issue, so his opinion on this issue does not carry significant weight.
Ellison Tr, 106-07. Hill did testify that at least with respect to the peep sight, the rounded shape
promoted aesthetic continuity. Hill Tr. 192-93. Nevertheless, Toolz has raised a substantial
question as to whether plaintiff's identified points of novelty are functional in nature, which
precludes a finding that plaintiff has a reasonable likelihood of success on its design patent
infringement claim for purposes of a TRO.’ See Thomas & Betts Corp. v. Panduit Corp., 65 F.3d
654, 661, n.6 (7" Cir. 1995) (to establish functionality, accused infringer need only establish that
the feature is “at least one of a few superior designs for its de facto purpose”).

2. Trade Dress Infringement

“Trade dress” refers to “the total image of a product, including features such as size,

shape, color or color combinations, texture, graphics, or even particular sales techniques.”

5 Toolz has also challenged the validity of the ‘506 patent, claiming that the patent

depicts “an obvious combination of well-known design features.” Def. Mem., p. 13. Given the
Court’s findings on the infringement question, it need not reach the issue of validity at this
preliminary stage of the litigation. This decision does not prevent Toolz from asserting any
validity challenge raised during the TRO proceedings or from relying on admissible evidence
presented at the TRO hearing in support of its invalidity defense at trial.

6


Plaintiff identifies four features of the ‘506 patent which it claims are both novel — i.e.,
not reflected in the prior art ~ and non-functional: (1) the “rounded-delta” level vial recess; (2)
the raised semi-cylindrical midsection; (3) the proximal body member with a flat top, a flat
bottom and rounded sides; and (4) the overall proportions and relationships of the components.
PI. Mem., p. 11. The overall proportions and relationships of the components cannot be
considered a point of novelty because it improperly merges the “ordinary observer” and “point of
novelty” tests. See, e.g., Contessa Food Products, 282 F.3d at 1377 (“it is legal error to merge
the two tests, for example by relying on the claimed overall design as the point of novelty”). In
addition, plaintiff describes the design of the compensator housing as the proximal body member
with a flat top, a flat bottom and rounded sides, but the actual patented design has beveled sides
on the top portion of the telescope nearest the eyepiece and a step on the bottom. The Toolz
automatic level has neither of these features, raising a substantial question as to whether the
Toolz product infringes the ‘506 patent in this regard.

With respect to the rounded-delta level vial recess and raised semi-cylindrical midsection,
Toolz presented evidence that both features are dictated by function. Daniel Hill, Toolz’ Product
Manager and a former engineering geologist, testified that bubble vials are often recessed to
ensure that they stay level; indeed, he identified and presented at the hearing several other
automatic levels with recessed bubble vials in a similar location on the product. Hill Tr. 143,
161-63; DX 21, 22, 23. As for the raised semi-cylindrical midsection housing the peep sight,
Hill testified that it is helpful to have this feature on top so that it is near the telescope line of
sight. He also stated that the center placement allows for easier focus on far objects, and that the

rounded housing both protects the peep sight from breaking and allows water to run off the sides



specific customer surveys to that effect. Dubrick Tr. 71-72. Thus, plaintiff has not presented
sufficient evidence that the public has come to associate the trade dress with the David White
label. See Bretford, 116 F. Supp. 2d at 956 (evidence that the plaintiff had used a design for a
number of years insufficient to demonstrate secondary meaning absent evidence that consumers
recognized the design as “indicative of origin”). And plaintiff's advertising arguably promotes
the functional features of the product as opposed to its distinctive trade dress. PX G (promoting
product clarity, accuracy, precision and ease of use). See also Schwinn Bicycle Co. v. Ross
Bicycles, Inc., 870 F.2d 1176, 1190 (7" Cir. 1989) (“‘it is well-established that trade dress
protection does not extend to features already shared by different brands on the market”).

On the other hand, plaintiff has presented evidence that the Meridian Series has generated
a high volume of sales and revenues over the years, and has a longstanding reputation for
manufacturing reliable, high-quality instruments. Pl. Mem., pp. 19-20; Dubrick Tr. 54-55.
Plaintiff has also raised at least some question as to whether Toolz deliberately copied the
Meridian Series levels. Hill Tr. 185-86. But even assuming that this was sufficient to establish
secondary meaning, plaintiff has failed to demonstrate a likelihood of success on the issue of
customer confusion.

b. Likelihood of Confusion

In determining whether there is a likelihood of confusion, the Seventh Circuit has
considered several factors to be important: (1) similarity of the trade dresses; (2) similarity of the
products; (3) area and manner of advertising and use; (4) degree of care likely to be used by
consumers; (5) strength of plaintiff's trade dress; (6) whether any actual confusion exists; and (7)

defendant’s intent to palm off its goods as those of plaintiff. See, e.g., Ty, Inc. v. Jones Group,


Minute Order Form (06/97)

United States District Court, Northern District of Minois

lame of Assigned Judge Sitting Judge if Other
s we Magienate Judes John W. Darrah than acitsed jute Nan R. Nolan
CASE NUMBER 02 C 7156 DATE 11/26/2002
CASE David White Instruments, LLC v. TLZ, Inc., et al.
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.)

2)

MOTION:
DOCKET ENTRY:
qd) Oo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) Oo Answer brief to motion due___. Reply to answer briefdue___.
(4) Qo Ruling/Hearingon__s set for at
(5) oO Status hearing{held/continued to] [set for/re-set for] on___—_ssetfor_ at
(6) Oo Pretrial conference[held/continued to] [set for/re-set for]on__—ssetfor__——sat_—
(7) o Trial[set for/re-set for]on__at
(8) oO [Bench/Jury trial] [Hearing] held/continuedto__—_aat
(9) q This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) O Local Rule 41.1 OFRCP41(a)(1) OFRCP41(a)(2).
qo) wf [Other docket entry) The Court recommends that David White’s motion for TRO be denied. To

preserve confidentiality of certain information, the Court has prepared a public Report and
Recommendation as well as a sealed version containing proprietary materials. Sentences in the sealed

version which differ from the public version have been bolded and italicized. Enter
Recommendation under seal and Report and Recommendation.

Q [For further detail see order (on reverse side offattached to) the original minute order.]

Report and

No notices required, advised in open court.

No notices required. .
umber of notices

Notices mailed by judge’s staff. ‘

Notified counsel by telephone. EC 04 2002

Docketing to mail notices.

Mail AO 450 form. 14unoo Low LSid ‘sin
ite o

Copy to judge/magistrate judge

joe)

a6cketing deputy initials

Wwnei2002
SOs1HY £2 AGN 20 date male rosie
courtroom
mm deputy’s op ren m
ina OT G30 TM
mm Date/time received in
central Clerk’s Office mailing deputy initials



properly deny injunction where “a grant might destroy [the defendant] while a denial would leave
{the plaintiff] a going concern”); Flotec, Inc. v. Southern Research, Inc., 16 F. Supp. 24 992,
1012 (S.D. Ind. 1998) (denying preliminary injunction where plaintiff would suffer irreparable
harm in the absence of an injunction but defendant, a “significant new competitor,” would be
shut down for a substantial period of time if the injunction was granted).

The public interest also weighs against granting a TRO in this case. “When deciding
whether to grant or withhold equitable relief a court must give high regard to the interest of the
general public, which is a great beneficiary from competition.” August Storck, 59 F.3d at 619.
The public’s interest in competition and product availability carries the day given plaintiff's
inability to show a reasonable likelihood of success on its infringement claims. Jd.

CONCLUSION

For the reasons stated above, plaintiff's motion for a TRO (Docket Entry #8-2) should be
denied. The district court has advised that counsel has ten days from the date of service of this
Court’s Report and Recommendation regarding plaintiff's supplemental motion for TRO to file
objections to this Report and Recommendation with the Honorable John W. Darrah. See Fed. R.
Civ. P. 72(b); 28 U.S.C. §636(b)(1). Failure to object constitutes a waiver of the right to appeal.
Lorentzen v. Adnerson Pest Control, 64 F.3d 327 (7" Cir. 1995).

Nh oh helen

[AN R. NOLAN
United States Magistrate Judge

Dated: November 25, 2002

li



likely be confused as to the source of the products. Thus, plaintiff has failed to demonstrate a
reasonable likelihood of success on its trade dress infringement claim.
B. Irreparable Harm and Public Interest

Having determined that plaintiff presented insufficient evidence of a reasonable
likelihood of success on the merits of its infringement claims, the Court need not address the
issues of irreparable harm and public interest. Thomas & Betts, 65 F.3d at 664; Glaxo Group
Lid. v. Ranbaxy Pharmaceuticals, Inc., 262 F.3d 1333, 1339 (Fed. Cir. 2001). Nevertheless, the
Court notes that these factors also weigh against granting a TRO.

Irreparable harm is harm that cannot be compensated by money damages. Hybritech Inc.
y. Abbott Laboratories, 849 F.2d 1446, 1457 (Fed. Cir. 1988). Irreparable harm may be
established by showing that the alleged infringer is financially irresponsible or might be
judgment-proof at the end of the litigation. Cordis Corp. v. Medtronic, Inc., 780 F.2d 991, 996
(Fed. Cir. 1985). Plaintiff has made some showing that it will suffer harm in the form of lost
profits and good will if the Court does not issue a TRO. However, plaintiff has not made an
adequate showing that it cannot be compensated with money damages in the absence of a TRO.
August Storck K.G. v. Nabisco, Inc., 59 F.3d 616, 619 (7" Cir. 1995) (“[dJamages in trademark
cases are hard to measure, but the possibility of compensation offers sufficient protection to a
trademark owner, when an injunction bids fair to stifle competition and injure consumers in order
to ward off occasional confusion”). On these facts, the Court cannot say that the balance of harm
tips in plaintiff's favor, and a TRO is not appropriate. See Illinois Tool Works, Inc. v. Grip-Pak,
Inc., 906 F.2d 679, 683 (Fed. Cir. 1990) (“hardship on a preliminarily enjoined manufacturer

who must withdraw its product from the market before trial can be devastating”; court may

10



Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633, 636 (7" Cir. 1999) (internal
quotations omitted). To demonstrate a likelihood of success on its trade dress infringement
claim, plaintiff must show that (1) it has a protectable trade dress; that is, its trade dress has
acquired secondary meaning; and (2) the similarity of Toolz’ trade dress is likely to cause the
purchasing public to be confused as to source. Wal-Mart Stores, Inc. v. Samara Brothers, Inc.,
529 U.S. 205, 214 (2000). The Court addresses each in turn.

a Secondary Meaning

A product acquires secondary meaning when “in the minds of the public, the primary
significance of [the dress] is to identify the source of the product rather than the product itself.”
Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 163 (1995). Consumers must care that the
product including the design or dress comes from a particular source and “must desire the
product with the particular feature because it signifies that producer.” Thomas & Betts, 65 F.3d
at 658-59. To establish secondary meaning, courts consider “direct consumer testimony,
consumer surveys, length and manner of use, amount and manner of advertising, volume of sales,
place in the market and proof of intentional copying.” Spraying Systems Co. v. Delavan, Inc.,
975 F.2d 387, 393 (7" Cir. 1992); Bretford Manufacturing, Inc. v. Smith System Manufacturing
Co., 116 F. Supp. 2d 951, 956 (N.D. Ill. 2000).

Plaintiff claims that it has sold and advertised its Meridian Series manual levels and
level-transits for nearly two decades, which creates a presumption of secondary meaning.
Gregory F. Dubrick, Vice President of David White Instruments, LLC, testified that plaintiff's
due diligence in connection with the asset purchase revealed strong consumer recognition of the

David White product line. Dubrick Tr. 43. However, Dubrick was unable to identify any


Chicago and again at the September 2002 Handy Hardware Show in Houston, Toolz displayed
and offered for sale automatic and manual levels similar to the ones offered by plaintiff under the
David White label.

On October 4, 2002, plaintiff filed a complaint and a motion for a TRO with respect to its
AL8 and Meridian Series optical levels. Specifically, plaintiff claims that Toolz’ automatic
levels infringe the David White AL8 Series automatic levels embodied in the ‘506 design patent,
and that Toolz’ manual levels and level-transits infringe the David White Meridian Series trade
dress.’

DISCUSSION

A TRO is an “extraordinary and drastic” remedy that should only be granted upon a clear
showing of need. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997); Cooper v. Salazar, 196 F.3d
809, 813 (7" Cir. 1999). A plaintiff seeking a TRO or preliminary injunction must show: (1) a
reasonable likelihood of success on the merits; (2) irreparable harm if the preliminary injunction
is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction’s favorable
impact on the public interest. Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343,
1350 (Fed. Cir. 2001). Plaintiff's TRO motion can only be granted if it establishes both of the
first two factors; i.e., likelihood of success on the merits and irreparable harm. Jd. If plaintiff
establishes the first factor by making a clear showing of both validity and infringement, it is
entitled to a rebuttable presumption of irreparable harm. Purdue Pharma L.P. v, Boehringer

Ingelheim GMBH, 237 F.3d 1359, 1363 (Fed. Cir. 2001).

2 For purposes of this motion for a TRO, the Court will not distinguish between the

product prototypes shown at the trade shows and the finished products, which differ primarily
with respect to labeling and color. Tr. 22-23.



FACTUAL BACKGROUND

David White has been supplying optical and laser instruments to the building and
construction industries since 1895. On May 24, 2002, CST/berger, a worldwide venture with
270 employees and over 1,000 products, purchased substantially all of the assets of David White,
LLC, including its “patents, trademarks, trade secrets, trade names, names, brands, methods of
doing business and other intellectual property and all good will associated with any of the
foregoing.” PX A; Tr. 44, 46-47. Plaintiff David White Instruments, LLC was formed as an
affiliate of CST/berger to sell the David White product line. Dubrick Tr. 41 ; Def. Mem., p. 1.
As part of the sale, plaintiff purchased and was assigned United States Design Patent No.
D440,506 (“506 patent”); Dubrick Tr. 46. Plaintiff's AL8 Series automatic levels are sold
pursuant to the design claimed in the ‘506 patent. Dubrick Tr. 50, 53. Plaintiff also
manufactures and sells manual levels and level-transits under the name “Meridian.” Plaintiff
says that it based its decision to purchase the David White product line on consumer recognition
of the product designs and the “substantial good will that has been developed over many years in
the David White trademark and unique and distinctive instrument designs.” Pl. Mem., p. 5;
Dubrick Tr. 48.

Toolz is a small privately-owned company founded in 1998. Soucy Decl. 2. Toolz first
manufactured only laser products but in 2001, it decided to enter the optical measurement market
as well. Shortly after making this decision, Toolz was approached about acquiring the David
White assets and, in February 2002, it signed a confidentiality agreement in that regard. Soucy
Decl. 11; Soucy Tr. 205, 221; PX 5. In the spring of 2002, Toolz bid on certain of the David

White assets but the bid was not accepted. Then, at the August 2002 National Hardware Show in


Liat

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DAVID WHITE INSTRUMENTS, LLC,

f/k/a DAVID WHITE FORMATION,
Plaintiff,

Case No. 02 C 7156

vs.

TLZ, INC. d/b/a TOOLZ, and
TOOLZ LIMITED,

weevevenvevernwerververvev

DOCKETED

DEC 9 4 2002

Defendants.

REPORT AND RECOMMENDATION

NAN R. NOLAN, Magistrate Judge:

Plaintiff David White Instruments LLC, formerly known as David White Formation, LLC
seeks a temporary restraining order (“TRO”) to prevent defendants TLZ, Inc. d/b/a Toolz and
Toolz Limited! (“Toolz”) from continuing to make, use, sell or offer for sale certain optical
surveying instruments that allegedly infringe plaintiff's design patent and trade dress. The
motion was referred to this Court for an evidentiary hearing and a Report and Recommendation
as to whether the motion should be granted. In making its recommendation on this matter, the
Court has considered the facts and documents set forth in the complaint, the motion for a TRO
and Toolz’s opposition brief, as well as the witness testimony and exhibits presented at a hearing
on October 27, 2002. For the reasons set forth below, the Court recommends that plaintiff's

motion for a TRO be denied.

' For purposes of this motion for TRO only, plaintiff does not seek relief against

Toolz Limited of Hong Kong. Tr. 203, 254... Lees

dO