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Ruehl v. Am General, LLC

United States District Court, N.D. Indiana, Hammond Division

March 28, 2017

PHILLIP C. RUEHL and PC RUEHL ENGINEERING, INC., Plaintiffs,
v.
AM GENERAL, LLC, Defendant.

          OPINION AND ORDER

          JOSEPH S. VAN BOKKELEN UNITED STATES DISTRICT JUDGE.

         This case is about rights to a patent related to vehicular frame rails. The parties agree Ruehl[1] conceived the invention, but they disagree about who owns it given the contracts between them.

         Both sides move for partial summary judgment.

         A. Facts

         When considering AM General's motion the Court views the facts in the light most favorable to Ruehl, and when considering Ruehl's motion the Court views the facts in the light most favorable to AM General. The Court does not weigh the evidence or determine the truth regarding the facts.

         1. Mother Necessity

         The parties agree Ralf Pionke of AM General contacted his former co-worker Philip Ruehl in late 2004 or early 2005 about consulting with AM General on a project to upgrade the frame rails for its Humvee line of trucks.

         Mr. Pionke sent Mr. Ruehl drawings of the then-current side rail design on February 17, 2015 (via email), and on February 23, 2005 (via UPS). AM General claims Mr. Ruehl admitted that once he had its print drawings, which he did not receive until February 25, 2005, he looked at them and wanted to modify the spacers.[2]

         2. February purchase order

          Mr. Ruehl signed a purchase order on February 26, 2005. The front of this purchase order says: “This purchase order is issued to cover cost to provide engineering support for HMMWV frame rail feasibility study.” (Feb. Purchase Order, DE 51-13 at 2.) It also caps the cost at $22, 500. (Id.) It warns: “ACCEPTANCE OF THIS ORDER CONSTITUTES AN ACCEPTANCE OF THE TERMS AND CONDITIONS ON FACE AND REVERSE HEREOF.” (Id.)

         The back of this purchase order says:

1. This order constitutes the entire agreement between the parties hereto and the terms and conditions set forth herein cannot be modified or amended without the written consent of the Purchaser. No officer, employee or other representative of Purchaser is authorized to make any oral contract of commitment for the purchase of materials or to modify or change the terms and conditions of this order unless such modification or change is in writing approved by Vice President of the Purchaser.
* * *
5. It is understood and agreed the Seller warrants that the sale or use of the material covered by this order, either alone or in combination with other materials, will not infringe or contribute to the infringement of any patents, either in the U.S.A. or in foreign countries, and that the Seller covenants to defend every suit which shall be brought against the Purchaser or any party selling or using any of the Purchaser's products for any alleged infringement of any patent by reason of the sales or use of said materials, either alone, or in combination with other materials, and to pay all expenses and fees of counsel which shall be incurred in and about defending, and all cost, damages and profits recoverable in every such suit.
* * *
9. Information, including but not limited to technical information, drawing and data, submitted any time by Seller to Purchaser relating to goods or services covered by this purchase order are deemed not to be submitted in confidence unless otherwise specifically agreed to in writing. Any restrictive markings affixed upon any such information furnished to Purchaser shall be of no force or effect, may be modified, removed or ignored by Purchaser without any liability to Seller and the information may be used by Purchaser in any way in the conduct of its business. Seller's sole rights with respect to use of such information by Purchaser, it's [sic] successors, subsidiaries, licenses, affiliates or parents shall be determined only by valid pre-existing patent rights of Seller as related to the manufacture, use or sale of goods or services covered by this order. Seller agrees to promptly notify Purchaser of any pre-existing patents of any other form of protection which Seller may hold or know of which relates to the goods or services to be provided under this purchase order. In connection with the development of any ideas, inventions, improvement or discoveries, including all related information and know-how, related to the goods or services to be provided under this purchase order and for which Purchaser has provided or is to provide support to Seller in the form of funding, including but not limited to payments in whole or part for prototype components or tooling, designing, testing or consulting, Purchaser shall automatically be entitled to and Seller agrees to and hereby assigns all rights, title and interest to such ideas, inventions, improvements and discoveries (unless otherwise specifically agreed to in writing and such event Purchaser shall be entitled to at least a nonexclusive paid up, irrevocable worldwide right and license including the right to fully sublicense third parties including the U.S. Government for all Governmental purposes to practice and have practiced for its purpose such invention). Seller agrees to promptly notify Purchaser in writing of any such idea, invention, improvement or discovery so developed. The provisions of this clause shall survive termination of fulfillment of this order and shall incur to the benefit of Purchaser's successors, subsidiaries, licensees, affiliates of parents. (Feb. Purchase Order, DE 51-13 at 3.[3]) Mr. Ruehl acknowledges that his signature on this document commits him to its terms.

         3. Original concept sketch: March 5, 2005

         On March 5, 2005, Mr. Ruehl sketched the big idea at the heart of this case. But the parties disagree about the genesis of this idea.

         Mr. Ruehl claims in his amended complaint he conceived the idea before signing the purchase order on February 26, 2005. But he testified on November 19, 2015: “The iterative process of inventing the concept was completed on March 5, 2005.” (Ruehl Dep., DE 51-11 at 15.) And on April 14, 2016, Mr. Ruehl signed his declaration stating: “None of my invoices to AM General included charges for my work inventing my new frame rail concept, which was completed no later than March 5, 2005 (and, to my best recollection, earlier than that.)” (Ruehl Decl., DE 55-3 at 2.)

         AM General argues there is no evidence Ruehl conceived the idea before signing the February purchase order other than his say-so. AM General argues the evidence demonstrates that the spacer concept was not completed until March 5, 2005, and that the idea continued to develop after that Dated: “[T]he undisputed evidence demonstrates that Ruehl, after reviewing AMG's frame rail drawings and signing the February PO, came up with a spacer concept and then spent three weeks further refining and developing this concept as part of the engineering support he provided to AMG.” (AM General's Br. Opp'n Pl.'s Mot. Partial Summ. J., DE 60 at 20.)

         Not only do the parties disagree about the genesis of the idea, they also disagree about what happened to the idea after Ruehl sketched it on March 5, 2005. Ruehl claims the idea never changed or developed after that date, or perhaps even for some time before. Ruehl claims no one refined, tested, supported, or funded the idea after that date, or perhaps even for some time before. AM General, however, argues that the idea was subject to continued development, refinement, and testing during the following months.

         The parties refer to the idea in various ways. Ruehl refers to it as an invention “comprised of a box-type frame rail assembly, ” and as “a much improved means of assembling frame rails.” (Am. Compl., DE 22 at 4, 6.) He says the patent, entitled “Boxed Frame Member and Method for Manufacture, ” covers the invention. (Id. at 7.)

         AM General refers to the idea as a “spacer concept.” (AM General's Br. Supp. Mot. Partial Summ. J., DE 51 at 5.) AM General denies the amended complaint's detailed definition of the invention is accurate, but admits the patent relates to the new frame rail design. Mr. Ruehl also refers to the idea as “my spacer concept” in correspondence. (Email, Dec. 1, 2005, DE 52-7 at 3.) For the sake of simplicity, the Court will use “idea” to reference the contested intellectual property.

         On March 5, 2005, Mr. Ruehl showed the sketch of the idea to Werner Kraenzler, a prototype shop owner, who confirmed he believed he could make a prototype of the idea. Mr. Ruehl did not identify the idea as confidential.

         4. “Kick-off” meeting: March 7, 2005

         On March 7, 2005, Ruehl met with representatives of Applied Technologies, Inc., and Mr. Pionke at AM General's facility in Livonia, Michigan. Ruehl claims he showed the ATI representatives his sketch of the idea before Mr. Pionke even entered the room.

         At that meeting, after disclosing his idea to the ATI representatives and to Mr. Pionke, Ruehl signed a confidentiality agreement presented to him by AM General. R.J. Gula, a vice president of AM General, signed it the next day.

         5. Confidentiality agreement: March 7, 2005

         The confidentiality agreement states:

1. “Confidential Information” shall mean any information that has value to the Disclosing Party and is not generally known to its competitors, including but not limited to all of the Disclosing Party's trade secrets, designs, specifications, ideas, concepts, plans, formulas, patterns, devices, software, drawings, machinery and equipment, products, processes, procedures, methods, applications, technologies, financial information, customer information (including identity, specific needs and any of such customer's information possessed by the Disclosing Party) or any compilation or combination of the foregoing that is disclosed to Receiving Party and marked as confidential or proprietary. Any information that is transmitted orally shall be considered to be Confidential Information, provided such information is identified as proprietary or confidential at the time of such oral transmittal and notice is subsequently provided in writing of its confidential or proprietary nature by Disclosing Party and transmitted to Receiving Party within ten (10) days of such oral transmission. Any information that has value to the Disclosing Party and is not generally known to its competitors, including but not limited to Commercial/Military Vehicle Frame Feasibility Study 2. Information of the Disclosing Party shall not be considered “Confidential Information” if it:
(a) Is publicly known to the Receiving party at the time of disclosure;
(b) Becomes public knowledge without breach of this Agreement by Receiving Party;
(c) Is known to Receiving Party at the time of the disclosure and is not subject to any restriction that would be violated by its disclosure;
(d) Is lawfully obtained, without restriction that would be violated by the disclosure by Receiving Party, from a third party not affiliated with Disclosing Party; or
(e) Is independently developed by Receiving Party by employees of Receiving Party who have not had access to the Confidential Information or by third parties unrelated to Disclosing Party.
11. Nothing contained in this Agreement shall be construed as granting or conferring to Receiving Party any patent rights or licenses from Disclosing Party ...

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