Sme Steel Contractors, Inc. v. Seismic Bracing Co.

681 F.Supp.3d 1181

SME STEEL CONTRACTORS, INC., a Utah corporation;and Core-Brace, LLC, a Utah limited liability company, Plaintiffs, v. SEISMIC BRACING COMPANY, LLC, a Utah limited liability company;and Andrew J. Hinchman, an individual, Defendants.

Case No. 2:17-cv-00702-RJS-DAO

United States District Court, D. Utah

Signed July 11, 2023

James T. Burton, Joshua S. Rupp, Michael A. Eixenberger, Kirton McConkie, Salt Lake City, UT, for Plaintiffs.

Scott D. Swanson, Shaver & Swanson LLP, Boise, ID, for Defendants.

MEMORANDUM DECISION AND ORDER

ROBERT J. SHELBY, United States Chief District Judge

Plaintiffs SME Steel Contractors, Inc. (SME) and Core-Brace, LLC (Core-Brace) are business competitors with Defendants Seismic Bracing Company, LLC (SBC) and Andrew Hinchman. All parties are involved in the design of buckling-restrained braces, which are structural devices that help buildings withstand seismic activity. Plaintiffs filed suit against Defendants, asserting claims for, among other things, false advertising, false association, patent infringement, and copyright infringement.¹ Defendants counterclaimed.²

Three motions are now before the court: (1) Defendants' Motion for Partial Summary Judgment on SME's patent infringement claim (Defendants' First Motion),³ (2) Defendants' Motion for Partial Summary Judgment on Plaintiffs' other claims (Defendants' Second Motion),⁴ and (3) Plaintiffs' Motion for Summary Judgment on Defendants' Counterclaims (Plaintiffs' Motion).⁵ For the reasons stated below, Defendants' First Motion is GRANTED, Defendants' Second Motion is GRANTED IN PART and DENIED IN PART, and Plaintiffs' Motion is DENIED.

BACKGROUND⁶

Buckling-Restrained Braces

Buckling-restrained braces (BRBs) are "structural support members used in the construction of large steel structures."⁷ The court previously summarized the purpose and function of BRBs:

BRBs absorb seismic forces from earthquakes that would otherwise be exerted on a structure through plastic deformation. When an earthquake occurs, the steel core running through the middle of the BRB compresses or elongates without buckling. To absorb the seismic forces without destroying the BRB, the steel core must be free to move independently of the bracing element (i.e., the concrete-filled outer steel frame). When manufacturing a BRB, the steel core must therefore be prevented from bonding with the bracing element. This separation of steel core and bracing element allows the steel core to absorb seismic energy from the ends of the BRB without conveying that energy to the bracing element.⁸

A BRB is depicted in Figure A,⁹ which shows how the steel core fits within the buckling restraining assembly. Both ends of the steel core can be seen protruding from either end of the buckling restraining assembly.¹⁰

Figure A

Image materials not available for display.

Although BRBs are increasingly being "used in new structural steel construction projects, the BRB industry is still developing and might be considered a 'niche product' even within the steel construction industry."¹¹

The Parties

Core-Brace was founded in 2002 and has since designed, developed, manufactured, tested, and marketed BRBs.¹² SME fabricates and erects structural steel, with fabrication facilities in Utah and Idaho.¹³ SME is also the owner by assignment of U.S. Patent No. 7,174,680 ('680 Patent), which is a patent for an improved BRB.¹⁴ Core-Brace and SME are owned by the same parent company.¹⁵

Hinchman worked for SME as a chief engineer until he resigned sometime in 2010 or 2011.¹⁶ In 2016, Hinchman registered SBC as a limited liability company in Utah and through SBC, "began marketing BRBs and bidding [on] structural steel design jobs incorporating BRB technology."¹⁷

Both Core-Brace and SBC market and sell their BRBs by bidding on projects, and they have submitted bids for the same projects.¹⁸

SME's BRB Testing & Design Manual

Hinchman asked the University of Utah to evaluate and test five of SME's BRBs.¹⁹ In July 2016, the University issued a report concluding two of the five BRBs did not satisfy American Institute of Steel Construction (AISC) 341-10 requirements.²⁰ The report stated, "Further development is required for improving these two BRB types."²¹

In March 2017, SBC sent a ninety-page document titled "Design Manual" to at least six prospective clients.²² The Design Manual was part of SBC's marketing and promotional efforts, and it included sections on SBC's engineering experience, projects, testing reports, and BRB design.²³ Relevant to this case, the Design Manual included the following statements:

• "These patented methods have now been tested and qualified for use on projects in accordance with governing building codes (AISC 341)."²⁴

• "Our team has over 16 years of experience in R&D, testing, designing, engineering and manufacturing Buckling-Restrained Brace (BRB)."²⁵

• "We have been [ ] trend setters in the industry, helping develop numerous methods for connecting BRBs and streamlining production processes."²⁶

• "SBC's team has been involved in projects world-wide including the following highlights:

• Intermountain Medical Center, Murray UT, 646 BRBs

• Marriott Library Retrofit, Univ. of UT, 128 AESS BRBs

• World market Center, Las Vegas, NV, 596 BRBs

• West Emergency Wing, Univ. of UT Hospital, 200+ BRBs

• Bioengineering Lab, UCSF, 101 BRBs

• Los Angeles Police HQ, 182 BRBs."²⁷

• "Our team has experience in manufacturing over ten thousand BRBs for over 100 projects."²⁸

• SBC "[c]apabilities" include the "[p]roduce capacity of over 5000 BRBs per year."²⁹

The Design Manual also included several technical drawings of BRBs.³⁰

Core-Brace's Copyrighted Drawings

On June 27, 2017, Core-Brace filed three copyright registrations with the U.S. Copyright Office.³¹ Each registration claims a 2010 creation date and seeks to protect "technical drawing[s]" associated with Core-Brace's BRB designs.³² The first drawing is titled "BRB & Connection Layouts" and assigned number VAu001279857 ('857 Registration).³³ The second drawing is titled "Typical Bolted BRB & Connection Layouts" and assigned number VAu001279859 ('859 Registration).³⁴ Finally, the third drawing is titled "Typical Welded BRB & Connection Layouts" and assigned number VAu001279862 ('862 Registration).³⁵

SBC's Design Manual included "technical drawings that are either identical to or nearly identical to the technical drawings found in the '857 Registration, '862 Registration, and/or the '859 Registration."³⁶

Plaintiffs' Complaint & TRO Motion

On June 28, 2017, Plaintiffs initiated this action against Defendants.³⁷ In their Complaint, Plaintiffs asserted, among other things, Defendants infringed on SBC's patents, the Design Manual was false advertising, and the Design Manual improperly used Core-Brace's materials and intellectual property.³⁸

The following day, Core-Brace filed a Motion for Temporary Restraining Order and Preliminary Injunction (TRO Motion).³⁹ In the TRO Motion, Core-Brace asked the court to "temporarily and preliminarily enjoin[ ] SBC from further marketing or selling of BRBs" and to enjoin SBC "from any future use of Core-Brace's materials."⁴⁰ Core-Brace also asked the court to compel SBC to identify its customers and "distribute corrective information."⁴¹

Plaintiffs' Letters

In July 2017, Plaintiffs sent identical letters to three different companies Defendants were in contact with.⁴² One of the companies was "a steel fabricator who had contracted with [ ] SBC for the production of BRBs," another "was a general contractor who presumably hired the steel fabricator, and the third was the owner of the project."⁴³

The letters included the name and case number of the present lawsuit and listed the claims Core-Brace asserted against Defendants.⁴⁴ The letter also explained there was a pending TRO Motion.⁴⁵ To the letters, Plaintiffs attached a copy of the Complaint, the TRO Motion, and a declaration filed in support of the TRO Motion.⁴⁶

Plaintiffs' Second Amended Complaint

Also in July 2017, Defendants filed a Motion to Dismiss,⁴⁷ which the court granted in part and denied in part.⁴⁸ The dismissals were without prejudice,⁴⁹ and Plaintiffs filed their Second Amended Complaint on May 10, 2018.⁵⁰ In the Complaint, Plaintiffs asserted the following claims against Defendants:

• "False Advertising Under 15 U.S.C. § 1125(a)(1)(B)" - asserted by Core-Brace⁵¹

• "False Association Under 15 U.S.C. § 1125(a)(1)(A)" - asserted by Core-Brace⁵²

• "Utah Deceptive Trade Practice - U.C.A. § 13-11A-3" - asserted by Core-Brace⁵³

• "Infringement of United States Patent No. 7,174,680" - asserted by SME⁵⁴

• "Unfair Competition - U.C.A. § 13-5a-103" - asserted by SME⁵⁵

• "Intentional Interference with Economic Relations" - asserted by SME and Core-Brace⁵⁶

• "Copyright Infringement Under 17 U.S.C. § 101 et seq." - asserted by Core-Brace⁵⁷

• "Defamation" - asserted by SME and Core-Brace⁵⁸

Defendants' Counterclaims

Defendants filed their Answer on May 24, 2018, which included three counter claims: "Defamation per se," "Utah Deceptive Trade Practice - U.C.A. § 13-11A-3(h)," and "Intentional Interference with Economic Relations."⁵⁹ Each counterclaim is based on the letters Plaintiffs sent to the companies Defendants were in contact with.⁶⁰ More specifically, the counterclaims are based on statements from the Complaint and TRO Motion, which were attached to the letters.⁶¹

Claim Construction

Plaintiffs assert Defendants' BRB design infringes on independent claims 1, 3, 4, 9, 11, 18, 26, and 27 of the '680 Patent.⁶² On March 15, 2019, both parties filed Cross-Motions for Claim Construction.⁶³ The parties asked the court to construe four disputed terms: "bearing member," "air gap," "formed between," and "positioned between."⁶⁴ Except for Claim 27, Claim 1 is representative of how the terms are used in the allegedly infringed claims:

at least two separate bearing members each of which is interposed between the rigid layer and the core member so that one side of the bearing member is in direct

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