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Rockwell Automation, Inc. v. Radwell International, Inc.

United States District Court, D. New Jersey, Camden Vicinage

September 25, 2019

Rockwell Automation, Inc. Plaintiffs,
v.
Radwell International, Inc., Defendants.

          OPINION

          ROBERT B. KUGLER, UNITED STATES DISTRICT COURT JUDGE

         Before the Court in this action involving, among other things, trademark infringement, is the motion [“the motion”] of plaintiff Rockwell Automation [“Rockwell”] (ECF Doc. 314) under Federal Rule of Civil Procedure [“Fed. R. Civ. Proc.” or “Rule”] 56(a) for summary judgment on Counts I[1], V[2] and VII‐IX[3] of its second amended complaint (ECF Doc. 140) against defendant Radwell International, Inc. [“Radwell”], The COURT HAVING REVIEWED the parties’ submissions without a hearing as endorsed by Rule 78.1 (b), and for the reasons below, and for good cause shown, The Court DENIES plaintiff’s motion for summary judgment as to Counts I, V, and VII‐ IX of its second amended complaint.

         An appropriate Order accompanies this Opinion.

         1.0 Background and Procedure

         What follows is an abridged version of the lengthy procedural history in this action‐‐ with which the parties will be aware-that focuses on information relevant to this motion. Plaintiff Rockwell makes and sells a large number of products for a wide variety of uses in industrial automations systems. Safety and reliability of these parts are of paramount importance not only to customers, but to Rockwell as a manufacturer to minimize quality problems and/or products liability claims. All of Rockwell’s products bear one or more of its U.S. registered trademarks, which Rockwell asserts are source identifiers to its U.S. customers of its warranty, quality control measures, and customer support for each of its products sold in the U.S.

         On 6 July 2015, Rockwell initiated this action against defendant Radwell. On 16 February 2016, it filed a first amended complaint and on 28 March 2017 a second amended complaint [“the complaint”], which is the one that controls here. The complaint has the following claims relevant to the motion: trademark infringement (Count I), statutory unfair competition (Count V), tortious inference with contract and aid and abetting thereof (Counts VII and VIII) and aiding and abetting fraud (Count IX).

         Rockwell is suing Radwell because it alleges Radwell has been selling in the United States certain products bearing Rockwell trademarks but which are unauthorized and unlawful gray goods. Since Radwell is not an authorized dealer of Rockwell goods in the U.S., those goods Radwell has sold in the U.S. [“Radwell goods”] have entered and/or been sold in the U.S. without Rockwell’s warranty, quality control and customer support. As unauthorized gray goods bearing Rockwell’s trademarks, Radwell goods appear identical to U.S.‐authorized Rockwell goods, but lack their quality benefits and Rockwell alleges are therefore inferior. Rockwell further alleges the Radwell goods confuse the public as to their source and quality and thereby infringe Rockwell’s trademarks and are consequently unlawful.

         Rockwell also alleges that, in order to get around that Radwell was not an authorized U.S. distributor of Rockwell goods, Radwell committed fraud by creating a purchasing network of third party agents that bought Rockwell goods from Rockwell authorized distributors and sold them to Radwell. Thus, the Rockwell distributors did not know they sold goods intended for Radwell. Radwell in turn re‐sold the goods in the U.S. without authorization from Rockwell. Rockwell alleges Radwell deceived its authorized distributors to breach their distributorship agreements. Rockwell further alleges such deception constitutes fraud, tortious interference in the contractual relationships with its authorized distributors, and unfair competition under New Jersey law.

         On 6 September 2017, Rockwell petitioned the International Trade Commission [“ITC”] to institute an investigation of several respondents including Radwell pursuant to 19 U.S.C. §1337 [“the investigation” or “§337 investigation”][4], In the ITC petition, Rockwell alleged the same claims as in the complaint before this Court. On 10 October 2017, the ITC instituted an investigation into Rockwell claims, and, in response to Radwell’s motion to stay this litigation, on 1 November 2017, the Court ordered the stay of all discovery in this action until the related ITC proceedings were concluded.

         On 12 July 2018, Radwell voluntarily entered into a consent order stipulation with the ITC by which Radwell agreed it would stop selling, importing, and selling for import any goods bearing Rockwell marks. This meant the investigation effectively ended as to Radwell. On 20 July 2018, the ITC Administrative Law Judge [“ALJ”] issued an initial determination, which formally approved Radwell’s consent stipulation, constituted a consent order and formally terminated the investigation as to Radwell. On 15 August 2018, the Commission in full accepted Radwell’s consent stipulation, and the consent order with the ITC became effective. Between institution of the investigation and its termination as to Radwell, Rockwell alleges extensive and expensive discovery had been conducted, which disrupted the parties’ business and concluded with the preparation of complex, lengthy pre‐hearing briefs, all of which efforts were rendered moot and irrelevant as to Radwell’s prior activities because of the consent order.

         On 22 February 2019, Rockwell filed this motion; the opposition and reply papers were later timely filed.

         2.0 Parties Contentions

         Rockwell argues the consent order that Radwell concluded with the ITC [“the consent order”]-by which Radwell agreed to stop selling, importing, or selling for import in or to the United States goods that infringed Rockwell’s registered marks and by which the investigation as to Radwell’s unlawful activities under §337 terminated-constitutes a final determination of the trademark infringement, tortious interference, and fraud claims before the ITC. ECF Doc. 314‐1:10. Rockwell also argues Third Circuit jurisprudence regarding the finality of consent orders applies to the Counts reviewed in this motion. Thus, plaintiff argues in the Third Circuit, the ITC consent order must be regarded as a final determination against Radwell and necessarily and finally resolves Counts I, V, and VII of the second, amended complaint (ECF Doc. 140) because these are the very same claims examined in the investigation. Id. at 13. Accordingly, the ITC consent order precludes further legal determination of these Counts by this Court. Id. at 11‐12.

         Radwell argues the ITC consent order can never be considered final because of a plain language interpretation of the Federal Regulations governing ITC consent orders in §337 investigations. ECF Doc. 337:13‐14. Moreover, the consent order as to Radwell was agreed to and executed by the ITC before the ALJ issued any fact finding or initial determination as to the Radwell. Id. at 20‐22. Therefore, the consent order simply terminated the investigation before any legal or factual determinations were made. Id. Thus, the consent order cannot logically confer claim preclusion as to any of the Counts in the complaint as there is no legal finding that can preclude them. Id. at 15.

         3.0 STANDARDS

         3.1 Summary Judgment Generally

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). An issue is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non‐moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is “material” if it might affect the outcome of the case under governing law. Id.

         The movant bears the initial burden of proof to present those portions of the record it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant makes this showing, the burden shifts to the non‐moving party to offer evidence establishing the existence of a genuine dispute that compels a trial. Id. at 324. Specifically, the non‐movant “must set forth specific facts showing that there is a genuine issue for trial” (Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 324) through affidavits or otherwise as provided by Rule 56 and must “identify those facts of record which would contradict the facts identified by the movant.” Port Auth. of N.Y. and N.J. v. Affiliated FM Ins. Co., 311 F.3d 226, 233 (3d Cir. 2002). If the non‐movant fails to do so, the Court must grant summary judgment. Big Apple BMW v. BMW of North America, 974 F.2d 1358, 1363 (3d Cir.1992). The evidence introduced to defeat or support a motion for summary judgment must be capable of being admissible at trial. Callahan v. AEV, Inc., 182 F.3d 237, 252 n. 11 (3d Cir.1999) (citing Petruzzi's IGA Supermarkets, Inc. v. Darling‐Delaware Co., 998 F.2d 1224, 1234 n. 9 (3d Cir.1993)).

         In evaluating whether there is a genuine dispute of material fact, the Court considers all facts and ambiguities in the light most favorable to the non‐moving party (Anderson v. Liberty Lobby,477 U.S. 242, 255; Burton v. Teleflex Inc.,707 F.3d 417, 425 (3d Cir.2013)) and also draws all reasonable inferences in their favor. (Burns v. Pa. Dep’t of Corr., 642 F.3d 163, 1703d Cir.2011)). However, the Court determines not “the truth of the matter, ” but whether a genuine dispute of material fact necessitates a trial. Anderson, 477 U.S. at 242; Petruzzi's IGA Supermarkets, 998 F.2d at 1230. The Court ...


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