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Durr Systems, Inc. v. EFC Systems, Inc.

United States District Court, D. Maryland, Southern Division

August 5, 2019

DURR SYSTEMS, INC., Plaintiff,
v.
EFC SYSTEMS, INC., Defendant.

          MEMORANDUM OPINION

          GEORGE J. HAZEL, UNITED STATES DISTRICT JUDGE

         In this patent infringement case, Defendant/Counter-Plaintiff EFC Systems, Inc. asserts five counterclaims against Plaintiff/Counter-Defendant Durr Systems, Inc. ECF No. 20. Pending before the Court is Durr Systems, Inc.'s Motion to Dismiss Counts III, IV, and V of EFC's Amended Counterclaims, which assert violations of the Lanham Act, 15 U.S.C. § 1125 (Count III), unfair trade practices in violation of Maryland Commercial Code §§ 13-301, et seq. (2017) (Count IV), and tortious interference with business expectancy in violation of Maryland common law (Count V). ECF No. 25. No. hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the following reasons, Durr Systems, Inc's partial Motion to Dismiss is granted.

         I. BACKGROUND[1]

         Durr Systems, Inc. (Durr) is a United States subsidiary of the German parent company, Dürr AG. ECF No. 20 ¶ 10. Dürr Systems AG is a German subsidiary of the same parent company. See ECF No. 20-2.[2] Neither Dürr AG, the parent company, nor Dürr Systems AG, the German subsidiary, are parties to this case. ECF No. 20 ¶¶ 1-2.

         Dürr AG, the non-party parent company, manufactures robotic paint systems for the automotive and industrial paint industries. ECF No. 20 ¶ 10. Automatic and industrial paint application is accomplished by using rotary atomization paint systems that utilize a “bell cup, ” which attaches to the end of a turbine and rotates at high speed. Id. ¶ 7. Paint is injected into the center of the bell cup from the rear, and the bell cup's rotation moves paint to the edge of the cup by centrifugal force, resulting in atomization of the paint into small droplets. Id. Durr, the United States subsidiary that is a party to this case, markets and sells its parent company's robotic paint systems and components (i.e., turbines and bell cups) in the United States to automobile manufacturers. Id. ¶ 9. Durr and Dürr AG sell bell cups under the name Ecobell3. See Id. ¶ 47; ECF No. 20-2 at 4.

         EFC Systems, Inc. (EFC) is an alternative source for industrial paint equipment. Id. ¶ 11. EFC does not manufacture or sell robotic arms, robotic control systems, or similar equipment but specializes in the design, construction, and manufacture of turbines and bell cups, as well as other critical parts for industrial paint equipment, such as color changers and fluid valves. Id. ¶ 12.

         EFC alleges that Frank Herre, a Senior Manager for Process Development at Dürr Systems AG-the German subsidiary-made a presentation on February 8, 2018 to automobile manufacturer Jaguar Landrover (JLR) in which he indicated that certain EFC turbines infringed on patents for the EcoBell3 turbine. Id. ¶ 45; ECF No. 20-2 at 2, 12. The last page of the presentation materials includes Mr. Herre's contact information:

         (Image Omitted)

         Id. at 11.[3] Every page of the presentation lists Dürr Systems AG as the copyright holder of the presentation. Id. at 2-11.

         The presentation was made in response to a complaint lodged by JLR about the high cost of spare parts for turbines and certain vibration issues “of the DURR turbines on the EFC test stand.” ECF No. 20 ¶ 47; ECF No. 20-2 at 4. JLR is both an EFC, Durr, and Dürr Systems AG customer, utilizing certain robotic paint systems in its automobile assembly lines. ECF No. 20 ¶ 48; ECF No. 20-2. In connection with those paint robots, JLR utilizes turbines and bell cups purchased from both Durr and EFC. ECF No. 20 ¶ 48.

         In the presentation's discussion of EFC's competing turbine, Mr. Herre referred to the EFC turbine as a “clone” of the “EcoBell3 turbine, ” indicating that it infringed on the patent. Id. The EFC turbine pictured in the presentation is EFC part number 34-1A00. Id. ¶ 49. In November of 2017, Durr's counsel and EFC's representatives communicated regarding EFC 34-1A00 parts being sold by EFC to JLR. Id. More specifically, through those discussions, Durr's counsel admitted that the EFC 34-1A00 parts being sold to JLR did not infringe Durr's patents due to certain distinctions between the EFC and Durr designs. Id.

         In this context, EFC alleges that Mr. Herre's statements to JLR approximately three months later were knowingly false. Id. ¶ 50. EFC further alleges that “those statements were made with intent to cause harm to EFC” and that they have caused reputational harm to EFC. Id. ¶ 51. Since Mr. Herre's presentation, JLR has not purchased any more of the turbines mentioned in the presentation from EFC. Id.

         In a separate incident at an unknown time, a Durr representative met with an automobile manufacturer who had previously purchased and installed robotic paint equipment sold by Durr. Id. ¶ 56. The customer was at the time considering the purchase of EFC bell cups to be used in place of Durr's bell cups on the Durr robotic paint equipment. Id. ¶ 57. When the Durr representative learned that the customer was considering switching to EFC bell cups, the Durr representative told the customer that they could not purchase EFC's bell cups due to a patent infringement issue. Id. EFC experienced economic and reputational harm as a result of this and other similar incidents. Id. ¶ 58.

         II. ...


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