Andrew and Beverly reach settlement on stackable hanger and grounding clip infringement case
February 21, 2007 - Andrew Corporation and Beverly Manufacturing Company have reached a settlement of a patent infringement lawsuit brought by Andrew of violating its patents on cable hangers and grounding kits.
Under terms of the settlement, Beverly had acknowledged its infringement of Andrew's patents for certain cable accessory products and will pay an undisclosed sum to the company. Andrew filed the suit in 2004 accusing Beverly, based in Tinley Park, IL, of infringing on its patents for cable transmission line hangers and grounding clips used in wireless networks. The settlement also requires that Beverly cease any further production of these products.
In an industry where manufacturers are constantly trying to improve upon a competitor's product and eliminate a step along the way, cease and desist orders can oftentimes follow product introduction. It has been questioned whether Beverly was penalized early on in the dispute when a merged Chicago law firm violated conflict of interest rules.
Firm declines to represent both parties
A 2006 Northern District of Illinois decision illustrated what can happen when two law firms merge and fail to perform a thorough conflicts check. It also identified that it is the client that must investigate whether there is a conflict of interest within the law firm they have selected.
In Andrew Corp. v. Beverly Manufacturing Co., Andrew alleged that Beverly willfully infringed on two patents after Beverly received written notice from Andrew of the alleged infringement.
In the suit, Beverly was going to use three adverse opinion letters against Andrew written by its counsel from the law firm of Barnes & Thornburg in the company's defense to the willful infringement allegations. Beverly said that these letters were clear evidence that they did not willfully infringe upon Andrew's patents.
The nation's largest wireless infrastructure manufacturer then filed a motion seeking to prevent Beverly from presenting evidence regarding the three letters and bar Barnes & Thornburg attorneys from testifying or otherwise participating in the case.
Andrew said that Beverly, in business since 1967, had previously been represented by two partners at Barnes & Thornburg when the attorneys were members of the law firm Lee Mann, Smith, McWilliams, Sweeney & Ohlson. Back in 2000, these attorneys represented Beverly in a dispute the company had with Andrew that ended in a settlement.
While still at the Lee Mann firm the same two attorneys began working for Beverly on their opinions two years later with regard to Andrew's patents at issue in the case and opened two legal files in the Lee Mann firm filing system regarding that work - however, in these files Andrew was not listed as the adverse party.
In early 2003, the Lee Mann firm merged into Barnes & Thornburg, a 475-member firm, and the two attorneys who had represented Beverly at Lee Mann became partners. At the time of the merger, Andrew was a client of Barnes & Thornburg.
During the merger, Barnes & Thornburg failed to recognize the conflict between Andrew and Beverly despite the fact that the work the two Lee Mann attorneys performed for Beverly analyzed Andrew's patents adversely to Andrew and the firm approved Beverly as one of its new clients.
The Lee Mann attorneys had previously provided their opinions that Beverly's modified stackable hanger did not fall within the claims of Andrew's patent. They also provided a similar opinion that their client's newly designed grounding kit did not infringe upon Andrew's patent and there was no infringement under the Doctrine of Equivalents.
In that dispute, Andrew threatened to sue Beverly for unfair competition and misappropriation of trade secrets over Beverly's "snap-in hangers," but before a lawsuit was filed, both manufacturers reached a settlement in which Beverly agreed to adjust the design of the "snap-in hanger."
According to the July 8, 2003 opinion letter, Beverly's post-2000 settlement "modified snap-in hanger" is a "variation on a hanger described in Andrew's expired '132 patent." Beverly renamed the modified "snap-in hanger" to be called "the modified stackable hanger." The modified stackable hanger is analyzed in the July 8, 2003 opinion letter and Andrew asserted in the most recent litigation that Beverly's modified stackable hanger infringes Andrew's '543 patent.
In 2004, both Andrew and Beverly contacted the firm seeking representation in the patent dispute that was settled this month and Barnes & Thornburg finally recognized the conflict and declined each company's request for representation against the other.
In the motion, Andrew argued that Barnes & Thornburg breached its fiduciary duties to Andrew by taking positions adverse to the company in the opinion letters provided to Beverly - therefore, the company contended the firm should be disqualified from any participation in the case, that the three opinion letters must be withdrawn, and that Beverly must be barred from using the opinions or presenting any testimony regarding those opinion letters in the case. Beverly countered by arguing that it is blameless in this situation and that it should not be punished for the mistakes made by Barnes & Thornburg.
Court says Beverly has ability to sue its law firm
The Court noted in its 2006 opinion: "It has long been the law that [l]awyers' errors in civil proceedings are imputed to their clients'…", The Court weighed both the effect on each party and the public interest, and noted that "[t]he competency of an attorney to produce an opinion" is more than just the analysis, but also working "within the confines of the ethical obligations…". While noting that Beverly could seek redress against its law firm, the Court held that Beverly had a duty to seek "competent legal advice" and that included obtaining "legal advice from a counsel who was free of ethical conflicts."
The Court also said, "The mere act of obtaining an opinion letter, however, is not sufficient to avoid a later finding of willful infringement. The relevant question is the infringer's investigation and good faith belief of invalidity or non-infringement."
In the settlement announced today, John DeSana, executive vice president and group president, Antenna and Cable Products segment, said "Andrew Corporation is pleased with the outcome we have achieved in this case."
"Over the years, we have invested substantial amounts of time and resources into developing intellectual property that gives our customers an advantage in the market. We will continue to actively protect that intellectual property and ensure that others do not attempt to unfairly compete by infringing our patents and other valuable rights," he said.
In addition to manufacturing products for the telecommunications industry, Beverly provides components for the automotive, electrical, aeronautical and computer companies.
In telecom they manufacture transmission line hangers, boots and entry ports, standoffs, round member adaptors, and angle adaptors. Beverly private labels these products to component manufacturers and distributors and had at one time been a supplier to Andrew.
Beverly management would not comment upon the settlement. Two wireless component manufacturers said that attorneys' fees could cost a defendant up to $500,000 or more for counsel and expenses for an infringement lawsuit.
WANHO to take up slack?
Industry observers say that WANHO Manufacturing LLC, a subsidiary of U.S. Capital Resources LLC of Waterbury, CT, will benefit from Beverly's inability to manufacture the popular transmission line ground kits and stackable snap-in hangers.
As the country's largest manufacturer of transmission line attachment hardware, WANHO private labels ground kits and hanger kits for the leading cable companies by competitively manufacturing their products from their US and Asian-based plants.
The majority of WANHO's executives held senior management positions with MTS Wireless Components when the company was a subsidiary of American Tower Corporation.
American Tower previously sold its component unit to a group of private investors, MTS Holding Co., in July of 2002 for $30 million as part of a three-year-long divestment strategy to focus on its business of leasing space on wireless towers. MTS Holding Co., in turn sold MTS Wireless Components to Andrew Corporation in March of 2004 for approximately $27.5 million, but retained their Singapore manufacturing group and other assets.
MTS fathered many manufacturers
Today's key component manufacturers and distributors are owned by former heads of companies that were acquired by MTS or by marketing and sales executives of MTS.
In the late 1970s, Tom Carpenter and Jeff Austin incorporated Microwave Tower Services to provide tower installation and maintenance services for the pre-cellular market in Salem, OR. The construction company began fabricating antenna mounts and other components in 1984 for their projects and began marketing their products in 1988 throughout the industry to satisfy the growing demand for components.
MTS was then purchased by Specialty Teleconstructors, Inc. of Albuquerque, NM in 1997 and remained a profitable subsidiary for the public company. OmniAmerica Inc. of Boca Raton, FL announced in early 1998 that it was acquiring Specialty. Nine months later American Tower of Boston, MA acquired OmniAmerica.