Raymond P. Niro Jr.
Are Sears Holding Corp.’s Kenmore Elite brand gas grills an illegal knockoff of Weber grills?
A patent trial scheduled for September is set to answer that issue between the maker of Weber Grills and Sears Holdings Corp., which resulted from a business dispute that led Weber-Stephen Products LLC to pull its grills from Sears’ shelves.
U.S. District Judge Edmond E. Chang issued a summary judgment order last week dismissing two counterclaims Sears made in response to a patent infringement suit filed by Weber in Chicago federal court in March 2013.
Chang dismissed Sears’ claim that Weber fraudulently acquired a patent that it then used to acquire a monopoly in the market for premium gas grills. He also dismissed in part a claim that Weber breached a 1998 contract that laid out the business relationship between the two household names.
“We were very happy with that. It brings the focus of the case back to where it should be, which is on Sears’ misconduct,” said Raymond P. Niro Jr., a partner at Niro, McAndrews, Dowell & Grossman LLC who represents Weber-Stephen Products.
“We look forward to preparing the case for trial and, hopefully, having a jury verdict in the fall.”
At trial, Weber will seek monetary damages to compensate for past infringement, Niro said, and an injunction to prevent Sears from selling the Kenmore Elite grills at issue.
A Sears spokesperson declined to comment.
The dispute was triggered by the unraveling of a decades-long business relationship.
Sears and the maker of Weber grills signed a contract allowing Sears to sell the grills in 1998. In 2010, a majority stake of Weber-Stephen Products was sold, and it changed its business structure from a company to an LLC. It asked Sears to assign the 1998 contract to the new entity.
But that never happened, and a new contract was never signed. After the entity change took place, Weber-Stephen Products created a “minimum advertised price” program.
Under that program, Weber provided advertising dollars to retailers under the condition that its products were not to be advertised below certain prices.
Sears allegedly advertised the products at too low of a price and, as a result, Weber grills were off their shelves by mid-2013.
“It was a big, big decision because they had been in partnership for decades,” Niro said.
That decision was made a bit easier, Niro said, because the company’s line of Genesis gas grills were selling much better at retailers such as The Home Depot or Lowe’s. The sales lagged at Sears.
“Weber felt like what was happening was Sears was using Weber’s products in their advertising and promotions to lure people into Sears stores, and when customers were there, they would guide them over to Sears’ own products, where they made higher margins,” Niro said.
One such product might be the Kenmore Elite brand of gas grills, which was released in 2013, right around the time Weber stopped selling grills to Sears. Kenmore is a brand owned by Sears.
That set of grills is the basis of Weber’s patent infringement lawsuit against Sears.
Weber alleged a number of Kenmore Elite brand gas grills infringed three patents related to the design and also function of Weber’s Genesis gas grills. The company also filed claims of trade dress infringement, unfair competition and false designation of origin.
In response, Sears lodged a Walker Process claim against Weber. Chang, in his ruling, described that move as “a species of monopolization claim that targets the use of a fraudulently obtained patent to obtain or maintain a monopoly.”
Chang dismissed Sears’ claim, saying Weber likely did not have a monopoly on premium gas grills and, even if it did, it had not used the patent to gain it. Weber’s assertion of the patent against Sears was not enough to fulfill the law’s requirements.
Sears also alleged Weber breached the 1998 contract, in part, by refusing to sell the retailer parts at below-retail prices. At trial, the judge said, Sears can seek damages of the difference between the retail price it paid for spare parts and the price it would have paid for them under the 1998 contract.
Attorneys for Sears include Paul R. Garcia and Jordan A. Arnot of Partridge & Garcia P.C. as well as David R. Yohannan and Stephen R. Freeland of Kelley, Drye & Warren LLP in Washington, D.C.
The case is Weber-Stephen Products LLC v. Sears Holding Corp. and Sears, Roebuck & Co., No. 1:13-cv-01686.