DCT
1:13-cv-02245
Rehco LLC v. Spin Master Ltd
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Rehco, LLC (Illinois)
- Defendant: Spin Master, Ltd. (Canada)
- Plaintiff’s Counsel: INNOVALAW, P.C.
- Case Identification: 1:13-cv-02245, N.D. Ill., 03/26/2013
- Venue Allegations: Plaintiff alleges venue is proper because Defendant has committed acts of infringement in the district, is deemed to reside in the district, and has contractually agreed to jurisdiction in Chicago, Illinois.
- Core Dispute: Plaintiff alleges that Defendant’s "Air Hogs" brand of radio-controlled flying toys infringes two patents related to mechanical helicopter stabilization and automatic altitude control systems, and further alleges breach of a prior license agreement.
- Technical Context: The patents address fundamental stability and control challenges in the market for mass-produced, inexpensive flying toys, a category where ease of use is a critical driver of commercial success.
- Key Procedural History: The complaint alleges that the parties had a "Helicopter Agreement" dating back to 2001, under which Defendant previously paid royalties to Plaintiff for the '395 patent before unilaterally ceasing payments. This prior licensing relationship is central to the allegations of willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 2001-09-01 | Rehco and Spin Master enter "Helicopter Agreement" |
| 2001-11-07 | ’395 Patent Priority Date |
| 2003-12-09 | ’395 Patent Issue Date |
| 2003-12-09 | Alleged notice of ’395 Patent to Spin Master |
| 2004-09-01 | First Amendment to Helicopter Agreement (approx. date) |
| 2005-01-14 | ’866 Patent Priority Date |
| 2006-07-01 | Second Amendment to Helicopter Agreement (approx. date) |
| 2006-09-05 | ’866 Patent Issue Date |
| 2008-01-01 | Spin Master receives award for accused product (approx. date) |
| 2008-12-01 | Alleged notice of ’866 Patent to Spin Master |
| 2008-09-12 | Rehco terminates Helicopter Agreement for non-payment |
| 2013-03-26 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 6,659,395 - "Propellers and Propeller Related Vehicles," issued December 9, 2003
The Invention Explained
- Problem Addressed: The patent’s background section describes the difficulty and expense of controlling toy helicopters, which are prone to instability (tipping, oscillating, or banking) due to minor power fluctuations or wind, making them hard for children to fly ('395 Patent, col. 1:59-65).
- The Patented Solution: The invention is a mechanical stabilization system for a helicopter. It features a "horizontal stabilizing means," which is a pivotal joint connecting the main propeller to the main drive shaft ('395 Patent, col. 2:28-32). This joint allows the propeller to pivot freely and independently of the helicopter's body. When the rotating propeller begins to pitch, the centrifugal force it generates tends to pivot the propeller back toward a stable, horizontal orientation, thus self-correcting the helicopter's attitude without complex electronics ('395 Patent, Abstract; col. 2:32-36).
- Technical Importance: This design offered a simple, passive, and inexpensive mechanical method for achieving flight stability in toy helicopters, potentially replacing or augmenting more complex and costly electronic systems like gyros or servos ('395 Patent, col. 1:7-14).
Key Claims at a Glance
- The complaint asserts independent claims 1 and 11, and dependent claims 19 and 21 (Compl. ¶¶ 24-27).
- Independent Claim 1 recites:
- A helicopter with an airframe, a motor for a main propeller, and a motor for a tail rotor.
- A "horizontal stabilizing means" attached between the main propeller and the main drive shaft.
- The stabilizing means "permits the main propeller to freely pivot about the main drive shaft independently from the airframe."
- Wherein this pivot action, driven by the propeller's centrifugal force, counteracts pitch and keeps the helicopter "in a substantially horizontal position."
U.S. Patent No. 7,100,866 - "Control System for a Flying Vehicle," issued September 5, 2006
The Invention Explained
- Problem Addressed: The patent identifies the difficulty of maintaining a stable hover, which typically requires constant user input to adjust propeller speed. It notes the need for a "self-hovering vehicle" that can automatically maintain its height above a surface or object ('866 Patent, col. 1:31-39).
- The Patented Solution: The invention is an automatic altitude control system. It uses a downward-facing transmitter (e.g., infrared) and a corresponding receiver on the vehicle's underside ('866 Patent, Abstract). The system's logic is binary: when the receiver detects a signal bounced from a surface below, it sets the propeller to a "first speed" causing the vehicle to gain altitude. When it does not receive the bounced signal, it sets the propeller to a "second speed" causing it to lose altitude. By toggling between these two states, the vehicle automatically hovers at a predetermined distance from the surface ('866 Patent, col. 2:53-62).
- Technical Importance: This technology provides an "auto-hover" feature for flying toys using a simple and cost-effective sensor system, greatly improving usability by relieving the user of the need to constantly manage the throttle to maintain altitude ('866 Patent, col. 1:31-39).
Key Claims at a Glance
- The complaint asserts independent claims 1, 10, 11 and dependent claims 2 and 12 (Compl. ¶ 41).
- Independent Claim 1 recites:
- A vehicle with a means for vertical propulsion.
- A downward-facing transmitter on the vehicle's bottom.
- A receiver on the vehicle's bottom for detecting the "bounced signal."
- A control system that automatically sets propeller speed based on the receiver's state.
- The system sets a "first speed" (to gain altitude) when the bounced signal is received.
- The system sets a "second speed" (to lose altitude) when the bounced signal is not received.
III. The Accused Instrumentality
Product Identification
The complaint names a wide range of Defendant’s "Air Hogs" brand products. For the ’395 patent, these include the Havoc Heli, Gyroblade, and Bell 222, among others (Compl. ¶¶ 24-26). For the ’866 patent, the accused products are the "Air Hogs Vectron Wave" and "Air Hogs Vectron Wave Battle" (Compl. ¶ 41).
Functionality and Market Context
The complaint alleges the products infringing the ’395 patent are "radio controlled helicopters" (Compl. ¶ 24). The products infringing the ’866 patent are described as "auto hover toys" (Compl. ¶ 41). The complaint asserts that the "Air Hogs" line is the "largest radio-controlled toy brand in the world" and notes that one accused product, the Air Hogs Havoc Heli Laser Battle, won a "Toy of the Year Award" in 2008, suggesting significant commercial success and market presence (Compl. ¶¶ 8-9). No probative visual evidence provided in complaint.
IV. Analysis of Infringement Allegations
The complaint does not contain detailed claim charts or specific factual allegations mapping product features to claim limitations. The following tables summarize the infringement theory based on the general product descriptions provided.
’395 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A helicopter having an airframe housing, a motor mechanism for powering a main propeller attached to a main drive shaft that extends vertically through the airframe and for powering a tail rotor... | The accused products are identified as "radio controlled helicopters" which are alleged to possess the fundamental components of a helicopter. | ¶24 | col. 4:35-53 |
| ...the helicopter further comprising a horizontal stabilizing means attached between the main propeller and the main drive shaft, which permits the main propeller to freely pivot about the main drive shaft independently from the airframe... | The complaint alleges infringement by the accused helicopters but does not specify the mechanical structure that allegedly constitutes the "horizontal stabilizing means." | ¶24 | col. 5:42-65 |
| ...wherein when the main propeller is rotating and the main propeller begins to pitch, the rotating main propeller having a centrifugal force... will tend to pivot about the horizontal stabilizing means... such that the helicopter remains in a substantially horizontal position. | The complaint alleges infringement but does not provide technical details on how the accused products allegedly use centrifugal force and a pivoting mechanism for stabilization. | ¶24 | col. 6:15-32 |
- Identified Points of Contention:
- Scope Questions: The central issue will be the construction of "horizontal stabilizing means." The dispute may focus on whether this term is limited to the specific U-shaped joint shown in the patent's embodiments or if it covers any mechanical pivot that provides passive stabilization.
- Technical Questions: A key factual question is whether the accused helicopters achieve stability using the claimed passive, pivoting mechanism. The court will need to determine if Defendant's products use this specific claimed solution or an alternative, such as electronic gyroscopic stabilization, that may not be covered by the claims.
’866 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A vehicle having a means for propelling in a vertical direction... | The accused products are identified as "auto hover toys," which are alleged to be capable of vertical propulsion. | ¶41 | col. 3:9-11 |
| ...a transmitter positioned on the bottom of said vehicle for transmitting a signal... downwardly... a receiver positioned on the bottom... for receiving said signal as it is bounced off of a surface... | The complaint alleges the "auto hover" functionality of the accused toys operates using a downward-facing sensor system, but does not detail the specific transmitter or receiver technology. | ¶41 | col. 3:19-34 |
| ...a control system that automatically sets a speed... to a first speed when the receiver receives the bounced signal and... to a second speed when the receiver does not receive the bounced signal... | The complaint alleges the "auto hover" feature infringes, implying that its control logic corresponds to the claimed two-speed system, but provides no specific details on its operational logic. | ¶41 | col. 4:21-34 |
| ...the first speed being predefined as a speed that causes the vehicle to gain altitude and the second speed being predefined as a speed that causes the vehicle to lose altitude. | The complaint does not offer evidence regarding the specific speed settings or altitude-change behavior of the accused toys' control systems. | ¶41 | col. 8:1-8 |
- Identified Points of Contention:
- Scope Questions: The analysis will likely focus on whether the claim's two-speed logic ("a first speed" and "a second speed") can be read to cover a system that might also include a third, distinct "hover speed" or utilize proportional control, as opposed to the strictly binary system recited.
- Technical Questions: An evidentiary question will be how the "Vectron Wave" control system actually operates. Does it function by simply toggling between a "climb" speed and a "fall" speed as claimed, or does it employ a more complex algorithm for maintaining altitude that is technically different from the claimed method?
V. Key Claim Terms for Construction
Term ('395 Patent): "horizontal stabilizing means"
- Context and Importance: This term is the core of the '395 invention. Its scope will determine whether the patent covers a broad category of passive stabilization systems or is confined to a specific mechanical implementation, directly impacting the infringement analysis for all accused helicopters.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The Summary of the Invention describes the term functionally as a means that "permits the main propeller to freely pivot about the main drive shaft independently from the airframe" ('395 Patent, col. 2:28-32). This could support an interpretation covering any structure that achieves this function.
- Evidence for a Narrower Interpretation: The detailed description focuses on a specific embodiment: a "freely pivotal main rotor head 44" described as a "U-shaped joint" ('395 Patent, col. 5:47-54; FIG. 2). A party could argue the claims should be limited to this disclosed structure or its equivalents.
Term ('866 Patent): "a control system that automatically sets a speed... to a first speed when the receiver receives the bounced signal and... to a second speed when the receiver does not receive the bounced signal"
- Context and Importance: This limitation defines the precise operational logic of the patented auto-hover system. Infringement by the "Vectron Wave" toys depends entirely on whether their control systems function according to this specific two-state, binary logic.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: A party might argue this language covers any system where altitude is managed by increasing speed upon signal detection and decreasing speed upon signal loss, even if other states (like a separate hover speed) exist.
- Evidence for a Narrower Interpretation: The claim explicitly recites only two states and two corresponding speeds. The patent specification itself, particularly in the control flow diagram (FIG. 7), describes a more complex process involving a distinct "hover speed" that is set when the receiver's output changes ('866 Patent, col. 4:11-13, FIG. 7 at 215, 265). A party may argue that the claim is limited to the simpler two-speed system and does not cover the three-speed logic disclosed elsewhere in the patent.
VI. Other Allegations
- Indirect Infringement: For both patents, the complaint alleges inducement of infringement by asserting that Defendant provides "instruction manuals" that instruct and encourage end-users to operate the accused products in an infringing manner (Compl. ¶¶ 31, 46).
- Willful Infringement: The complaint alleges willful infringement for both patents. For the ’395 patent, the allegation is based on notice since the patent's issue date and, more significantly, on the allegation that "Spin Master previously paid Rehco royalty payments under the ‘395 patent pursuant to the Helicopter Agreement and then unilaterally decided that it had paid Rehco enough money and decided to cease" payments (Compl. ¶ 60). For the ’866 patent, willfulness is alleged based on knowledge of the patent since at least December 1, 2008 (Compl. ¶ 43).
VII. Analyst’s Conclusion: Key Questions for the Case
A core issue will be one of definitional scope and historical conduct: For the ’395 patent, the dispute will turn on the construction of "horizontal stabilizing means" and the factual question of whether Defendant's products incorporate it. The alleged prior license and royalty payments will be a critical piece of evidence regarding Defendant's knowledge and its own past interpretation of the patent's coverage.
A key evidentiary question will be one of functional operation: For the ’866 patent, the case will depend on the precise technical operation of the "Vectron Wave" auto-hover system. Does it use the specific two-speed, binary control logic required by Claim 1, or does it employ a more sophisticated, multi-state, or proportional control scheme that may place it outside the literal scope of the claim?
A central question for damages will be willfulness and intent: The allegation that Defendant licensed the ’395 patent, paid royalties, and then stopped presents a compelling narrative for willful infringement. A key issue for the court will be to examine Defendant's conduct and any asserted justification for ceasing payments and continuing sales of allegedly infringing products.