Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Schultz v. iGPS Co., No. 10 C 71, Slip Op. (N.D. Ill. Aug. 16, 2011) (Hibbler, Sen. J.).

Judge Hibbler denied defendants' motion to dismiss plaintiff's patent infringement complaint for lack of standing. Defendants argued that plaintiffs did not hold enforceable title to the patents in suit. The patents in suit were intentionally abandoned by plaintiff's co-owner, CHEP. When plaintiff learned of the abandonment, he asked the Patent Office to revive the patents, explaining that his failure to pay the maintenance fee was inadvertent. The only way plaintiff could truthfully claim inadvertence was if he referred only to himself and not CHEP, which intentionally abandoned. As such plaintiff was estopped from arguing that he also revived CHEP's rights. Defendants argued that plaintiff had a fiduciary duty to assign his rights to his then employer, VTEC. But because VTEC never required plaintiff to assign his rights, the Court held that plaintiff had retained the remaining rights in the patents in suit based upon the facts alleged in the complaint. Plaintiff, therefore, had standing to sue.

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Simonian v. Allergan, Inc., No. 10 C 2414, Slip Op. (N.D. Ill. Apr. 28, 2011) (St. Eve, J.).

Judge St. Eve denied defendant Allergan's motion to dismiss plaintiff Simonian's false patent marking suit holding that the false marking statute was constitutional pursuant to the Take Care Clause. The government retained little control over false marking actions, but that was less of a concern because false marking cases were civil not criminal. And, in fact, the government retained sufficient control. The executive branch was notified of each suit because the district court clerk was required to give the Director of the Patent Office (a member of the executive branch) notice of every patent suit. Furthermore, the government may intervene in every case. And when the government intervenes, plaintiff cannot dismiss a case without the government's agreement.
 

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Trading Techs. Int'l., Inc. v. BCG Partners, Inc., No. 10 C 715, Slip Op. (N.D. Ill. May 5, 2011) (Kendall, J.).

Judge Kendall granted the FuturePath defendants' and denied the SunGuard defendants' Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Trading Technologies' ("TT") patent claims regarding trading software.

FuturePath:  The Court dismissed TT's direct infringement claims against FuturePath because TT did not accuse a specific FuturePath product or even category of product. TT's reference to unspecified "products" did not meet the Twomby or Iqbal standards, nor did it meet the Federal Circuit's requirements in McZel v. Spring Nextel Corp., 501 F. 3d 1354 (Fed. Cir. 2007). Identification of an accused product in TT's briefing and reference to FuturePath's website in TT's indirect infringement claims were insufficient.

TT did not allege that FuturePath had knowledge of TT's patents. Without an allegation of knowledge, TT's claims were deficient. The Court, therefore, dismissed all of TT's claims against FuturePath with leave to replead correcting the deficiencies.

SunGuard:  TT alleged that SunGuard had constructive knowledge of TT's patents, but not actual knowledge. Constructive knowledge was sufficient to maintain TT's claims, regardless of whether the Federal Circuit might later hold constructive knowledge insufficient.
 

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SCI Ill. Servs., Inc. v. Mitzvah Memorial Funerals, Inc., No. 10 C 6111, Slip Op. (N.D. Ill. Apr. 27, 2011) (Holderman, C.J.).

Judge Holderman denied defendants' Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff's Lanham Act false designation of original claim in this trademark dispute involving funeral home trademarks - Lloyd Mandel Levayah Funerals (plaintiff) and Lloyd Mandel Mitzvah Memorial Funerals (defendant). Plaintiff properly pled that it had a protectable mark and that there was a likelihood of confusion as to defendants' funeral services. The Court could not find the marks so dissimilar that plaintiff could not demonstrate a likelihood of confusion between the marks as a matter of law. The Court refused to consider defendants' motion as to other claims because defendant did not argue or support its motion as to the other claims in its briefing.
 

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Hollister Inc. v. Convatec Inc., No. 10 C 6431, Slip Op. (N.D. Ill. June 21, 2011) (Kennelly, J.).

Judge Kennelly granted defendant Convatec's summary judgment because of earlier settlement agreement released plaintiff Hollister's patent infringement claims involving bowel management systems as to then existing products. Here are the key holdings:
 

• The release provisions in the agreement made clear that the parties intended to release future sales of existing product lines.
   
• The accrued products did not have new, infringing features that would have brought them outside the bonds of the agreement.
   
• Hollister cited no case supporting its argument that in New Jersey releases would only be for past and current sales, not future.
   
• Hollister offered no case law supporting its arguments that a patent application cannot be released before it is issued.

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Flava Works, Inc. v. Gunter d/b/a myVidster.com, No. 10 C 6517, Slip Op. (N.D. Ill. May 10, 2011) (Grady, J.).

Judge Grady granted in part defendants' Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Flava Works' complaint in this copyright case involving adult entertainment on the internet. 

Direct Infringement

Defendant Gunter operates myVidster.com where users could post content, including the allegedly infringing videos. But, as an internet service provider ("ISP") Gunter was not liable for his user's copying. And Flava Works did not allege that Gunter copied. The claim was, therefore, dismissed. 

Contributory Infringement

Flava Works could not rely solely upon its DMCA take down notices to defendants - even multiple notices - to prove either actual or constructive knowledge of the infringement. Flava Works, however, showed knowledge based upon seven notices it sent to defendants over seven months, in addition to the DMCA takedown notices. The contributory infringement count was, therefore sufficiently pled. 

Vicarious Liability

Flava Works did not sufficiently plead defendants' direct financial interest in the alleged infringement. Flava Works did allege that defendants' inexpensive storage space and video sharing attracts customers. But Flava Works did not allege that the presence of the allegedly infringing material drew customers. 

Inducement

The Court dismissed Flava Works' inducement claim. It was a "formulaic recitation" of the standard void of facts showing an infringing purpose of active steps fostering infringement. 

False Designation & Trademark Infringement

Defendants' alleged posting on their website of Flava Works' videos containing Flava Works marks did not constitute a use in commerce. 

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Free Green Can, LLC v. Green Recycling Enterprs., LLC, No. 10 C 5764, Slip Op. (N.D. Ill. June 20, 2011) (Coleman, J.).

Judge Coleman granted the individual defendant Menas' motion to dismiss the counterclaims against him and granted in part defendant Green Recycling Enterprises' ("GRE") motion to dismiss plaintiffs' (collectively "FGC") counterclaim in this trademark case regarding recycling can systems with integral advertising.

The Court's significant holdings included: 

• GRE did not plead sufficient facts showing Menas was PGC's alter ego that would warrant piercing the corporate veil. GRE only pled that Menas made significant investment in FGC and that Menas directed FGC without any factual support or detail.
   
• GRE's deceptive trade practices act claims were all based upon actions taken before Menas invested. So, Menas could not be liable for them. 

The holdings with respect to FGC's motion were all related to Nebraska causes of action. So, I am not addressing them here. 

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LM Insur. Co. v. Aceo, Inc., No. 08 C 2372, Slip Op. (N.D. Ill. July 7, 2011) (Cole, Mag. J.).

Judge Cole granted a motion to compel further deposition testimony of a witness. During a deposition, the witness testified that she thought an "individual broker" may have received "'return' (kickback)." When asked to identify the broker, her counsel objected that the question called for speculation and coached the witness through a speaking objection that she should not answer without "clear information." Counsel then took the witness out of the room while a question was pending for a discussion which lasted thirty minutes. After the discussion, the witness stated that she had been "speculating" and that "I don't feel like what I said was correct." The Court noted that counsel's coaching was wrong, but that the counsel's most "disturbing" action was removing the witness to confer outside the deposition room. Furthermore, counsel never offered a justification for the conference during questioning. And in any event, the only acceptable explanation was determining whether the answer would have been privileged. However, there was no indication of that. Because of the deposition misconduct, the Court ordered that the deposition would continue in-court pursuant to the Court's supervision. The Court also ordered an in camera conference with the witness and her counsel to determine whether there is any privilege protecting what counsel told the witness during the break in the original deposition. Finally, the Court declined to consider whether further action was necessary at the time of the opinion.

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Triteq v. HMC Holdings LLC, No 11 C 843, Slip Op. (N.D. Ill. Jul. 5, 2011) (Leinenweber, J.).

Judge Leinenweber granted in part and denied in part defendant HMC Holdings' ("HMC") motion to dismiss this patent and false marking complaint involving pistol boxes. Plaintiff Triteq had standing to bring its declaratory judgment claim based upon HMC's letter to Triteq alleging Triteq's products were direct copies of HMC's patented product and seeking the names of Triteq's customers. The Court dismissed Triteq's false marking claim - alleging that the marked pistol boxes were not covered by the marked design patent - with leave to replead. Triteq's claim lacked specific facts showing intent as required by BP Lubricants.
 

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EnVerve, Inc. v. Unger Meat Co., No 11 C. 472, Slip Op. (N.D. Ill. Apr. 26, 2011) (Castillo, J.).

Judge Castillo denied plaintiff EnVerve's motion for preliminary injunction in this copyright infringement action involving advertisements. The Court first held that EnVerve had only shown a minimal likelihood of success on the merits:

• EnVerve's arguments were "very conclusory" and that "brevity [was] fatal."
   
• There was a significant dispute regarding who owned the copyrights based upon a contract between the parties. 
   

• EnVerve's evidence of copying was an unsupported conclusion that defendant use constituted copying.

• EnVerve failed to address defendant's best argument - that EnVerve's claim sounded in contract, not copyright. 

The Court also held that there was no irreparable harm:

• Money damages were an adequate remedy and were readily calculable based upon the contract, EnVerve's invoices and defendant's payments.
   
• EnVerve's claims are reputational harm and defendant's potential insolvency were too speculative to be considered irreparable harm.

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OFA Royalties LLC v. Apne, No. 10 C 4237, Slip Op. (N.D. Ill. Jun. 17, 2011) (Dow, J.).

Judge Dow awarded plaintiffs (collectively "Quizno's") their attorney's fees of approximately $28k in this franchise and trademark case involving Quizno's restaurants. The Court held that the parties' franchise agreement required that a defaulting party pay the attorney's fees of the other party. Because Quizno's won its preliminary injunction motion and later won a final judgment against defendants, the agreement required that defendants pay Quizno's attorney's fees. And the Court awarded Quizno's its full fees request because defendants did not contest Quizno's motion for fees or its specific fees.
 

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Peerless Indus., Inc. v. Crimson AV, LLC, No. 11 C 1768, Slip Op. (N.D. Ill. Jun. 10, 2011) (Lefkow, J.).

Judge Lefkow denied plaintiff Peerless' motion for a preliminary injunction in this patent and tortious interference case involving audio-visual mount equipment. Peerless had a manufacturing agreement with Sycamore Manufacturing ("Sycamore") which was terminated no later than March 2010. The agreement included a non-compete clause that prevented Sycamore from selling the products it made for Peerless or any similar products, with a very broad definition of similarity. After the March 2010 termination and before the end of the non-compete term, in March 2011, Sycamore began selling similar products to defendant Crimson. The Court held that Peerless had "negligible" likelihood of success because the non-compete clause was likely unenforceable because it was broader than necessary to protect Peerless' interests. The scope of similar products was far too broad. The scope should have been limited to substantially similar products. Additionally, the definition of similar products was "unworkably difficult to determine."

Peerless also could not show irreparable harm. As an initial matter, the non-compete term had ended before the date this Opinion issued. An injunction barring Crimson from selling product the agreement now allowed it to sell would have improperly extended the term of the non-compete. Additionally, because the alleged unauthorized sales were complete, the damages were readily quantifiable.
 

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Culligan Int'l Co. v. Water Sys. of Birmingham, Inc., No. 10 C 8199, Slip Op. (N.D. Ill. Apr. 27, 2011) (Bucklo, J.).

The Court granted defendants' Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction in this trademark dispute regarding plaintiff's CULLIGAN marks. Defendants were Alabama entities without offices, employees or agents in Illinois. All of defendants' business was conducted in Alabama. The parties' agreement was negotiated and executed in Alabama, and there was no indication of a choice of law provision selecting Illinois law. The only connection to Illinois was that plaintiff did business in Illinois, and that was not sufficient to create jurisdiction over defendants.
 

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Heathcote Holdings Corp. v. L'Oreal USA, Inc., No. 11 C 1921, Slip Op. (N.D. Ill. Aug. 9, 2011) (Lefkow, J.).

Judge Lefkow granted defendant L'Oreal's motion to transfer plaintiff's false patent marking case involving boxes of hair dye to the S.D. New York, L'Oreal's home district. Generally, plaintiff's Heathcote's choice of forum would be given deference, but in false marking cases the United States is the real party in interest. So, the qui tam plaintiff's chosen forum is given little deference. The situs of material events was New York, where the accused packaging was designed and where the relevant employees reside. L'Oreal's witnesses and documents were more likely in New York than Illinois.

The convenience of the parties also weighed in favor of New York. Heathcote did not identify any employees that would have to travel to New York for the case, whereas L'Oreal's relevant employees were in New York. Furthermore, Heathcote's only business was litigation and therefore the travel would not distract Heathcote from its business.

The interests of justice weighed in favor of transfer. There were already four false marking cases against L'Oreal or its subsidiaries that had been transferred to the S.D. New York. And the potential consolidation of those cases would benefit the parties and judicial economy.
 

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Flava Works, Inc. v. Gunter d/b/a myVidster.com, No. 10 C 6517, Slip Op. (N.D. Ill. Jul. 27, 2011) (Grady, J.).

Judge Grady granted plaintiff Flava Works' motion for a preliminary injunction in this copyright case involving adult movies, and ordered the parties to confer on language for the preliminary injunction. Defendants' myVidster website is a "social video bookmarking" site which allows users to post or link to video content. When a user posts or links to the content, myVidster crawls the website hosting the video to gather data about the video, creates a thumbnail image of the video and embeds the video on the myVidster site.

Likelihood of Success

The Court held that there was a likelihood of success on at least Flava Works' contributory copyright infringement claim. It could not be "seriously disputed" that third parties have directly infringed Flava Work's works by posting video content on myVidster. And defendants knew or should have known about the infringement based upon Flava Works' seven DMCA take down notices outlining instances of the infringement to defendants. In fact, the email exchanges surrounding the notices show that defendants were not cooperative in addressing the notices. And myVidster's repeat infringer policy was the "epitome" of willful blindness. Furthermore, there was significant evidence that defendants encouraged the infringement. For example, myVidster encouraged sharing of video content without warning of potential copyright infringement issues.

Defendants were not protected by the DMCA's safe harbor provision. A threshold requirement for safe harbor is that a party adopt and reasonably implement a policy providing for termination of users that are repeat infringers. Defendants policy did not require or directly provide for termination of repeat infringers. And defendants did not consider copyright infringement to be part of the defintion of "infringer."

Irreparable Harm

Defendants failed to rebut the presumption of irreparable harm in copyright cases. Flava Works' did not delay in bringing the suit and then the injunction motion. Prior to filing suit, Flava Works attempted to resolve the issue with several DMCA take down notices and the Court would not penalize Flava Works for attempting to avoid litigation.

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