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

In yesterday's edition, the Chicago Tribune published a commentary on the Patent Reform Act of 2007 by Cummins-Allison Corp.'s Chairman William J. Jones -- Cummins-Allison is based in Mt. Prospect, Illinois and develops and distributes coin and currency handling/counting machines.  Jones has strong feelings about the Act and offers some unique opinions.  First, he is against "harmonizing" US law with international patent laws, arguing that the European and Japanese systems are "parochial."  He also makes the, in my experience unfair although widely held, argument that the Chinese system "specializes in intellectual property theft."  I believe if you look at recent Chinese cases or the experts on Chinese IP law -- like the excellent IP Dragon -- you will see that China has become increasingly willing to protect the intellectual property of foreign entities, as long as the entities have invested in the necessary Chinese patents, trademarks, etc.

Jones notes that at the recent Congressional hearings, no manufacturing firms testified, despite some interesting statistics:

U.S. manufacturers undertake 60 to 70 percent of the nation's research and development and hold 60 percent of its patents.

                                                                   * * *

. . . .  Roughly one-third of all patent applications are made by independent inventors, small manufacturers, universities and non-profit research groups. Their efforts are crucial for leading-edge scientific advances, and their views should be heard.

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Varitalk, LLC v. Lahoti, No. 07 C 1771, 2007 WL 1576127 (N.D. Ill. May 30, 2007) (Conlon, J.).

Judge Conlon denied defendant Dave Lahoti’s (“Lahoti”) motion to dismiss plaintiff Varitalk’s complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2), improper venue pursuant to Fed. R. Civ. P. 12(b)(3) and forum non conveniens. Varitalk had a principal place of business in Chicago, where it developed software to relay highly customizable pre-recorded audio messages to consumers that were indistinguishable from live human voice. Varitalk registered a trademark in its name “Varitalk” for use in connection with this business. Lahoti is an individual residing in California where he operates various businesses using websites, such as www.omegaworks.com and www.crosspath.com. Lahoti registered the domain name www.veritalk.com, where he set up an internet portal which allowed visitors to his site to click through links to buy various products or services. The Court held that Lahoti’s website fell in the gray area between active websites (which create specific jurisdiction) and passive websites (which do not create specific jurisdiction). But the portal’s interactive and commercial nature – Lahoti earned income from the site based on how many visitors clicked on links on the site and whether they bought products from the linked sites – combined with Varitalk’s evidence that some consumers were confused and erroneously visited Lahoti’s portal, create specific jurisdiction over Lahoti. On the other hand, Lahoti’s email exchange with Varitalk’s CEO Frederick Lowe, initiated by Lowe, regarding whether Lahoti would sell his portal to Varitalk did not create specific jurisdiction because the exchange was limited and not initiated by Lahoti.

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Trading Techs. Int'l., Inc. v. eSpeed, Inc., No 04 C 5312, Slip op. (N.D. Ill. June 20, 2007) (Moran, Sen. J.).*

Judge Moran granted defendants (collectively "eSpeed") summary judgment of noninfringement regarding eSpeed's Dual Dynamic, eSpeedometer and Modified eSpeedometer products (collectively the "Products").**  The Court held that none of the Products met the "static" limitation in the claim terms "common static price axis" and "static display of prices."  In previous opinions, the Court construed and reconstrued "common static price axis" as:

a line comprising price levels that do not change positions unless a manual re-centering command is received . . . .

(emphasis added).  The Court also construed "static display of prices" as:

a display of prices comprising price levels that do not change positions unless a manual rec-centering command is received.

(emphasis added).  Because each of the Products included either an automatic re-centering feature or "drift" re-centering (automatic re-centering in response to market changes), the Court held that the Products did not meet the "static" limitation and, therefore, did not literally infringe plaintiff Trading Technologies' ("TT") patents.  In support of its ruling, the Court cited its claim construction reconsideration opinion (discussed in the Blog's archives), where it explained that "any movement of the static price axis leaves accused technology outside the protection of [TT's] patents."

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Republic Tobacco L.P. v. North Atlantic Trading Co., No. 06 C 2738, 2007 WL 1424093 (N.D. Ill. May 10, 2007) (Der-Yeghiayan, J.).*

Judge Der-Yeghiayan granted plaintiff/counter-defendant Republic Tobacco’s (“Republic”) motion for summary judgment on defendant/counter-plaintiff North Atlantic Trading’s (“North Atlantic”) counterclaims and granted North Atlantic’s motion for summary judgment as to each of Republic’s claims. Republic brought claims against North Atlantic for Lanham Act false advertising, violation of the Illinois Uniform Deceptive Trade Practices Act (“IDTPA”) and other state law claims, all arising out of an allegedly “false and misleading” presentation entitled “Cigarette Paper Review” (“CPR”) which North Atlantic allegedly gave to various Republic customers. The CPR allegedly criticized Republic, saying among other things that Republic’s cigarette rolling papers were the same as North Atlantic’s and that Republic’s Chairman Donald Levin had “lied” about the composition of Republic’s cigarette papers. North Atlantic filed counterclaims alleging Lanham Act false advertising, violation of the IDTPA and other state law claims, all arising out of Republic’s alleged sales of orange cigarette papers similar in color and size to North Atlantic’s orange Zig-Zag papers, for the purpose of confusing or deceiving consumers.

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Baldwin Graphic Sys., Inc. v. Siebert, Inc., No. 03 C 7713, 2007 WL 1610449 (N.D. Ill. Mar. 21, 2007) (Moran, J.).*

Judge Moran granted defendant Siebert’s motion for reconsideration of the Court’s earlier claim construction ruling.  Based upon it reconsidered construction, the Court granted Siebert summary judgment of noninfringement of plaintiff Baldwin Graphic Systems’ (“Baldwin”) patent claiming printing press cleaning components. The Court originally construed the claims at issue and then denied Siebert’s first motion for reconsideration in 2005 -- the Court held that Siebert's 2005 motion for reconsideration simply repackaged arguments the Court considered in its original claim construction opinion. At that time the Court construed “reduced air content cleaning fabric” as not excluding fabric having its air content reduced by winding or rewinding the fabric on to a roll. In its current motion, Siebert argued that “reduced air content cleaning fabric” includes only fabric having its air content reduced by mechanical means before being wound on to a roll. The Court acknowledged that this was a new argument and, therefore, considered it.  The Court held that the claim language itself was not helpful in construing the term, but the language of the dependent claims combined with the patent’s specification made clear that “reduced air content cleaning fabric” required that the fabric have its air content reduced by “some method” before being wound on to a roll. Because there was no evidence that Siebert’s fabric underwent no mechanical process for removing air prior to being wound on to a roll, the Court granted Siebert summary judgment of noninfringement.

This opinion is especially remarkable because, while I do not have statistics confirming this, motions for reconsideration do not have a high success rate.  And it is even more rare for a second motion for reconsideration of the same opinion to succeed.

* You can read more about this case in the Blog’s archives.

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Rosenthal Collins Group, LLC v. Trading Techs. Int'l, Inc., No. 05 C 4088, 2007 WL 1597928 (N.D. Ill. May 16, 2007) (Moran, Sen. J.).

Judge Moran granted declaratory judgment defendant Trading Technologies' ("TT") motion to compel documents and things identified by third party declarant Walter Buist during his deposition, despite declaratory judgment plaintiff Rosenthal Collins Group's ("RCG") assurances that the documents and things had already been produced.  RCG previously filed a motion for summary judgment of invalidity of TT's patents based upon a declaration by Buist regarding software that he developed, at least partially, more than a year before TT filed its patent applications.  In a previous opinion, the Court held that RCG's motion was "somewhat misleading" and possibly "disingenuous," but refused to dismiss the case (you can read the Blog's discussion of that opinion here, as well as more on this case generally in the Blog's archives). 

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Rembrandt Techs., LP v. Comcast Corp., No. 07 C 1010, 2007 WL 1598003 (N.D. Ill. Apr. 25, 2007) (Moran, J.).

Judge Moran granted defendants' motion to compel documents from third party Zenith Electronics Corp. ("Zenith"), but restricted access to the documents by plaintiff, Rembrandt Technologies' ("Rembrandt") inhouse counsel.  In the underlying action, E.D. Texas Case No. 05 C 443,  Rembrandt alleged that defendants infringed its patents.  Zenith was identified as a leading licensor of Rembrandt's technology.  So, defendants subpoenaed Zenith to determine what Zenith paid for its license.  Zenith essentially agreed to produce the documents pursuant to the subpoena, but wanted to restrict access to the documents so that no party's inhouse counsel received access.  Defendants agreed to the restriction, but Rembrandt argued that its chief patent counsel, John Meli, was a chief decisionmaker in the case and, therefore, required access to the documents.  The Court acknowledged that Meli was a decisionmaker in the case and noted that the Texas court's protective order allowed Meli access to highly confidential documents.  Therefore, the Court granted Meli access to any license agreements produced by Zenith pursuant to the subpoena.  But the Court denied Meli access to any other documents produced by Zenith.

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PSN Illinois, LLC v. Ivoclar Vivadent, Inc., No. 04 C 7232, 2006 WL 3523760 (N.D. Ill. Dec. 7, 2006) (Kendall, J.).

Judge Kendall denied plaintiff's Fed. R. Civ. P. 59 motion for reconsideration of the Court's prior ruling (discussed in the Blog's archives) construing the claims of the patent at issue and granting summary judgment of noninfringement on behalf of defendant Ivoclar Vivadent, Inc. ("Ivoclar").  The Court denied plaintiff's motion for reconsideration because it considered each of plaintiff's reconsideration arguments in its original Opinion granting summary judgment.  But the Court spent some time on one of plaintiff's claim construction arguments regarding a patent related to porcelain veneers.  On reconsideration, plaintiff argued for a different construction of "ready for mounting."  In its original papers plaintiff did not argue for the proposed construction, although it did propose it in its Local Rule 56.1 Additional Statement of Material Facts.  The Court held that because claim construction is a matter of law, proposed constructions are not material facts and, therefore, cannot be put in LR 56.1 statements.  The Court noted its obligation pursuant to LR 56.1 to disregard legal arguments and conclusions placed in statements of fact.  The Court did, however, go on to consider plaintiff's construction and explain why the Court's original construction was correct.

Practice tip:  Think carefully about what goes into your LR 56.1 statements of material fact.  Do not put arguments in your statements of fact. And by all means, do not put arguments in your statements of fact and then omit those arguments from your brief. The Court will disregard them, and you will be out of luck. 

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Rowe Int'l Corp. v. Ecast, Inc., No. 06 C 2703, 2007 WL 1498958 (N.D. Ill. May 17, 2007) (Kennelly, J.).*

Judge Kennelly issued this claim construction opinion construing the claims of eight patents related to computer jukeboxes and computer jukebox networks.  Of particular note, the Court construed "song selection means" in USPN 5,355,302 (the "'302 patent") as a keyboard separate from a display for generating a signal representing a song selected from the set of songs stored in the jukebox.  Plaintiffs sought a construction that would include a visual touchscreen, arguing that the Court should consider the following language from an unrelated patent by the same patentee (the "'398 patent"), that was not part of the patent in suit or its prosecution history:  "song selection means displayed on said visual screen."  Plaintiffs argued that this language showed that "song selection means" could include on-screen displays.  But the Court held that considering the language was not permissible and that, even if it were, the language only showed that the inventors were capable of claiming an on-screen display, but chose not to in the '302 patent.

*  You can read more about this case in the Blog's archives.

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Rowe Int'l Corp. v. Ecast, Inc., No. 06 C 2703, 2007 WL 1438370 (N.D. Ill. May 14, 2007) (Kennelly, J.).*

Judge Kennelly denied defendants' motion to dismiss plaintiffs' patent infringement complaint for lack of standing.  As to two patents that were not expressly assigned to plaintiffs before the suit was filed (the "Progeny Patents"), the Court used Illinois contract law to interpret the following blanket provision in the assignment agreement regarding the parent patent, which assigned the parent application and any improvements or related applications:

any and all other applications . . . which the undersigned may file . . . on said invention or improvements, and in any and all Letters Patent of the United States and foreign countries, which may be obtained on any of said applications . . . .

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On a related note, Chief Judge Michel of the Federal Circuit has written a letter (following up an earlier, broader letter and his Congressional testimony, discussed at Patently-O) strenuously arguing that the Act's damage apportionment sections are impractical and that Congress should either retain the current damages law which has undergone "decades of refinement" and is "highly stable and well understood by litigators as well as judges."  Here is some discussion of Judge Michel's letter:

• Patently-O
  
• Patent Baristas

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When the Patent Reform Act of 2007 was unveiled, the conventional wisdom was that the law would be enacted and remain largely intact, unlike the 2006 version which was never sent to the White House.  But it has hit its first delay, shortly after its first public hearings last week.  Earlier this week, five Senate Judiciary Committee (which is considering the Act) members -- Tom Coburn (R-Oklahoma), Jeff Sessions of (R-Alabama), Chuck Grassley of (R-Iowa), Jon Kyl (R-Arizona) and Sam Brownback (R-Kansas) -- sent a letter to the Committee's Chair Senator Patrick Leahy (D-Vermont) and its Ranking Member Arlen Specter (R-Pennsylvania).  The Senators sought a delay in voting on on the Act and reporting it out of the Committee to allow time for additional hearings to explore, among other issues:

• Apportionment of damages;
• Post-grant opposition procedures;
• Granting the USPTO broad rulemaking authority;
• How to improve patent quality; and
• "[E]xamining the problem of speculative litigation and alternatives to stopping unnecessary and costly litigation."

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Trading Techs. Int'l., Inc. v. eSpeed, Inc., No 04 C 5312, 2007 WL 1628352 (N.D. Ill. Mar. 1, 2007) (Moran, Sen. J.).

Judge Moran denied plaintiff Trading Technologies' ("TT") motion for a protective order to prevent the deposition of Robert Klinger, related to defendant eSpeed's inequitable conduct defense (more on this case in the Blog's archives).  The Court held that discovery is a "balancing act."  eSpeed's assertion that Klinger was involved in drafting a response to a USPTO Office Action at the center of its inequitable conduct claim outweighed TT's best argument -- that the deposition was duplicative because defendants had deposed or have scheduled the depositions of two lead outside patent prosecutors, TT's in-house patent prosecutor and the relevant patent examiner.  The Court also noted that the case is approaching the discovery close, so we may start seeing fewer discovery motions in the case and more substantive motions.

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Abbott Labs. v. Sandoz, Inc., No. 05 C 5373, 2007 WL 1549498 (N.D. Ill. May 24, 2007) (Coar, J.).

Judge Coar denied defendant Sandoz, Inc.'s ("Sandoz") motion to stay the Court's preliminary injunction pending appeal to the Federal Circuit pursuant to Fed. R. Civ. P. 62(c).  The Court previously granted plaintiff Abbott's motion for a preliminary injunction (you can read more about that decision and related cases in the Blog's archives).  The PI enjoined defendant Sandoz from selling a generic version of Abbott's patented extended release antibiotic (clarithromycin, an erythromycin derivative which Abbott markets as Biaxin XL).  Sandoz argued that the PI should be stayed pending appeal because of conflicting Federal Circuit law regarding the Court's claim construction and because of the Supreme Court's KSR decision. 

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Am. Hardware Manufs. Assoc. v. Reed Elsevier Inc., No. 03 C 9421, 2007 WL 1521185 (N.D. Ill. May 14, 2007) (Moran, J.).

Judge Moran denied in part plaintiff's motion to strike defendants' confidentiality designations regarding the deposition of defendants' former CEO.  Defendants designated as "Highly Confidential," among other portions of the deposition, those portions in which one of defendants' customer contracts (the "Contract") was discussed.  Defendants argued that the terms of the Contract were trade secrets and, therefore, should be given the strongest confidentiality protection available pursuant to the parties' Protective Order.  Magistrate Judge Mason previously reviewed the designation, held that the Contract was not likely trade secret and reduced the related designations to "Confidential."  Judge Moran agreed with Judge Mason, rejecting the argument that the Contract was a trade secret as "conclusory and vague."  And Judge Moran agreed that the Contract warranted a "Confidential" designation.  Judge Moran also explained that while the deposition and related documents would be protected by the Protective Order during discovery, they would not when the Court ruled on dispositive motion or held trial, quoting the Seventh Circuit:

"Secrecy is fine at the discovery stage, before the material enters the judicial record" those documents that "influence or underpin the judicial decision are open to public inspection unless they meet the definition of trade secrets or other categories of bona fide long-term confidentiality."  Baxter Int'l, Inc. v. Abbott Labs., 297 F.3d 544, 545 (7th Cir. 2002).  Thus, at the summary judgment, trial or appellate stage, documents that have previously been deemed confidential may not retain such a designation.  See Little v. Mitsubishi Motor Mfg. of Am. Inc., 2006 WL 1554317, at *3 (C.D. Ill. 2006).

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Wednesday, the Senate held its first hearings regarding the Patent Reform Act.  Both the main stream media and the legal blogs are busy handicapping the battle over the legislation and the Act's chances of success.  Here are some of the highlights:

The WSJ Law Blog handicaps the big players in Patent Reform's Battle Royale

The WSJ print edition featured the Senate hearings in a page-one story (subscription required).

FileWrapper provides a nice summary of each witness's positions.

The New York Times also ran a Business section story.

Patent Prospector takes a very strong position: 

The thankful result of today's Senate hearing is watching the Patent Reform Act of 2007 appear the statutory tub of lard that it is.

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Ace v. Marn, No. 06 C 5335, 2007 WL 1541747 (N.D. Ill. Apr. 17, 2007) (St. Eve, J.).

Judge St. Eve granted in part and denied in part plaintiff/counterdefendant Ace Hardware Corp.'s ("Ace") Fed. R. Civ. P. 12(b)(6) motion to dismiss defendants/counter-plaintiffs' (collectively "Marn") counterclaims.  The Court denied the motion as to Marn's breach of contract claim and dismissed Marn's fraud and tortious interference claims.  Ace and Marn entered an agreement (the "Agreement") allowing Marn the right to use certain Ace trademarks and to purchase product for resale from Ace.  Marn alleged that Ace and its representatives breached the Agreement, made numerous misrepresentations leading up to the signing of the Agreement and failed to provide promised inventory.  Ace argued that Marn's breach of contract claim should be dismissed because it did not identify a specific provision of the Agreement that was breached, citing several Northern District cases.  But noted that each of Marn's cases came down before the Seventh Circuit's decision in Kolupa v. Roselle Park Dist., 438 F.3d 713, (7th Cir. 2006).  In Kolupa the Seventh Circuit explained the Rule 8(a)(2) requirements:

[i]t is enough to name the plaintiff and the defendant, state the nature of the grievance, and give a few tidbits (such as the date) that will let the defendant investigate. . . .  Any district judge (for that matter, any defendant) tempted to write "this complaint is deficient because it does not contain ..." should stop and think:  What rule of law requires a complaint to contain that allegation?  Any decision declaring "this complaint is deficient because it does not allege X" is a candidate for summary reversal, unless X is on the list in Fed. R. Civ. P. 9(b).

Kolupa at 714-15 (emphasis in original).  Based upon the Kolupa decision the Court held that Marn was not required to cite a specific breached section of the Agreement.

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Judge Kapala's investiture has been set for Tuesday, June 26 at 3:30 in the James Benton Parsons Memorial Courtroom (25th floor) of the Dirksen Building.  The schedule for the investiture has not been announced, but here is the Court's announcement of the investiture.

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Papa John's Int'l, Inc. v. Rezko, No. 04 C 3131, 2007 WL 1521472 (N.D. Ill. May 21, 2006) (Moran, J.).

Relying on its prior opinion, which included a detailed analysis of the Complaint and notice pleading standards (you can read discussion of that opinion in the Blog's archives), the Court denied defendants' various Fed. R. Civ. P. 12(b)(6) motions to dismiss plaintiff's trade secret and trademark infringement claims.  Defendants argued that plaintiff did not sufficiently which defendants were alleged to have performed the acts at issue.  But the Court reasoned that defendants had notice of plaintiff's claims and that notice is all the Federal Rules require.  The Court pointed out that it had "covered much of this same ground in much greater detail" in its prior opinion and cautioned that "this case will not go away for any defendant by a motion to dismiss . . . ."

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Days Inns Worldwide, Inc. v. Lincoln Park Hotels, Inc., No. 06 C 2960, 2007 WL 1455798 (N.D. Ill. May 16, 2007) (Der-Yeghiayan, J.)

Judge Der-Yeghiayan granted in part defendants' motion for reconsideration of the Court's award of plaintiff's attorneys fees' and costs for preparing summary judgment motions.  Plaintiff owns various marks relating to its Days Inn chain (the "Days Inn Marks").  Plaintiff licensed defendants Lincoln Park Hotels, Inc. and Richard Erlich (collectively "LPH") to use the Days Inn Marks in connection with the operation of a hotel in Chicago's Lincoln Park neighborhood.  In 2005, LPH sold the hotel to defendant Gold Coast Investors ("GCI") without informing plaintiff, in violation of the parties' license agreement.  GCI continued operating the hotel using the Days Inn Marks without licensing the rights to the marks from plaintiff.  As a result, plaintiff brought this suit against defendants alleging that, among other things, GCI infringed plaintiff's Days Inn Marks and LPH contributorily infringed plaintiff's Days Inn Marks by selling the hotel to GCI with the knowledge that GCI intended to continue using the Days Inn Marks and without informing plaintiff of the sale or removing the Days Inn Marks from the hotel, as required in the parties' license agreement.  In February, the Court granted plaintiff's summary judgment motion on twelve of fifteen counts and dismissed the remaining three counts as moot (you can find discussion of that opinion in the Blog's archives).  The Court also awarded plaintiff its attorneys' fees, approximately $150,000, for preparing its summary judgment motion.  Defendants moved the Court to reconsider, arguing that the Court should have required the parties to meet to resolve the attorneys fees dispute pursuant to  Local Rule 54.3 before ruling on the fees and that the Court should specifically apportion the fees between defendants.  The Court held that it was not required to follow the Local Rule 54.3 procedure in this case because defendants did not object to plaintiff's requests for fees made in its summary judgment briefing and because additional briefing required by the rule would not have benefited the Court because of its intimate knowledge of the case.  The Court did, however, apportion the fees that it was able to identify as only applicable to one group of defendants.  And the Court awarded an additional $35,000 of fees and costs that had not been presented in the initial motion.

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Wm. Wrigley Jr. Co. v. Cadbury Adams USA LLC, No. 04 C 346, 2007 WL 1468630 (N.D. Ill. May 18, 2007) (Zagel, J.).

Judge Zagel construed the claims of the parties' patents, each to chewing gum containing physiological cooling agents.  The Court first construed "menthol" and "physiological cooling agent," but of particular interest was the Court's construction of "N-ethyl-p-methane-3-carboxamide."  Plaintiff/counter-defendant Wm. Wrigley Jr. Co.'s ("Wrigley") argued that the term in defendant/counter-plaintiff Cadbury Adams USA LLC's ("Cadbury") patent should be required to be at least 30% of the cooling composition of the gum based upon alleged disclaimers in the specification, as well as alleged judicial and prosecution history estoppel.  The Court stated that it was a very close issue, but held that the term was not required to make up at least 30% of the cooling composition.  The specification language relied upon by Wrigley was in the preferred embodiment and, therefore, should not be read into the claims.  And while Cadbury may have disclaimed using less than 30% of N-ethyl-p-methane-3-carboxamide in the cooling compound during both the prosecution of other patents and judicial proceedings regarding those patents, the patents had no direct relation to the patent in suit and, therefore, estoppel could not apply. 

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The Northern District of Illinois has implemented a new attorney search feature on its website.  You can enter some or all of a name and find out the attorney's:  name; contact information; when they were admitted to the Northern District's general bar; and if and when they were admitted to the trial bar.  The Northern District states that the database will be updated weekly, but that it may not include members of either bar that were admitted before June 1991and have not appeared in a case since June 1991.  It appears to be an excellent tool.

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