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

Zimnicki v. Neo-Neon Int'l, Ltd., No. 06 C 4879 (N.D. Ill. Nov. 9, 2009) (Norgle, J.)

Judge Norgle denied defendant Neo-Neon International's ("Neo-Neon") Fed. R. Civ. P. 12(c) motion for judgment on the pleadings regarding plaintiff's unjust enrichment claim in this copyright dispute.  Plaintiff sued Neo-Neon and others for alleged infringement of plaintiff's copyrighted decorative holiday lighting products.  Plaintiff also asserted an unjust enrichment claim against Neo-Neon alleging that Neo-Neon profited from making, using and selling products based upon plaintiff's designs.  The unjust enrichment claim met the first prong of the preemption test because plaintiff admitted the designs at issue were copyrighted.  But the second prong was not met.  Neo-Neon's accused acts occurred outside the US, in China.  Because the alleged acts were extraterritorial, they did not fall within the exclusive rights granted to copyright holders pursuant to §106.  This was true even though the same acts in the US would presumably have been covered and, therefore, preempted.

*  Click here for more on this case in the Blog's archives.

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Memorylink Corp. v. Motorola, Inc., No. 08 C 3301, Slip Op. (N.D. Ill. Oct. 15, 2009) (Hibbler, J.)

Judge Hibbler granted in part plaintiff Memorylink’s motion for reconsideration of the Court’s earlier opinion dismissing seventeen of Memorylink’s nineteen claims.

Correction of Inventorship

The Court previously held that Memorylink pled itself out of court because its complaint indicated that Memorylink was silent when Motorola gave Memorylink the opportunity to object to inventorship of the patents. But upon reconsideration, the Court reversed its decision for two reasons. First, the pleadings did not show whether Memorylink reviewed or approved the patent application. Second, the patent statute allowed for correction based upon mistake. It was possible Memorylink reviewed the application; but made a mistake regarding inventorship.

Statutes of Limitation

The Court held that it was correct in dismissing Memorylink’s claim based upon Motorola’s legal representation of Memorylink because Memorylink knew of its claims prior to the legal representation. One dismissed claim, however, was not based upon the legal representation. The Court treated Memorylink’s claim that the assignment at issue was void as a fraud claim. But the Court held that the claim sounded in contract, not fraud. Because the contract statute of limitation had not run, that claim was reinstated.

Patent Infringement

Because Memorylink’s contract claim could void the patent assignment, the Court reinstituted the related patent infringement claims which had been dismissed upon the basis that as a joint owner of the patents Motorola could not be liable for infringement. In the event that the assignment is held void, Motorola could be liable for infringement.

Unjust Enrichment

Motorola’s agreement that the memoranda of understanding at issue in this claim did not create any legal obligations did not change the Court’s determination that they created relevant legal obligations. 

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Heading into the long holiday weekend, here are several items that client responsibilities have prevented me from devoting full posts to:

• Next week, on December 28, new trademark rules go into effect that are intended to codify current PTO practice.  Click here for the excellent new Pittsburgh IP Law Blog's take on the new rules.  Welcome to the world of regional IP blogs.  I look forward to reading your local IP analysis.
   
• If you are looking for some top notch CLE or just want a broader view of the Bilski argument, check out Doug Lichtman's IP Colloquium where Lichtman and his UCLA students do a dramatic reading of the argument.  It is a great way to absorb the transcript and is an hour of free CLE.
   
• Congratulations to Mark Herrman of Jones Day and the Drug and Device Law Blog.  Herrman is leaving both the firm and the blog at the end of the month to take a senior litigation position with Aon.  Herrman will be greatly missed in the blogosphere.  Although I do not practice Herrman's area of law, Drug and Device Law is a must read blog for me because of both Herrman and his blogging counterpart Jim Beck of Dechert, who is continuing to write the blog.

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Minemyer v. B-Roc Reps., Inc., No. 07 C 1763, Slip Op. (N.D. Ill. Oct. 27, 2009), (Cole, Mag. J.). 

Judge Cole granted defendants' motion for summary judgment regarding plaintiff's Lanham Act trade dress and related state law claims. Plaintiff alleged that defendants infringed his trade dress in certain plastic pipe couplers. The trade dress consisted of the coupler's length, diameter, internal lead-in taper, flutes, arrows, the solid reinforced area between the flutes and end taper, and the base coloring of the material. But the Court held that plaintiff admitted that each element of his alleged trade dress was functional. Of particular note, the coupler's color was dictated by the parties' customers. And the flutes were the subject of a utility patent held by plaintiff. The fact that the flutes could have been designed using another shape did not matter. The Court held that once an element is functional, you need not consider whether there are other ways to obtain the function. 

Although the case was resolved on functionality grounds, the Court also considered plaintiff's secondary meaning arguments. But plaintiff provided no direct evidence of secondary meaning. Instead of survey evidence or consumer testimony, plaintiff relied upon direct copying. But event assuming defendants copied plaintiff's coupler, that alone did not create secondary meaning. Plaintiff also needed to show that defendants intended to steal plaintiff's goodwill. No such evidence was offered.

The Court also held that there was not a likelihood of confusion. Defendants printed their names on their products. And the parties' customers were very sophisticated purchasers and were unlikely to be confused. The customers competitively bid its purchases of the couplers, so purchasing decisions were made directly with the parties, not by looking at the products in bins side-by-side at a hardware store.

Finally, the Court held that plaintiff's state law Consumer Fraud and Deceptive Trade Practices Act claim were coterminous with the Lanham Act claim. The Court, therefore also granted summary judgment as to the state law claims.

* Click here fore more on this case in the Blog's archives.

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The face of patent litigation in the U.S. has evolved greatly in the last 5 years with respect to patent reexamination. For patent litigators, throughout the U.S. and especially the Northern District of Illinois, the emergence of this now seemingly reliable strategic option is an important case management consideration. Indeed, if not adequately considered in the course of litigation counseling, reexamination ignorance may create malpractice opportunities for unsuccessful defendants.

Defendants, as well as those concerned with patents clouding their competitive landscape are increasingly requesting patent reexamination at the USPTO. When prior art patents and printed publications can be effectively presented to enable the USPTO to reject original patent claims, the expectation is that the prosecution of the reexamination proceeding will result in cancellation or amendment of original patent claims. 

The sudden growth in reexamination filings can be attributed to several factors. These factors include, the emergence of the “non-practicing entity”(NPE) problem, the eligibility of inter partes reexamination for post 1999 patent application filings, and the efforts of the USPTO and Congress to overhaul the reexamination process, first with legislation overruling the Portola Packaging decision in 2002, and with creation of a special USPTO unit in 2005.

In 2005, the USPTO established the Central Reexamination Unit (CRU) to exclusively handle all reexaminations, whether ex parte or inter partes within the Office. The CRU created a procedure by which every reexamination proceeding is processed by a team (3) of experienced primary examiners. The CRU has greatly improved the responsiveness and quality of patent reexamination.

With respect to NPEs, reexamination is an attractive strategy as an active reexamination may shut down (i.e., stay) an otherwise costly litigation by forcing the dispute away from the high cost battle of district court litigation, back to the PTO. At the PTO, the NPE’s leverage of contingency litigation counsel and forced discovery costs are removed. Moreover, the standard of review in reexamination for proving unpatentability is much more favorable to a challenger as compared to the district court action. In federal district court the standard to invalidate a U.S. patent is “clear and convincing evidence.” Whereas, in reexamination, the US PTO can establish unpatentability by a “preponderance of evidence,” and unexpired claims are given their broadest reasonable interpretation. See 37 C.F.R. 1.555(b)(2)(ii).

Upon conclusion of a reexamination, canceled or amended claims will present the challenger with freedom to operate either through non-infringement of the altered claims, or decrease liability through the doctrine of intervening rights. 

With this background in mind, a review of a recently asserted malpractice claim is presented along with a discussion of the new Local Patent Rules of the Northern District of Illinois as they pertain to concurrent reexaminations.

In Ecast Inc. v. Morrison & Foerster L.L.P. (Superior Court for the State of California, County of San Francisco) Ecast, a former client of MoFo, sued the firm for malpractice. The compliant stemmed from MoFo’s defense of Ecast in a patent infringement suit in the Northern District of Illinois. In the suit, six patents were asserted against Ecast by Rowe International Corp and Arachnid Inc. (Rowe International Corp., and Arachnid, Inc. v. Ecast, Inc., Rockola Mfg. Corp., and View Interactive Entertainment Corp. (click here for much more about this case from the Chicago IP Litigation Blog's archives).

** Guest Post by Scott A. McKeown of Oblon Spivak & PatentsPostGrant.com **

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Minemyer v. B-Roc Reps., Inc., No. 07 C 1763, Slip Op. (N.D. Ill. Oct. 27, 2009) (Cole, Mag. J.)*

Judge Cole granted summary judgment of invalidity based upon the §102(b) on-sale bar and denied summary judgment as to invalidity based upon §102(b) public use and obviousness.

                                                             Priority Date

Plaintiff argued that its pipe coupler patent was entitled to the priority date of its provisional application because the provisional application disclosed in the drawings the tapered threads at issue, although they were not described in the specification. The Court held that figures showing tapered threads would be sufficient, but that the figures did not show tapered threads. Plaintiff alleged that enlargements of the figures showed a 1% taper. But the Court held that the original drawing did not “convey” the tapered threads with "reasonable clarity.” Even the enlargement showed “no true tapers.” Because the provisional application did not disclose the taper, the patent’s priority date was its filing date.

                                                             On-Sale Bar

The Court held that plaintiff admitted he offered the patented couplers for sale more than one year before the filing date, also known as the critical date. Plaintiff also admitted both in interrogatory responses and at deposition that his invention had been reduced to practice at the time of the offer.  Plaintiff claimed that the use was experimental, but the court held that the claim was not properly supported by evidence in plaintiff’s Local Rule 56.1 statement of material facts.

                                                             Public Use Bar

The Court denied summary judgment based upon the public use bar. The alleged prior art device was asserted against other claims in defendants’ invalidity contentions, but not against the claim at issue, claim 12. Furthermore, the evidence of the alleged prior art coupler was provided by a witness that was not disclosed in defendants’ Rule 26 disclosures or their interrogatory responses. He was first identified in a subpoena at the end of fact discovery.

                                                             Obviousness

Defendant’s obviousness arguments were based upon the same prior art as the public use bar prior art. So, summary judgment was not appropriate for similar reasons. Additionally, defendants arguments were cursory and did not even cite case law.

*  Click here for more on this case in the Blog's archives.

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Kolcraft Enter., Inc. v. Chicco USA, Inc., No. 09 C 339, Slip Op. (N.D. Ill. Oct. 23, 2009) (Norgle, J.)

Judge Norgle denied defendant Chicco's § 1404(a) motion to transfer this patent case to the Eastern District of Pennsylvania, where Chicco's principle place of business is located. Neither court was more suited for the case in terms of speed or familiarity with the law. The Court also noted that the location of documents was neutral based upon electronic document exchange. The convenience of the parties was also neutral because one party would be inconvenienced by the decision either way. Additionally, the situs of material events was irrelevant as in most patent cases because the comparison of an accused product to a claim does not revolve around any location. 

As to non-party witnesses, one inventor was within the Northern District and the other was outside the subpoena power of both districts. And patent prosecution counsel also resided within the Northern District. Additionally, plaintiff agreed to depose all U.S. parties in their home districts, further diminishing that factor. Finally, the Court held that plaintiff's choice of forum deserved significant weight. The Court, therefore, denied Chicco's motion to transfer. 

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Last month I had the opportunity to participate in a panel discussing the Northern District of Illinois' new Local Patent Rules* hosted by Applied Discovery. In addition to me, the panelists were:

• Mark Ouweleen of Bartlit Beck
   
• David Callahan of Kirkland & Ellis

The panel briefly touched on the mechanics of the Rules, and then dove into the implications of the Rules for Northern District patent litigation generally, as well as specific issues litigants will likely face with the Rules. Here are some of the highlights:

• The Rules will increase patent litigation filings in the Northern District despite the fact that the 2+ year trial timeline does not create a rocket docket.

• The Rules are widely accepted as positive by both sides of the bar.

• The Initial Disclosure document production requirements will have the most significant impact. Plaintiffs will need to prepare their cases early, and defendants cannot delay prior art searches.

• The combination of early document production and early initial contentions means that parties will not be able to use the first six months of a patent case to try settling it without much investment in the case.

• Ouweleen pointed out that other courts have used the contention disclosures to exclude new information after content deadlines without a showing of good cause. That places a premium on early prior out searches and fleshing out each party's technical case early.

• Callahan believed that the Rules will focus cases on the substantive issues, instead of negotiating over protective orders and interrogatory responses. That is a benefit to judges (reduced motion practice), litigants (reduced cost), and litigators (more time to focus on the art of lawyering and the substantive case).

It will be very interesting to test the accuracy of these predictions once we have a year or two of data using the Rules.

*  Click here for much more on the Blog's archives about the Local Patent Rules.

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Allen v. Destiny's Child, No. 06 C 6606 (N.D. Ill.) (Holderman, C.J.).

As I reported earlier this week, plaintiff's copyright infringement case against Destiny's Child and its members, among others, was set for trial before Chief Judge Holderman this week.  Plaintiff alleged that defendants, including the musical group Destiny's Child and its members, infringed plaintiffs' copyrights in his song "Cater 2 U" by producing and selling Destiny's Child's song of the same name (watch the video of Destiny's Child's version on their website).  Late last week, the Sun-Times' Natasha Korecki reported (click here for the story) that the parties settled the case at the courthouse steps. A dismissal has not been filed yet, but it appears that the case is likely settled. I will post about some of the more interesting motion in limine rulings in the next week or two, as well as about any settlement-related orders that may issue.

* Click here for more on this case in the Blog's archives.

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Allen v. Destiny's Child, No. 06 C 6606, Slip Op. (N.D. Ill.) (Holderman, C.J.).

Plaintiff's copyright infringement case against Destiny's Child and its members, among others, is set for trial before Chief Judge Holderman on December 8, 2009.  Plaintiff alleges that defendants, including the musical group Destiny's Child and its members, infringed plaintiffs' copyrights in his song "Cater 2 U" by producing and selling Destiny's Child's song of the same name (watch the video of Destiny's Child's version on their website).  For more on this case, click here for the Blog's archives and here for a story by Natasha Korecki, the Sun-Times' federal court reporter.  I will post about some of the more interesting motion in limine rulings in the next week or two.

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Lorilland Tobacco Co. v. Elston Self Service Wholesale Grocs., Inc., Case No. 03 C 4753, Slip Op. (N.D. Ill. Oct. 21, 2009) (Gottschall, J.).

Judge Gottschall ruled upon the parties’ motions in limine in this Lanham Act case regarding the alleged sale of counterfeit Newport cigarettes. Of particular interest, the Court denied in part plaintiff’s motion to exclude evidence of the religious belief of any party or witness. In order to ensure that “no anti-Muslim prejudice infect[ed] the jury’s deliberation," the Court allowed one defendant to state once that he was a Christian. The Court also noted that it would reconsider its order if plaintiff suggested a reasonable way for the Court to resolve the issue in voir dire.

The Court also agreed to read the jury a statement regarding the fact that the health of one defendant prevented his attendance at trial and that the jury should not hold his absence against him or consider it in their deliberations.

*  Click here for much more on this case in the Blog’s archives.

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Minemyer v. B-Roc Reps., Inc., No 07 C 1763, Slip Op. (N.D. Ill. Nov. 9, 2009) (Cole, Mag. J.).

Judge Cole granted in part defendants' motion to extend the trial date.  The Court continued the trial, but not to the early 2010 date defendants requested.  Instead, the Court continued the trial until early 2011.  An early 2010 trial date would have prevented plaintiff from attending the patent trial because plaintiff begins serving a one-year federal prison sentence in December 2009.  The Court held that holding a trial that plaintiff would be unable to attend in person would prejudice plaintiff.  Instead, the Court delayed the trial until plaintiff will be able to attend.  Plaintiff argued that he would be prejudiced by the one-year delay because his damage award would be delayed an additional year.  The Court, however, held that any prejudice from a delayed award was too speculative to be considered because there was no way to know that plaintiff would be awarded any damages.  Additionally, the Court noted that the delay would benefit plaintiff if he ultimately prevails because his award would include an additional year of damages.

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