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

I am taking a day off from intellectual property to say "thank you" to the men and women who have given their lives in service to our country, and to those protecting us around the world today.  Amidst the barbecues and time with family and friends, take a moment to remember our young soldiers.  And here is a link to Patent Barista's 2008 Memorial Day Blawg Review.  The posts it reviews are no longer topical, but the picture of the young woman lying down in a military cemetery is still just as moving.

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Adams v. Pull'R Holding Co., LLC, No. 09 C 7170, Slip Op. (N.D. Ill. Apr. 20, 2010) (Gettleman, Jr.).

Judge Gettleman granted defendants' motion to dismiss as to plaintiff's civil conspiracy claim and granted in part plaintiff's motion to dismiss defendants' trade secret and related state law counterclaim in this case involving hoists, fence installation tools and other do it yourself tools. The Court dismissed plaintiff's civil conspiracy claim because it was not based upon an underlying tort claim. The purpose of a civil conspiracy is to extend tort liability to members of a conspiracy. 

The Court denied plaintiff's motion to dismiss as to defendants' breach of contract counterclaim.  The motion was premised upon plaintiff's argument that he was not a party to the agreement. But plaintiff was not allowed to make that argument after having pled in his complaint that he was a party to the agreement. 

The Court also denied plaintiff's motion as to defendants' trade secret misappropriation claim. It did not matter that defendants' allegations were all pled on information and belief. Defendants' pleading sufficiently provided plaintiff the what, where, when, why and how required by the pleading standards. 

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Stereo Optical Co. v. Judy, No. 08 C 2512, Slip Op. (N.D. Ill. Apr. 1, 2010) (Kocoras, J.)

Judge Kocoras granted defendants’ (collectively “Vision”) summary judgment as to plaintiff Stereo Optical’s copyright infringement claim. The Court denied the parties’ cross-motions for summary judgment as to Stereo Optical’s related state law claims. Stereo Optical alleged that Vision, many of whom were Stereo Optical’s former employees, misappropriated, and sold in competition with Stereo Optical, Stereo Optical's copyright-protected stereopsis vision tests. Stereo Optical did not mark the tests at issue with a copyright notice between 1980 and 1988. Between 1978 and 1988 a copyrightholder was required to add a copyright notice to publicly distributed copies of a work. 

Where the copyrightholder was responsible for distributing unmarked copies, the work entered the public domain unless: 1) only a “relatively small” number of unmarked copies were distributed; or 2) the copyright was registered within five years after the unmarked copies were distributed and “reasonable efforts” were made to add the missing notice. Stereo Optical made no argument that its distribution was “relatively small.” And Stereo Optical made no efforts to replace the missing markings. The Court, therefore, granted summary judgment for Vision as to the copyright claim. The Court denied both parties summary judgment as to Stereo Optical’s state law claims because the parties contested essentially all of each other’s statements of material fact.

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Zimnicki v. General Foam Plastics Corp., No. 09 C 2132, Slip Op. (N.D. Ill. Mar. 24, 2010) (Grady, J.).

Judge Grady denied defendants' motion to dismiss or, in the alternative, to join a necessary party pursuant to Fed. R. Civ. P. 19 in this copyright case involving holiday decorations including  "decorative deer" designs. In an earlier-filed, ongoing litigation defendant Neo-Neon claimed that it owned the copyrights-in-suit and argued in the alternative, that the designs are generic. As an initial matter, the Court held that dismissal was not appropriate, even if Neo-Neon was a required party, because defendants did not attempt to show that Neo-Neon could not be joined.

Defendants did argue that their failure to join Neo-Neon would subject defendants to multiple or inconsistent obligations. While a theoretical interest in a litigation would not require joinder, Neo-Neon's actual claimed interest in the copyright was more than theoretical.  The Court had discretion to require joinder based upon that claim.

But the Court did not require joinder. Neo-Neon was determining its interests in a parallel proceeding in the Northern District – click here for more on that case. And while the ownership dispute generally put defendants in risk of multiple obligations, circumstances mitigated that concern. In addition to claiming ownership, Neo-Neon claimed the copyrights were generic. And there was no indication that Neo-Neon intended to use any interest it acquired to enforce the copyrights-in-suit.

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The Northern District of Illinois sent the following invitation to e-filers for its eleventh annual Awards for Excellence in Pro Bono and Public Interest Service next Wednesday, May 26, 2010 at 3:00pm in the Dirksen courthouse:

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Kim v. The Earthgrains Co., No. 01 C 3895, Slip Op. (N.D. Ill. Feb. 18, 2010) (Cox, Mag. J.). 

Judge Cox granted defendant summary judgment, limiting plaintiff's potential damages to the date that the Patent Office issued plaintiff's reexamination certificate. During reexam, the transitional phrase in each of the claims at issue was revised from "consisting essentially of" to "consisting of." "Consisting essentially of" signals a partially open claim which can include non-claimed ingredients so long as they do not materially affect the claimed properties of the invention. "Consisting of," however, signals a closed claim limiting it to the listed elements, unrelated elements and unavoidable impurities. 

The defendant argued that the changed transitional phrases were substantive changes which limited the damages period to the period from the reexam certificate forward. The Court held that the changed transitional phrases was a substantive change. The plaintiff argued that the changed transitional phrases did not change the scope of her patents based upon plaintiff's research. But the Court held that the plaintiff had not shown that any element excluded from the original claims would have also been excluded from the reexamined claims. The Court also explained the scope of "consisting essentially of" as follows:

[A] formula which falls under a "consisting essentially of" claim may contain additional "active" ingredients not listed in the claim, as long as the additional active ingredients do not materially alter the "basic and novel" characteristics of the invention. Ecolab also suggests that additional active ingredients which improve the performance of the basic claim formula, but do not otherwise change its function, do not materially alter the "basic and novel" characteristics of the invention.

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Scandaglia v. Transunion Interactive, Inc., No. 09 C 2121, Slip. Op. (N.D. Ill. Jan 21, 2010) (Hibbler, J.)

Judge Hibbler granted in part plaintiffs’ discovery motion in this Lanham Act case involving the alleged infringement of plaintiffs’ “Always Know Where You Stand” registered trademark. After wading through the parties’ 267 pages of briefing and exhibits, the Court cautioned both parties to avoid bad faith and work together to resolve disputes:

Throughout its review of the parties’ materials it finds that both parties have acted in bad faith in this discovery dispute and therefore denies Plaintiffs’ request for attorneys fees. Both parties have obstinately drawn lines in the sand that have not been warranted: [Defendant] asserting, generally, that Plaintiffs are entitled to virtually nothing; Plaintiffs asserting, generally, that they are entitled to virtually everything. The Court has committed substantial judicial resources to reviewing the parties’ cumbersome materials and resolving a dispute that the parties should have been able to resolve themselves. Such resources have been diverted from resolving other claims. 

The Court hopes that in the future the parties will demonstrate a greater degree of professionalism and collegiality and make a good faith effort to resolve their disputes before consuming the Court’s resources.

The Court held that defendant’s production of documents sufficient to show its revenues, profits, and expenditures was enough. Defendant need not produce every such document. On a related issue, the Court warned defendant that actual confusion was not required in the case, only a likelihood of confusion. And the Court warned against misrepresenting law or fact: 

Lawsuits are not shell games in which counsel should try to hide the peanut from the Court’s eye. The Court will tolerate no further misrepresentation of fact or law to bolster an argument.

The Court also warned the parties against compound document requests because they were “bound to produce difficulties.”  And the Court refused to compel further production without proof of withheld documents, pursuant to a request seeking “everything, including the kitchen sink.” This request sought all documents related to the Complaint, answer, counterclaim and affirmative defenses. The Court would only enforce it with evidence of withheld documents. The Court held that an interrogatory seeking proof supporting defendant’s request for admission denials did not contain discrete subparts, ordering defendants to answer the interrogatory.

The Court held that defendant’s identification of people that potentially had relevant knowledge was a sufficient response because it answered plaintiffs’ broad interrogatory. If plaintiffs wanted only those people with actual knowledge, it should have prepared a narrower interrogatory. The Court ordered defendant to supplement its Fed. R. Civ. P. 33(d) response to a contention interrogatory regarding defendant’s genericness defense as more documents were identified. And defendant was directed to provide a “general statement of its legal basis.”

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Late last month, the Senate Judiciary Committee unanimously approved President Obama's recent appointments to fill two of the five pending or scheduled vacancies on the Northern District of Illinois bench.  Sharon Coleman and Gary Feinerman now await confirmation by the full Senate. 

President Obama has now nominated Assistant U.S. Attorney Edmon Chang to fill the third of the five vacancies.  Chang started his career as a Northern District of Illinois clerk for Judge Aspen and then as a Sixth Circuit clerk for Judge Ryan.  Chang's bio from Senator Durbin's press follows:

Chang has served as an Assistant U.S. Attorney in the Northern District of Illinois since 1999, and he is currently the chief of appeals. He previously worked as an associate at Sidley Austin in Chicago, and as a judicial law clerk to Judge Marvin Aspen in the Northern District of Illinois and Judge James Ryan on the U.S. Court of Appeals for the 6th Circuit. He received a Star of Distinction award from the Chicago Crime Commission. He has served as an adjunct professor at Northwestern University law school, where he graduated with honors and served on the law review.

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Ho v. Taflove, No. 07 C 4305, Slip Op. (N.D. Ill. Apr. 9, 2010 (Bucklo, J.) 

Judge Bucklo denied plaintiffs’ motion for reconsideration of the Court’s order granting defendants summary judgment as to plaintiffs’ Copyrights, Lanham Act and related state law claims in this dispute over whether defendants took plaintiffs’ mathematical model (the “Model”). As an initial matter, the Court noted that the Federal Rules of Civil Procedure do not provide for “motions to reconsider.” Rather, parties file either a Rule 59(e) motion to alter or amend judgment (within 28 days of the judgment) or a Rule 60(b) motion for relief from judgment (within a "reasonable time”). The substance of the motion determines whether it is heard pursuant to Rule 59(e) or Rule 60(b). Plaintiffs’ motion was brought pursuant to Rule 60(b), but the Court treated it as a Rule 59(e) motion because it sought to alter the judgment, not for relief from it.

A Rule 59(e) motion requires newly discovered evidence or manifest errors of law. Plaintiffs’ motion as to their state law conversion, copyright and Lanham Act claims relied upon additional facts that were available during the initial briefing, but not raised at that time. The Court, therefore, did not consider the evidence and the plaintiffs' arguments were denied.

As to the Court’s decision that the Model was not copyrightable as a mathematical formula pursuant to §102(b) of the Copyright Act, plaintiffs provided no convincing authority showing that it was copyrightable. And plaintiffs provided not even a single example of an alternate expression of the Model to satisfy the merger doctrine.

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Lyons Partnership, L.P. v. Welle, No. 08 C 2909, Slip Op. (N.D. Ill. Feb. 22, 2010) (Grady, Sen. J.).

Jude Grady denied defendants' motion to set aside the Court's Fed. R. Civ. P. 55(c) default judgment in this case alleging that defendants violated plaintiff's intellectual property rights in children's characters Hello Kitty, Bob the Builder and Thomas the Tank Engine, among others. While the defendants acted diligently after default was entered, they did not act diligently prior to the default. Defendants' "cash flow" problems were not an excuse for failing to appear pro se. Additionally, the defendants did not identify a meritorious defense. Bare denials from defendants' answer were not sufficient.

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My latest IP for Your Business column has been published in the Southeast Texas Record, and its sister publications the West Virginia Record and the Madison (Illinois) Record, focused upon crafting an effective social media policy for your business.  With the Record's permission I am reposting the article on the Blog.  Click here to read the column at the Record.  And if you are an executive or business owner that is reading this and thinking that you do not need to worry about social media because you do not allow, read the article.  It will give you some pause and may change your mind.   Here is the article:

Social media is a terrifying unknown for many businesses. There are countless opportunities to lose control of your corporate message. And as I have discussed before, there are new and varied ways to have your trademarks and brands stolen or diluted.

But an equally serious concern is what your employees are saying about your company. Every employee is now potentially an unsupervised spokesperson for your company twenty-four hours per day, 365 days per year. And each of your employee's unapproved statements is being categorized by search engines and forever identified with your company on Twitter, Facebook, personal employee blogs and other third party sites.

How does a reasonable company react to each employee being turned into an unregulated source of public information? Some are paralyzed. Others ban all use of social media related to the company. This is a facially reasonable approach.

You no longer have to worry about your employees' intentional statements about the company. But there are two significant problems with this approach.

First, you will drive some users underground. They will continue generating public content, but will attempt to do it anonymously. Of course, you can generally find them, but that can backfire as a public strategy, and you may not find them before damage is done, intentionally or accidentally.

Second, your employees likely see a distinction between their personal and work lives that may be far less clear than they realize. For example, an employee might post the following on Facebook and Twitter:

"@EngineerJim is sick as a dog and not thinking clearly, but working through it so that I have enough personal days for Orlando next month."

It is an innocent post by a good employee who is making a common mistake. But if a customer that has a big deadline that day is part of Engineer Jim's social network, your customer may see things differently. And the results could be even worse if an employee accidentally tweets a detail of a confidential project on the date of a key product launch.

The safest approach to social media is to allow your employees to use social media as part of a broader corporate social media policy. Working with counsel to develop a comprehensive social media policy will protect your company and allow you to harness the value of employees spreading the message of your company's value and benefits. Here are the broad outlines of such a social media policy:

1. Make it Clear

The policy must be clear to be effective. So, write in plain English. Whenever possible, use examples of acceptable and unacceptable postings. Examples help guide your employees, sometimes more than the written policies. But make it clear that the examples are not comprehensive.

2. Allow for Questions

Social media changes quickly, and your policy cannot keep up with it in real time. So, provide a contact for questions. And because social media is fast-paced, commit to getting answers to most questions within a few days or at least a week.

3. Identify What is Allowed

Make the rules as clear as possible, and, again, use examples. Identify whether postings may occur at work, on breaks, or never doing work hours. Lay out what types of posts are off-limits as work-related, such as the Engineer Jim example above.

Determine whether an employee can have a blog about the company or within the employee's job area. On one hand, it is easiest to exclude these blogs. But before doing that, look at other companies like Sun Microsystems and Microsoft that have successfully allowed employee blogs. If you do allow blogs about the company, consider requiring that employees register the blogs. A registration requirement makes sure you know which employees are blogging and allows you to follow what they write. In addition to being a valuable marketing tool, following employee blogs can be an excellent indicator of employee issues and concerns.

4. Develop a Review Process

As with all things, mistakes happen. So, prepare a plan for dealing with any objectionable or harmful content posted by employees. Identify how quickly content must be removed upon your request, and outline any appeal process. Also, make any consequences for publishing objectionable or harmful content clear.

5. Give Someone Oversight Responsibility

Identify someone, perhaps a General Counsel or even someone in Human Resources, to administer and oversee the policy. Giving an individual ownership and responsibility insures that the program does not become a forgotten section of the employee handbook. That person should also be responsible for setting up a variety of searches to identify any internet or social media mentions of the company and its brands.

Developing this policy takes some work, but it will pay dividends in terms of employee satisfaction, message management, and preventing social media accidents. And it will allow your company to harness more of the value of social media and the internet at a relatively low cost.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., Case Nos. 2008-1392,-1393 & -1922, Slip Op. (Fed. Cir. Feb. 25, 2010) (Rader, J.) (Clark, J. concurring).

Writing for a panel including Judge Lourie and Eastern District of Texas District Judge Clark, Judge Rader affirmed each of the challenged decisions from Judge Moran’s jury trial in this patent litigation involving futures trading software.

For much more on this case, click here to read numerous posts in the Blog’s archives analyzing Judge Moran’s opinions and various aspects of the jury trial. Judge Moran construed the claims of the patents-in-suit, ruled upon several summary judgment motions and presided over the jury trial. The jury found that defendants’ (collectively “eSpeed”) Future View software willfully infringed the patents and that the patents were valid, awarding plaintiff Trading Technologies (“TT”) $3.5M. Judge Moran remitted the damages overall to approximately $2.5M.

Claim Construction

The most interesting aspect of the decision is the discussion of the de novo review of claim construction decisions. Judge Rader spent two and a half pages explaining the fact-law dichotomy of claim construction and concluded that claim construction required resolution of evidentiary and factual issues before construing the disputed terms:

In sum, claim construction involves many technical, scientific, and timing issues that require full examination of the evidence and factual resolution of any disputes before setting the meaning of the disputed terms.

And District Judge Clark wrote a concurring opinion solely to argue against de novo review:

[de novo review] may result in the unintended consequences of discouraging settlement, encouraging appeals, and, in some cases, multiplying the proceedings.

After a de novo review of his decisions, the Court upheld Judge Moran’s constructions. “Static display of prices” meant "a display of prices comprising price levels that do not change positions unless a manual re-centering command is received." And a “static condition” meant that “the price axis never changes positions unless by manual re-centering or re-positioning.” While Judge Moran’s constructions may have appeared narrower than the patent intended initially, they were supported by both the intrinsic and extrinsic evidence. Because eSpeed’s Dual Dynamic and eSpeedmeter systems had mandatory re-centering features, they did not literally infringe.

Doctrine of Equivalents

The court upheld Judge Moran's ruling that the doctrine of equivalents did not apply to the static elements in the claim. Even if the accused products only re-centered once or twice a day, allowing that re-centering to be captured by the doctrine of equivalents would vitiate the claims. Furthermore, prosecution history estoppel also barred equivalents. The patentee differentiated his invention by explaining that its "price axis do[es] not move."

Willfulness

The Court upheld Judge Moran's ruling overturning the jury's willfulness finding. eSpeed's prompt redesign efforts and immediate removal of infringing products were not objectively reckless. And TT offered no evidence that eSpeed sold Future Views during the contested period.

Indefiniteness

The Court held that "single action of a user input device" was not indefinite. Judge Moran correctly construed the term as requiring "an action by a user within a short period." One of ordinary skill in the art could distinguish between single and multiple actions, even when a "single action" was a double-click.

Priority Date

The Court held that there was an issue of material fact regarding the priority date warranting a jury trial. The Court upheld the use of patent law experts, and found a sufficient basis for the jury's priority decision:

Considering the undisputed knowledge of those skilled in the art, disclosure of a species in this case provides sufficient written description support for a later filed claim directed to a very similar and understandable genus. Accordingly, the patents-in-suit are entitled to claim priority to the provisional application.

Inequitable Conduct

The Court upheld Judge Moran's ruling that failure to disclose certain software to the PTO was not inequitable conduct. The software was not material because the software's use after the priority date would not have impacted the examiner's analysis. And confidential use of the software for personal purposes was experimental. 

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The Corporate Intellectual Property Law Conference is being held in Chicago on May 25, 2010.  The conference promises to address a number of topics, including a patent law update led by the Northern District of Illinois's Chief Judge James Holderman.  Other intellectual property-related topics include:

• General Session -- A discussion of conflicts and ethical challenges facing management and outside counsel;
   
• "Unfair" patent marking: The law may be changing, but has management learned its valuable lesson?
   
• Managing IP assets, patent enforcement & damages, and the Patent Reform Act of 2010.

Click here for more information about the conference. The registration fee is $109, but only $89 if you register before May 10, 2010.  Click here to register.

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