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Chicago IP Litigation Tracking Northern District of Illinois IP Cases

Monthly Archives: March 2011

Court Lacks Jurisdiction Over Contract Case “Artfully Plead” in Trademark

By R. David Donoghue on Posted in Jurisdiction

Airoom LLC v. Demi & Cooper, Inc., No. 09 C 4205, Slip Op. (N.D. Ill. Jan. 5, 2011) (Gottschall, J.).

Judge Gottschall granted defendants’ Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of jurisdiction. Plaintiff Airoom accused defendants of infringing its trademarks, as well as related state law claims. Defendants, who were creating and hosting Airoom’s website, stopped when Airoom refused to pay amounts allegedly due pursuant to the parties’ contract hosting the site, causing website visitors to be directed to a generic "text page."

Airoom claimed Lanham Act violations based upon defendants’ decision not to continue hosting the site. Based upon the "artful pleading" doctrine, the Court held that Airoom’s claims sounded in copyright, not the Lanham Act. The Court, therefore, lacked federal question jurisdiction. And because all parties were Illinois residents, there could not be diversity jurisdiction. Airoom’s case was, therefore, dismissed.

Trading Technologies: “Mirror Image” Patent Counterclaims Struck Sua Sponte as “Meaningless”

By R. David Donoghue on Posted in Pleading Requirements

Trading Technologies Int’l, Inc. v. CQG, Inc., No. 10 C 718, Slip Op. (N.D. Ill. Jan. 24, 2011) (Shadur, Sen. J.).*

Judge Shadur sua sponte dismissed defendants’ (collectively "CQG") noninfringement and invalidity counterclaims. The Court explained that "mirror image" noninfringement and invalidity patent counterclaims are "seemingly meaningless." And the "amorphous nature" of CQG’s counterclaims resulted in them being especially unnecessary. The Court, therefore, dismissed the declaratory judgment counterclaims.

*Click here for much more on this and TT’s other cases in the Blog’s archives.

Trading Technologies: Court Consolidates 2010 Cases

By R. David Donoghue on Posted in Local Rules

Trading Technologies, Inc. v. BGC Partners, Inc., No. 10 C 715, Slip Op. (N.D. Ill. Feb.3, 2011) (Kendall, J.).*

Judge Kendall consolidated plaintiff Trading Technologies’ ("TT") patent infringement cases that were filed in 2010 – Judge Coleman previously denied TT’s motions to consolidate the cases filed in 2005 with those filed in 2010. The Court held that the 2010 cases were sufficiently related pursuant to Local Rule 40.1. While the products were not identical and the asserted patents were not identical for each defendant, the accused products were similar and were all accused of infringing one or more of three of TT’s patent families. Additionally, consolidation would conserve substantial time and effort without causing delay.

The Court also ordered the parties to file a summary of all pending motions and discovery status.

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

CLE: What Everyone Should Know About the Mechanics of E-Discovery

By R. David Donoghue on Posted in Legal Seminars

The Seventh Circuit Electronic Discovery Pilot Program is sponsoring a free e-discovery webinar on April 6, 2011 from noon until 1:30 pm CDT.  This is the next in a series of e-discovery seminars sponsored by the local federal courts which have been excellent so far.  Participation is limited to 1,500.  So, sign up early — click here to register.  Attendance for the past events has been impressive.  1.5 hours of MCLE credit have been applied for in Illinois, Indiana and Wisconsin.

Here are the details of the webinar from the Northern District’s inviation:

What Everyone Should Know About the Mechanics of E-Discovery

April 6, 2011 – Noon – 1:30 p.m. (CDT)

Understanding the mechanics of electronic discovery is essential to your effectiveness in litigation and to fulfill your responsibility to your clients. The Seventh Circuit Electronic Discovery Pilot Program, together with Merrill Corporation, has developed a program designed to assist you in mastering the e-discovery challenges of today’s litigation and to help you manage the preservation, retrieval and production of ESI through the e-discovery process. You will gain information including:

  • A basic understanding of the terminology unique to the realm of e-discovery.
  • The meaning of preservation and how to achieve this crucial obligation in an evolving technological landscape.
  • How to assess and manage the challenges of an e-discovery project.
  • A foundational understanding to help you identify potential e-discovery pitfalls and potential problems.

 

Chicago IP Colloquium Discusses First Sale & Friction

By R. David Donoghue on Posted in Legal News

The annual Chicago IP Colloquium continues this Tuesday, March 22, 2011  The Chicago IP Colloquium is jointly sponsored by Chicago-Kent College of Law and Loyola University Chicago School of Law  to discuss a range of issues in intellectual property and cyberspace law based upon papers by six nationally renowned intellectual property scholars.  The sessions are uniformly excellent, and well worth your time.  The next session will be Tuesday, February 9 from 4:10 pm to 5:50 pm at Loyola and will feature Professor Molly Van Houweling, UC Berkeley School of Law, discussing her paper:  First Sale and Friction.

Court Reevaluates Claim Constructions from Prior Related Case

By R. David Donoghue on Posted in Claim Construction

Civix-DDI, LLC v. Hotels.com, No. 05 C 6869, Slip Op. (N.D. Ill. Oct. 25, 2010) (St. Eve, J.).

Judge St. Eve construed the terms of the patents-in-suit to internet technology. From a procedural standpoint, the Court did the parties and readers of the opinion the favor of identifying the Court’s construction in a bulleted list at the beginning of the opinion, as well as at the end. Lists of the construed terms and their construction opinions make claim constructions far more readable.

Of particular note, the Court construed the following terms:

  • "Associated category" means "a classification both stored in the database and provided or selected by a user that divides particular items of interest into subgroups." The Court gave "little weight" to a construction from a prior case which the parties in that case stipulated to because defendants in this case were not parties to that case, nor did they have privity with the prior defendants.
  • "Connected to" means "joined together or linked to, in a direct or indirect manner." Because neither the claim language nor the specification exclude an indirect connection, the construction included both direct and indirect connections.
  • "Database" means "a collection of related information organized for convenient access." The Court accepted the construction from the prior case because it was supported by the intrinsic evidence. Nothing in the claims or specifications required a single device as proposed by defendants.
  • "Internet" means "a system of linked computer networks, worldwide in scope, that is typically associated with using TCP/IP as a standard protocol." This was the Court’s construction from the prior case, but it was reached after a de novo review of the construction and all relevant evidence. Additionally, "Internet" and "internet" were construed to mean the same thing.
  • "User" means "a human being."
  • "Video" means "a presentation of multiple sequential frames of image data." The construction was intended to create a distinction between digital pictures and video.
  • "Within a radius about the one port" means "within a circular area the center of which is the user’s present physical location."

Parties May Not Deny Statements for Which They Lack Information and Belief

By R. David Donoghue on Posted in Pleading Requirements

Bernina of Am., Inc. v. Imageline, Inc., No. 10 C 4917, Slip Op. (N.D. Ill. Jan. 12, 2011) (Shadur, Sen. J.).

Judge Shadur sua sponte struck two paragraphs of plaintiff’s answer and affirmative defenses to defendants’ counterclaims. Both paragraphs denied allegations for which plaintiff lacked information and belief, which was both "oxymoronic" and in violation of Fed. R. Civ. P. 8(b)(5).

Trading Technologies: Motion Not Allowed to Lie “Fallow”

By R. David Donoghue on Posted in Local Rules

Trading Techs. Int’l., Inc. v. CQG, Inc., No. 10 C 718, Slip Op. (N.D. Ill. Jan. 6, 2011) (Shadur, Sen. J.).

Judge Shadur denied plaintiff Trading Technologies’ ("TT") motion to strike certain of defendants’ (collectively "CQG") affirmative defenses and counterclaims.* The motion was originally filed September 1, 2010 and had been stayed by agreement as the parties attempted to negotiate a global settlement. Because allowing motions to lie "fallow" for so long was "undesirable" the Court dismissed the motion with leave to refile it should the parties restart the substantive portion of the case.

*  Click here for much more on this and the related Trading Technologies cases in the Blog’s archives.

Out-of-State Lawyer Avoids Fine for Failure to Comply with Local Rules

By R. David Donoghue on Posted in Local Rules

CP Prods., Inc. v. Does 1-300, No. 10 C 6255, Slip Op. (N.D. Ill. Dec. 29, 2010) (Shadur, Sen. J.).

Judge Shadur dismissed defendant Doe 300′s motion to quash a subpoena in this copyright case, for numerous failures to comply with the Local Rules: 1) failure to provide a courtesy copy to chambers; 2) failure to notice the motion; and 3) failure to seek leave to appear pro hac vice. The Court, however, did not fine counsel for the violations because she was an out-of-state lawyer.

Defendant Cannot Show Knowledge of Prior Art Necessary for Inequitable Conduct

By R. David Donoghue on Posted in Legal News

Neutral Tandem, Inc. v. Peerless Network, LLC, No. 08 C 3402, Slip Op. (N.D. Ill. Dec. 2, 2010) (Darrah, J.).

Judge Darrah granted plaintiff Neutral Tandem summary judgment as to defendants’ (collectively "Peerless Network") inequitable conduct claim. Peerless offered no clear and convincing evidence that the inventor knew of the allegedly withheld prior art, referred to as the "Phase II Order." The fact that the inventor was involved in the proceeding’s from which the Phase II Order issued was not sufficient. Those proceedings lasted eleven years and resulted in thirteen orders. And the inventor testified that he did not remember the Phase II Order. Furthermore, similarities between a paragraph of the Order and a statement made during prosecution was not sufficient. Finally a petition filed with the FCC by the inventor referencing the Order was not sufficient because he testified it was written by his outside counsel and he had not reviewed the petition.

Eye of the Tiger: Survivor Survives Motion to Dismiss

By R. David Donoghue on Posted in Pleading Requirements

Sullivan d/b/a Survivor v. Jamison, No. 06 C 5240, Slip Op. (N.D. Ill. Dec. 1, 2010) (Coleman, J.).

Judge Coleman denied counter-defendants’ (collectively "Survivor Music") Fed. R. Civ. P. 12(b)(6) motion to dismiss counter-plaintiffs’ breach of contract and related claims in this dispute over royalties due based upon the copyrighted songs of the band Survivor — Eye of the Tiger was one of their big hits. Although counter-plaintiffs were not signatories to the agreements from which the song royalties flowed, they were replacement members of Survivor and as such had agreed in writing to be bound by and enjoy the benefits of the agreements. As to Survivor Music’s statute of limitations claim, although the claim was older than five years, counter-plaintiffs did not discover it until less than five years before filing their counterclaims.

Marking With an Unexpired Patent Not Fixed by Also Marking with a Live Patent

By R. David Donoghue on Posted in Pleading Requirements

Simonian v. Allergan, Inc., No. 10 C 2414, Slip Op. (N.D. Ill. Nov. 30, 2010) (St. Eve, J.).

Judge St. Eve denied defendant Allergan’s motion to dismiss plaintiff Simonian’s false patent marking claim regarding Allergan’s RESTASIS product. The Court, citing its Blistex decision, held that false patent marking claims were subject to Fed. R. Civ. P. 9(b) heightened pleading requirements. Simonian’s general averment that Allergan marked with an allegedly expired patent with an intent to deceive was sufficient, without more facts.

The Court also held that the fact that RESTASIS was marked with an unexpired patent, did not insulate Allergan from marking with an expired patent as well, citing Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347 (Fed. Cir. 2005). In Clontech, the Federal Circuit explained that "an unpatented article" was one "not covered by at least one claim of each patent with which the article is marked." Id. at 1352 (emphasis added).

Trading Technologies: Court Denies Motion to Consolidate Sixteen Pending Cases

By R. David Donoghue on Posted in Local Rules

Rosenthal Collins Group, LLC v. Trading Technologies Int’l, Inc., No. 05 C 4088, Slip Op. (N.D. Ill. Nov. 23, 2010) (Coleman, J.).

Judge Coleman denied plaintiff Trading Technologies’ ("TT") Local Rule 40.4 motion to consolidate TT’s sixteen pending patent cases,* involving nine patents. Initially, the Court noted that TT did not seek consolidation of all sixteen cases in a single case, but consolidation of the four remaining cases that TT filed in 2005, and separately the twelve cases TT filed in 2010. LR 40.4 requires that a motion to consolidate be filed in the lowest number case. So, while the instant case was the lowest number of the 2005 cases, it was not the lowest number 2010 case. As to the 2010 cases, therefore, the Court did not address consolidation. As to the 2005 cases, TT failed to show that the cases were sufficiently related — while they involved common patents, the accused products operated in "very different manner[s]." Furthermore, while Judge Moran previously coordinated discovery of all of the 2005 cases before the cases were reassigned, TT did not demonstrate that consolidating the 2005 cases would conserve resources.

*  Click here for much more on these cases in the Blog’s archives.

Trading Technologies: “Willful and Intentional” Evidence Fabrication Leads to $1M Fine & Default Judgment

By R. David Donoghue on Posted in Discovery

Rosenthal Collins Group, LLC v. Trading Techs. Int’l, Inc., No. 05 C 4088, Slip Op. (N.D. Ill. Feb. 23, 2011) (Coleman, J.).*

Judge Coleman granted defendant/counter-plaintiff Trading Technologies’ ("TT") motion for evidentiary sanctions and default judgment.  Judge Moran previously dismissed plaintiff/counter-defendant Rosenthal Collins Group’s ("RCG") motion for summary judgment regarding the alleged prior art Buist trading program for discovery abuse, ordered RCG to produce additional documents and things related to the Buist program, and ordered RCG to pay certain of TT’s attorney’s — click here for the Blog’s post on that decision.  Initially, the Court the severity of a default judgment as a sanction, calling it "extreme," and noted that the Seventh Circuit required a showing of willfulness, bad faith or fault by a preponderance of the evidence in order to justify dismissing a case.

The Court held that the high standard was met in this case, for at least the following reasons:

  • During his deposition, Buist admitted modifying and overwriting source code in 2006 that he and by extension RCG held out as having been created in 1998 or 1999.  And in the face of clear evidence of these facts, RCG continued to deny them, even calling the claims "libelous," "audacious," and "Oliver Stone-esque."
  • Buist later admitted "wiping" or erasing six of seven zip disks that originally contained the relevant source code and that were later produced by RCG because they allegedly contained the code.  The seventh was also wiped, although there was a dispute regarding whether Buist or others had access to it when it was wiped.  But the Court held that it was "impossible to believe that it is merely coincidence that the seventh disk happened to be wiped on May 2, 2006, which just happened to be the same day that TT was scheduled to inspect it."
  • There was evidence that "virtually every piece of media ordered produced by the Court in May 2007 and July 2008 was wiped, altered, or destroyed after those orders were entered . . . ." (emphasis in original).
  • Even if RCG and its counsel had no knowledge of the destruction of the evidence, the destruction might have been avoided if RCG had timely complied with the Court’s orders to produce the materials.  And regardless, RCG and its counsel should have preserved the evidence by taking custody of it.
  • Buist was RCG’s agent and, therefore, RCG was bound by Buist’s behavior and actions.

Based upon these determinations, the Court found clear and convincing evidence that "RCG, and its counsel, acted in bad faith and with willful disregard for the rules of discovery and this Court’s orders."  And because a monetary sanction alone was not sufficient, the Court entered a default judgment in favor of TT and dismissed RCG’s complaint and struck its defenses to TT’s counterclaim.  The Court also fined RCG $1,000,000 for "egregious conduct before the Court" and ordered RCG’s counsel to pay TT the attorney’s fees and costs related to TT’s motion for default judgment.

*  I have a few earlier opinions from the Trading Technologies cases, but this one was significant enough that I moved it up.  Click here for more on the case in the Blog’s archives.