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Chicago IP Litigation Tracking Northern District of Illinois IP Cases

Monthly Archives: November 2011

Court Grants Limited Discovery to Identify Does in BitTorrent Copyright Case

By R. David Donoghue on Posted in Discovery

MCGIP, LLC v. Does 1-14, No. 11 C 2887, Slip Op. (N.D. Ill. May 10, 2011) (Lindberg, Sen. J.).

Judge Lindberg granted plaintiff MCGIP limited, early discovery to identify the fourteen Does based upon their IP addresses. MCGIP was allowed to serve subpoenas upon six identified internet service providers ("ISP") seeking limited information about the identity of the Does. McGip, however, could only use any information it received for purposes of protecting its interests in the complaint and not for any other purposes.

Lawyers Sanctioned for False Pro Hac Vice Application Statements

By R. David Donoghue on Posted in Local Rules

Irrevocable Trust of Anthony J. Antonious v. Tour Edge Golf Manufacturing, Inc., No. 10 C 5552, Slip Op. (N.D. Ill. Apr. 17, 2011) (Kennelly, J.).

Judge Kennelly sanctioned two counsel, Silverman and Daghighian, for false statements made in Silverman’s pro hac vice application which was filed by Daghighian in this patent case. Daghighian prepared and filed Silverman’s application, without his consent or review, based upon prior applications the two had filed in other courts. In doing so, Daghighian stated for Silverman that he had never been suspended from practice and that he had not been held in contempt. The Court later learned that both statements were false. The Court noted that it would likely have granted Silverman’s application had he explained the two instances that should have been identified, but despite that the misstatements were material.

The Court ordered that: 1) Silverman provide a copy of the Court’s opinion to his state disciplinary authority; 2) Silverman pay a $5,000 fine to the Clerk to be put into the pro bono fund; and 3) Silverman was barred from seeking pro hac vice admission to the Northern District for three years without prior permission from the Court’s Executive Committee. Silverman received the more severe sanctions of the two because he was significantly more experienced and because he failed to take personal responsibility in the declaration he provided the Court.

Daghighian received lesser sanctions because he had only been practicing five years and, while his violations were more egregious in some ways, he took responsibility for his actions in his declaration. The Court ordered that: 1) Daghighian provide a copy of the Court’s opinion to his state disciplinary authority, but suggested that the authorities consider the mitigating factors the Court noted in rendering its decision; 2) Daghighian pay a $1,000 fine to the Clerk to be put into the pro bono fund; and 3) Daghighian’s appearance and pro hac vice application were not stricken.

Letters and Emails to State Cannot Alone Create Jurisdiction

By R. David Donoghue on Posted in Jurisdiction

TechnoLines, LP v. GST Autoleather, Inc., No. 11 C 965, Slip Op. (N.D. Ill. Jun. 30, 2011) (Grady, J.).

Judge Grady granted defendant GST’s motion to dismiss plaintiffs’ patent claims for improper revenue and lack of production and dismissed the remaining state law claims without prejudice to be refiled pursuant to diversity jurisdiction, if possible.

The Court’s key rulings were:

  • GST’s failed license negotiations with plaintiff Echelon in Illinois alone could not create personal jurisdiction.
  • Echelon residing in Illinois and, therefore, having been allegedly harmed in Illinois does not create personal jurisdiction. GST’s conduct must have been specifically directed at Illinois. And there was no evidence that GST sold product into Illinois.
  • GST’s phone calls and emails to Echelon in Illinois did not create personal jurisdiction.
  • The Court refused supplemental jurisdiction over the remaining state law claims, and gave plaintiff a deadline for repleading based upon diversity jurisdiction, if it could.

Department of Clotted Nonsense: Court Rejects Jurisdiction Over Holding Company

By R. David Donoghue on Posted in Jurisdiction

Revenue Realization LLC v. H&R Block, Inc., No. 11 C 85, Slip Op. (N.D. Ill. Apr. 11, 2011) (Shadur, Sen. J.).

Judge Shadur granted defendant H&R Block’s motion to dismiss, after granting plaintiff Revenue Realization leave to file its response to the motion and fully considering it. Revenue Realization accused H&R Block of patent infringement. H&R Block moved to dismiss because it was a passive holding company for a variety of subsidiaries and, therefore, was not the proper H&R Block defendant.

H&R Block offered to identify the proper entities for Revenue Realization. But Revenue Realization refused the offer, as well as the Court’s suggestion that it file against all possible subsidiaries and narrow the defendants based upon the entities’ subsequent motions to dismiss. Instead Revenue Realization argued that the Federal Circuit’s decision in Nuance Commc’ns, Inc. v. Abbyy Software House, 626 F.3d 1222 (Fed. Cir. 2010) confirmed that the Court had jurisdiction over a passive parent entity in patent cases. The Court, however, held that the opinion stood for quite a different proposition and was a "weak reed to lean on." In fact, Nuance dealt with a subsidiary entity that had direct contacts with the forum. In contrast, H&R Block was a true holding company. And the fact that H&R Block defined itself as including its subsidiaries in certain SEC filings was irrelevant to the Court’s analysis.

The Court finished the opinion referring to the New Yorker’s old practice of filling the final page of an article that otherwise would have left a portion blank with a section captioned "Department of Clotted Nonsense" containing amusing quotations and reprinted errors from other publications. The Court then granted plaintiff leave to file its response brief, and noted that the Court had already fully considered it.

Naming Doe Defendants in Bit Torrent Copyright Case is Shooting First, Identifying Targets Later

By R. David Donoghue on Posted in Discovery

Boy Racer, Inc. v. Does 1-22, No. 11 C 2984, Slip Op. (N.D. Ill. May 9, 2011) (Shadur, Sen. J.).

Judge Shadur sua sponte dismissed plaintiff Boy Racer’s copyright infringement complaint without prejudice. The Court held that Boy Racer could not "shoot first and identify [its] targets later" by suing twenty-two Doe defendants. Instead, Boy Racer was free to file its suits against identifiable individuals.

CLE: Ethics of E-Discovery

By R. David Donoghue on Posted in Legal News

The Seventh Circuit Electronic Discovery Pilot Program and Wilson Elser are offering a CLE program entitled Ethics of E-Discovery on November 30, 2011 from 12:00-1:30 pm ct.  The program will explore ethical issues in e-discovery, a critical issue for all IP litigants.  Registration is limited to the first 3,000 participants.  So, register quickly.

The program is offering 1.5 ethics credits in a number of states, including Illinois, and looks to be excellent.  Panelists include:

  • Cinthia Motley of Wilson Elser (moderator);
  • Magistrate Judge Mark J. Dinsmore (S.D. Indiana);
  • Debra Bernard of Perkins Coie;
  • Timothy Chorvat of Jenner & Block; and
  • Rachel Lei of GATX Corporation.

Here is what the program promises to cover:

  • What are your ethical duties regarding preservation of Electronically Stored Information (ESI) and what triggers those duties? Does it matter if you are “only” outside counsel?
  • What ethical considerations are at play when you are searching for and producing ESI? What if you know proposed search terms will yield no results? Must you speak up?
  • To what extent does metadata pose ethical issues?
  • What if you inadvertently produce privileged information? Do you need a clawback or will the rules protect you?
  • What about contract attorneys? What is the scope your ethical obligation to supervise?

Exclusion of Lead Trial Counsel as Trial Witness Premature Until Trial Witnesses are Identified

By R. David Donoghue on Posted in Trial

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

Judge Kendall denied defendant GL Trade Americas’ ("GL") motion to disqualify plaintiff Trading Technologies’ ("TT") lead litigation counsel and in-house counsel Borsand, without prejudice to reconsider whether Borsand should be excluded from testifying should he seek to testify. GL alleged that Borsand received confidential information when TT briefly retained a European law firm to represent it in patent prosecution matters without realizing that the firm represented an entity working on behalf of GL. Borsand only had two contacts with the firm, and it was reasonable that during those two contacts no confidential information was transferred to Borsand. As such, the drastic measure of disqualification was not warranted.

GL’s request that Borsand be excluded as a trial witness because of his role as lead trial counsel was denied as premature with leave to refile at a later date. The Court could not determine what discovery would show, what facts would be disputed at trial or whether Borsand would even testify at trial.

Consent Judgment Enjoins Defendants’ Use of Its Own Initials

By R. David Donoghue on Posted in Settlement

The Counselors of Real Estate v. Masters Commercial Real Estate, Inc., No. 11 C 3173, Slip Op. (N.D. Ill. Aug. 18, 2011) (St. Eve, J.).

Judge St. Eve entered a consent judgment as part of a settlement in this trademark dispute involving the CRE and CRE marks. Here were the key elements of the judgment:

Defendant Masters Commercial Real Estate could not use the letters "CRE" in "sequence or substantial sequence", except when referring to plaintiff, in relation to real estate services.

Defendant was also enjoined from using the letters "MCRE" in sequence or substantial sequence.

Lanham Act Case Settles After Jury Verdict

By R. David Donoghue on Posted in Settlement

Cement-Lock v. Gas Tech. Institute, No. 05 C 0018 (N.D. Ill. Oct. 5, 2009) (Pallmeyer, J.).

Judge Pallmeyer issued an order dismissing this patent case with prejudice based upon the parties’ settlement.  The Court previously presided over a jury trial resulting in a verdict for plaintiffs Cement-Lock LLC and Alderman Richard Mell on behalf of Cement-Lock Group (collectively "CLG") on various RICO and breach of fiduciary duty claims. The jury awarded CLG $15M in damages, which was resolved by the settlement.

This was a dispute over the control and use of Cement–Lock technology (the “Technology”) which decontaminated certain waste products and used the decontaminated waste as a beneficial cement additive. CLG asserted various IP claims, including Lanham Act unfair competition, deceptive trade practices and trademark infringement. GTI also allegedly claimed to own and have developed the Technology.

Patent Cross-License Releases Future and Past Claims

By R. David Donoghue on Posted in Settlement

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

Judge Kennelly granted defendant ConvaTec’s motion for summary judgment that its accused bowel management systems were covered by a patent cross-license agreement between ConvaTec and plaintiff Hollister’s predecessor Zassi. The agreement released each party for "any and all past, present or future claims" including patent infringement claims involving the parties then existing product lines.

The agreement excerpted new features from the release. But ConvaTec’s accused Flexi-Seal products had the same designs as ConvaTec’s products at the time of the agreement.

Hollister’s argument that only covenants not to sue, not releases, may discharge future claims was not founded in the law. Hollister cited no cases that stood for that point.

Bill of Costs Support Need Only be Reasonable

By R. David Donoghue on Posted in Trial

Bobak Sausage Co. v. A & J Seven Bridges, Inc., No. 07 C 4718 Slip Op. (N.D. Ill. May 31, 2011) (Dow, J.).

After entering judgment for defendants, the Court granted defendants’ unopposed bill of costs in this trademark case. The opinion is fairly vanilla, but it answers one question I get frequently: How much do you have to break down costs to support your bill of costs? Creating too much detail from summary bills can quickly eclipse the value of the average bill of costs. The Court answered that question as follows, with useful case cites:

Under Section 1920(4), the prevailing party is "not required to submit a bill of costs containing a description so detailed as to make it impossible economically to recover photocopying costs." Northbrook Excess & Surplus Ins. Co. v. Proctor & Gamble, 924 F.2d 633, 643 (7th Cir. 1991). Instead, the prevailing party need only provide the best breakdown obtainable from the records. See id.

Doctrine of Equivalents Improper Where it Vitiates Claim Element

By R. David Donoghue on Posted in Claim Construction

Wells-Gardner Elecs. Corp. v. C. Ceronix, Inc., No. 10 C 2536, Slip Op. (N.D. Ill. Apr. 14, 2011) (Hart, J.).

Judge Hart construed the term "flange" and granted defendant C. Ceronix summary judgment of noninfringement in this patent case involving flat panel television mounting frames. The Court held that "flange" as used in the claims was interchangeable with "bracket," which C. Ceronix argued should be excluded from the definition of flange. In addition to the intrinsic evidence, the Court looked to dictionary definitions of flange.

C. Ceronix had brackets on the sides of the frame, but the brackets did not directly attach to the sides of the flat panel display as required by the claim. Instead the bracket attached at the back of the display. The doctrine of equivalents did not apply because allowing a flange that attached at the back not the side would vitiate the claim element.

The Court exercised its discretion to dismiss C. Ceronix’s claim for declaratory judgment of invalidity.

Restating and Bolding Allegations Does Not Overcome Motion to Dismiss

By R. David Donoghue on Posted in Pleading Requirements

Caldera Pharms., Inc. v. Los Alamos Nat’l. Sec., L.L.C., No. 10 C 6347, Slip Op. (N.D. Ill. Mar. 11, 2011) (Bucklo, J.).

Judge Bucklo granted defendant UChicago Argonne’s ("Argonne") Fed. R. Civ. P. 12(b)(1) & (b) motion to dismiss plaintiff Caldera’s claims against Argonne in this patent dispute. Caldera was allegedly the exclusive licensee of the patents-in-suit and Argonne was allegedly using the patented technology in a partnership with the licensor. Argonne argued that there was no case or controversy for Caldera’s declaratory judgment complaint because: 1) Argonne had no contract with Caldera; and 2) Caldera lacked the right to bring suit using the patents-in-suit. Caldera said its claims did not sound in breach of contract or patent infringement, but Caldera never explained what its claim was. And because Caldera had the burden of proof, the motion was granted.

Argonne also argued that Caldera’s claims were not sufficiently plead. In response, Caldera simply restated its claim with the relevant portion bolded. But merely restating claims in bold does not support plaintiff’s claims or overcome a motion to dismiss. The Court, therefore, dismissed the claims.