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Chicago IP Litigation Tracking Northern District of Illinois IP Cases

Monthly Archives: December 2011

Plaintiff’s Business in Illinois Alone Cannot Create Personal Jurisdiction

By R. David Donoghue on Posted in Jurisdiction

Culligan Int’l Co. v. Water Sys. of Birmingham, Inc., No. 10 C 8199, Slip Op. (N.D. Ill. Apr. 27, 2011) (Bucklo, J.).

The Court granted defendants’ Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction in this trademark dispute regarding plaintiff’s CULLIGAN marks. Defendants were Alabama entities without offices, employees or agents in Illinois. All of defendants’ business was conducted in Alabama. The parties’ agreement was negotiated and executed in Alabama, and there was no indication of a choice of law provision selecting Illinois law. The only connection to Illinois was that plaintiff did business in Illinois, and that was not sufficient to create jurisdiction over defendants.

False Marking Case Transferred to District Where Defendant Already Faces Four False Marking Cases

By R. David Donoghue on Posted in Jurisdiction

Heathcote Holdings Corp. v. L’Oreal USA, Inc., No. 11 C 1921, Slip Op. (N.D. Ill. Aug. 9, 2011) (Lefkow, J.).

Judge Lefkow granted defendant L’Oreal’s motion to transfer plaintiff’s false patent marking case involving boxes of hair dye to the S.D. New York, L’Oreal’s home district. Generally, plaintiff’s Heathcote’s choice of forum would be given deference, but in false marking cases the United States is the real party in interest. So, the qui tam plaintiff’s chosen forum is given little deference. The situs of material events was New York, where the accused packaging was designed and where the relevant employees reside. L’Oreal’s witnesses and documents were more likely in New York than Illinois.

The convenience of the parties also weighed in favor of New York. Heathcote did not identify any employees that would have to travel to New York for the case, whereas L’Oreal’s relevant employees were in New York. Furthermore, Heathcote’s only business was litigation and therefore the travel would not distract Heathcote from its business.

The interests of justice weighed in favor of transfer. There were already four false marking cases against L’Oreal or its subsidiaries that had been transferred to the S.D. New York. And the potential consolidation of those cases would benefit the parties and judicial economy.

Attempts to Resolve Dispute Do Not Prevent a Preliminary Injunction

By R. David Donoghue on Posted in Legal News

Flava Works, Inc. v. Gunter d/b/a myVidster.com, No. 10 C 6517, Slip Op. (N.D. Ill. Jul. 27, 2011) (Grady, J.).

Judge Grady granted plaintiff Flava Works’ motion for a preliminary injunction in this copyright case involving adult movies, and ordered the parties to confer on language for the preliminary injunction. Defendants’ myVidster website is a "social video bookmarking" site which allows users to post or link to video content. When a user posts or links to the content, myVidster crawls the website hosting the video to gather data about the video, creates a thumbnail image of the video and embeds the video on the myVidster site.

Likelihood of Success

The Court held that there was a likelihood of success on at least Flava Works’ contributory copyright infringement claim. It could not be "seriously disputed" that third parties have directly infringed Flava Work’s works by posting video content on myVidster. And defendants knew or should have known about the infringement based upon Flava Works’ seven DMCA take down notices outlining instances of the infringement to defendants. In fact, the email exchanges surrounding the notices show that defendants were not cooperative in addressing the notices. And myVidster’s repeat infringer policy was the "epitome" of willful blindness. Furthermore, there was significant evidence that defendants encouraged the infringement. For example, myVidster encouraged sharing of video content without warning of potential copyright infringement issues.

Defendants were not protected by the DMCA’s safe harbor provision. A threshold requirement for safe harbor is that a party adopt and reasonably implement a policy providing for termination of users that are repeat infringers. Defendants policy did not require or directly provide for termination of repeat infringers. And defendants did not consider copyright infringement to be part of the defintion of "infringer."

Irreparable Harm

Defendants failed to rebut the presumption of irreparable harm in copyright cases. Flava Works’ did not delay in bringing the suit and then the injunction motion. Prior to filing suit, Flava Works attempted to resolve the issue with several DMCA take down notices and the Court would not penalize Flava Works for attempting to avoid litigation.

Court Reconsiders Ruling re Patent Settlement Agreement

By R. David Donoghue on Posted in Settlement

Balshe LLC v. Ross, No. 08 C 3256, Slip Op. (N.D. Ill. Jul. 7, 2011) (Zagel, J.).

Judge Zagel granted in part defendants’ motion to reconsider the Court’s prior ruling regarding the parties’ settlement agreement in this case regarding a patent to a system of pooling life insurance policies to create a predictable income stream. Pursuant to the agreement, defendants were to transfer their respective interests in the patent to newly-created, third party Institutional Pooled Benefits LLC ("IPB"). Defendants refused to transfer their rights, arguing that provisions of IPB’s operating agreement were in tension with the agreement.

The Court held that, while the agreement did not require that defendants sign IPB’s operating agreement, terms of the operating agreement did require defendants’ signature. Those signatures, however, were mere formalities.

Defendants’ argument that they did not agree to naming the Newco contemplated by the agreement IPB was no different than the argument in defendants’ original papers and was, therefore, improper as a motion for reconsideration.

The Court denied defendants’ request, in its reply brief, for additional relief. Defendants were limited to the relief sought in their motion to reconsider.

Normally, courts do not consider new evidence presented in a reply. But in light of the particular circumstances of this case, the Court considered defendants’ new evidence offered in their reply.

Venue Questioned Sua Sponte

By R. David Donoghue on Posted in Jurisdiction

ArrivalStar S.A. v. Geo-Comm, Inc., No. 11 C 5016, Slip Op. (N.D. Ill. Jul. 27, 2011) (Shadur, Sen. J.).

Judge Shadur sua sponte challenged the sufficiency of plaintiff ArrivalStar’s venue allegations. Venue is proper in patent cares: 1) where the defendant resides; or 2) where the defendant allegedly committed the accused acts and had a regular place of business. Geo-Comm resided in Minnesota. So, only the second option was possible. ArrivalStar did plead that Geo-Comm sold accused products in the district. But ArrivalStar failed to plead that Geo-Comm had a regular and established place of business in the district. Instead of requiring immediate repleading or briefing, the Court set a status conference to discuss the issue.

Vendor’s Patent License Covers Private Label Resellers

By R. David Donoghue on Posted in Summary Judgment

Illinois Computer Research, LLC v. Best Buy Stores, L.P., No. 10 C 4298, Slip Op. (N.D. Ill. Jun. 29, 2011) (Zagel, J.).

Judge Zagel granted defendants (collectively "Best Buy") summary judgment that its Rocketfish sound cards were already licensed because they were designed and manufactured by license from Creative Products ("Creative") for Best Buy.

First, Best Buy’s vendor Ectiva was an Affiliate of Creative. Best Buy’s documents showed a clear relationship between the parties. The fact that Best Buy’s evidence was only authenticated by counsel’s declaration did not prevent considering the evidence for several reasons:

  1. FRE 902(3) allows the Court discretion to consider certain evidence that had not been finally authenticated.
  2. Plaintiff offered no evidence or even argument that the documents were fraudulent or otherwise amendable.
  3. Best Buy ultimately produced certified copies of the evidence.

The Court also held that the Rockefish sound cards were Creative products. The Court already held that Ectiva was an Affiliate of Creative, and plaintiff did not dispute that the soundcards were manufactured for Creative and its affiliates, including Ectiva.

Finally, Creative was not acting as a foundry for Best Buy. Best Buy’s uncontroverted declarations established that Creative, not Best Buy, designed the soundcards.

False Patent Marking Settlement Allows Sales of Existing Marked Product

By R. David Donoghue on Posted in Settlement

Zojo Sol’ns., Inc. v. Cooper Tools, Inc., No. 10 C 1504, Slip Op. (N.D. Ill. Jun. 15, 2011) (Norgle, J.).

Judge Norgle entered final judgment as part of an agreed settlement that had been approved by the Department of Justice in this false patent marking case, which was entered before President Obama signed the America Invents Act. Of particular interest:

  • Any litigation involving alleged false marking before the date of the judgment was barred.
  • Defendant Cooper Tools was free to sell existing inventory with the accused markings as of the Effective Date until such product was fully depleted.

Subpoenas to Identify Does Allowed in BitTorrent Copyright Case

By R. David Donoghue on Posted in Discovery

MCGIP, LLC v. Does 1-316, No. 10 C 6677, Slip Op. (N.D. Ill. Jun. 9, 2011) (Kendall, J.).

Judge Kendall denied putative defendants’ motions to quash plaintiff MCGIP’s subpoenas seeking to identify users associated with specific IP addresses that allegedly used BitTorrent in a manner that infringed MCGIP’s copyrights in certain adult films. The Court’s key reasons for denying the motions to quash were:

MCGIP issued subpoenas to internet service providers ("ISP"), not the putative defendants. The subpoenas, therefore, did not create an undue burden on the putative defendants because the ISPs had a duty to produce documents, not the putative defendants.

MCGIP was seeking identifying information, none of which was privileged.

The subpoena requests were not outweighed by the putative defendant’s privacy or First Amendment rights.

Whether the Does were improperly joined is a premature question. As such, motions raising it were denied without prejudice to refile once the issue was ripe.

The putative defendants’ arguments that the Court lacked personal jurisdiction were also premature as defendants were not in the suit yet. Defendants will be free to raise those issues once they ripen.

Notice Pleading Sufficient for Lanham Act and Trade Secret

By R. David Donoghue on Posted in Pleading Requirements

Dynamic Fluid Control (PTY) Ltd. v. International Valve Mfg., LLC, No. 10 C 7555, Slip Op. (N.D. Ill. May 11, 2011) (Darrah, J.).

Judge Darrah denied defendants’ Fed. R. Civ. P. 12(b)(6) motions to dismiss in this patent and Lanham Act case involving air-release valves for water and sewage pipes, and plaintiff Dynamic Fluid Control’s ("DFC") VENT-O-MAT mark.

Trademark Infringement

 

The fact that DFC’s related entity DFC Water (Pty) Ltd. was the trademark registrant not DFC did not require dismissal. The terms "applicant" and "registrant" are read to include predecessor and future assignees of the mark.

Trade Dress Infringement

 

DFC was not required to specifically identify the elements of its trade dress in the complaint. DFC’s general statement that its trade dress consisted of distinctive shape, contours . . . and color scheme" was sufficient. 

Unfair Competition

 

Because DFC’s unfair competition claim was of the likelihood of confusion type, not the false advertising type, DFC was not required to meet Fed. R. Civ. P. 9(b) pleading standards. As a result, while DFC’s allegations were "rather broad and somewhat ambiguous" they met the notice pleading standards. Defendants were on notice that DFC believed that customers were likely to be confused by defendants’ use of the VENT-TECH mark and alleged use of DFC’s trade dress.

 

The Court also noted that the Illinois Uniform Deceptive Trade Practices Act ("DTPA") codified unfair competition so it was unclear what limited exception DFC’s state unfair competition claim might fall into, but the Court allowed the claim to remain. 

 

Deceptive Trade Practices Act

 

Once again, because DFC’s DTPA claim was based upon likelihood of confusion, heighted pleadings standards were not required. And DFC’s claim met the standard, as did its Lanham Act claims. 

 

Illinois Trade Secrets Act 

 

The Court held that DFC need not identify specific trade secrets that were allegedly misappropriated. DFC’s general list of trade secret categories were sufficient to put defendants on notice.

 

Unjust Enrichment

 

Unjust enrichment is not a stand alone claim in Illinois. But it can be brought, although it is dependent upon other claims.

 

Pegasus Airline Group LLC

 

The individual defendants argued that there was no such entity as Pegasus Airline Group LLC ("PAG"). But as PAG was allegedly a limited liability company, not a corporation, defendant’s argument that PAG was not incorporated was irrelevant. And defendant’s only evidence that PAG did not exist came in its reply – too late. Finally, DFC’s failure to prove service did not effect the validity of service.