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

Junction Solutions, LLC v. MBS Dev., Inc., No. 06 C 1632, 2007 WL 4233995 (N.D. Ill. Nov. 20, 2007) (Gottschall, J.).*

Judge Gottschall denied defendant’s Fed. R. Civ. P. 12(c) motion to dismiss plaintiff’s trade secret misappropriation complaint based upon the parties’ prior settlement agreement and resulting dismissal with prejudice by the District of Colorado. While the alleged misappropriation was the same — defendant employees leaving plaintiff to start their own competing software company — the use of the trade secrets was different. In the Colorado case, defendants allegedly harmed plaintiff by starting a competitor using plaintiff’s trade secrets. In this case, the alleged harm was developing competing software, after the Colorado settlement and dismissal. Claim preclusion, therefore, did not apply. Issue preclusion did not apply because the Colorado court did not make any substantive final judgments. The settlement agreement could have barred plaintiff’s claim, but the agreement’s release expressly excluded claims arising after the agreement’s effective date.

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

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Telewizja Polska USA, Inc. v. Echostar Satellite Corp., No. 04 C 3293, Slip Op. (N.D. Ill. Oct. 30, 2007) (Guzman, J.). 

Judge Guzman adopted Magistrate Judge Keys’s Report and Recommendation in its entirety, awarding plaintiff all of the approximately $800,000 in attorney’s fees and costs plaintiff sought pursuant to the fee-shifting provision in the parties’ agreement and Fed. R. Civ. P. 54(d). At trial, plaintiff sought approximately $2.8M for its breach of contract claim and approximately $5.8M for its unjust enrichment claim – the claims were plead in the alternative. The jury awarded plaintiff approximately $1.4M on the breach of contract claim. The jury also awarded defendant $1 in compensatory damages and approximately $18,000 in punitive damages on defendant’s defamation counterclaim. Defendant argued that plaintiff was not the prevailing party, as required by Rule 54(d) and, therefore, should not be awarded its fees and costs or, at least, should be awarded a reduced amount.

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Last week the intellectual property world obsessed over injunctions – specifically, a preliminary injunction hearing in the Eastern District of Virginia resulting in an injunction against the U.S. Patent & Trademark Office’s (“PTO”) new continuation rules. There was a lot of analysis about the injunction, including live blogging by Patent Practice Center Patent Blog and a lot of post-injunction analysis by, among others: 271 Patent Blog; FileWrapper; Patent Baristas; Patent Docs (and here); Patent Prospector; PHOSITA; Patently-O; WSJ Law Blog; and Washington State Patent Law Blog. For those of you who have no idea what a continuation is or just do not care about the particulars of the rules, I promise that I am done with patent continuations for this post. Honestly, I find the rules rather tedious myself. I prefer to focus on litigating patents, rather than the PTO’s prosecution rules. So, today we talk about injunctions:

According to TechCrunch, Patent Monkey received a permanent injunction when it was sold to the Internet Real Estate Group. But Patent Monkey’s patent search technology will see its injunction lifted when it is used on www.patents.com. Hopefully, for those like me who enjoyed it, Patent Monkey’s Infinite Monkey Theorem Blog will also see its injunction lifted.

Virtually Blind has an interesting report on Second Life’s* new Patent & Trademark Office, the SLPTO. No word on whether the SLPTO and the Second Life legal system generally will allow for any permanent injunctions. Right now it appears that the SLPTO will be heavily skewed toward copyright and trademark, which makes sense in a virtual world. And before we learn whether the SLPTO has any enforcement mechanisms, Blawg IT is offering to represent virtual clients before the SLPTO. I would get a retainer up front Brett – virtual clients can be difficult to track down when the bills are due.

The Patry Copyright Blog shows why Second Life injunctions may be necessary. Six Second Life players have sued a Queens man in the Eastern District of New York for trademark and copyright infringement based upon sales of goods in Second Life. I wonder if the trademarks and copyrights were registered with the SLPTO or the US PTO/Copyright Office. And does the E.D.N.Y. have authority to issue cyber-injunctions?

Promote the Progress provides an interesting piece on the long-term effects of last week’s injunction against the PTO on shaping patent reform.

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Bucciarelli-Tieger v. Victory Records, Inc., No. 06 C 4258, 2007 WL 684047 (N.D. Ill. Mar. 1, 2007) (Moran, Sen. J.).

Judge Moran held that the parties' contract was not exclusive and, therefore, granted in part and denied in part defendants' Rule 12(c) motion to dismiss.  Plaintiffs are members of an Ohio-based band called Hawthorne Heights (collectively "HH").  HH entered into a contract (the "Agreement") with defendants to produce and promote four albums.  The first album was created and promoted seemingly without incident, but just before release of the second album the relationship soured.  HH sent defendants a letter which purported to terminate the Agreement and listed several ways that defendants had allegedly harmed HH.  This suit arose from that dispute.  Plaintiffs allege breach of contract, as well as copyright and trademark infringement for promotions and sales after the date of HH's letter allegedly terminating the Agreement and related state law claims.  The Court held that the Agreement was not exclusive because it did not contain any exclusivity provisions, which meant that HH was free to record other songs or records with another company during the life of the Agreement.  The Court also held that the only way HH's songs can be considered a work-for-hire owned by defendants is if HH were defendants' employees.  But the Court was unable to decide that issue on the pleadings.  As a result, the Court also could not decide HH's copyright and trademark infringement claims on the pleadings because whether defendants could have infringe requires a determination of whether HH or defendants own the marks.  The opinion also contains a very detailed analysis of Illinois choice of law issues for the related state law claims.

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Allied Ins. Co. v. Bach, No. 05 C 5945, 2007 WL 627635 (N.D. Ill. Feb. 27, 2007) (Leinenweber, J.).

Judge Leinenweber granted declaratory judgment defendants/counter-plaintiffs (collectively "defendants") summary judgment DJ plaintiff/counter-defendant's ("plaintiff") duty to defend defendants against Lanham Act and related state law claims.  Defendants were sued by third party Acushnet which accused defendants of willful and intentional violation of Acushnet's marks related to its Titlest Pro VI golf ball based upon defendants' alleged marketing of counterfeit golf balls.  Defendants sought defense and indemnification from plaintiff, their insurer.  Defendants' insurance policy covered, among other things, defendants' infringement of third party marks or copyrights in defendants' advertising so long as the infringement was not done with knowledge or intent of the infringement.  Although the Complaint charges defendants' with willful and intentional violations of the marks, the Lanham Act provides claims without regard to intent.  Because not all of Acushnet's claims require intent, plaintiff has a duty to defend defendants' against the suit.  The Court did note, however, that should Acushnet prove that defendants' acts were willful and intentional, plaintiff would have no duty to indemnify.

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Bergt v. McDougal Littell, No. 06 C 4645, 2006 WL 3782919 (N.D. Ill. Dec. 21, 2006) (Lefkow, J.).

Judge Lefkow denied defendants' motion to dismiss plaintiff's copyright and fraud case which alleged that defendants' use of plaintiff's copyrighted painting "Primavera" in textbooks exceeded the number of copies allowed by the parties' license agreement.  Defendants sent plaintiff, via his agent ("Agent"), a request to use copies of his painting in a run of no more than 40,000 textbooks.  Agent responded shortly thereafter with a document labeled "Invoice" which granted defendants the right to use Primavera in textbooks without specifying any limitations, for example limiting use to the run of 40,000 textbooks as per defendants' initial request.  Defendants argued that Agent's letter was a counteroffer which changed the terms of the parties' license.  But the Court held that defendants' initial letter, specifying the price and the limited run, was an offer and that Agent's letter was the acceptance.  The Court reasoned that Agent's letter did not require a response, suggesting it was an acceptance, and that defendants could not have reasonably believed that Agent was modifying the offer to allow unlimited use of Primavera, instead of a limit of 40,000 copies, without increasing the $200 license fee.

There is also what appears to be a similar case, although brought by a different plaintiff, addressed in this post.

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Avery Dennison Corp. v. Naimo, No. 06 C 3390, 2006 WL 3343762 (N.D. Ill. Nov. 16, 2006) (Grady, J.).

In this trade secret dispute, Judge Grady dismissed plaintiff's breach of contract claim alleging defendant's breach of the parties' Employment Agreement because the Separation Agreement the parties subsequently signed included an integration clause.  When defendant began his employment with plaintiff he signed an Employment Agreement which required that, among other things, defendant not compete with plaintiff for twelve months after his employment ended and that defendant never use plaintiff's proprietary information for the benefit of anyone besides plaintiff.  When defendant later stopped working for plaintiff, the parties signed a Separation Agreement with a similar proprietary information clause and a strong integration clause, but apparently without a similar non-compete clause. 

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