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

United Image Print Group, LLC v. Mullen, No. 07 C 6720, 2008 WL 62205 (N.D. Ill. Jan. 4, 2008) (Kocoras, J.).

Judge Kocoras held that the Court lacked sufficient information to rule on preemption of plaintiff's Illinois Computer Tampering Act and breach of fiduciary duty claims by the Illinois Trade Secret Act. Both claims were based upon defendant's alleged misappropriation of allegedly confidential information before defendant resigned and took a position with a competitor. The Court reasoned that confidential information could include both trade secrets and protected information that did not rise to the level of trade secrets. Because information outside of the complaint was required to decide the scope of the claims, preemption could not be resolved in defendant's Fed. R. Civ. P. 12(b)(6) motion to dismiss.

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CardioNet, Inc. v. LifeWatch Corp., No. 07 C 6625, 2008 WL 567031 (N.D. Ill. Feb. 27, 2008) (Conlon, J.).

Judge Conlon granted in part counter-defendant CardioNet’s Fed. R. Civ. P. 12(b)(6) motion to dismiss counter-plaintiffs’ (collectively, “LifeWatch”) Lanham Act false advertising and related Uniform Deceptive Trade Practices Act (“UDTPA”) and Consumer Fraud and Deceptive Trade Practices Act (“CFA”) claims. LifeWatch alleged that CardioNet improperly acquired one of LifeWatch’s prescription-only heart monitoring devices, the Life Star ACT. The device monitors a person’s heart rate and uses a cell phone to transmit irregular readings to a monitoring station. CardioNet allegedly inspected and tested the device. Then based on its tests, CardioNet allegedly misappropriated LifeWatch’s trade secrets and intentionally made false and misleading statements about the LifeStar ACT in its advertising. LifeWatch’s Lanham Act, UDTPA and CFA claims were all based upon CardioNet’s allegedly false advertising.

LifeWatch identified the allegedly false statements with specificity, but because LifeWatch did not plead who made them or when and where they were made, LifeWatch’s claims did not meet Rule 9(b) heightened pleading standards. The Court, therefore, dismissed the Lanham Act, UDTPA and CFA claims.

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CardioNet, Inc. v. LifeWatch Corp., No. 07 C 6625, 2008 WL 567223 (N.D. Ill. Feb. 27, 2008) (Conlon, J.).

Judge Conlon granted in part defendants’ (collectively, “LifeWatch”) motion to dismiss plaintiff CardioNet’s state law claims as preempted by the Illinois Trade Secrets Act (“ITSA”). CardioNet alleged that LifeWatch improperly obtained one of CardioNet’s prescription-only MCOT remote heart monitoring devices by getting a false prescription for it. LifeWatch then tested the MCOT by, among other things, simulating a heart attack. Based upon the tests, LifeWatch gathered allegedly trade secret information from the MCOT.

The Court held that CardioNet’s conversion claim was preempted to the extent it was based upon gathering trade secret information from the MCOT because conversion of trade secrets is a restatement of misappropriation. But the claim was not preempted as it related to conversion of the MCOT device.

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Krueger v. TradeGuider Sys., LLC, No. 07 C 6261, Slip Op. (N.D. Ill. Nov. 27, 2007) (Kendall, J.)*

Judge Kendall granted plaintiff Todd Krueger’s (“Krueger”) motion to remand this breach of Employment Agreement (“Agreement”) suit to Cook County Circuit Court. Krueger originally filed his Complaint in Cook County Circuit Court. Defendants (collectively “TradeGuider”) remanded the case to the Northern District, arguing that Krueger’s claim for breach of the Agreement, which governed his employment as TradeGuider’s CEO, was a federal copyright claim. TradeGuider reasoned that determining whether it had breached the Agreement required a determination of whether Krueger’s works were works for hire. The Court cited the Seventh Circuit’s narrow view of copyright preemption for contract claims – generally a contract involving copyrights is of a different scope than the copyrights because the contract is a private agreement between parties and a copyright is a right against the world. The alleged breach, therefore, was not essentially a copyright claim because it included rights beyond the copyright. Additionally, the Court reasoned that there was no evidence that suggested any copyright law would have to be interpreted to construe the contract or rule upon the alleged breach.

*Click here for a copy of the opinion.

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RTC Indus., Inc. v. Haddon, No. 06 C 5734, 2007 WL 2743583 (N.D. Ill. Sep. 10, 2007) (Grady, J.).

Judge Grady denied defendant’s Fed. R. Civ. P. 12(c) motion for judgment on the pleadings. The Court held that plaintiff’s breach of fiduciary duty claim was not preempted by the Illinois Trade Secret Act. Plaintiff alleged that defendant (plaintiff’s employee) violated his fiduciary duty to plaintiff (his employer at the time) by disclosing to third party DCI Marketing (“DCI”) that a DCI employee had accepted an offer to work for plaintiff. The Court held that the alleged acts would breach defendant’s fiduciary duty regardless of whether the hiring decision was confidential. The breach of fiduciary duty claim, therefore, was not preempted.

The Court also held that the non-complete clause defendant signed as a condition of employment was enforceable even though it lacked a geographic restriction. There was a two year time restriction and an “activity” restriction - defendant was only prevented from taking a job with a competitor that would either result in actual or threatened use of plaintiff’s confidential information.

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United States Gypsum Co. v. LaFarge N. Am., Inc., No. 03 C 6027, 2007 WL 2091020 (N.D. Ill. Jul. 18, 2007) (Hart, J.).

Judge Hart granted in part defendants motion to enforce the Court’s order and denied plaintiff’s motion to compel discovery. The Court previously ruled upon the parties’ cross-motions for summary judgment, holding that plaintiff’s state law claims were not preempted by the Illinois Trade Secrets Act, but significantly limiting the claims and removing some defendants (you can read more in the Blog’s archives). Defendant sought reconsideration of the Court’s preemption ruling. But the Court held that the motion, filed three months after the Court’s opinion, was untimely and that it presented no new arguments. The Court granted defendant’s request that plaintiff be limited to the trade secrets it identified during fact discovery and prior to summary judgment briefing.

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Vaughn v. Kelly, No. 06 C 6427, Slip Op. (N.D. Ill. Jul. 16, 2007) (Manning, J.).

Judge Manning denied defendant R. Kelly’s (“Kelly”) motion to dismiss plaintiff Vaughn’s case arguing that Vaughn’s state law claims were preempted by copyright law. The Court previously dismissed Vaughn’s motion to remand the case to state court, holding that his unjust enrichment claim sounded in copyright law and giving Vaughn time to amend his complaint to remove the copyright elements (you can read more about the case in the Blog’s archives). Kelly now moves to dismiss the amended complaint. As in the original complaint, Vaughn alleged that he introduced Kelly to stepping, taught him how to step, helped him write a stepping-based song entitled "Step in the Name of Love," and collaborated with Kelly to develop a video for the song.  The Court held that Vaughn’s unjust enrichment claim was preempted by copyright law, but granted Vaughn leave to refile the claim as one for copyright infringement. The Court refused to consider Vaughn’s proposed amended unjust enrichment claim because Vaughn failed to amend the unjust enrichment claim when the Court first offered Vaughn a chance to amend and because it is improper to consider amendments as part of a motion to dismiss. The Court held that Vaughn’s breach of oral contract claim was not preempted by copyright law because it could be for less than co-ownership of the copyright, which would be preempted. 

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Abanco Int'l., Inc. v. Guestlogix Inc., __ F. Supp.2d __, 2007 WL 1492928 (N.D. Ill. May 21, 2007) (Bucklo, J.).

Judge Bucklo dismissed plaintiff's conspiracy claim but not its unjust enrichment and tortious interference claims, holding that the former was preempted by the Illinois Trade Secret Act ("ITSA").  Plaintiff alleged that it entered a business relationship with defendant, supported by a confidentiality agreement (the "Agreement").  The parties were working together to supply airlines with electronic "buy-on-board" systems that would allow passengers to pay for drinks and other in-flight purchases with credit cards.  Plaintiff alleged that, based upon the Agreement, it provided defendant confidential, trade secret information about its buy-on-board system (the "Abanco System") and that with defendant's support, plaintiff entered negotiations to provide the Abanco System to third party American Airlines.  But after the parties' relationship soured, American Airlines allegedly ended negotiations with plaintiff and entered an agreement with defendant for a buy-on-board system.  Plaintiff then filed suit against defendant alleging trade secret misappropriation, breach of the Agreement, unjust enrichment, tortious interference and conspiracy.  The Court held that plaintiff's unjust enrichment and tortious interference claims were not preempted by ITSA because they were based upon information protected by the Agreement in addition to plaintiff's alleged trade secrets.  Specifically, plaintiff alleged that it gave defendant information "including information that was confidential, non-public, and proprietary and which constituted Abanco trade secrets." (emphasis added by the Court).  But plaintiff's conspiracy claim was based solely upon defendant's and American Airline's use of information obtained from Abanco "constitut[ing] trade secrets belonging to Abanco."  Because Abanco did not claim the conspiracy used any information other than its trade secrets, the conspiracy claim was preempted.

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Stafford Trading, Inc. v. Lovely, No. 05 C 4868, 2007 WL 1512417 (N.D. Ill. May 21, 2007) (Coar, J.).

Judge Coar granted in part declaratory judgment plaintiffs' (collectively "Stafford") motion to dismiss and denied Stafford's summary judgment motion.  The Court dismissed defendants' fraud and unjust enrichment counterclaims after holding that they were preempted by the Illinois Trade Secret Act.  The Court also dismissed defendants' fraudulent concealment.  The material fact that Stafford allegedly failed to disclose was the opinion that Stafford owned the RIVAS electronic options trading platform outright.  But the Court held that an allegedly withheld opinion could not support a fraudulent concealment claim.

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Vaughn v. Kelly, No. 06 C 6427, 2007 WL 804694 (N.D. Ill. Mar. 13, 2007) (Manning, J.).

Judge Manning denied plaintiff Vaughn's motion to remand his case to state court, but gave plaintiff leave to file an amended complaint.  Vaughn sued defendant R. Kelly ("Kelly") in Illinois state court alleging breach of contract, fraud and unjust enrichment, among other things.  Vaughn alleged that he introduced Kelly to stepping, taught him how to step, helped him write a stepping-based song entitled "Step in the Name of Love," and collaborated with Kelly to develop a video for the song.  Kelly had the case removed to the Northern District based upon an argument that the claims sound in copyright law.  In his motion to remand, Vaughn argued that his case was not about copyright, but about Kelly's alleged theft of his uncopyrightable ideas and the breach of the contract governing the exchange of those ideas.  The Court noted that Vaughn's fraud and breach of oral contract claims were close questions, but held that Vaughn's unjust enrichment claim sounded in copyright.  The unjust enrichment was based upon fixed works -- Kelly's song and video -- and the unjust enrichment claim is equivalent to allegations of Kelly's infringement of Vaughn and Kelly's alleged joint work.  The Court acknowledged that Vaughn was likely to amend his complaint to force remand and gave Vaughn a deadline for filing any such amended complaint.

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RRK Holding Co. v. Sears, Roebuck & Co., No. 04 C 3944, 2007 WL 495254 (N.D. Ill. Feb. 14, 2007) (Coar, J.).

Judge Coar denied defendant summary judgment on plaintiff’s trade secret and breach of contract (nondisclosure agreement) claims. The Court also granted defendant summary judgment on plaintiff’s unjust enrichment claim holding that because it was based upon the trade secret misappropriation allegations it was preempted by the Illinois Trade Secret Act (“ITSA”). Plaintiff alleged that, pursuant to a nondisclosure agreement, it disclosed to defendant its plans for its “combination tool” which consisted of a rotary saw, also called a spiral saw, which could be converted into a plunge router. But after negotiations broke down over price, defendant allegedly disclosed the idea to its Canadian subsidiary, which then allegedly disclosed the idea to another party, Choon Nang Electrical Appliance Manufacturing Ltd. (“Choon Nang”), that obtained a British design patent on the combination tool and produced it for defendant. 

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QSRSoft, Inc. v. Restaurant Tech., Inc., No. 06 C 2734, 2006 WL 3196928 (N.D. Ill. Nov. 2, 2006) (Der-Yeghiayan, J.).

In this trade secret and copyright dispute, Judge Der-Yeghiayan granted the individual defendants' motion to dismiss plaintiff's conversion claim because it was preempted by plaintiff's Illinois Trade Secrets Act claim.  The Court, however, denied the remainder of the motion.  The remainder of the challenged the sufficiency of the pleadings generally, as well as each count specifically.  The individual defendants argued that each of the counts was not sufficiently plead because plaintiff failed to specifically identify each defendant by name, instead they were collectively referred to in the allegations as "defendants."  The Court held that the general references to the "defendants" were more than sufficient to put defendants on notice of the alleged acts.

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Conditioned Ocular Enhancement, Inc. v. Bonaventura, 05 C 3153, 2006 WL 2982140 (N.D. Ill. Oct. 17, 2006) (Zagel, J.).

Judge Zagel held that Illinois's absolute litigation privilege, which protects communications leading up to a litigation, did not protect a patentholder's cease and desist letters because, in addition to federal preemption issues, the Illinois privilege is limited to defamation and false light claims.  Plaintiff alleged that defendant was practicing its patented vision training services.  In addition to filing suit, plaintiff also sent certain of defendant's customers cease and desist letters warning that defendant was unlawfully using plaintiff's patented vision training methods.  Defendant filed several Lanham Act and tortious interference counterclaims alleging that plaintiff's cease and desist letters were sent in bad faith.

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Richmond v. National Inst. of Certified Estate Planners, No. 06 C 1032, 2006 WL 2375454 (N. D. Ill. Aug. 15, 2006) (Manning, J.).

This is a trademark action regarding defendants' use of the term "certified estate planner" ("CEP").  In addition to trademark claims, plaintiff also brought claims for civil conspiracy, conversion and trespass to chattel.  Plaintiff alleged that defendants' use of the CEP mark constituted conversion and trespass to chattel.  Plaintiff also alleged that the individual defendants engaged in civil conspiracy by taking the CEP mark for the benefit of NICEP and for their own individual uses.

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