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

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.
 

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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.
   

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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.

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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.

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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.

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Trading Techs. Int'l., Inc. v. TradeHelm, Inc., No. 10 C. 931, Slip Op. (N.D. Ill. May 2011) (Kendall, J.).

Judge Kendall entered the parties - Trading Technologies ("TT") and TradeHelm - agreed consent order, as part of their settlement in this futures trading software - there is much more on this and related cases in the Blog's archives case. The parties agreed as follows:

1. TT's patent infringement claims as to its '999 and '056 patents were dismissed.
    
2. TradeHelm admitted infringement as to TT's '411, '768, '382 and '992 patents, but not the '056 and '999 patent-in-suit.
    
3. TradeHelm admitted validity and enforceability of the '304, '132, '411, '768, '382 and '996 patents, but again not the '056 or the '999 patents-in-suit.
    
4. TradeHelm was permanently enjoined from infringing, unless TT permitted it, the '132, '304, '411, '768, '382 and '996 patents. But again, not the '056 and '999 patents-in-suit.
    

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Several significant trends are developing as I read this year's N. D Illinois patent decisions. The trends are largely, although not all, Chicago-specific. And they appear to be largely influenced by the not-so-new Local Patent Rules.

1. Faster Settlement Times. Patent cases are settling faster. While the economy may still be playing a role, I believe that the LPR 2 initial contentions are driving early settlements. When parties take them seriously and make their best early cases, it is causing opponents to reconsider their positions and driving earlier settlements. Maybe more importantly, armed with more substantive analysis up-front, parties are talking more and more settlement discussions lead to more settlements. No doubt this is one of the impacts that the Court expected when it developed the LPR 2 initial contentions.
    
2. False Patent Marking is Dying. In early 2010, the Northern District was among the top three districts for false patent marking filings, in particular those cases brought by marking trolls (non-competitors in the defendant's industry). Unlike the Eastern District of Texas (which applied Rule 8 notice pleading to the intent requirement), the Northern District was split with many judges applying Rule 9 heightened pleading and a few applying Rule 8 notice pleading. That slowed the flow of cases to a degree, but what seems to have finished them is a combination of the Federal Circuit's BP Lubricants decision (requiring Rule 9(b) pleading for the intent requirement) and a decision this spring holding that corporate intent was not recognized in the Seventh Circuit, so the required intent must be shown in at least one employee, officer or agent of the corporation.
    
3. LR 56.1 Summary Judgment Decisions are on the Decline. There seem to be fewer decisions granting or denying summary judgment for failure to comply with the Local Rule 56.1 requirements for statements of material facts. Having tracked five years worth of intellectual property summary judgment decisions chastising parties for failure to comply with Local Rule 56.1, I cannot imagine that there is a trend toward strict compliance with Local Rule 56.1. Furthermore, this does not appear to be true in the trademark, copyright or trade secret realms. So, my suspicion is that this trend is really about fewer summary judgment decisions. And there are fewer summary judgment decisions for at least two reasons: 1) earlier settlement which avoids summary judgment motions; and 2) the Local Patent Rule 6.1 comment that judges have discretion to delay "early" summary judgment motions until the end of the discovery and the LPR 1.1 authority to delay motions raising claim construction issues until after the claim construction opinion issues.
    

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Heathcote Holdings Corp. v. Learning Curve Brands, Inc., No. 10 C 7799 (Kendall, J.).

I generally write about opinions issued by the Northern District, but the parties in this case recently filed their false patent marking settlement agreement. Because of the extreme interest in false marking cases over the last eighteen months, I am posting about the settlement. Plaintiff accused defendants of falsely marking various Thomas the Tank Engine toy trains and related products with two patents. In one instance, the alleged false marking appears to be based upon the omission of one number from the patent number -- it read U.S. Patent No. 7,178,68 instead of 7,178,685.

Here are the highlights of the agreement:

• Defendants agreed to pay $85,000, with half mailed for overnight delivery directly to the Department of Justice.
   
• The agreement was subject to approval by Department of Justice's Director of Intellectual Property Staff before becoming final, which was given with minor edits.
   
• The agreement released all false marking claims related to the two patents at issue, but did not attempt to waive any possible false marking by defendant as of the date of the agreement. Of course, it may be that the two identified patents were either defendants' only patents or the only patents that defendant had marked products with. So, this term may effectively be a complete release of all possible false marking claims.
   
• Neither party admits or denies the constitutionality of the false marking statute.
   

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RNA Corp. v. The Procter & Gamble Co., No. 08 C 5953, Slip Op. (N.D. Ill. Oct. 21, 2010) (Zagel, J.).

Judge Zagel held that defendant Procter & Gamble's ("P&G") intellectual property rights could not be held infringed based upon the available evidence and held that on the available record, the Court could not grant attorney's fees because a prevailing party could not be determined, in this Lanham Act case regarding P&G's alleged trademarks and trade dress in its Herbal Essence hydrating shampoos and conditioners. Through a series of settlement conferences, the parties agreed to the scope of a preliminary and then a permanent injunction, but were unable to determine money damages issues. The parties, therefore, agreed to submit the remaining issues to trial by the Court on the papers. The Court, therefore, ruled based upon the parties' written submissions. In my experience, this is a relatively unique way to resolve and especially to try a case in federal court. And it is an excellent example of how willing the Northern District bench tends to be to find cost-effective ways to resolve what are otherwise often prohibitively expensive intellectual property disputes.
 

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Allen v. Destiny's Child, No. 06 C 6606 (N.D. Ill.) (Holderman, C.J.).

As I reported earlier this week, plaintiff's copyright infringement case against Destiny's Child and its members, among others, was set for trial before Chief Judge Holderman this week.  Plaintiff alleged that defendants, including the musical group Destiny's Child and its members, infringed plaintiffs' copyrights in his song "Cater 2 U" by producing and selling Destiny's Child's song of the same name (watch the video of Destiny's Child's version on their website).  Late last week, the Sun-Times' Natasha Korecki reported (click here for the story) that the parties settled the case at the courthouse steps. A dismissal has not been filed yet, but it appears that the case is likely settled. I will post about some of the more interesting motion in limine rulings in the next week or two, as well as about any settlement-related orders that may issue.

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

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SPSS Inc. v. Nie, No. 08 C 66 (N.D. Ill.) (Darrah, Jr.).

The parties recently settled this trademark dispute shortly before trial.  For more on the parties' history and the settlement, click here for Chicago Tribune reporter and Chicago Law blogger Ameet Sachdev's reporting on the case in the Tribune, and click here for more coverage of the case in the Blog's archives.

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Earlier this week, the Northern District announced a court-wide Early Settlement Conference Program focused on reducing costs for litigants where there is potential for early settlement.  The program was generated by the Northern District magistrate judges, in particular Judge Denlow.  The plan provides that at the outset of a case, a judge can send plaintiff via ECF a "Notice to Plaintiff's Counsel of Early Settlement Program."  That Notice will require plaintiff's counsel to conduct defendant's counsel within fourteen days of receiving the Notice if defense counsel has been identified or within fourteen days of defense counsel filing an appearance, if not.    If all parties are interested in a judicial settlement conference, they will file a "Request for Early Settlement Conference."  The Request will cause a settlement conference to be scheduled before either the judge or an assigned magistrate judge.  Additionally, the parties can file a Request on their own without first receiving a Notice from a judge, if all parties want a judicial settlement conference.

It is great to see that the Northern District is creating a formal process for requesting early settlement conferences.  For the most part, my experience suggest that this program just formalizes the Northern District's standard practices.  But it is still very valuable, especially for litigants that are not as familiar with Northern District custom and practice.

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Bajer Design & Marketing, Inc. v. Base4 Group, Inc., No. 08 C 02296, Slip Op. (N.D. Ill.  Nov. 12, 2008) (Coar, J.).

Judge Coar entered the parties consent judgment, holding that defendant Base4 infringed plaintiff Bajer Design's patents and trademarks, as well as granting judgment for Bajer Design as to its related state law claims.  The Court also awarded Bajer Design damages equal to slightly more than 20% of Base4's gross sales.  Finally, the Court permanently enjoined Base4 from making, using or selling the infringing product and from using Bajer Design's POP-UPS! and POP OPEN trademarks, absent a license from Bajer Design.

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Illinois Computer Research, LLC v. Google Inc., No. 07 C 5081 (N.D. Ill.) (Pallmeyer, J.).

The parties in this case filed a Stipulation of Dismissal this week -- click here to read it.  Of course, details of the settlement were not disclosed.  But this appears to close what had been a very contentious dispute -- click here to read the Blog's coverage of the case. 

One other note about the case, I had been meaning to cover plaintiff's motion to strike some of defendant's pleadings for using variations of the term "shell corporation," arguing that the term is derogatory in a manner similar to the "patent troll" moniker.  Judge Pallmeyer ruled on the motion in a Minute Order stating that the Court would no longer use the terms, but denying the motion to strike.  Because the Minute Order does not provide much analysis and because the issue was already covered very well by Joe Mullin at The Prior Art blog -- click here to read Mullin's post -- I will not do a separate post on the motion.  But if you are interested in the historical, legal use of the term, the pleadings on the motion are an excellent information source.
 

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Mullen v. Society of Stage Directors & Choreographers, No. 06 C 6818 (N.D. Ill.) (Coar, J.).

Judge Coar dismissed this case based upon the parties' settlement in late 2007.*  Plaintiffs were the various production heads of the Chicago production of the musical “Urinetown!” (“Chicago Production”). The Chicago Production was performed pursuant to a license from Blue Dog Entertainment, LLC. Despite that license, plaintiffs each received a cease and desist letter from counsel for defendants (the heads of production of the Broadway Urinetown! production (“Broadway Production”) and their unions USA and the Society of Stage Directors & Choreographers (“SSDC”). The letter warned that plaintiffs willfully copied copyrighted aspects of the Broadway Production and attempted to pass off the Chicago Production as the award-winning Broadway Production. Defendants also held a press conference during which they publicly stated that the plaintiffs “plagiarized” the Broadway Production. Plaintiffs responded by filing suit seeking declaratory judgments that the Chicago Production did not infringe any of plaintiffs’ copyrights and that it was not Lanham Act passing off. And based upon the press conference, plaintiffs included a defamation claim.

The lesson for producers is clear.  Obtaining production rights from a publisher (such as Samuel French, Tams-Witmark, Rodgers & Hammerstein, etc.), does NOT include the right to copy all or part of the broadway, off-broadway or other original production.  It is incumbent on producers to either (a) obtain such rights separately, or (b) re-imagine the show and create a new, original production from the ground up.

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The Chicago Tribune is reporting that a trademark suit between well-known Southern California chain Roscoe's House of Chicken 'n Waffles (“Roscoe’s”) against new Chicago restaurant Rosscoe's House of Chicken and Waffles (“Rosscoe’s Chicago”) was at least partially resolved the day after it was filed when Rosscoe’sChicago agreed to change its name to Chicago's Home of Chicken and Waffles.

The restaurants had no affiliation with each other, but had numerous similarities, beyond just the names:

• Both use a cartoon chicken and a waffle as logos; and
  
• Both have drinks called "Sun Rise" and "Sunset".

Those involved in an early hearing yesterday appeared to have a sense of humor about the dispute. After the hearing, Rosscoe’s Chicago’s owner Darnell Johnson was quoted as saying “I'm happy as a chicken eating waffles."  And during the hearing, Judge Der-Yeghiayan summed up the case's status this way: "I see that both parties understand the issues and facts of life and none of the parties are waffling on the issue." Roscoe’s, however, did state that it intended to pursue damages for the period before Rosscoe’s Chicago’s name change.

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Angel Sales Inc. v. Hollywood Gadgets Inc., No. 07 C 1362, Min. Order (N.D. Ill. Nov. 19, 2007) (Denlow, Mag. J.).

Judge Denlow sanctioned defendant in the amount of plaintiff's attorney's fees and costs for preparation and attendance at a settlement conference before the Court.  Defendant's counsel attended the conference, but defendant did not appear.  In a subsequent order, the Court entered a sanctions award of $1,710 based upon plaintiff's fee affidavit.

There is not much to say about this opinion, but I included it as a practice tip and a cautionary tale.  Parties often do not want to personally attend settlement conferences before judges, or they attempt to send a representative without full settlement authority.  But that is a perilous choice.  It can result in sanctions, as here, and, at the least, it usually harms the chances of settlement.  The opposing party that took the time to be at the conference is generally offended that its time was wasted.

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Eolas Techs. Inc. v. Microsoft Corp., No. 99 C 626 (N.D. Ill.) (Pallmeyer, J.).

Speculation regarding Judge Pallmeyer's delay of the Eolas v. Microsoft trial is over.  Eolas announced that it settled with Microsoft in a letter to shareholders (available from theSeattle Post-Intelligencer).  No details of the settlement were available, but Eolas told its shareholders to expect a dividend from the settlement of up to $60-$72 per share.  Here is more coverage of the settlement:*

• Vnunet.com
  
• Todd Bishop's Microsoft Blog -- discussing the letter to Eolas shareholders.
  
• Wall Street Journal (subscription required)
  
• Patent Prospector

*  As I have explained in previous posts, I will not comment on any news from this case because of my family's connection to it, but feel free to discuss the case in the comments.

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Sitrick v. Freehand Sys., Inc., No. 02 C 1568, 2007 WL 2298362 (N.D. Ill. Aug. 3, 2007) (Guzman, J.).

Judge Guzman denied plaintiff’s motion to amend the Court’s final order dismissing plaintiff’s patent infringement case with prejudice pursuant to Fed. R. Civ. P. 41(a)(1). Plaintiff sought to amend the order to include the terms of the parties’ settlement agreement because in Lynch v. SamataMason, Inc., 279 F.3d 487, 489 (7th Cir. 2006), the Seventh Circuit held that a court only maintains ancillary jurisdiction to enforce settlement agreements if the dismissal order contains (not just by incorporation) the terms of the agreement. But the Court denied the motion for two reasons. First, the Court’s original order was a nullity because it was issued after the parties filed their unconditional stipulation of dismissal pursuant to Fed. R. Civ. P. 41(a)(1) which immediately ended the Court’s jurisdiction. Second, because the amendment was not clerical, sought within one year of entry of the order or otherwise justified, Fed. R. Civ. P. 60 prevented the Court from amending the order.

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Super Wash, Inc. v. Allen, No. 06 C 50169, Slip Op. (N.D. Ill. Apr. 20, 2007) (Mahoney, Mag. J.).

Magistrate Judge Mahoney recommended dismissing one group of defendants' ("Genecor defendants") motion to enforce the settlement agreement and the other group's ("MJR defendants") motion for judgment and sanctions.  Plaintiff alleged that defendants infringed its trademarks related to its "Super Wash" car washes, engaged in Lanham Act unfair competition, falsely designated its origins pursuant to the Uniform Deceptive Trade Practices Act and related state law claims.  Shortly after the case was filed, it was stayed to allow settlement discussions and a settlement conference was held by the Court.  At that conference the parties agree that an agreement was reached, but disagree as to its scope and power.  Plaintiff alleged that a settlement had been reached on some terms subject to resolving the remaining terms and memorializing the agreement in writing.  The defendants, on the other hand, all agree that a binding settlement was agreed to and read aloud by the Court.  Defendants agreed that they were required to:  1) pay plaintiff a sum of money; 2) stop using plaintiff's marks; 3) provide plaintiff reasonable assistance in removing the marks from the internet, phone books, etc. and 4) were not required to admit liability.  But the Genecor defendants believe the agreement stipulated that neither the settlement agreement or any discovery from the case could be used in a pending state court case.  The MJR defendants believe there was no limitations on the use of information from or about the instant case in the pending state court case.  The Court, therefore, held that it could not grant defendants' motions to enforce the agreement or enter sanctions related to it.  There was no evidence of a meeting of the minds as to the use of information from the case in the state court case, which was a material term of the agreement.  And Illinois law required a meeting of the minds on a settlement's major terms in order to have an enforceable oral settlement agreement.

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Cummins-Allison Corp. v. Glory Ltd., No. 02 C 7008 (N.D. Ill. Apr. 25, 2007) (Posner, J.).

Judge Posner, sitting by designation, entered an order dismissing all claim and counterclaims without prejudice and terminating the case, on what appeared to be near the eve of trial.  The parties filed a Stipulated Dismissal earlier in the month.  No further settlement details were readily available. 

The Court's order ended what had been a fairly protracted patent dispute between the two parties centering around patents covering money-counting and bill-sorting devices.  You can read more about prior rulings from the Northern District case in the Blog's archives.  You can read about several opinions from the related Eastern District of Texas case here and here at Michael Smith's E.D. Texas Blog.

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