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Chicago IP Litigation

Tracking Northern District of Illinois IP Cases

Court May Not Maintain Jurisdiction After Dismissal With Prejudice

Posted in Jurisdiction

Digital Design Corp. v. Kostan, No. 11 C 6243, Slip Op. (N.D. Ill. Oct. 7, 2013) (Holderman, J.).

Judge Holderman denied the parties’ joint motion for entry of a consent judgment.  The Court previously granted the parties agreed stipulation of dismissal and dismissed the parties’ claims with prejudice.  Seventh Circuit precedent prevents district courts from retaining jurisdiction after dismissing with prejudice.  Had the parties wanted a consent judgment entered they should have dismissed without prejudice or sought the consent judgment before dismissing with prejudice.

No Irreparable Harm Where Plaintiff Delays Seeking Injunction

Posted in Uncategorized

Real-Time Reporters, P.C. v. Sonntag Reporting Servs., Ltd., No. 13 C 5348, Slip Op. (N.D. Ill. Der-Yeghiayan, J.).

Judge Der-Yeghiayan denied plaintiff Real-Time Reporters’ (“RTR”) preliminary injunction motion in this Lanham Act matter involving RTR’s REAL-TIME REPORTERS trademark.  Defendant Sontag Reporting Services (“SRS”) use of the name “Chicago-area Realtime Reporters” alleged infringed RTR’s REAL-TIME REPORTERS trademark. 

RTR’s slow actions belied its claims of irreparable harm.  RTR allegedly learned of SRS’s use of the mark in April 2013, but did not sue until late July 2013, did not seek a temporary restraining order and waited almost a month before filing the instant motion for preliminary injunction. 

The Court also held that in light of the Supreme Court’s eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) decision, it was unclear that the presumption of irreparable harm in trademark cases remained. 

Regarding RTR’s likelihood of success, the Court held that RTR’s REAL-TIME REPORTERS mark appeared to be generic.

Balancing the harms favored SRS because it would be harmed by an injunction, while RTR had already shown it would not be significantly harmed by its delay in filing suit and its delay in seeking a preliminary injunction.

No Irreparable Harm Where Plaintiff Delays Seeking Injunction

Posted in Damages

Real-Time Reporters, P.C. v. Sonntag Reporting Servs., Ltd., No. 13 C 5348, Slip Op. (N.D. Ill. Der-Yeghiayan, J.).

Judge Der-Yeghiayan denied plaintiff Real-Time Reporters’ (“RTR”) preliminary injunction motion in this Lanham Act matter involving RTR’s REAL-TIME REPORTERS trademark.  Defendant Sontag Reporting Services (“SRS”) use of the name “Chicago-area Realtime Reporters” alleged infringed RTR’s REAL-TIME REPORTERS trademark. 

RTR’s slow actions belied its claims of irreparable harm.  RTR allegedly learned of SRS’s use of the mark in April 2013, but did not sue until late July 2013, did not seek a temporary restraining order and waited almost a month before filing the instant motion for preliminary injunction. 

The Court also held that in light of the Supreme Court’s eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) decision, it was unclear that the presumption of irreparable harm in trademark cases remained. 

Regarding RTR’s likelihood of success, the Court held that RTR’s REAL-TIME REPORTERS mark appeared to be generic.

Balancing the harms favored SRS because it would be harmed by an injunction, while RTR had already shown it would not be significantly harmed by its delay in filing suit and its delay in seeking a preliminary injunction.

Similar Claims Do Not Alone Warrant Joinder

Posted in Pleading Requirements

Slep-Tone Ent. Corp. v. Roberto, No. 12 C 5750, Slip Op. (N.D. Ill. Oct. 22, 2013) (Darrah, J.).

Judge Darrah denied defendants’ (collectively “Arrowsound”) Fed. R. Civ. P. 12(b)(6) motion to dismiss, but granted Arrowsound’s motion to sever.  The Court, therefore, dismissed Arrowsound without prejudice for improper joinder in this trademark dispute regarding SOUND CHOICE karaoke discs. 

Plaintiff Slep-Tone sufficiently pled its trademark claims by pleading that it owned the SOUND CHOICE marks and that defendants display the marks in advertising to garner the “quality and superiority” associated with SOUND CHOICE.  Slep-Tone similarly sufficiently pled Lanham Act unfair competition by alleging that defendants used counterfeit karaoke discs in ways likely to confuse customers and that Slep-Tone was harmed by these actions. 

Fed. R. Civ. P. 20(a)(2) joinder of claims requires that joint or several relief is sought against defendants arising from the same transaction and that there be a common question of law or fact.  Similarlity of claims is not enough.  In this case, Arrowhead and the other defendants were all accused of similar acts — using counterfeit karaoke discs — but otherwise the parties were unrelated.  The Court, therefore, dismissed Arrowhead with leave to refile a separate case against Arrowhead.

Limiting Interrogatory Language Allows Limited Response

Posted in Discovery

Hubbell Indus. Controls, Inc. v. Electro Power Sys. Of Utah, Inc., No. 12 C 8609, Slip Op. (N.D. Ill. Oct. 17, 2013) (St. Eve., J.).

Judge St. Eve granted in part defendant Electro Power’s motion to compel further interrogatory responses and denied Electro Power’s motion to compel production of unredacted attorney billing records in this Lanham Act case involving Electro Power’s alleged improper reproduction of components of plaintiff Hubbell’s braking contactors and allegedly passing them off as genuine Hubbell parts.

Hubbell listed twenty one elements of its trade dress.  For all but three, Hubbell provided detail regarding the aspects that were part of the trade dress.  Those eighteen elements were sufficiently described and no further interrogatory responses was required.  For the other three — armature assembly, stator assembly and arc shield assembly — Hubbell was ordered to supplement its interrogatory response to specifically identify the aspects that were part of the trade dress.  The Court also struck the phrase “include[ing], but not limited to” from Hubbell’s responses.  Hubbell was required to identify all elements of its alleged trade dress.

As to the other eighteen elements of Hubbell’s alleged trade dress, Hubbell’s descriptions were not “amorphous,” “vague” or “unclear” as Electro Power asserted.

Hubbell’s response regarding its date of first use of its trade dress was deficient in two respects.  First, although Hubbell had three distinct trade dresses, it only provided one date of first use.  If all three share the same date, Hubbell must state that.  Otherwise, three dates should be provided.  Hubbell also failed to respond to the request for the circumstances of its first use and any documents evidencing the use.

The Court also denied Electro Power’s motion to compel unredacted attorney’s bills.  While Hubbell sought damages in the amount of certain attorney’s fees, the parties failed to brief whether unredacted bills were required to decide fees pursuant to the Lanham Act.  The motion failed, however, for a more basic reason.  Electro Power’s interrogatory only seeks documents upon which Hubbell intends to rely.  To the extent that Hubbell does not intent to rely upon unredacted bills, it need not produce them.  The Court, however, gave Electro Power the opportunity to request additional documents on the limited issue of Hubbell’s fees damages.

BitTorrent “Swarm” Must be Related in Time to be Joined in One Action

Posted in Discovery

Malibu Media, LLC v. Does 1-68, No. 12 C 6675, Slip Op. (N.D. Ill. Sep. 27, 2013) (Lee, J.).

Malibu Media, LLC v. Does 1-42, No. 12 C 6677, Slip Op. (N.D. Ill. Sep. 27, 2013) (Lee, J.).

Judge Lee granted various Doe defendants motion to sever their cases as unrelated, denied motions to quash subpoenas to the Doe’s ISPs and allowed Does to proceed anonymously at least through discovery in this BitTorrent copyright case.  The Court handled the two cases, both by plaintiff Malibu Media, in a single opinion because of the similarity of the various Does’ motions to quash subpoenas to their respective ISPs and/or to sever the cases of the various Does

Considering the motions to sever, the Court noted that the Seventh Circuit had not ruled on whether alleged members of a single BitTorrent “swarm” could be combined in a single suit, even if there are no allegations that the Does were a part of the swarm at or about the same time.  Although district courts had decided the issue both ways, the Court, citing a Judge Kendall decision (Malibu Media, LLC v. Reynolds, No. 123 C 6672, 2013 WL 870618, at *10 (N.D. Ill. Mar. 7, 2013), held that the better approach was requiring that Does have been part of the same swarm at or about the same time.  The Court also held that Malibu Media’s allegation that each Doe had downloaded the same file containing one element of the copyrighted work was not sufficient to avoid severing, without an allegation regarding the timing of the Does’ alleged participation in the swarm.  Because Malibu Media had not alleged that the Does were part of the same swarm at “roughly” the same time, the Court severed the cases against each remaining Doe.

The Court denied a motion to quash an ISP subpoena based upon the Doe’s right to privacy in its personal information provided to the ISP.  The Doe gave up any right to privacy in its personal information as to the ISP by providing its personal information to the ISP during registration.

While every party accused of downloading pornographic material did not necessarily have a right to proceed anonymously, the Court balanced that against the possibility that the ISP address owner did not necessarily do the accused downloading and allowed the Doe defendant to proceed anonymously at least through discovery.  Additionally, Malibu Media did not object to the Doe proceeding anonymously, as long as Malibu Media could be made aware of the Doe’s identity, which the Court held that it would.

Benefits of Parallel District Court Litigation and Patent Office Review

Posted in Uncategorized

I wrote this article for IP Law360.  I am cross-posting it here with permission — thank you Law360 — because inter partes review (“IPR”) is increasingly a valuable strategy for patent defendants in Chicago, as it is for defendnats across the country.

Inter partes review has become a popular, powerful tool for patent defendants. In many cases, it allows the defendant to get the expensive district court litigation stayed in favor of the Patent Trial and Appeal Board’s more focused and more economical validity review. The IPR proceeding must be completed within 12 months of the PTAB instituting the IPR, with a possible six-month extension for cause. That is half, or less, the lifespan of a typical district court litigation, and the cost is far less than half of defending a patent litigation.

The statistics show that most, but not all, district courts stay related litigation in the face of an IPR, particularly after an IPR is instituted. District courts have granted stays approximately 72 percent of the times they are sought. So, most litigants will get a stay, but 28 percent will be left with parallel district court and PTAB proceedings.

You can often confidently predict whether your stay will be granted based upon your judge’s history with stay motions. But even if your judge typically grants a stay pending an IPR, there is always some risk that the judge denies the stay in your case because of the particular facts of your case or a changing philosophy. So, when considering an IPR, it is important to consider whether the advantages from parallel PTAB and district court proceedings outweigh the risks, typically the added cost. Here are several benefits to adding a parallel IPR to your district court litigation:

1. Early Claim Construction

The PTAB’s decision instituting an IPR comes with an initial claim construction ruling. It is not the PTAB’s final claim construction, and it is not controlling on the district court. In fact, even the final PTAB claim construction is not binding upon the district, at least, because the PTAB’s claim construction standard — the broadest reasonable construction — is broader than the district court’s ordinary and customary meaning standard. But a noncontrolling claim construction is still powerful.

Additionally, the PTAB’s administrative law judges have uniformly excellent credentials and experience. That generally has led to claim constructions that evidence a deep understanding of the technology and the relevant case law. So, even if they may be broader than the appropriate district court construction, they are likely to be clear and true to the technology. So, if you are confident in your claim construction positions, particularly where you have two or three potentially dispositive arguments that are well supported by the intrinsic and extrinsic evidence, the PTAB’s initial claim construction may be exceptionally valuable.

Of course, the PTAB’s constructions do not bind the district court, but any litigator who has been in a later filed patent case knows that it is very difficult to argue against a non-controlling, prior construction, even when a different court or judge issued the construction. So, both parties are forced to argue from the PTAB’s initial constructions as a starting point, as opposed to being able to argue for any position they want. That can be a powerful tool to focus the claim construction process. Finally, while you may likely get a broader construction than you would from the district court, that at least opens up invalidity arguments for you and in many cases it may not matter where you believe even a broad construction will prove that you do not infringe.

Finally, in many courts you may get to the conclusion of the IPR process and the PTAB’s final claim constructions, which still are not binding upon the district court, but necessarily carry more weight than the initial constructions.

2. Fees

Parallel proceedings necessarily add cost for both parties, but it can often be especially painful for plaintiffs being represented on contingent fee agreements. Generally, contingent fee counsel does not want to handle PTAB proceedings on a contingent fee because there is no direct monetary upside to IPRs. Of course, more and more plaintiff’s counsel are working possible IPRs into their fee arrangements, but it remains an added cost.

Furthermore, while the PTAB has been relatively liberal in granting nonpatent barred litigation counsel pro hac vice admission, the PTAB still requires that a party’s lead counsel be patent barred. So, if your opponent’s counsel does not have any registered patent attorneys, the IPR adds extra fees for the counsel that must be hired to lead the IPR. Regardless of the patent holder’s attorney’s fee arrangement, dual proceedings add time and complexity to the patent holder’s case. There is a cost to someone in the extra time, whether or not the plaintiff pays it directly.

3. Increased Risk

Most patent litigation is settled because of a combination of high costs and significant uncertainty in the outcome. When faced with more than $1 million in attorneys fees and a risk, even a small one, of losing a seven- or eight-figure sum at trial, it is often hard for an accused infringer to stay in a suit just because they are confident that they do not infringe and/or that the asserted patents are invalid. Typically, the plaintiff does not have a similar risk profile. There is certainly a cost to prosecuting a patent litigation, but it is often born by counsel in the form of a contingent fee. Especially in nonpracticing entity cases, defendants have very few opportunities to create counter-balancing risk for the plaintiff. Plaintiffs know that because invalidity and inequitable conduct are fact-intensive and generally battles of experts, they are hard to win on summary judgment.

That means the defendant often has to take those defenses to trial in order to win, along with all of the expense of litigating a case through trial. IPRs, however, are different. They are faster, as detailed above, promising a ruling within one year of the IPR’s institution. And the PTAB has routinely invalidated the challenged claims. As of early this year, approximately 84 percent of IPR petitions are being instituted. Of those cases, 264 out of 274 challenged claims that went to trial were invalidated — more than 95 percent.

Those are staggering numbers, which is likely what has led some in the plaintiff’s bar to call the PTAB judicial panels “roving patent death squads.” Of course, sophisticated plaintiffs are aware of these statistics and are resolving cases that include IPRs quickly. One indication of this is that, the 41 percent of IPRs settle before the PTAB issues a decision regarding institution of the proceedings, indicating that seeking an IPR is strong leverage for a patent defendant.

While virtually every patent defendant that seeks an IPR would prefer that their district court litigation be stayed pending the IPR, there is real value in adding an IPR proceeding to your district court litigation, even without a stay.

CLE: 12th Annual Rocky Mountain Intellectual Property & Technology Institute

Posted in Legal Seminars

At the end of this month, I will be heading to the Colorado Rockies for the Annual Rocky Mountain IP & Technology Institute.  It will be my fourth year in a row attending and presenting at the Institute, which is consistently one of the two best CLE programs that I attend.  I will be speaking on a panel about “Understanding the Characters of ‘Troll Land’ for Non-Patent Attorneys.” My co-panelists are:

We will be discussing, among other things, software patents, indemnity and the anatomy of a claim.  I expect it to be a lively and interesting discussion.  And if that is not enough, come for the judges panel, which includes:

  • Judge Jimmie V. Reyna,  U.S. Court of Appeals for the Federal Circuit;
  • Judge Phillip A. Brimmer, U.S. District Court for the District of Colorado;
  • Judge Faith S. Hochberg, U.S. District Court for the District of New Jersey;
  • Judge Barbara M.G. Lynn, U.S. District Court for the Northern District of Texas;
  • Judge Leonard Davis, U.S. District Court for the Eastern District of Texas; and
  • Judge Andrew Hartman, 20th Judicial District Court, Colorado

The Institute is May 29-30 in Denver and features an outstanding faculty and agenda with four different program tracks. Check out the complete agenda on the Institute’s website, and register here. I look forward to seeing you there.

Late Damages Theory Allowed Based Upon Lack of Prejudice

Posted in Summary Judgment, Trial

NanoChem Sol’ns, Inc. v. Global Green Prods., LLC., No. 10 C 5686, Slip Op. (N.D. Ill. Sep. 10, 2013) (Hart, Sen. J.).

Judge Hart denied defendants’ motion in limine to exclude plaintiff NanoChem’s late-disclosed lost profit damages analysis.  The Court also granted defendants’ motion for summary judgment as to NanoChem’s Lanham Act and Illinois state law unfair competition claims.

During discovery, NanoChem stated that it would seek a reasonable royalty for its patent claims without providing a calculation.  In response to defendant’s motion, NanoChem provided a lost profit calculation.  While the calculation was late, defendants were not prejudiced because the final pre-trial order had not been filed yet and NanoChem did not rely upon an expert.  But NanoChem was limited to the offered calculation and no other damages theories.

The Court granted defendants summary judgment as to NanoChem’s Lanham Act and Illinois unfair completion claims.  Each claim required that NanoChem prove that its A-5D mark had acquired secondary meaning.  Because NanoChem did not offer evidence supporting secondary meaning, the Court granted defendants summary judgment.

Failing to Offer Construction for Indefinite Term Can Leave a Court “at Sea”

Posted in Claim Construction

Saro Golf, Inc. v. Nike, Inc., No. 08 C 1110, Slip Op. (N.D. Ill. Sep. 9, 2013) (Chang, J.).

Judge Chang clarified the claim constructions in this patent case regarding an improved golf club head.  “Radius of curvature” was previously construed to mean “radius of a substantially circular curve of a substantial portion of the back side profile shape.”  This construction presumed that each of the heel and toe of a club head had a profile that was “circular in profile” meaning that it was largely made of a single radius.  Neither party had sought a construction limiting the profile to one composed of a single radius, nor did they address the construction at the claim construction hearing.

The Court considered the parties’ briefs and the intrinsic evidence, but could not “square” the construction with the evidence because:

  1. The single radius requirement read one of the preferred embodiments out of the claim.
  2. The construction was a “mouthful” and did not make sense grammatically within the asserted claim 7.  It is good to see courts concerned with making claims that could go to a jury more reasonable and understandable, although it may be a nearly impossible task.
  3. The prior construction was based upon the faulty premise that a radius of curvature could only be a circle.  In fact, it is a mathematical term that can be applied to any curve.

The Court, therefore, held that the Radius of Curvature was an average measure along a complex curve, and the issue was where it was measured from.  The Court ordered further briefing on the issue because neither party fully addressed it.

The Court also upheld the prior constructions of “Heel” and “Toe” of the club.  In doing so, the Court cautioned defendants to strongly consider offering alternative constructions when arguing terms were indefinite to avoid leaving the Court “at sea” should indefiniteness be denied.  The Court acknowledged that offering a construction could weaken the indefiniteness argument, but pointed out that courts regularly handle arguments in the alternative.