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Chicago IP Litigation

Tracking Northern District of Illinois IP Cases

Rule 11 Sanctions for Failing to Purchase the Accused Product

By R. David Donoghue on Posted in Trial

Smart Options, LLC c. Jump Rope, Inc., No. 12 C 2498, Slip Op. (N.D. Ill. Feb. 11, 2013) (St. Eve, J.).

Judge St. Eve granted defendant Jump Rope’s Fed. R. Civ. P. 11 motion for sanctions in this patent case.  The Court previously granted Jump Rope summary judgment of noninfringement and plaintiff Smart Options appealed to the Federal Circuit.  As an initial matter, the Court held that while Smart Options’ notice of appeal divested the Court of jurisdiction generally, the Court retained jurisdiction over Jump Rope’s Rule 11 motion.

The Court previously held that Jump Rope did not infringe because it did not sell options to purchase items at a later date.  Instead, Jump Rope sold the immediate ability to go to the front of a line for an event or location.  Smart Options could have ascertained that inexpensively by downloading Jump Rope’s free app and purchasing a jump.  Instead, Smart Options provided generalized descriptions of it investigations, including reviewing Jump Rope’s website Terms of Use.  And Smart Options’ patent claims require paying an “option fee” to acquire an “option” to purchase something.  Furthermore, faced with Jump Rope’s explanation that it did not infringe at the outset of the case via Jump Rope’s Rule 11 motion, Smart Options continued to prosecute its case and still did not buy a “jump.”

Smart Options’ reliance upon Judge Lefkow’s constructions in a similar case did not protect Smart Options.  Lefkow did not construe “option.”  And the construction of “option” Smart Options allegedly used as part of its Rule 11 investigations was inexplicably different than the construction Smart Options advanced before the PTO and before Judge Lefkow.

The Court, therefore, granted Jump Rope’s Rule 11 motion and awarded Jump Rope its reasonable attorney’s fees and costs for defending the case and for the Rule 11 motion giving Jump Rope leave to file a petition setting out and supporting its fees and costs.

 

Parent Cannot Seek Lost Profits Based Upon Subsidiaries Sales

By R. David Donoghue on Posted in Damages

Fujitsu Ltd. v. Tellabs, Inc., No. 09 C 4530, Slip Op. (N.D. Ill. Dec. 21, 2012) (Holderman, C.J.).

Judge Holderman granted defendants (collectively “Tellabs”) summary judgment that plaintiff Fujitsu Limited was not able to seek lost profits in this patent litigation.  Fujitsu, the patent holder, did not sell a covered product in the United States (a requirement for lost profits), but its subsidiary Fujitsu Network Communications (“FNC”) did.  Fujitsu Limited argued that the profits of FNC inexorably flowed to Fujitsu Limited warranting lost profits. Fujitsu Limited argued that various payments from FNC to Fujitsu Ltd. represented profits from sales of patented goods.  The Court, however, held that the payments were for use of trademarks, employees working for FNC and part of a corporate tax planning.  Because the payments did not represent the profits from patented goods, Fujitsu Ltd. could not seek lost profits.

 

Spoliation Sanctions were Premature Until the Parties Determined Whether Evidence was Actually Destroyed

By R. David Donoghue on Posted in Discovery

Digital Design Corp. v. Kostan, No. 11 C 6243, Slip Op. (N.D. Ill. Dec. 7, 2012) (Holderman, C.J.).

Judge Holderman denied without prejudice plaintiff’s motion for sanctions based upon alleged spoliation of evidence in this copyright case involving InVision software.  Defendant acknowledged deletion of a copy of the InVision software from his harddrive which allegedly contained metadata showing when he worked on the software.  But defendant argued that a copy of the program was recovered as part of a forensic scan in a related state court case.  Plaintiff replied that the recovered copy may not have all of the relevant metadata as it originally existed and that the terms of the state court protective order did not allow plaintiff access to the recovered file.  The Court ordered that defendant waive the relevant terms of the protective order so that plaintiff could access the file for purposes of this case.  And the Court denied the motion for sanctions with leave to refile after the parties reviewed the recovered file.

 

Court has Jurisdiction Over Foreign Defendant But Service was Not Perfected

By R. David Donoghue on Posted in Jurisdiction

Bobel v. U Lighting Am., Inc., No. 12 C 6064, Slip Op. (N.D. Ill. Feb. 16, 2013) (Kennelly, J.).

Judge Kennelly granted in part defendant U Lighting Group’s (“ULG”) motion to dismiss plaintiff’s patent case for lack of personal jurisdiction and improper service.  The Court held that personal jurisdiction was proper:

  • ULG identifies co-defendant U Lighting America (“ULA”) as its US office; and
  • ULG frequently communicates with ULA.

But while the Court had personal jurisdiction, plaintiff did not properly serve ULG.  Plaintiff served ULG by personally serving ULA’s president.  Pursuant to Fed. R. CIv. P. 4(f)(3), plaintiff could have served ULG via its representative.  But plaintiff can only serve in that manner with leave of the Court, which ULG never sought. 

 

  

 

Motion to Add Counterclaim Granted Where Schedule has Ample Time for Discovery

By R. David Donoghue on Posted in Discovery

CIVIX-DDI, LLC v. Loopnet, Inc., No. 12 C4968, 7091 & 8632, Slip Op. (N.D. Ill. Feb. 6, 2013) (Holderman, C.J.).

Chief Judge Holderman granted defendant Loopnet’s Fed. R. Civ. P. 15(a)(2) motion to amend its answer and counterclaims add a counterclaim for breach of contract alleging that plaintiff CIVIX-DDI breached a license between the parties by filing this suit.  The Court held that the case schedule provided CIVIX-DDI ample time to seek discovery on Loopent’s counterclaim.  Additionally, Loopnet’s prior refusal to produce documents regarding the defense was not a reason to deny Loopnet’s motion.  Should Loopnet continue refusing to produce after entry of the counterclaim, CIVIX-DDI may move to compel the necessary information.

 

Court Stays Case Pending Reexam on Plaintiff’s Motion

By R. David Donoghue on Posted in Pleading Requirements

C&C Power, Inc. v. C&D Techs., Inc., No. 12 C 3376, Slip Op. (N.D. Ill. Feb. 11, 2013) (Dow, J.).

Judge Dow granted plaintiff’s motion to stay its patent infringement case pending an  inter partes review of the patent in suit initiated by defendants.  Defendants acknowledged that the reexam could simplify or moot the district court case and that there would be few wasted resources due to a stay because the case was in its early stages.  Defendants, however, argued that they would be prejudiced by the delay in deciding their Rule 12(b)(6) motion to dismiss.  But the Court held that plaintiff had not made “utterly fantastic factual allegations” that would subject it to dismissal.  And because defendants initiated the reexam, they could not claim prejudice from the reexam.

Law Firm Must Perform Limited Search for Use of Allegedly Infringed Scientific Papers

By R. David Donoghue on Posted in Discovery

John Wiley & Sons, Ltd. v. McDonnell Boehnen Hulbert & Berghoff LLP, No. 12 C 1446, Slip Op. (N.D. Ill. Feb. 12, 2013) (Keys, Mag. J.).

Judge Keys granted in part plaintiffs’ motion to compel discovery responses regarding use of its copyrighted articles. Plaintiffs accused defendant McDonnell Boehnen Hulbert & Berghoff (“MBHB”) of copyright infringement based upon alleged use of plaintiffs’ articles in MBHB’s legal practice before the U.S. Patent Office, as well as in litigation and client counseling. Plaintiffs demanded that MBHB search each of its employees’ files, email and hard drives for potential infringing use of the articles. The Court held that while some discovery was relevant to plaintiffs’ broad copyright infringement claims, plaintiffs’ demand went too far. Instead, the Court ordered that MBHB perform a search that it has suggested as a compromise position during the parties’ discussion of the discovery requests, specifically:

  • Search MBHB’s electronic document management system for copies of the articles;
  • Search the index of MBHB’s off-site document storage for references to the articles and manually search any files identified;
  • Ask each MBHB lawyer, law clerk or technical advisor if they remember using the articles; and
  • Search the paper and electronic files of two individuals previously identified as having used the articles in their practices.

 

CLE: Loyola University Program on Patents, Innovation & Freedom to Use Ideas

By R. David Donoghue on Posted in Legal Seminars, Uncategorized

On Thursday, April 11 at Loyola University Law School, the Loyola University Chicago Law Journal is putting on a program called:  Patents, Innovation & Freedom to Use Ideas.  Click here for the program brochure.  The program has an interesting mix of theoretical and practical discussions.  Among the more interesting topics are:

  • Chief Judge Holderman discussing Innovations to Improve Juror Understanding in Patent Trials
  • Emory University’s Professor Timothy Holbrook (a former Chicagoan), Boston University’s Professor Michael Mueur (who has written interesting articles regarding the costs of NPE suits); and University of San Diego Professor Ted Sichelman discussing Shortcomings in the Patent System.

This looks like an excellent program.

Nominations Open for Northern District Excellence in Pro Bono and Public Interest Service Awards

By R. David Donoghue on Posted in Legal News

The Northern District and the Chicago Chapter of the Federal Bar Association are seeking nominations (by April 11, 2013) for attorneys who have provided outstanding pro bono and public interest representation in civil and criminal matters before the Northern District that are complete and no longer pending. In the words of the Northern District:

The nominee should be someone who has demonstrated excellence in commitment to pro bono or public interest work by handling a matter in this district as a court-appointed attorney, pro bono attorney, or staff attorney for a not‑for‑profit agency, representing an indigent party in a civil or criminal matter.

Factors include:

  • dedication to pro bono or public interest work, outstanding achievement resulting from the representation of a large group of indigents;
  • successful representation in a difficult case;
  • outstanding negotiation and settlement skills in achieving a result without trial;
  • extraordinary number of hours committed to pro bono work; and
  • other distinguished performance.  

Click Here for the nomination form.  Send your nominations via e-mail to: ProBono_ILND@ilnd.uscourts.gov.  For any questions contact:

Chambers of Chief Judge James F. Holderman
2548 Dirksen Courthouse
219 South Dearborn Street
Chicago, Illinois 60604
Telephone: 312-435-5600 

CLE: 7th Circuit on Social Media Discovery

By R. David Donoghue on Posted in Legal Seminars
The Seventh Circuit Electronic Discovery Pilot Project and Seyfarth Shaw LLP are offering a free webinar (register here) on the discovery of social media April 5 from 12:00 – 1:15 central.  The program will focus on the particular issues with discovery of social media including:
  • The discoverability of social media
  • The preservation duty as it applies to this data
  • Methods of and limitations of discovery of social media
  • Overview of technical tools that assist with the preservation and collection of social media
One CLE credit is available for Illinois.