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Chicago IP Litigation

Tracking Northern District of Illinois IP Cases

Patent Eligibility Could Not be Decided on the Pleadings

Posted in Discovery

Vehicle Intelligence & Safety LLC v. Mercedes-Benz USA LLC, No. 13 C 4417, Slip Op. (N.D. Ill. Mar. 13, 2014) (Hart, Sen. J.).

Judge Hart denied defendant’s Fed. R. Civ. P. 12(c) motion to dismiss plaintiff’s patent infringement claims related to screening drivers for various types of impairment and “controlling operation” of the vehicle if the driver is impaired.  While the parties’ briefs showed likely issues of patentability, the Court could not decide whether the claims were patent eligible without further discovery regarding how and whether computers were used in the patent-in-suit.

Social Media Alone Does Not Create Personal Jurisdiction

Posted in Jurisdiction

Telemedicine Sol’ns LLC v. WoundRight Techs, LLC, No. 13 C 3431, Slip Op. (N.D. Ill. Mar. 14, 2014) (Dow, J.).

Judge Dow granted defendant WoundRight Technologies’ (“WoundRight”) Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction in this Lanham Act case involving plaintiff Telemedicine Solutions’ (“Telemedicine”)  & WOUND ROUNDS federal registration.  Despite no physical or sales contacts with Illinois, Telemedicine argued that WoundRight “expressly aimed” its alleged infringing activities at Illinois using Google Ad Words, its website and social media.

Of particular note, the Court held as follows:

  • “Express aiming” required more than an intentional tort to create jurisdiction from internet activity.  There must be some connection to Illinois.
  • Telemedicine’s residence in Illinois is not enough, unless without evidence that WoundRight knew that or otherwise directed its alleged harm at Illinois.
  • WoundRight, further, had not targeted Illinois or generated Illinois contacts except by “happenstance.”

Not Accepting Well-Pled Allegations is “Cardinal Sin” of Affirmative Defenses

Posted in Pleading Requirements

Sonic Indus., LLC v. iRobot Corp. No. 13 C 9251, Slip Op. (N.D. Ill. Feb. 28, 2014) (Shadur, Sen. J.).

Judge Shadur sua sponte struck portions of defendant iRobot’s answer and affirmative defenses, and allowed other portions to be repled.  Of particular note:

  • The Court struck iRobot’s noninfringement affirmative defense for committing the “cardinal sin” for an affirmative defense of not accepting plaintiff Sonic’s well-pled allegations.
  • The invalidity defense was stricken with leave to replead it in a “more particularized and fleshed-out form.”

Scheduling Delay Does Not Warrant Canceling the Deposition

Posted in Discovery

Cleversafe, Inc. v. Amplidata, Inc., No. 11 C 4890, Slip Op. (N.D. Ill. Jan. 11, 2014) (Cole, Mag. J.).

Judge Cole denied plaintiff Cleversafe’s motion for a protective order and sanctions preventing the deposition of Cleversafe’s CEO.  The CEO was a critical witness — one of two listed on Cleversafe’s initial disclosures.  And defendant Amplidata’s alleged delay in scheduling it did not warrant sanctions.  Furthermore, Cleversafe could point to no harm for the delay.  In fact, the CEO had enjoyed the benefit of not having to prepare or sit for a deposition.

“Growing Trend” That Bit Torrent Doe Defendants Need Not be Time-Related

Posted in Discovery

TCYK, LLC, v. Does 1-44, No. 13 C 3825, Slip Op. (N.D. Ill. Feb. 20, 2014) (Dow J.).

Judge Dow denied various Doe defendants’ motions to grant subpoenas to their respective ISPs in this BitTorrent copyright case involving the movie “The Company You Keep” with Robert Redford and Susan Sarandon.  Of particular note, the Court held as follows:

  • Noting a split of authority, the Court went with the “growing trend” in the Northern District that Doe defendants need not have been members of its same BitTorrent swarm at the same time to be joined in a single suit.  It was enough that the Does were members of the same swarm.
  • Subpoenas served on ISPs do not unduly burden the Doe defendants.
  • The fact that a Doe claimed they could not have downloaded the movie was not a sufficient reason to quash its subpoena.  That was an issue for discovery and the case.

Modifying the Innovation Act to Selectively Target the Patent Troll Problem

Posted in Legal News

The following is a blog post by Varun Shah, Aruba Network’s Director, Intellectual Property — full disclosure, I previously represented Aruba.  Shah has an interesting alternative patent reform proposal that seeks to target the patent troll problem.  It is interesting because it is under-inclusive.  On the one hand, that is less than ideal because it does not cover all trolls (or at least all entities that are arguably trolls).  On the other hand, it is intriguing because by being under-inclusive it minimizes the impact of the legislation outside of the troll world, which may make it easier to get it a vote in both houses of Congress.  Additionally, while Shah’s discussion focuses largely upon creating a heightened pleading requirement for a subset of patent troll cases, using the same definition of a potential troll, other requirements could be added to the legislation, for example fee awards or discovery limitations, as Shah notes.  So, while Shah’s proposal is not perfect, it is an interesting proposal and is, at a minimum, positive in that it is creating new discussion around patent reform.

With that, here are Shah’s thoughts: 

The Innovation Act was a great attempt at reducing the patent troll problem for the Information Technology industry. For example, the Innovation Act proposed regulating patent litigation practice by increasing pleading standards, placing limitations on patent discovery, and providing cost-shifting mechanisms. However, the Innovation Act is now stalled in Congress, in part, due to the rejection by the Pharmaceutical and Biotech industries of the new proposed regulations such as the limitations on discovery. A solution is needed that reduces the patent troll problem for the Information Technology industry while balancing the needs of the Pharmaceutical and Biotech industries.

I propose modifying the Innovation Act to limit discovery only if the current patent owner is not one of:

  1. The inventor
  2. The assignee, including subsidiaries and parent companies thereof, to whom the inventor was obligated to assign to at the time of filing an application for the patent
  3. An acquiring entity that acquired the patent in a sale of an established line of business originated by (a) or (b), the sale including all trademarks, copyrights, and patents related to the established line of business.

Additional criteria for qualifying as a sale of an established line of business (such as a minimum annual revenue for the established line of business) may be needed in order to ensure that patents are not held in shell entities for selling of patents to third parties and designing around this proposal.

Similar to the limited discovery example above, other sections of the Innovation Act may be considered for modification such that the rights and requirements related to patent assertion activities depend on whether or not the current patent owner is one of (a), (b), or (c) identified above.

This proposal reduces the patent troll problem for the Information Technology industry without reducing the patent assertion rights for the original patent Applicant. More generally, this proposal will protect the interests of all innovators that actually generate the ideas/patents while partially diluting the value of the patents if commoditized and transferred to others that are abusing and burdening the patent system. This re-structuring of patent value is in-line with the true goals of the patent system, i.e., the promotion of innovation.

– — – –

Mr. Shah is actively discussing the proposal with bill writers in Representative Goodlatte’s office to modify the Innovation Act.  If you are in support of the proposal, Mr. Shah suggests contacting the key policymakers: Representative Goodlatte, Senator Reid, Senator Leahy, Senator Cornyn, Senator Schumer, and the White House Office of Science and Technology Policy (OSTP).

Patent Claims Dismissed for Lack of Ownership

Posted in Local Rules

Rehco, LLC v. Spin Master, Ltd., No. 13 C 2245, Slip Op. (N.D. Ill. Mar. 17, 2014) (Leinenweber, J.).

Judge Leinenweber granted defendant Spin Master’s motion to dismiss plaintiff Rehco’s patent infringement claim related to a toy airplane, granted in part Spin Master’s motion to strike and granted Rehco’s motion to strike. 

As an initial matter, the Court struck Spin Master’s use of Rehco’s attorney work product document because it was inadvertently produced and properly clawed back pursuant to Fed. R. Evid. 502.  Spin Master first used the document during a hearing.  Rehco did not object at that time because lead counsel was unable to attend the hearing.  But upon returning from his travels, lead counsel saw the document, identified it as work product and clawed it back.  Based upon those facts, Spin Master could not use the document and must comply with FRE 502.

The Court dismissed Rehco’s patent infringement claim because Spin Master was the proper assignee of the patent.  Rehco argued that rights in the patent reverted to Rehco based upon Spin Master’s breach of the parties’ agreement.  But even if Spin Master had breached, Rehco only received the “sole and exclusive right . . . [to] exploit . . . .”  The rights in the patent itself would not have transferred.  The agreement also would not have transferred all substantial rights because at least the right to prosecute patents and assert the patents would have been retained by Spin Master.

The Court struck a portion of Rehco’s LPR 2.2 Initial Infringement Contentions.  Because Rehco’s infringement charts were “detailed” identifying where each element was found in Spin Master’s accused products.  Rehco also provided sufficient detail regarding means plus function claim terms.  The Court, however, struck Rehco’s doctrine of equivalents arguments because the allegations were a bare recitation that the accused products “perform substantially the same function, in substantially the same way, to achieve substantially the same result” with the level of detail required by LPR 2.2(d).  The Court gave Rehco twenty one days to amend its doctrine of equivalents contentions to meet the LPR 2.2(d) standards.

Damages Awarded on Lanham Act Default Judgment

Posted in Damages

O.A. Cargo, Inc. v. OA Cargo Chicago, No. 12 C 5763, Slip OP. (N.D. Ill. Mar. 13, 2014) (Zagel, J.).

Judge Zagel awarded damages in this Lanham Act case after he and Judge Conlon entered default judgment against the defendants.

Pursuant to its “considerable discretion” to award damages based upon a default judgment, the Court awarded the following damages:

  1. Expenses incurred in setting up Defendants’ business – $36,826.24
  2. Franchise fee – $50,000
  3. Ongoing licensing fees of $8,633.33 per month for 16.5 months – $142,449.95 + $35,612.49 = $178,062.44
  4. Attorneys’ fees and costs – $35,816.47
  5.  Statutory interest

The Court did not award damages for the entire 26 month period for which plaintiff sought the ongoing licensing fees.  The Court held that the evidence did not support the full 26 months.  Instead, the evidence supported 16.5 months.  The Court awarded damages for 16.5 months.  The Court also held that there was evidence that defendants’ conduct was willful.  The evidence warranted a 25% increase in the award of ongoing licensing fees, but not the trebling sought by plaintiff.  Finally, the Court denied damages based upon plaintiff’s alleged reputational harm because the damages were “insufficiently supported.”

Descriptive Trademark Does Not Survive Summary Judgment

Posted in Summary Judgment

Box Acquisitions, LLC d/b/a Box Partners, LLC v. Box Packaging Prods., LLC, No. 12 C 4021, Slip Op. (N.D. Ill. Mar. 26, 2014) (Kocoras, J.).

The Court granted summary judgment for defendant in this Lanham Act case involving alleged trademark infringement regarding plaintiff’s BOX PACKAGING trademarks.  The “key issue” was whether BOX PACKAGING was a protectable mark or was unprotectable as a descriptive term that has not acquired sufficient secondary meaning.

The Court held that BOX PACKAGING was descriptive as a matter of law.  No imagination was required to connect BOX PACKAGING to the box and packaging services offered by plaintiff.  The fact that plaintiff did more than just distribute boxes and packaging did not sway the Court because all of plaintiff’s services encompass boxing and packaging somehow.  The Court was also swayed by how other companies used “Box Packaging” within the industry.  The fact that BOX PACKAGING is not defined in the dictionary was not enough to avoid summary judgment of descriptiveness.

Regarding secondary meaning, plaintiff did not offer any direct evidence, which comes from consumer testimony or consumer surveys.  The Court, therefore, turned to the circumstantial evidence.  Plaintiffs use of BOX PACKAGING was not exclusive, many others used the phrase.  And the fact that plaintiff largely stopped using BOX PACKAGING in favor of BOX PARTNERs weighed against a finding of secondary meaning. 

Furthermore, plaintiff offered no evidence of advertising or sales figures to support secondary meaning based upon such expenditures.  The Court also held that plaintiff’s evidence of intentional copying was weakened because plaintiff chose a descriptive mark. 

Plaintiff’s proof of actual confusion was insufficient because plaintiff could not identify the customers that allegedly expressed confusion.

The Court granted summary judgment regarding plaintiff’s claims that defendant sought to fraudulently register its trademark because there were several other entities using versions of the mark.  So, the fact that defendants were aware of plaintiff did not suggest that defendants could not register their marks. 

The Court also granted summary judgment as to defendant’s purchase of various “boxpackaging” domain names because plaintiff was not actively using BOX PACKAGING at the time, noting that had defendants acted when plaintiff was actively using the mark the result “could have been vastly different.”

An Investigation By Any Other Name is Still an Investigation

Posted in Discovery

Sloan Valve Co. v. Zurn Indus., Inc., No. 10 C 204, Slip Op. (N.D. Ill. Mar. 5, 2014) (St. Eve, J.).

Judge St. Eve denied defendants’ (collectively “Zurn”) motion to exclude plaintiff Sloan Valve’s (“Sloan Valve”) expert in this patent litigation involving dual mode flush valves for plumbing fixtures.  Plaintiff’s expert conducted what he called a “survey,” but was in fact an investigation.  The expert, a 27 year veteran of the FBI, coordinated an investigation of approximately 200 bathrooms across the country which plaintiff believed would have either Sloan or Zurn plumbing fixtures.  The expert’s agents photographed specific fixtures using an app that time and location stamped them. 

The Court held that the fact that the expert used the term “survey” did not change the fact that it was an investigation, not a survey as the term is used in the legal context.  And Zurn did not dispute that the expert was qualified to conduct such an investigation.  Furthermore, the investigators did not interview anyone, they just took pictures.  So, there were no hearsay concerns.

Finally, Zurn’s other concerns did not warrant exclusion, although the could be addressed on cross-examination:

  1. The 200 sites were not randomly selected and were selected by Sloan;
  2. The sites were “overwhelmingly” public buildings; and
  3. The investigators did not investigate every bathroom at each site and did not adequately investigate the bathrooms that they did enter.