Slep-Tone Ent. Corp. v. Elmwood Enterprises, Inc., No. 13 C 7346, Slip Op. (N.D. Ill. Apr. 21, 2014) (Lefkow, J.).
Judge Lefkow denied defendant Elmwood’s Fed. R. Civ. P. 12(b)(6) & (7) motion to dismiss plaintiff Slep-Tone’s Lanham Act claims related to its SOUND CHOICE marks used in connection with its karaoke accompaniment tracks. Of particular note, the Court held as follows:
- Slep-Tone sufficiently pled Elmwood’s alleged use in commerce by claiming that Elmwood used karaoke services as an inducement for its customers’ patronage and purchase of food and drink.
- Slep-Tone sufficiently pled likelihood of confusion. It was sufficient to plead likely confusion of karaoke patrons, even though Slep-Tone’s direct customers were the “KJs” that purchase the tracks and play them for the consumers who do the karaoke, not those consumers. The two markets were sufficiently related, and Slep-Tone’s sales to KJs ultimately met the needs of the consumers it alleged were likely to be confused.
- Pursuant to the Seventh Circuit’s Hard Rock test, a supplier of goods or services can be liable for contributory infringement even without an affirmative duty to prevent trademark violation. The supplier does have a duty “to understand what a reasonably prudent person would understand.” Based upon that standard, Slep-Tone sufficiently pled contributory infringement. Slept-Tone pled that Elmwood hires and may control its KJs and that Elmwood had actual knowledge of the infringing materials.
- Elmwood’s nominative fair use defense failed. First, Northern District judges have held that nominative fair use could not be decided on a Rule 12(b) motion. Second, the defense failed substantively based upon Slep-Tone’s allegations. Slep-Tone alleged that the KJs used the SOUND CHOICE mark on bootleg versions of Slep-Tone’s tracks. That would suggest affiliation, sponsorship or endorsement, which makes the nominative fair use doctrine inapplicable.
- Dastar was not applicable to this case. Slep-Tone was not using its SOUND CHOICE marks to control the content of the tracks. Slep-Tone’s claims were not focused upon the music. They were focused upon the use of Slep-Tone’s marks in connection with tracks allegedly from third parties.
- Slep-Tone’s state law unfair competition law claims survived the motion to dismiss for the same reasons as the Lanham Act claims did.
- The KJs were not necessary parties to the litigation. Slep-Tone’s claims could be addressed fully without the inclusion of the KJs.
Radiation Stabilization Sol’ns LLC v. Accuray Inc., No. 11 C 7700, Slip Op. (N.D. Ill. Aug. 21, 2012) (Coleman, J.).
Judge Coleman granted in part defendants’ Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Radiation Stabilization Solutions’ (“RSS”) claims in this patent infringement suit regarding technology for stabilizing irradiated targets. While defendant Cancer Treatment Centers of America (“CTCA”) was not properly named because its corporate designation – Inc. – was not listed, there was no need to dismiss CTCA. Instead, RSS was given leave to amend identifying CTCA’s correct corporate form.
RSS sufficiently pled induced infringement by making statements at least as detailed as Form 18 to the Federal Rules regarding the alleged underlying direct infringement. The complaint need not identify a specific direct infringer. While RSS did not allege it gave defendants notice of the infringement, the complaint itself served as notice. Similarly, RSS’s claims of intent starting from the date of the complaint were sufficient.
The Court dismissed RSS’s contributory infringement claims without prejudice. While RSS’s similar claims of direct infringement and intent were sufficiently pled, RSS made no statement at all that defendants’ products did not have substantial non-infringing uses.
I recently attended and spoke at the Rocky Mountain IP Institute in Denver. It was the second year in a row I have attended and spoken at the Institute. In my opinion, the Rocky Mountain IP Institute is one of the two best IP CLE events (and destinations) in the country. As evidence of that, the following is one of a series of posts from the excellent presentations over the two days of the conference. I encourage you to consider joining me at next year’s Rocky Mountain IP Institute.
This post (cross-posted from my Retail Patent Litigation Blog) discusses Heidi Keefe of Cooley’s presentation regarding the state of indirect infringement law. Here are the key points:
- Indirect infringement includes inducement and contributory and is the codification of pre-1952 case law.
- Indirect infringement requires intent and was created to prevent a party from knowingly acting and avoiding direct infringement by carving out one or two elements for another to perform.
- Inducement requires that the accused intended for the end user to infringe.
- Accused has to have had knowledge in the form of actual knowledge or willful blindness that the end user would be infringing.
- Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011) rejected the Federal Circuit’s “deliberate indifference” test for knowledge, in favor of willful blindness drawn from criminal law. It is an open question whether willful blindness applies to contributory infringement. Willful blindness was found where defendant’s freedom to operate opinion was procured without providing opinion counsel key patent information.
- Contributory infringement requires knowing the product is “especially made or especially adapted” for infringement.
- As with inducement, there must be (at least) a single, direct infringement.
- The component cannot have any substantial, noninfringing use.
- Knowledge of the patent and that the component is especially made or adapted for infringement.
- Pleading indirect infringement
- Twombly/Iqbal generally require additional pleading for the intent element of either indirect infringement claim.
- Inducement – Must plead sufficient facts to plausibly infer the specific intent to induce the infringing acts (knowledge of the patent and of the infringing acts may be enough).
- Contributory – Must plead sufficient facts to infer there are no substantial noninfringing uses, as well as knowledge of the patents.
- Trading Tech. Int’l, Inc. v. BCG Partners, Inc., No. 10 C 715, 2011 WL 3946581 (N.D. Ill. Sep. 2, 2011) intent was sufficiently shown where defendants allegedly advertised their products and taught their customers how to commit the allegedly infringing acts.
- Some case law in Delaware suggests that accusations in a complaint regarding expected continued infringement after the complaint creates knowledge of the patents could be sufficient.
- McRee v. Goldman, No. 11 CV 991, 2012 WL 929825 (N.D. Cal. Mar. 19, 2012) indirect infringement claims dismissed without prejudice because all of the allegedly knowing acts pre-dated the alleged knowledge of the patent in suit.
- Should you get an opinion letter to protect against inducement?
- Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683 (Fed. Cir. 2008) held that failure to secure an opinion “may be probative of intent in this context.” But that potential inference appears to have been abrogated by the America Invents Act (“AIA”). Of course, the opinion letter is a powerful story for a jury.
- Global-Tech Appliances, Inc. v. SEB, S.A., 131 S. Ct. 2060 (2011) had a similar holding.
- The AIA seems to abrogate the holdings in Broadcom and Global-Tech with clear language. But the legislative history of the AIA says that it was codifying law, which should have included Broadcom and Global-Tech. So, there is some tension between the clear language of the statute and its legislative intent.
- Best practices when deciding whether to get an opinion letter for indirect infringement:
- Look at the cost/benefit analysis. The opinion can be valuable before a jury, but also costly. So, more likely to get them in important or close cases.
- There is little value in post-filing opinion letters.
- Best practices for avoiding indirect infringement:
- Teach non-infringing uses
- Teach multiple uses
- Tell users that how they use a device is up to them