LimitNone v. Google, Inc., No. 08 C 4178 (Manning, J.).
Last month I posted that LimitNone, a Chicago company, sued Google for trade secret misappropriation seeking $1B — click here for that post. Earlier this week, Google removed the case to the Northern District, arguing that LimitNone’s Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”) claim sounded in copyright and, therefore, was preempted by the Copyright Act creating federal question jurisdiction (click here for Google’s removal papers).
In its complaint, LimitNone alleged that Google entered a nondisclosure agreement with LimitNone to review LimitNone’s gMove software — software that helps Microsoft Outlook users migrate data to the Google platform. Google allegedly assured LimitNone that it would not offer a competing product. But after receiving LimitNone’s trade secrets, including its software code, and promoting the $19 gMove software, Google allegedly began offering a free, competing software package which allegedly used LimitNone’s trade secrets. LimitNone has not filed any responsive papers or pleadings yet, but I will keep you updated if LimitNone challenges the removal.

Continue Reading Removal Papers Argue Consumer Fraud Act Claim Sounds in Copyright

United Image Print Group, LLC v. Mullen, No. 07 C 6720, 2008 WL 62205 (N.D. Ill. Jan. 4, 2008) (Kocoras, J.).
Judge Kocoras held that the Court lacked sufficient information to rule on preemption of plaintiff’s Illinois Computer Tampering Act and breach of fiduciary duty claims by the Illinois Trade Secret Act. Both claims were based upon defendant’s alleged misappropriation of allegedly confidential information before defendant resigned and took a position with a competitor. The Court reasoned that confidential information could include both trade secrets and protected information that did not rise to the level of trade secrets. Because information outside of the complaint was required to decide the scope of the claims, preemption could not be resolved in defendant’s Fed. R. Civ. P. 12(b)(6) motion to dismiss.

Continue Reading Confidential Information is Potentially Broader Trade Secret Information

CardioNet, Inc. v. LifeWatch Corp., No. 07 C 6625, 2008 WL 567031 (N.D. Ill. Feb. 27, 2008) (Conlon, J.).
Judge Conlon granted in part counter-defendant CardioNet’s Fed. R. Civ. P. 12(b)(6) motion to dismiss counter-plaintiffs’ (collectively, “LifeWatch”) Lanham Act false advertising and related Uniform Deceptive Trade Practices Act (“UDTPA”) and Consumer Fraud and Deceptive Trade Practices Act (“CFA”) claims. LifeWatch alleged that CardioNet improperly acquired one of LifeWatch’s prescription-only heart monitoring devices, the Life Star ACT. The device monitors a person’s heart rate and uses a cell phone to transmit irregular readings to a monitoring station. CardioNet allegedly inspected and tested the device. Then based on its tests, CardioNet allegedly misappropriated LifeWatch’s trade secrets and intentionally made false and misleading statements about the LifeStar ACT in its advertising. LifeWatch’s Lanham Act, UDTPA and CFA claims were all based upon CardioNet’s allegedly false advertising.
LifeWatch identified the allegedly false statements with specificity, but because LifeWatch did not plead who made them or when and where they were made, LifeWatch’s claims did not meet Rule 9(b) heightened pleading standards. The Court, therefore, dismissed the Lanham Act, UDTPA and CFA claims.

Continue Reading Rule 9(b) Pleading Standards for Lanham Act False Advertising Claims

CardioNet, Inc. v. LifeWatch Corp., No. 07 C 6625, 2008 WL 567223 (N.D. Ill. Feb. 27, 2008) (Conlon, J.).
Judge Conlon granted in part defendants’ (collectively, “LifeWatch”) motion to dismiss plaintiff CardioNet’s state law claims as preempted by the Illinois Trade Secrets Act (“ITSA”). CardioNet alleged that LifeWatch improperly obtained one of CardioNet’s prescription-only MCOT remote heart monitoring devices by getting a false prescription for it. LifeWatch then tested the MCOT by, among other things, simulating a heart attack. Based upon the tests, LifeWatch gathered allegedly trade secret information from the MCOT.
The Court held that CardioNet’s conversion claim was preempted to the extent it was based upon gathering trade secret information from the MCOT because conversion of trade secrets is a restatement of misappropriation. But the claim was not preempted as it related to conversion of the MCOT device.
Similarly, CardioNet’s fraud claim was preempted to the extent the alleged fraud was acquiring the trade secret or confidential information, but the claim was not preempted to the extent the alleged fraud was acquiring the MCOT device.
CardioNet’s intentional interference with contract claim was not preempted. The alleged wrong was not the alleged misappropriation, but interference with the contract signed by the patient to get the MCOT.
Finally, CardioNet’s unfair competition claim was preempted. The alleged unfair competition was possession and use of the alleged trade secret information taken from the MCOT, the same acts forming the trade secret claim.

Continue Reading Trade Secret Act Preempts State Claims Based Upon Confidential Information

Krueger v. TradeGuider Sys., LLC, No. 07 C 6261, Slip Op. (N.D. Ill. Nov. 27, 2007) (Kendall, J.)*
Judge Kendall granted plaintiff Todd Krueger’s (“Krueger”) motion to remand this breach of Employment Agreement (“Agreement”) suit to Cook County Circuit Court. Krueger originally filed his Complaint in Cook County Circuit Court. Defendants (collectively “TradeGuider”) remanded the case to the Northern District, arguing that Krueger’s claim for breach of the Agreement, which governed his employment as TradeGuider’s CEO, was a federal copyright claim. TradeGuider reasoned that determining whether it had breached the Agreement required a determination of whether Krueger’s works were works for hire. The Court cited the Seventh Circuit’s narrow view of copyright preemption for contract claims – generally a contract involving copyrights is of a different scope than the copyrights because the contract is a private agreement between parties and a copyright is a right against the world. The alleged breach, therefore, was not essentially a copyright claim because it included rights beyond the copyright. Additionally, the Court reasoned that there was no evidence that suggested any copyright law would have to be interpreted to construe the contract or rule upon the alleged breach.
*Click here for a copy of the opinion.

Continue Reading Breach of Contract With IP Implications Not Enough for Federal Jurisdiction

RTC Indus., Inc. v. Haddon, No. 06 C 5734, 2007 WL 2743583 (N.D. Ill. Sep. 10, 2007) (Grady, J.).
Judge Grady denied defendant’s Fed. R. Civ. P. 12(c) motion for judgment on the pleadings. The Court held that plaintiff’s breach of fiduciary duty claim was not preempted by the Illinois Trade Secret Act. Plaintiff alleged that defendant (plaintiff’s employee) violated his fiduciary duty to plaintiff (his employer at the time) by disclosing to third party DCI Marketing (“DCI”) that a DCI employee had accepted an offer to work for plaintiff. The Court held that the alleged acts would breach defendant’s fiduciary duty regardless of whether the hiring decision was confidential. The breach of fiduciary duty claim, therefore, was not preempted.
The Court also held that the non-complete clause defendant signed as a condition of employment was enforceable even though it lacked a geographic restriction. There was a two year time restriction and an “activity” restriction – defendant was only prevented from taking a job with a competitor that would either result in actual or threatened use of plaintiff’s confidential information.

Continue Reading Trade Secret Act Does Not Preempt Breach of Fiduciary Duty Claims

Judge Hart granted in part defendants motion to enforce the Court’s order and denied plaintiff’s motion to compel discovery. The Court previously ruled upon the parties’ cross-motions for summary judgment, holding that plaintiff’s state law claims were not preempted by the Illinois Trade Secrets Act, but significantly limiting the claims and removing some defendants (you can read more in the Blog’s archives). Defendant sought reconsideration of the Court’s preemption ruling. But the Court held that the motion, filed three months after the Court’s opinion, was untimely and that it presented no new arguments. The Court granted defendant’s request that plaintiff be limited to the trade secrets it identified during fact discovery and prior to summary judgment briefing.
Finally, the Court denied plaintiff’s motion to compel fact discovery. The motion was filed after the close of fact discovery and two months after plaintiff represented to the Court that only expert discovery remained to be completed.
Practice tip: File motions in a timely manner. It is especially important to file discovery motions during or at least near the discovery period.

Continue Reading Parties Must File Motions Promptly

Vaughn v. Kelly, No. 06 C 6427, Slip Op. (N.D. Ill. Jul. 16, 2007) (Manning, J.).
Judge Manning denied defendant R. Kelly’s (“Kelly”) motion to dismiss plaintiff Vaughn’s case arguing that Vaughn’s state law claims were preempted by copyright law. The Court previously dismissed Vaughn’s motion to remand the case to state court, holding that his unjust enrichment claim sounded in copyright law and giving Vaughn time to amend his complaint to remove the copyright elements (you can read more about the case in the Blog’s archives). Kelly now moves to dismiss the amended complaint. As in the original complaint, Vaughn alleged that he introduced Kelly to stepping, taught him how to step, helped him write a stepping-based song entitled “Step in the Name of Love,” and collaborated with Kelly to develop a video for the song. The Court held that Vaughn’s unjust enrichment claim was preempted by copyright law, but granted Vaughn leave to refile the claim as one for copyright infringement. The Court refused to consider Vaughn’s proposed amended unjust enrichment claim because Vaughn failed to amend the unjust enrichment claim when the Court first offered Vaughn a chance to amend and because it is improper to consider amendments as part of a motion to dismiss. The Court held that Vaughn’s breach of oral contract claim was not preempted by copyright law because it could be for less than co-ownership of the copyright, which would be preempted.

Continue Reading Unjust Enrichment Claim is Preempted by Copyright Law

Abanco Int’l., Inc. v. Guestlogix Inc., __ F. Supp.2d __, 2007 WL 1492928 (N.D. Ill. May 21, 2007) (Bucklo, J.).
Judge Bucklo dismissed plaintiff’s conspiracy claim but not its unjust enrichment and tortious interference claims, holding that the former was preempted by the Illinois Trade Secret Act (“ITSA”). Plaintiff alleged that it entered a business relationship with defendant, supported by a confidentiality agreement (the “Agreement”). The parties were working together to supply airlines with electronic “buy-on-board” systems that would allow passengers to pay for drinks and other in-flight purchases with credit cards. Plaintiff alleged that, based upon the Agreement, it provided defendant confidential, trade secret information about its buy-on-board system (the “Abanco System”) and that with defendant’s support, plaintiff entered negotiations to provide the Abanco System to third party American Airlines. But after the parties’ relationship soured, American Airlines allegedly ended negotiations with plaintiff and entered an agreement with defendant for a buy-on-board system. Plaintiff then filed suit against defendant alleging trade secret misappropriation, breach of the Agreement, unjust enrichment, tortious interference and conspiracy. The Court held that plaintiff’s unjust enrichment and tortious interference claims were not preempted by ITSA because they were based upon information protected by the Agreement in addition to plaintiff’s alleged trade secrets.

Continue Reading Conspiracy Claim Based Solely on Trade Secrets Preempted by ITSA

Stafford Trading, Inc. v. Lovely, No. 05 C 4868, 2007 WL 1512417 (N.D. Ill. May 21, 2007) (Coar, J.).
Judge Coar granted in part declaratory judgment plaintiffs’ (collectively “Stafford”) motion to dismiss and denied Stafford’s summary judgment motion. The Court dismissed defendants’ fraud and unjust enrichment counterclaims after holding that they were preempted by the Illinois Trade Secret Act. The Court also dismissed defendants’ fraudulent concealment. The material fact that Stafford allegedly failed to disclose was the opinion that Stafford owned the RIVAS electronic options trading platform outright. But the Court held that an allegedly withheld opinion could not support a fraudulent concealment claim.
The Court’s summary judgment decision turned largely upon whether RIVAS was a computer program protected by copyright or a “methodology” protected as a trade secret. The Court held that it had insufficient evidence to make the determination. Furthermore, neither party briefed the issue of what effect the copyright/methodology would have upon defendants’ alleged oral contract between the parties which allegedly made the parties co-owners of RIVAS. The Court denied summary judgment as to defendants’ breach of contract counterclaim because the existence of an oral contracts and its terms were both disputed facts. Finally, the Court denied summary judgment as to defendants’ trade secret counterclaim because, whether RIVAS was determined to be protected by copyright or trade secret, the parties disputed whether defendants employed sufficient means to protect RIVAS’s secrecy.

Continue Reading Insufficient Facts to Determine Whether Computer Program was Protected by Copyright or Trade Secret