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Chicago IP Litigation Tracking Northern District of Illinois IP Cases

Tag Archives: Tortious Interference

Illinois Does Not Recognize Tortious Interference Based Upon Wrongfully Filed Suits

Posted in Pleading Requirements

Flava Works, Inc. v. Gunter d/b/a myVidster.com, No. 10 C 6571, Slip Op. (N.D. Ill. Sep. 3, 2013) (Grady, Sen. J.).

Judge Grady granted in part plaintiff Flava Works’ Fed. R. Civ. P. 12(b)(6) motion to dismiss defendants’ (collectively “myVidster”) tortious interference and Digital Millenium Copyright Act (“DMCA”) claims in this copyright infringement suit involving videos posted on websites.  To the extent the tortious interference claim was based upon the alleged wrongful filing of this suit it was dismissed because Illinois does not recognize a tortious interference claim based upon wrongfully filed suits.  The claim, however, survived to the extent it was based upon Flava Works allegedly misrepresenting myVidster’s intellectual property infringement with the intent of causing myVidster’s server suppliers to terminate contracts with myVidster.

With respect to its DMCA claim, myVidster pled that Flava Works knowingly misrepresented that allegedly infringing content was available on myVidster to “improperly exaggerate the actual amount of infringing content available” on the website.  Those allegations were sufficient to meet the intent requirement.

Unenforceable Contract Provision Requires Dismissal of Contract-Based Claims

Posted in Summary Judgment

Peerless Indus., Inc. v. Crimson AV, LLC, No. 11 C 1768, Slip Op. (N.D. Ill. Jun. 27, 2012) (Lefkow, J.).

Judge Lefkow granted defendants’ (collectively “Crimson”) Fed. R. Civ. P. 12(c) motion for judgment on the pleadings as to plaintiff Peerless’s tortious interference and civil conspiracy claims in this patent infringement and related state law claims involving television mounts.  The Court held that a clause in the parties’ agreement that restricted defendant Sycamore from selling “Similar Products” was “unworkably difficult” and “unfairly burdensome” because it prevented the sale of any Sycamore product that was similar to any Peerless product.  Additionally, the clause gave Peerless sole discretion to determine whether a Sycamore product was similar in Peerless’s reasonable judgment.  Because the relevant clause of the agreement was unenforceable, Peerless’s tortious interference claim based upon the clause could not stand. 

Similarly, Peerless’s civil conspiracy claim could not survive because it was based upon the clause.  The Court denied defendants’ request for their fees noting that defendants offered no justification for an award of fees based upon a “routine” pre-trial motion.

Competition Alone Not Enough for Sherman Act or Tortious Interference

Posted in Pleading Requirements

OpticsPlanet, Inc. v. OpticSale, Inc., No. 09 C 7934, Slip Op. (N.D. Ill. Jul. 14, 2010) (Shadur, Sen. J.).

Judge Shadur granted in part plaintiff OpticsPlanet’s Rule 12(b)(6) motion to dismiss certain of defendants’ (collectively "OpticSale") counterclaims in this dispute over trade names. As an initial matter, the Court noted that OpticSale’s tortious interference with prospective business relationships and with prospective economic advantage claims were properly brought as a single federal claim pursuant to Fed. R. Civ. P. 10(b). Furthermore, both counts failed at the hands of the competitor’s privilege. Businesses are free to compete to divert business from their competitors unless, among other exceptions, the competition is solely motivated by spite or ill will. OpticSale made no such allegation in this case. And the Court noted that OpticSale had competed with OpticsPlanet in similar ways. 

The Court also dismissed OpticSale’s Sherman Act attempted monopolization claim because there was no indication that OpticsPlanet controlled or could come to control market prices. The Court further noted that the claim improperly sought to turn competition into attempted monopolization.

Finally, the Court dismissed OpticSale’s accounting claim to the extent its scope was reduced by dismissal of the other claims.

Court Strikes Affirmative Defenses that are not Affirmative Defenses

Posted in Pleading Requirements

Aller-Caire, Inc. v. Am. Textile Co., No. 07 C 4086, Slip Op. (N.D. Ill. Feb. 11, 2009) (Andersen, J.).

Judge Andersen granted in part plaintiff’s motion to strike certain of defendant’s affirmative defenses in this trademark and unfair competition case.  Defendant’s competitor’s privilege defense was sufficiently pled, although it alleged no specific facts, because it put plaintiff on notice.  Plaintiff knew that the parties were the competitors.  The Court struck the remaining two affirmative defenses:  1) plaintiff’s damages were not the proximate result of defendant’s alleged acts; and 2) a reservation of rights to amend the defenses.  Neither were affirmative defenses and, therefore, could not be properly pled.

Allegations That Specific References Were Withheld Sufficient for Inequitable Conduct Claim

Posted in Legal News

UTStarcom, Inc. v. Starent Networks, Corp., No. 07 C 2582 Slip Op. (N.D. Ill. Dec. 5, 2008) (Lindberg, Sen. J.).

Judge Lindberg granted in part plaintiff’s motion to dismiss certain of defendant Starent’s counterclaims.  Starent’s allegations that specific patentee withheld specific references from the Patent Office were sufficient to meet the Rule 9(b) heightened pleading standards for inequitable conduct.  But the Court dismissed Starent’s tortious interference counterclaim to the extent that it was based upon the filing of a law suit because Illinois prohibits tortious interference with prospective economic advantage claims based upon filing law suits.  The Court also dismissed Starent’s malicious prosecution counterclaim because Starent did not allege a special injury, such as arrest, seizure of property, taking or interference with property.

Warning Customer of Competitor’s Potential Patent Infringement Not Tortious Interference

Posted in Legal News

Polyad Co. v. Indopco Inc., No. 06 C 5732, 2008 WL 4287623 (N.D. Ill. Sep. 12, 2008) (Coar, J.).

Judge Coar granted defendant Indopco’s motion for summary judgment regarding plaintiff Polyad’s tortious interference and unjust enrichment claims.  I do not normally deal with diversity cases based solely upon state law causes of action, but one of the alleged tortious interferences in this case was Indopco’s allegedly false statements that Polyad’s products may have infringed Indopco’s patents.  But the Court held that the evidence only showed that Indopco only suggested that Polyad’s products "may" have infringed patents and suggested that the customer ask Polyad for assurances of noninfringement.  Furthermore, Indopco was actually testing Polyad’s products to determine whether they infringed.  Ultimately, Indopco’s tests were inconclusive and Indopco did not pursue a patent infringement case.  But the possibility of infringement and Indopco’s inconclusive testing were sufficient for a grant of summary judgment in Indopco’s favor.

Trademark Plaintiff Must Specifically Plead Confusion

Posted in Legal News

Aller-Caire, Inc. v. Am. Textile Co., No. 07 C 4086, 2008 WL 4066976 (N.D. Ill. Aug. 28, 2008) (Andersen, J.)

Judge Andersen granted in part and denied in part defendant American Textile Co.’s (“ATC”) Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Aller-Caire’s trademark infringement case. Aller-Caire allegedly began using its ALLER-CAIRE mark in 1990, but never registered it.  ATC registered its ALLER CARE mark in 2006. Both use the marks to market, at least, allergy sensitive pillow and mattress encasements. The Court dismissed Aller-Caire’s trademark count with leave to refile because it did not expressly allege a likelihood of confusion. It was not sufficient that the complaint alleged facts sufficient to infer confusion, plaintiff must plead confusion. The Court did not dismiss Aller-Caire’s tortious interference claim. Aller-Caire’s allegations would have been insufficient pursuant to Illinois law because Aller-Caire did not plead that ATC interfered with Aller-Caire’s business expectancy with a specific third party. But federal pleading requirements governed, and did not require identification of an entity.

Finally, a competitor’s privilege did not defeat Aller-Caire’s tortious interference claim. Competition cannot be tortious interference unless the competition employs wrongful means. Aller-Caire’s allegation that ATC’s alleged trademark infringement was done with malice constituted wrongful means.

No Heightened Pleading for Trademark-Based Unjust Enrichment Claim

Posted in Pleading Requirements

Vulcan Gold, LLC v. Google, Inc., No. 07 C 3371, 2008 WL 2959951 (N.D. Ill. Jul. 31, 2008) (Manning, J.)

Judge Manning granted in part defendants’ Fed. R. Civ. P. 12(b)(6) motion to dismiss, dismissing plaintiffs’ RICO claims. The Court previously dismissed plaintiffs’ complaint with leave to refile – click here to read the Blog’s post on that opinion. The Court held that plaintiffs did not sufficiently plead an enterprise. Plaintiffs only alleged that the defendants were contractually related within Google’s adsense program. And the alleged contractual relationship did not show consensual decisionmaking or joined purpose. Plaintiffs’ RICO claims were, therefore, dismissed.

The Court denied defendants’ motion to dismiss the unjust enrichment and civil conspiracy claims. Fed. R. Civ. P. 9(b) heightened pleading standards did not govern the claims because they were both based upon trademark infringement, not fraud.

Federal Circuit Controls Patent DJ Jurisdiction

Posted in Jurisdiction

Genender Int’l, Inc. v. Skagen Designs, Ltd., No. 07 C 5993, Slip Op. (N.D. Ill. Apr. 14, 2008) (Grady, J.).

Judge Grady denied defendant Skagen’s Fed. R. Civ. P. 12(b)(3) motion to dismiss plaintiff Genender’s declaratory judgment ("DJ") case. The Court also granted in part Skagen’s Fed. R. Civ. P. 12(b)(6) motion to dismiss, dismissing Genender’s tortious interference claim. Skagen argued that Genender’s DJ suit should be dismissed in favor of Skagen’s later-filed suit for design patent and trade dress infringement filed in the District of Nevada. Skagen argued that dismissal was required by the Seventh Circuit’s standard as set forth in Tempco Elec. Heater Corp. v. Omega Eng., Inc., 819 F.2d 746 (7th Cir. 1987). The Court, however, held that Federal Circuit law controlled because of the design patent claims. And the Federal Circuit explicitly rejected Tempco in Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931 (Fed. Cir. 1993) (abrogated on other grounds). Instead, the Federal Circuit required that Skagen provide a "sound reason" that proceeding with the DJ would be unjust or inefficient. Skagen provided no such reason and, in fact, Skagen’s counsel agreed at argument that it did not matter whether the case was tried in the Northern District or in the District of Nevada.

The Court dismissed without prejudice Genender’s tortious interference claim. Genender alleged that Skagen interfered with Genender’s business relationship with customer Sears by copying Sears personnel on cease and desist letters. But the claim was deficient because Genender did not allege that it lost any Sears business because of Skagen’s actions.

Employee Owes Current Employer Duty of Loyalty

Posted in Summary Judgment

Single Source, Inc. v. Harvey, No. 07 C 1201, 2008 WL 927902 (N.D. Ill. Apr. 7, 2008) (Der-Yeghiayan, J.).

Judge Der-Yeghiayan denied defendants’ summary judgment motion. Defendant Harvey was employed by plaintiff Single Source (“SS”) as, among other things, its Sales Director. When Harvey was promoted to the Sales Director position he signed a confidentiality agreement which required that Harvey maintain the secrecy of SS’s trade secrets and only use them for SS’s benefit. SS alleged that Harvey became disgruntled and took a position with defendant Food Marketing Concepts (“FMC”). Before giving SS notice and leaving SS’s employ, Harvey allegedly solicited SS’s customers for FMC and used an SS expense account to pursue customers for FMC. Defendants argued that because Harvey was not an SS officer or director he did not owe SS a duty of loyalty. The Court, however, held that an employee owes it employer a duty not to compete with the employer or solicit the employer’s customers before terminating the employment. The Court also held that the parties’ competing evidence regarding whether Harvey had actually solicited SS’s customers prior to ending his employment with SS created a material question of fact.

Practice Tip: You must respond to Local Rule 56.1 statements of material facts. The Court noted that defendants did not respond to SS’s statement of additional facts. Because of that, the Court deemed each additional material fact admitted. The Court did not identify whether its decision turned on any of these admitted facts, but it is easy to imagine the circumstance in which the case could have turned on an inadvertently admitted fact.

Notice Pleading Does Not Require Correct Claim Name

Posted in Pleading Requirements

UTStarcom, Inc. v. Starent Networks, Corp., No. 07 C 2582, Min. Order (N.D. Ill. Aug. 16, 2007) (Lindberg, J.).

Judge Lindberg denied defendants’ motion to dismiss plaintiff’s state law claims and its claim seeking assignment of defendants’ patents to plaintiffs.  The Court held that the claim seeking assignment of defendants patents to plaintiff was an invalidity contention.  Plaintiff claimed that it had invented defendants’ patented inventions before defendants.  While plaintiff did not use the correct terms, it met the notice pleading standards.  Additionally, plaintiff’s state law trade secret and tortious interference claims were sufficiently related to the patent claims to come within the Court’s supplemental jurisdiction.

The Court refused to consider plaintiff’s requests for additional discovery  because it was made orally in court and in plaintiff’s responsive pleading, but never as a written motion as required by Fed. R. Civ. P. 7(b)(1).

Rule 8 Does Not Require Identification of the Specific Contract Provision Allegedly Breached

Posted in Pleading Requirements

Ace v. Marn, No. 06 C 5335, 2007 WL 1541747 (N.D. Ill. Apr. 17, 2007) (St. Eve, J.).

Judge St. Eve granted in part and denied in part plaintiff/counterdefendant Ace Hardware Corp.’s ("Ace") Fed. R. Civ. P. 12(b)(6) motion to dismiss defendants/counter-plaintiffs’ (collectively "Marn") counterclaims.  The Court denied the motion as to Marn’s breach of contract claim and dismissed Marn’s fraud and tortious interference claims.  Ace and Marn entered an agreement (the "Agreement") allowing Marn the right to use certain Ace trademarks and to purchase product for resale from Ace.  Marn alleged that Ace and its representatives breached the Agreement, made numerous misrepresentations leading up to the signing of the Agreement and failed to provide promised inventory.  Ace argued that Marn’s breach of contract claim should be dismissed because it did not identify a specific provision of the Agreement that was breached, citing several Northern District cases.  But noted that each of Marn’s cases came down before the Seventh Circuit’s decision in Kolupa v. Roselle Park Dist., 438 F.3d 713, (7th Cir. 2006).  In Kolupa the Seventh Circuit explained the Rule 8(a)(2) requirements:

[i]t is enough to name the plaintiff and the defendant, state the nature of the grievance, and give a few tidbits (such as the date) that will let the defendant investigate. . . .  Any district judge (for that matter, any defendant) tempted to write "this complaint is deficient because it does not contain …" should stop and think:  What rule of law requires a complaint to contain that allegation?  Any decision declaring "this complaint is deficient because it does not allege X" is a candidate for summary reversal, unless X is on the list in Fed. R. Civ. P. 9(b).

Kolupa at 714-15 (emphasis in original).  Based upon the Kolupa decision the Court held that Marn was not required to cite a specific breached section of the Agreement.

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Conspiracy Claim Based Solely on Trade Secrets Preempted by ITSA

Posted in Jurisdiction

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.  Specifically, plaintiff alleged that it gave defendant information "including information that was confidential, non-public, and proprietary and which constituted Abanco trade secrets." (emphasis added by the Court).  But plaintiff’s conspiracy claim was based solely upon defendant’s and American Airline’s use of information obtained from Abanco "constitut[ing] trade secrets belonging to Abanco."  Because Abanco did not claim the conspiracy used any information other than its trade secrets, the conspiracy claim was preempted.