Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Cassetica Software, Inc. v. Computer Sciences Corp., No. 09 C 0003, Slip Op. (N.D. Ill. Jun. 18, 2009) (Kendall, J.).

Judge Kendall granted defendant CSC's Fed. R. Civ. P. 12(b)(6) motion to dismiss.  Plaintiff Cassetica asserted patent infringement, breach of contract, violation of the Computer Fraud and Abuse Act ("CFAA"), and related state law claims based upon CSC's alleged continued use of Cassetica's NotesMedic software after the end the parties' contract for the software.  The Court dismissed each claim as follows:

• Copyright Infringement:  Cassetica's copyright claim was dismissed because Cassetica could not recover its claimed statutory damages.  Cassetica registered its copyright after CSC's alleged infringement began.  It did not matter that CSC's alleged infringement allegedly continued after the registration.
   
• Breach of Contract:  Because CSC's alleged breach occurred after the contract terminated there was no longer a contract to be breached and, therefore, no claim.
   
• CFAA:  There was no "damage" as defined by the CFAA.  The CFAA defines damages as harm to a computer system's data.  But Cassetica alleged copying of electronic information, not that any of its data was lost or harmed.  Otherwise, Cassetica only made bare allegations that its data was harmed without any factual statement.
   
• Other State Law Claims:  Cassetica's conversion, trespass to chattels and unjust enrichment claims were all preempted by the copyright law because each state law claim was based upon the alleged downloads of the NotesMedic software.

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I published an article  in the most recent edition of the John Marshall Review of Intellectual Property Law surveying the application of the Twombly "plausibility" pleading standard, in place of the former any set of facts regime, to patent cases -- The Uneven Application of Twombly in Patent Cases: An Argument for Leveling the Playing Field (click here to read it).  I found that district courts have largely followed the Federal Circuit's one case addressing Twombly, which unfortunately involved a pro se plaintiff, and held that Twombly did not change the pleading standards for patent plaintiffs.  But despite that ruling, many district courts are requiring that patent defendants plead affirmative defenses and, in some cases, counterclaims to the higher plausibility standard.  This creates a harmful dichotomy which can be remedied in two ways:  1) as some courts already do, use strict Local Patent Rules to require early disclosures of plaintiff's claims followed in short order by defendant's defenses; or 2) as at least the Western District of Wisconsin already does, require patent plaintiffs to identify the asserted claims and the accused products.  Either or both level the playing field for the parties and come at little cost to plaintiffs who already have a Fed. R. Civ. P. 11 pre-suit investigation requirement.

In addition to my article, there are several excellent pieces in Volume 8, Issue 1 of Review of Intellectual Property Law, including:

• European IP attorney Paul Cole provides a Eurpoean view of the KSR obviousness standard -- click here to read the article;
   
• Timothy Trainer looks at inconsistent international application of TRIPS and discusses what can be done to better protect intellectual property worldwide -- click here to read the article.
   
• Lawrence Ebert (of IPBiz fame) draws lessons from the patenting and licensing of the transistor -- click here to read the article;
   

• Vangelis Economou argues that a covenant not to sue should not destroy a court's declaratory judgment jurisdiction over a patent defendant's invalidity and inequitable conduct counterclaims and that the Federal Circuit should overturn its Super Sack decision -- click here to read the article;
   
• Nicholas Dernick looked at sovereign immunity -- click here to read the comment;
   
• Graham Liccardi considered the Computer Fraud & Abuse Act as a vehicle for getting federal jurisdiction of trade secret disputes -- click here to read the comment; and
   
• Mark Petrolis argued that fair use should not be an absolute defense to a moral rights violation -- click here to read the comment.

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Here are some interesting IP-related posts and because everyone (at least in Chicago) still seems to have last week's election on their minds, the first is election related:

• The MTTLR Blog's Dorothy Eshelman has an interesting post on whether the use of debate clips by, among others, the candidates involved is fair use -- click here to read it.  I agree with Eshelman's conclusion that it is probably not fair use.  And I agree that debate footage should be dedicated to the public domain, at least on a limited basis.  It would be an easy matter for debate commissions to require that for the privilege of filming the debate networks agree that their footage be available in the public domain so long as it is not used near in time to the debate itself (perhaps within an hour) and so long as clips are limited to no longer than a few minutes or one question and set of answers. 
   
• The MTTLR Blog's Sherri Nazarian looks at the application of the Computer Fraud and Abuse Act ("CFAA") to hacking VP candidate Sarah Palin's email and argues that the CFAA needs to be modernized -- click here to read the post.  Nazarian explains that the email hacking was not enough to trigger the CFAA, enacted in 1984.  Perhaps it is time to update the 24 year old CFAA to meet the massive changes in technology.

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MPC Containment Sys., Ltd. v. Moreland, No. 05 C 6973, 2008 WL 2875007 (N.D. Ill. Jul. 23, 2008) (Aspen, Sen. J.).*

Judge Aspen granted in part and denied in part defendants’ summary judgment motion regarding plaintiffs’ copyright, Lanham Act, trade secret and related state law claims.** Plaintiffs and defendants both design, manufacture and sell flexible fuel storage tanks. Corporate defendant MIL was formed by at least individual defendants John and Lawrence, both of whom previously worked for plaintiffs in various capacities and later worked for MIL in direct competition with plaintiffs over, at least, a United States Air Force contract.

Trade Secret Misappropriation

The Court held that plaintiffs’ pricing and warranty provisions were not trade secrets and, therefore, granted summary judgment in defendants’ favor. But the Court held that there was a question of fact as to whether plaintiffs’ tank designs were trade secrets. Additionally, the Court noted that the question of whether sufficient efforts were used to maintain secrecy of the alleged trade secrets was a question of fact for jurors in all, but the most extreme cases. Because plaintiffs identified several precautions taken to protect their trade secrets, the Court denied summary judgment. The fact that tank designs were provided to plaintiffs’ independent contractors without confidentiality did not warrant summary judgment for defendants. There are circumstances where independent contractors have independent, professional duties of confidentiality regardless of whether agreements were signed.

Copyright Infringement

Defendants argued that plaintiffs’ copyrighted fuel tank drawings were not original, as required for copyright ownership, because defendant John authored the drawings, not plaintiffs. The Court held that there was a question of fact as to the ownership because the parties disputed John’s employment status when he made the drawings. If John was an employee, plaintiffs owned the copyrights based upon the work for hire doctrine.

The Court also found a question of fact as to the degree of creativity employed in making plaintiffs’ drawings. A comparison of plaintiffs’ drawings and defendants’ drawings, which defendants alleged plaintiffs copied, left a question of fact as to whether plaintiffs’ drawings showed sufficient differences to rise to the level of creativity.

Compute Fraud and Abuse Act (“CFAA”)

The Court granted defendants summary judgment as to CFAA § 1030(a)(4) because plaintiffs did not respond to defendants’ claims and, therefore, waived their defenses. But the Court found questions of fact as to the two other charged sections of the CFAA, §§ 1030 (a)(2)(c) and (a)(5). First, there was a question of fact as to whether defendant John was authorized to access the documents he allegedly misappropriated. While John may have received the documents at issue during the normal course of his employment with plaintiffs, there was a dispute as to whether John exceeded his authorization by allegedly breaching his duty of loyalty to plaintiffs.

Additionally, there was a question of fact as to whether John passively received all accused documents by email or “accessed” the documents pursuant to the CFAA actively by email or otherwise.

Illinois Deceptive Trade Practices Act (“IDTPA”)

The IDTPA only provides for injunctive relief, not monetary damages. As a result, the IDTPA only addresses ongoing harms. The Court, therefore, granted defendants’ summary judgment as to defendants’ past acts. The Court also explained that it would not grant an IDTPA injunction to eliminate an existing commercial advantage, as courts sometimes do in trade secrets cases.
 

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Arience Builders, Inc. v. Baltes, No. 08 C 921, 2008 WL 2580166 (N.D. Ill. Jun. 17, 2008) (Bucklo, J.).

Judge Bucklo denied defendant’s Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff’s Computer Fraud and Abuse Act (“CFAA”) claim challenging whether plaintiff sufficiently pled a “transmission.” The Court held that plaintiff’s allegations that defendant used “a code and/or command” to “delete and/or change” plaintiff’s computer and electronic files constituted a transmission. The allegations went well beyond simply pressing a delete key, which the Seventh Circuit held was not a CFAA transmission in Airport Ctrs., LLC v. Citrin, 440 F.3d 418, 419 (7th cir. 2006).

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e360Insight, LLC v. Comcast Corp., No. 08 C 340, Slip Op. (N.D. Ill. Apr. 10, 2008) (Zagel, J.).

Judge Zagel granted defendant Comcast judgment on the pleadings, dismissing plaintiff e360Insight’s ("e360") Computer Fraud and Abuse Act, First Amendment, and related state law claims. e360, an Internet marketer and accused email spammer, alleged that Comcast harmed e360 by unjustifiably blocking all or most of e360’s emails from Comcast’s customer email accounts. Comcast stopped e360's emails with filtering software that identified and stopped emails from e360 addresses.

Comcast argued that the Good Samaritan clause of the Communications Decency Act, 47 U.S.C. § 230(c)(2), provided Comcast absolute immunity from e360's claims because Comcast voluntarily filtered e360's emails to restrict access to what Comcast believed was objectionable content. The Court held that the Good Samaritan clause provided absolute immunity for ISPs that filtered for objectionable material. The Court also held that Judge St. Eve's and the Seventh Circuit's recent Chicago Lawyers' Committee v. Craigslist opinions – click here for more on those cases – were not applicable. Those opinions limited the clause's protection for ISPs that chose not to filter. Because Comcast filtered, it enjoyed absolute protection. The Court also held that e360's compliance with Congress's spam prevention laws, 15 U.S.C. §§ 7701-13 (Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM") was irrelevant. Regardless of compliance with CAN-SPAM, the Good Samaritan clause still allowed the ISP to make a good faith judgment that e360's emails were objectionable. And e360 did not sufficiently plead Comcast's lack of good faith in determining that the emails were objectionable.

Eric Goldman at the Technology & Marketing Law Blog has a good post on this case and several other district court cases considering § 230(c) defenses. – click here for his post.

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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.

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United States Gypsum Co. v. LaFarge N. Am., Inc., No. 03 C 6027, 2007 WL 1100804 (N.D. Ill. Apr. 3, 2007) (Hart, J.).

Judge Hart granted in part and denied in part the parties' cross-motions for summary judgment.  This case was a dispute over technology related to gypsum wallboard manufacturing and included patent infringement, trade secret misappropriation, breach of contract, Stored Communications Act ("SCA"), Computer Fraud and Abuse Act ("CFAA") and various related state tort claims.  The Court first looked at plaintiff's patent infringement claims regarding methods for making gypsum board and resolved the parties' claim construction disputes.  The Court then turned to defendants' argument that plaintiff was estopped from claiming infringement by equivalents because it failed to expressly refer to the doctrine of equivalents in its complaint or in its contention interrogatory responses.  The Court held that it was sufficient to allege infringement and cite Section 271 in a complaint.  And as to waiver for failure to disclose equivalents in its interrogatory responses, the Court held that defendants had shown no prejudice from plaintiff's failure to disclose equivalents and that while plaintiff did not use the term equivalents in its responses, it did state that it contended defendants infringed the patents even if defendants processes did not meet timing requirements in the claims.  As a result, plaintiff was not barred from arguing infringement pursuant to the doctrine of equivalents.

The Court also performed a detailed analysis  of whether each alleged trade secret at issue was, in fact, a trade secret and whether it was  misappropriated.  For example, the Court held that regardless of whether plaintiff's Construction Specifications were trade secrets, they were not misappropriated because plaintiff's did not show that the Construction Specifications were used in the corporate defendants' business.  The Court held that certain drawings and blueprints were not misappropriated because there was no proof that the individual defendant alleged to have taken them gave them to the corporate defendants or otherwise used them in any way.  Additionally, there was no evidence that the corporate defendants used the drawings or blueprints in their business.  The Court dismissed claims based upon a slotted forming plate because of evidence that at least four different groups independently developed the slotted plates for use in wallboard manufacturing.  The Court noted that if just one other group had developed the plate it could have been accorded trade secret status, but because four others had developed similar technology it was a commonly known procedure which could not be afforded trade secret status.  The Court held that board formulation sheets which contained, among other things, the formula for making the wallboard material were protectable trade secrets.  The Court held that plaintiff could not claim blanket trade secret protection for its 11,000 page Operating Bulletins or its 500 page Expert System included therein.  But the Court did allow trade secret protection for elements of the Operating Bulletins and Expert System specifically identified as trade secrets. 

The Court also held that plaintiff's state court claims were preempted by the Illinois Trade Secret Act only to the extent that the torts involved trade secrets.  To the extent the torts were based simply on business issues, for example tortious interference with business expectancy, they were not preempted. 

Finally, the Court held that it had personal jurisdiction over the individual defendants because plaintiff was headquartered in Illinois and the individual defendants were aware of that based on the fact that each had attended limited training sessions in Illinois

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