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

FM Indus., Inc. v. Citicorp Credit Servs., Inc., No. 07 C 1794, 2008 WL 717792 (N.D. Ill. Mar. 17, 2008) (Conlon, J.).

Judge Conlon granted Citicorp defendants and denied defendant Gelfand summary judgment of copyright infringement. Plaintiff FM Industries ("FMI") alleged that Gelfand infringed FMI's copyright in its TUCANS debt-collection software by continuing to use it after Gelfand's license expired. Gelfand argued that FMI could not prove ownership of the copyright because it could not produce the written assignment. But the Court held that FMI's deposition testimony was sufficient to create a material question of fact and, therefore, denied summary judgment.

Citicorp was accused of encouraging and inducing its outside attorneys to use the TUCANS software after their licenses expired. But at least in part because FMI failed to respond to Citicorp's Local Rule 56.1 statements or to submit its own responsive statements of fact, the Court accepted as true Citicorp's evidence that it told its outside attorneys to stop using TUCANS before licenses expired and that Citicorp was unaware that the attorneys continued using TUCANS.

Practice Tip: I cannot say it enough: you must strictly comply with Local Rule 56.1. Click here to read about other opinions considering Local Rule 56.1

• Print
• Comments
• Trackbacks

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.

• Print
• Comments
• Trackbacks

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.

• Print
• Comments
• Trackbacks

Varitalk, LLC v. Lahoti, No. 07 C 1771, 2007 WL 1576127 (N.D. Ill. May 30, 2007) (Conlon, J.).

Judge Conlon denied defendant Dave Lahoti’s (“Lahoti”) Fed. R. Civ. P. 60(b) motion for reconsideration of the Court’s previous opinion denying Lahoti’s motion to dismiss for lack of personal jurisdiction, improper venue and forum non conveniens (you can read more about the previous decision in the Blog’s archives). Lahoti, a California resident, operated a website from California using the domain name www.veritalk.com. Lahoti’s site was an internet portal which allowed visitors to his site to click through links to buy various products or services. The Court held that Lahoti’s website fell in the gray area between active websites (which create specific jurisdiction) and passive websites (which do not create specific jurisdiction). But the portal’s interactive and commercial nature combined with plaintiff Varitalk’s evidence that some consumers were confused and erroneously visited Lahoti’s website created personal jurisdiction. Lahoti argued for reconsideration because he contends that his website did not link to businesses located in or doing business in Illinois, and that a third party puts the content on his website. The Court denied both of these arguments, explaining that Varitalk had put presented evidence that Lahoti’s website included links to business with substantial Illinois operations and that whether Lahoti or an agent of his placed the content on his website did not change the Court’s analysis. But the Court’s procedural analysis may be the most useful part of this case for litigators. The Court notes that Lahoti styled his motion as a Fed. R. Civ. P. 60(b) motion for reconsideration, but that it is actually a Fed. R. Civ. P. 54(b) motion. Rule 60(b) is for reconsideration of final judgments, where as Rule 54(b) is for interlocutory decisions. A denial of a motion to dismiss is necessarily interlocutory.

• Print
• Comments
• Trackbacks

Varitalk, LLC v. Lahoti, No. 07 C 1771, 2007 WL 1576127 (N.D. Ill. May 30, 2007) (Conlon, J.).

Judge Conlon denied defendant Dave Lahoti’s (“Lahoti”) motion to dismiss plaintiff Varitalk’s complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2), improper venue pursuant to Fed. R. Civ. P. 12(b)(3) and forum non conveniens. Varitalk had a principal place of business in Chicago, where it developed software to relay highly customizable pre-recorded audio messages to consumers that were indistinguishable from live human voice. Varitalk registered a trademark in its name “Varitalk” for use in connection with this business. Lahoti is an individual residing in California where he operates various businesses using websites, such as www.omegaworks.com and www.crosspath.com. Lahoti registered the domain name www.veritalk.com, where he set up an internet portal which allowed visitors to his site to click through links to buy various products or services. The Court held that Lahoti’s website fell in the gray area between active websites (which create specific jurisdiction) and passive websites (which do not create specific jurisdiction). But the portal’s interactive and commercial nature – Lahoti earned income from the site based on how many visitors clicked on links on the site and whether they bought products from the linked sites – combined with Varitalk’s evidence that some consumers were confused and erroneously visited Lahoti’s portal, create specific jurisdiction over Lahoti. On the other hand, Lahoti’s email exchange with Varitalk’s CEO Frederick Lowe, initiated by Lowe, regarding whether Lahoti would sell his portal to Varitalk did not create specific jurisdiction because the exchange was limited and not initiated by Lahoti.

The Court held that venue was proper in Illinois because a substantial part of the events giving rise to the claims occurred in Illinois and because Varitalk alleged that Illinois consumers were confused by Lahoti’s portal.

Finally, the Court dismissed Lahoti’s forum non conveniens argument because the doctrine only applies where the alternative forum is outside the United States or its territories. Where the alternate venue is California, or any other state, the defendant would have to move to transfer venue pursuant to 28 U.S.C. Section 1404(a).

• Print
• Comments
• Trackbacks

Goss Int'l Am., Inc. v. K & M Newspaper Serves., Inc., __ F. Supp.2d __, 2006 L 3883318 (N.D. Ill. Dec. 29, 2006) (Colon, J.).

In this claim construction opinion, Judge Colon considered several issues regarding whether "means" terms were actually means plus function terms.  The patented technology at issue is "inserts" which are machines that insert advertising materials into newspapers at specific locations within the newspaper.  The Court first held that "article feeder means" was no means plus function language governed by Section 112, para. 6.  Citing the Federal Circuit's MIT v. Abacus Software, 462 F.3d 1344 (Fed. Cir. 2006) decision, the Court concluded that "article feeder," like "circuitry" in the MIT case, described a known structure in the industry.  Additionally, the patent's prosecution history showed that both the examiner and the patienter understood "article feeder" to refer to a specific structure.  And dictionaries definitions of "feeder" were consistent with its use in the patent-at-issue.  Furthermore, the claims that included the term described the location of the article feeder and certain of its components, giving it structural definition.  Finally, defendant's means plus function definition failed because it sought to import structures that were not necessary to the "article feeder's" function and because certain of the structures were recited in independent claims, violating the doctrine of claim differentiation.

The Court also held that "control means" was means plus function language, except as used in claims 12 and 24.  In claims 12 and 24,  "control means" was defined as including two structures:  "'control means' . . . includes a main controller . . . and a plurality of sheet material feed controllers . . . ."  Because claims 12 and 24 defined the structure of the "control means," "control means" was not defined as means plus function term for those claims, although it was in the other independent claims.

Practice tip:  It is important to identify the terms actually in dispute and provide the Court with claim construction briefing focused on the disputed terms.  In this case, the Court noted that the initial briefs were "insufficient and unfocused" and required the parties to file a joint claim construction chart summarizing disputed terms and identifying the parties' respective constructions, including whether each party thought the terms required means plus function analysis.

• Print
• Comments
• Trackbacks

DeVore Family Partnership LLP v. McDougal Littell, No. 06 C 3484, 2006 WL 3393844 (N.D. Ill. Nov. 22, 2006) (Conlon, J.).

Having already refused to dismiss this case (here), Judge Conlon held that defendants had not waived the arbitration clause in the parties' Agreement and stayed the case pending the results of the arbitration.  Plaintiff argued that defendants waived the arbitration clause by their delay in seeking arbitration.  Defendants countered that they had not delayed because when their counsel sought copies of the agreement on several occasions, defendants' employee sent copies of the front pages of the agreement, but omitted the back pages which included a set of preprinted terms and conditions including the arbitration clause at issue.  Defendants' counsel received the full agreement several months after the case was filed and sought arbitration and a stay of this proceeding within two weeks of reading the full agreement.

Plaintiff argued that defendants had constructive knowledge of the arbitration clause because they signed and still had possession of the entire agreement.  The Court did not accept the constructive knowledge argument because of, among other things, counsel's diligent efforts to get the entire agreement.  Additionally, the Court noted that arbitration clause was not a negotiated portion of the agreement, but was part of plaintiff's preprinted contract.

• Print
• Comments
• Trackbacks

DeVore Family Partnership LLP v. McDougal Littell, No. 06 C 3484, 2006 WL 2861116 (N.D. Ill. Sept. 26, 2006) (Conlon, J.).

Judge Conlon refused to dismiss or strike plaintiff's claim for defendants' profits from sales of a textbook which allegedly included plaintiff's copyrighted photograph.  Plaintiff alleged that it licensed defendants to include plaintiff's photograph of the Himalaya Mountains in a run of no more than 40,000 textbooks, but that defendants made almost 1.5 million copies of the book.  Plaintiff sought, among other things, defendants' profits from the allegedly infringing textbooks.

Defendants argued that the claim for profits should be dismissed or struck because plaintiff could not show that defendants' profits were attributable to the use of a two inch square copy of plaintiff's copyrighted picture on a single page of the 1,254 page textbook.  The Court ruled that dismissing plaintiff's claim for profits would violate the liberal notice pleading standard, Fed. R. Civ. P. 8(a).  The Court acknowledged that profits are only available if plaintiff establishes that the profits are attributable to the infringement, but held that discovery was required to make that determination.

Defendants also sought to strike the claim for profits from the Complaint pursuant to Fed. R. Civ. P. 12(f).  The Court denied the request, noting that motions to strike are "generally disfavored" and that in order to grant a motion to strike a claim, a court would have to find that the claim was so unrelated to the Complaint that it was meritless and not worthy of any consideration.  Because the claim for profits survived the motion to dismiss, it did not meet the standard for a motion to strike.  I suspect that in the vast majority of cases, when the same claim is the subject of a combined motion to dismiss and to strike, if the motion to dismiss fails it follows that the motion to strike fails.  Having said that, however, I am curious to know whether anyone is aware of a case denying a motion to dismiss a claim, but granting a motion to strike the same claim.  If anyone has seen the case, post a comment or send me an email at chicagoiplitigation@yahoo.com.

• Print
• Comments
• Trackbacks