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

Dynamic Fluid Control (PTY) Ltd. v. International Valve Mfg., LLC, No. 10 C 7555, Slip Op. (N.D. Ill. May 11, 2011) (Darrah, J.).

Judge Darrah denied defendants' Fed. R. Civ. P. 12(b)(6) motions to dismiss in this patent and Lanham Act case involving air-release valves for water and sewage pipes, and plaintiff Dynamic Fluid Control's ("DFC") VENT-O-MAT mark.
 

Trademark Infringement

The fact that DFC's related entity DFC Water (Pty) Ltd. was the trademark registrant not DFC did not require dismissal. The terms "applicant" and "registrant" are read to include predecessor and future assignees of the mark.
 

Trade Dress Infringement

DFC was not required to specifically identify the elements of its trade dress in the complaint. DFC's general statement that its trade dress consisted of distinctive shape, contours . . . and color scheme" was sufficient. 
 

Unfair Competition

Because DFC's unfair competition claim was of the likelihood of confusion type, not the false advertising type, DFC was not required to meet Fed. R. Civ. P. 9(b) pleading standards. As a result, while DFC's allegations were "rather broad and somewhat ambiguous" they met the notice pleading standards. Defendants were on notice that DFC believed that customers were likely to be confused by defendants' use of the VENT-TECH mark and alleged use of DFC's trade dress.

The Court also noted that the Illinois Uniform Deceptive Trade Practices Act ("DTPA") codified unfair competition so it was unclear what limited exception DFC's state unfair competition claim might fall into, but the Court allowed the claim to remain. 

Deceptive Trade Practices Act

Once again, because DFC's DTPA claim was based upon likelihood of confusion, heighted pleadings standards were not required. And DFC's claim met the standard, as did its Lanham Act claims. 

Illinois Trade Secrets Act 

The Court held that DFC need not identify specific trade secrets that were allegedly misappropriated. DFC's general list of trade secret categories were sufficient to put defendants on notice.

Unjust Enrichment

Unjust enrichment is not a stand alone claim in Illinois. But it can be brought, although it is dependent upon other claims.

Pegasus Airline Group LLC

The individual defendants argued that there was no such entity as Pegasus Airline Group LLC ("PAG"). But as PAG was allegedly a limited liability company, not a corporation, defendant's argument that PAG was not incorporated was irrelevant. And defendant's only evidence that PAG did not exist came in its reply - too late. Finally, DFC's failure to prove service did not effect the validity of service.

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Deckers Outdoor Corp. v. Does 1-55, No. 114 C 10, Slip Op. (N.D. Ill. May 24, 2011) (Darrah, J.)

Judge Darrah dismissed without prejudice plaintiff's motion for a default judgment in this Lanham Act case about the UGG mark. The Court held that it would not exercise personal jurisdiction over the Does based solely on interactive websites without additional facts as to whether the websites were aimed at Illinois.
 

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The patent pilot program started this month in the Northern District and across the country.  The pilot program is a ten-year look at ways to handle patent cases more effectively.  The main component of the pilot program is judges in pilot districts, including the Northern District, self-selecting as patent judges.  Patent cases will continue to be randomly assigned to all Northern District judges.  But when a non-patent judge is assigned a patent case that judge will have thirty days to order reassignment of the case.  When reassignment is ordered, the case will be randomly reassigned to one of the patent judges.  There will also be patent-related education and programs offered for the patent judges across the country. 

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Neutral Tandem, Inc. v. Peerless Network, LLC, No. 08 C 3402, Slip Op. (N.D. Ill. Dec. 2, 2010) (Darrah, J.).

Judge Darrah granted plaintiff Neutral Tandem summary judgment as to defendants' (collectively "Peerless Network") inequitable conduct claim. Peerless offered no clear and convincing evidence that the inventor knew of the allegedly withheld prior art, referred to as the "Phase II Order." The fact that the inventor was involved in the proceeding's from which the Phase II Order issued was not sufficient. Those proceedings lasted eleven years and resulted in thirteen orders. And the inventor testified that he did not remember the Phase II Order. Furthermore, similarities between a paragraph of the Order and a statement made during prosecution was not sufficient. Finally a petition filed with the FCC by the inventor referencing the Order was not sufficient because he testified it was written by his outside counsel and he had not reviewed the petition.

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Eva's Bridal Ltd. v. Halanick Enters., Inc., No. 07 C 1668, Slip Op. (N.D. Ill. Aug. 4, 2010) (Darrah, J.)

Judge Darrah granted in part defendants' (collectively "Halanick") motion to reconsider the Court's summary judgment decisions in this trademark dispute. Initially, the Court overturned its decision that Sarniti could not file a proper claim in light of the Court's earlier decision allowing the same claim.

The Court also reversed its decision regarding plaintiffs' trademark claims. Plaintiffs exercised new control over defendants' use of the marks. Proof of plaintiff paying sales tax and keeping tabs on sales were insufficient. As such, plaintiffs' license is a "naked license".

Finally, the Court declined to exercise supplemental jurisdiction over the state law claims.

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MPH Techs. Oy v. Zyxel Coms. Corp., No. 10 C 684, Slip Op. (N.D. Ill. Jul. 16, 2010) (Darrah, J.).

Judge Darrah granted defendants' 28 U.S.C. § 1404(a) motion to transfer this patent case to the Northern District of California. Venue was proper in both districts. Plaintiff's choice of forum was only given slight weight because the Northern District of Illinois was not plaintiff's home forum and had only a weak connection to the case. The convenience of witnesses weighted in favor of transfer. All of defendants' employee witnesses were in the Northern District of California and, more importantly, half of the non-party witnesses were in the Northern District of California. Three of plaintiff's four witnesses were in its home country – Finland. Access to proofs is given little deference in light of wide-spread use of digital discovery, but still leaned slightly in favor of transfer because defendants' documents were largely in California.

The situs of material events was neutral because it is largely irrelevant in patent cases. The convenience of parties weighed in favor of transfer. Plaintiff's inconvenience in traveling from Finland to Chicago or to Northern California was not significantly different.

The interests of justice weighed slightly in favor of transfer because defendants' employees had a greater interest in the case than Illinois citizens did. Otherwise, the Courts were similarly capable of handling patent cases and had comparable times to resolution, with only a few months difference in each category.

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AutoZone, Inc. v. Strick, No. 03 C 8152, Slip Op. (N.D. Ill. Jun. 9, 2010) (Darrah, J.).

Judge Darrah granted in part defendants' bill of costs after defendants prevailed in a trademark infringement trial – click here for much more on the case in the Blog's archives. The Court awarded deposition transcript fees, but only up to the then applicable Northern District costs - $3.30 per page for an original transcript and $.83 per page for a copy. Because defendants did not show they were reasonably necessary, the Court did not award costs for condensed transcripts, word indexes, or delivery charges. 

The Court awarded costs for daily trial transcripts because they were necessary for direct and cross-examinations during trial and post-trial findings of fact. The Court awarded photocopying costs at $.10 per page only to the extent defendants showed the purposes of the copying. Finally, the Court awarded the costs of making the defendants' trial exhibits, excluding shipping costs. 

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Eva's Bridal Ltd. v. Halanick Enterprises, Inc., No. 07 C 1668, Slip Op. (N.D. Ill. May 19, 2010) (Darrrah, J.).

Judge Darrah granted in part defendants' and denied plaintiffs' summary judgment motions in this Lanham Act case over the use of the name "Eva's Bridal." The Court granted defendants' summary judgment as to plaintiffs' trademark infringement claim because plaintiffs presented no evidence that they federally registered the "Eva's Bridal" trademark.

Plaintiffs' Lanham Act unfair competition and trademark dilution claims did not require a federally registered trademark. But because the mark was not registered, plaintiffs had the burden of proving ownership of the mark.  Plaintiffs created at least a question of fact as to ownership with evidence that plaintiffs' business was a continuation of the original use of the mark. And because the mark was based upon a first name and not a last name the mark was not necessarily descriptive. The Court, therefore, held there was a question of fact as to whether the mark was descriptive. 

Defendants agreed that plaintiffs abandoned the mark by licensing it without maintaining any quality control. Plaintiffs, however, presented sufficient evidence of control to create a question of fact.

Defendants' argument that plaintiffs had not shown a likelihood of confusion was not relevant to a dilution analysis. And defendants' argument that the Eva's Bridal mark was not famous failed because it was not developed. Defendants' argument was a single sentence without elaboration or support.

There was also a question of fact as to defendants' laches and acquiescence claims. Plaintiffs cited evidence that during the alleged delay the parties engaged in various negotiations and defendants made various payments.

Finally, the Court denied plaintiffs' summary judgment motion. Plaintiffs failed to comply with Local Rule 56.1(a)(3) requiring a statement of uncontested material facts supported by admissible evidence. Plaintiffs' statements were largely taken verbatim from its amended complaint, were largely irrelevant to the summary judgment issues and were largely not supported by cites to the record. The Court, therefore, denied plaintiffs' motion without analyzing it on the merits. 

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Alta Mere Indus., Inc. v. DBC Window Tinting, Inc., No. 10 C 266, Slip Op. (N.D. Ill. May 6, 2010) (Darrah, J.).

Judge Darrah granted defendant Impact's Fed. R. Civ. 12(b)(2) motion to dismiss plaintiff Alta Mere's Lanham Act claims regarding its marks related to automotive window tinting and alarm systems. Impact operated a local Texas business and had no other identified Illinois contacts. Alta Mere argued that the Court had specific jurisdiction over Impact because of Impact's interactions with other defendants who were Alta Mere franchisees, as well as two letters allegedly sent to Impact warning that a franchise agreement governing defendant Cader's use of the Alta Mere marks were governed by Illinois law.

The Court considered jurisdiction over each defendant separately and, therefore, did not consider the other defendants' Illinois contacts in analyzing jurisdiction over Impact. Impact alleged that it never received Alta Mere's letters. But even if Impact had received them, correspondence sent to a defendant outside the forum could not alone create jurisdiction. The letters were "random, fortuitous, or attenuated contacts."

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AutoZone, Inc. v. Strick, No. 03 C 8152, Slip Op. (N.D. Ill. Mar. 8, 2010) (Darrah, J.).

Judge Darrah, after a bench trial, held that defendant’s use of his Oil Zone and Wash Zone marks did not create a likelihood of confusion with plaintiff AutoZone’s Auto Zone trademarks.*

Likelihood of Confusion

Only one of the seven likelihood of confusion factors weighed in AutoZone’s favor – the strength of AutoZone’s mark. But the strength of the mark was outweighed by the dissimilarity of both the marks and the services offered by the parties. Apart from the common use of the word “zone” there was little similarity between plaintiff’s AutoZone and defendant’s Oil Zone/Wash Zone. And while AutoZone sells auto parts, defendant performs automatic services.

Laches

AutoZone’s four-year delay exceeded the analogous Consumer Fraud and Deceptive Business Practices Act three-year statute of limitations. The fact that defendant’s alleged infringement “fell through the cracks” and was not acted on for four years, was not a sufficient excuse for the delay. And defendant was prejudiced by AutoZone’s delay based upon defendant’s four years of advertising the Oil Zone/Wash Zone names.

*  Click here for more on this case in the Blog’s archives.

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SPSS Inc. v. Nie, No. 08 C 66 (N.D. Ill.) (Darrah, Jr.).

The parties recently settled this trademark dispute shortly before trial.  For more on the parties' history and the settlement, click here for Chicago Tribune reporter and Chicago Law blogger Ameet Sachdev's reporting on the case in the Tribune, and click here for more coverage of the case in the Blog's archives.

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SPSS Inc. v. Nie, No. 08 C 66, Slip Op. (N.D. Ill. Aug. 19, 2009) (Darrah, J.).*

Judge Darrah granted plaintiff SPSS's motion to strike defendants' jury demand on their counterclaim. Defendants' claims for an injunction and destruction of items bearing the trademark were equitable and, therefore, not triable by a jury. And defendants' claim for attorney's fees is also not triable by a jury. 

The remaining claims for an accounting of SPSS's profits and a trebling of actual damages could be legal claims warranting a jury trial, but defendants had repeatedly characterized their claims as equitable unjust enrichment claims. And defendants could not claim actual damages from a breach of contract claim because the license that governed the parties' relationships was royalty-free. Defendants' counterclaims were, therefore, equitable and not triable to a jury.

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WMH Tool Group, Inc. v. Woodstock Int'l, Inc., No. 07 C 3885, Slip Op. (N.D. Ill. Apr. 8, 2009) (Darrah, J.).

Judge Darrah granted in part defendants' motion for summary judgment as to plaintiff's Lanham Act claims related to plaintiff's trademark for white exteriors applied to woodworking and metalworking machines.  Defendants sought summary judgment based upon the fact that their products were green and tan, and that plaintiff's counsel admitted that green and tan machines did not infringe plaintiff's trademark white color.  But the Court held that summary judgment was not appropriate even if plaintiff admitted the green and tan products did not infringe because the parties disputed which of the products were green and tan and whether defendants also sold green and white products.  Additionally, the Court held that there was a question of fact as to whether the alleged green and white products infringed plaintiff's trademarks.  The Court did, however, grant summary judgment as to plaintiff's dilution claim because plaintiff did not respond to the summary judgment arguments.

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SPSS Inc. v. Nie, No. 08 C 66, Slip Op. (N.D. Ill. Apr. 2, 2009) (Darrah, J.).

Judge Darrah denied the parties' cross-motions for summary judgment.  Plaintiff SPSS sought a declaratory judgment that defendants, SPSS's founders and former officers, were estopped from asserting any rights pursuant to the parties' Trademark Agreement.  Defendants countersued for trademark infringement.  While still officers of SPSS, defendants entered a Trademark Agreement with SPSS by which defendants gave SPSS rights to use the SPSS trademark.  Defendants argue that SPSS's continued use of the SPSS mark is an infringement.  SPSS argued that it owns the mark and, as proof, cited various documents signed by a defendant when SPSS went public.  In those documents, defendants allegedly made assurances that SPSS owned its trademarks and otherwise failed to disclose the Trademark Agreement. 

The Court denied plaintiff's summary judgment motion because the parties disputed defendant's state of mind when the documents at issue were signed.  Because  estoppel required a finding as to defendant's intent when he signed the documents, summary judgment was not appropriate.  Similarly, the Court denied the parties' cross-motions regarding SPSS's trademark infringement claim.  There were factual disputes regarding defendant's conduct during the public offering, which party made the first sale using the SPSS mark, and SPSS's knowledge of the Trademark Agreement.

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Edge Capture L.L.C. v. Lehman Bros. Holdings, Inc., No. 08 C 24112, Slip Op. (N.D. Ill. Aug. 28, 2008) (Darrah, J.).

Judge Darrah denied defendants' motion to dismiss plaintiffs' patent complaint and defendants' motion to bifurcate invalidity and enforceability from liability and damages issues. Plaintiffs' complaint was sufficient for the Fed. R. Civ. P. 8(a) notice pleading standards. It pled ownership of a patent to a trading system and infringement by defendants “by making, selling, and using [the device] embodying the patent.” (brackets in the opinion). Plaintiffs were not required to plead infringement by specific devices.

While the Court had broad discretion to bifurcate issues and to stay discovery on the bifurcated issues, it was not warranted in this case because defendants did not meet their burden of proof. While bifurcating would significantly speed resolution if defendants' invalidity or inequitable conduct arguments succeeded, bifurcation could significantly delay the case should defendants lose their invalidity and inequitable conduct arguments. Because defendants had not proven that they were likely to succeed, the Court denied the motion to bifurcate.

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The Seventh Circuit instituted a Commission to study the implementation of the ABA Jury Project.  The Northern District was heavily represented on the Commission.  The following Northern District Judges were members of the Commission:  Bucklo, Brown, Coar, Darrah, Denlow, Der-Yeghiayan, Gottschall, Holderman, Kennelly, Lefkow, Moran, Schenkier, St. Eve, and Zagel.  The Commission recently published its report -- click here to read it.  The report describes a two phase analysis.  In the first phase, district judges tested the following seven ABA Principles:

1.       Twelve-Person Juries;

2.       Jury Selection Questionnaires;

3.       Preliminary Substantive Jury Instructions;

4.       Trial Time Limits;

5.       Juror Questions;

6.       Interim Trial Statements by Counsel; and

7.       Enhanced Jury Deliberations.

Other Principles, such as juror notebooks and allowing jurors to take notes, were already in such widespread use that they were not tested.  Click here for the Phase One Project manual detailing the principles, the rationales and authority behind them, and suggested procedures.  Phase One resulted in questionnaires from 22 participating federal trial judges, 74 participating attorneys and 303 jurors from 38 trials that used one or more of the seven Principles.  Based upon the analysis of Phase One results and questionnaires, the Commission focused Phase Two on the following four Principles:

1.       Juror Questions;

2.       Interim Trial Statements by Counsel;

3.       Twelve-Person Juries; and

4.       Preliminary Substantive Jury Instructions.

These Principles were chosen because of Phase One popularity (78% of jurors reported that being able to ask questions increased their satisfaction with the process) and because of a desire to study the Principles more.  Click here for the Phase Two manual.

In Phase Two, 108 jurors from 12 trials employing one or more of the Phase Two Principles filled out questionnaires.  In addition, 12 attorneys and 4 district judges that participated also filled out questionnaires.  The results are interesting, but more importantly create the opportunity to powerfully impact the trial system across the Seventh Circuit in ways that benefit all of the stakeholders in the trial process -- the litigants, the jurors, the judge and the judge's chambers, and the litigators.

All four of the Phase Two Principles showed significant benefits to the trial process.  83% of jurors reported an increased understanding of the facts when allowed to ask written questions through a judge -- the questions were reworded to meet evidentiary rules.  And 75% of judges and 65% of attorneys thought the questions benefited jurors.  Similarly, preliminary substantive jury instructions were found to improve trials by jurors (80%), judges (85%) and attorneys (70%).  And the same was true for interim statements to the jury -- jurors (80%) and judges (85%).  Finally, twelve-person juries were found not to harm efficiency, while increasing juror diversity.

Each of the four Phase Two Principles, as well as several of the additional three Phase One Principles deserve more attention and analysis.  So, over the next several weeks I will provide follow up posts discussing the findings of those Principles in greater detail.  I will start with the idea of juror questions, which I find particularly important, later this week or early next.

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Jones Day v. BlockShopper.com, No. 08 C 4572 (N.D. Ill.) (Darrah, J.).

• Consumer Law & Policy Blog -- considering the merits of the claims.
   
• [UPDATE]:  Las Vegas Trademark Attorney -- pointing out that individuals could avoid being the subject of a Blockshopper story by purchasing through a trust.
   
• Legal Blog Watch -- questioning the PR ramifications of the suit.
   
• [UPDATE]:  MediaPost -- noting that Blockshopper's Florida stories also run in the South Florida Sun-Sentinel based on a deal with the Tribune company.
   
• Techdirt

While I generally save my commentary for the opinions, there is one point that needs to be made.  Many bloggers are using an alleged quote from Judge Darrah (I did not hear it and have not seen a transcript of the hearing, so cannot confirm it) warning Blockshopper that defending the suit would be very expensive.  Unless the comment was made in a hostile or aggressive manner, which I very much doubt and which has not been suggested in the posts I have seen, that is simply a statement of legal reality.  Defending federal intellectual property cases has become expensive, very expensive.  And defense costs are a factor in the calculus of every defendant's business decisions about  a law suit.

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Jones Day v. BlockShopper.com, No. 08 C 4572, Order (N.D. Ill. Aug. 18, 2008) (Darrah, J.).*

Judge Darrah entered the parties stipulated temporary restraining order ("TRO").  Plaintiff Jones Day sued defendants, BlockShopper.com and two individuals allegedly associated with the website, for allegedly using plaintiff’s service marks and linking to plaintiff’s website in at least two articles that discuss Chicago real estate transactions of plaintiff’s associates. Plaintiff claimed service mark infringement, Lanham Act false designation of origin, Lanham Act dilution, and state law deceptive trade practices and unfair competition and sought a TRO – click here for the Blog's earlier post on the case.

The Court entered the parties' stipulated TRO, ordering defendants not to:

1. Use reproductions or imitations of plaintiff's service mark;
    
2. Use any content from or link to plaintiff's website; or
    
3. reference plaintiff in its headlines.

Defendants were also ordered to remove any website content already on the site that would violate the TRO if written after its entry. 

As you would expect, other blogs and mainstream media have noticed the case.  At Legal Blog Watch, Robert J. Ambrogi just wrote about the dispute (click here), noting my post and discussing an article by Lynne Marek that will appear in next week's National Law Journal -- click here (subscription required).  According to the NLJ story, plaintiff asked only $10,000 to settle the case, but defendants rejected the offer, explaining:

Bending to the law firm's demands to stop coverage of the firm's lawyers would strangle the company's business model of using public records and publicly available Internet information, he said. Blockshopper, founded by former newspaper industry professionals, considers itself a next generation media outlet entitled to First Amendment protections just like any other news organization, he said.

Ambrogi sums up the issue at the heart of the dispute well:

In this age of electronically enhanced transparency, this whole dust-up reflects a sentiment I encounter time and again: "We like our public records to be public -- just not too public.

*  Click here for the Order.

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Jones Day v. BlockShopper.com, No. 08 C 4572 (N.D. Ill.) (Darrah, J.).

Plaintiff Jones Day sued defendants, BlockShopper.com and two individuals allegedly associated with the website, for allegedly using plaintiff’s service marks and linking to plaintiff’s website in at least two articles that allegedly discuss Chicago real estate transactions of plaintiff’s associates. Plaintiff claims service mark infringement, Lanham Act false designation of origin, Lanham Act dilution, and state law deceptive trade practices and unfair competition – click here for the complaint. Plaintiff also moved for a temporary restraining order (“TRO”) – click here for the TRO motion. In addition to the use of its service marks, plaintiff alleged that defendants used pictures of plaintiff’s associates that appear to be identical to pictures on plaintiff’s website.

A January 2007 Chicago Tribune article described defendants’ website as one that provides details surrounding Chicago-area real estate transactions using a Cook County list of home sales and internet research, noting that subjects of some posts do not like the stories:

But BlockShopper goes beyond the basic who-what-and-how-much, revealing tantalizing tidbits such as what the parties do for a living and what the sellers originally paid for the property, plus satellite maps and even photos of the property and the parties.

The TRO hearing was noticed for Tuesday, August 19. I will keep you updated as decisions are issued.

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Nilssen v. Osram Sylvania, Inc., No. 2007-1998, -1348 Slip. Op. (Fed. Cir. June 17, 2008).

The Federal Circuit affirmed Judge Darrah's award of defendant's/appellee's attorney's fees – click here to read the Blog's post about the inequitable conduct opinion. Judge Darrah previously held and the Federal Circuit previously affirmed that plaintiffs committed inequitable conduct by, among other things: (1) falsely claiming small entity status; (2) failing to disclose material prior art to the PTO; and (3) failing to disclose related litigation to the PTO. Judge Darrah then held that the case was exceptional based upon plaintiff's inequitable conduct, filing of a frivolous suit, and litigation misconduct. Because the case was exceptional, Judge Darrah awarded defendants their attorney's fees.

The Federal Circuit agreed with plaintiffs, holding that an inequitable conduct finding did not require a case be deemed exceptional. But the Court held that Judge Darrah's findings were supported by evidence and, therefore, were within his discretion.

Judge Newman dissented, stating:

The court today promotes unexceptional trial procedures and non-culpable prosecution errors into an "exceptional case" of such severity as to warrant the award of attorney fees. That is not what the status, or precedent, or policy contemplates. I respectfully dissent.

Check the following blogs for more on this opinion:

• Filewrapper
  
• Patently-O

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Nordstrom Consulting, Inc. v. M&S Techs., Inc., No. 06 C 3234, Slip Op. (N.D. Ill. Mar. 4, 2008) (Darrah, J.).*

Judge Darrah granted in part and denied in part the parties' cross-motions for summary judgment. Plaintiff and counter-defendant (collectively "NCI") developed visual eye chart software that defendants and counter-plaintiffs (collective "M&S") incorporated into their visual acuity system which was sold to ophthalmalic distributors and end users. For a period of time, the parties worked together, selling and servicing product and sharing office space. But eventually the relationship broke down and NCI began selling a competing system. The parties charged each other with various IP claims and related state law claims. Each of the IP-related claims is addressed below.

Copyright Infringement

The Court held that NCI was the sole owner of the copyright and that its principal Nordstrom was the sole author of the copyrighted software. M&S argued that its principal Marino contributed to the software. But the Court held that Nordstrom wrote the software and Marino only offered direction and ideas.

The Court granted M&S summary judgment for all copyrighted software sales during the terms of the parties' agreements, but not as to sales outside of the agreement dates. And the Court granted summary judgment of non-infringement as to M&S's new software package "Sports Vision Testing" ("SVT"). NCI argued that SVT was an infringing derivative work. But NSI failed to produce evidence or expert testimony refuting M&S's evidence that it created its SVT software independent of NCI's software using clean room procedures.

Digital Millennium Copyright Act ("DMCA")

NCI alleged that M&S violated the DMCA by circumventing protections on a computer containing the software code in order to aid an NCI licensee of the code. Because the code was accessed to aid a licensee, NCI could not show that the password had been bypassed for the purpose of infringing NCI's copyright. The Court, therefore, granted summary judgment for M&S. 

The Court also denied summary judgment as to M&S's claim that NCI violated the DMCA by accessing a portion of M&S's computer system for which NCI lacked authorization and passwords. Summary judgment was not appropriate because the parties disputed whether NCI accessed the computers and whether the accessed material was copyrighted.

Lanham Act

The Court denied M&S summary judgment on NCI's Lanham Act false advertising claim and its related state law claims. M&S argued that it had not made any statements likely to cause customer confusion. But NCI countered that M&S stated in advertising that it had used the same system for five years. NCI argued that the statement must be false because M&S switched to its new SVT software during that time. Because of these disputed facts, summary judgment was not appropriate.

Illinois Trade Secret Act

The parties agreed that prior to terminating their relationship, NCI took various information from M&S's offices and computers. But the parties disagreed as to whether M&S took reasonable measures to protect the information's confidentiality. The parties agreed that M&S password protected the information. But NCI argued passwords alone were not enough and suggested other protections that allegedly could and should have been employed. The Court held that password protection alone was not per se insufficient. But the Court required more information regarding M&S's actions and the feasibility of alternative protections before it could rule on summary judgment.

The Court also denied summary judgment as to M&S's claim that NCI violated the DMCA by accessing a portion of M&S's computer system for which NCI lacked authorization and passwords. Summary judgment was not appropriate because the parties disputed whether NCI accessed the computers and whether the accessed material was copyrighted.

Lanham Act

The Court denied M&S summary judgment on NCI's Lanham Act false advertising claim and its related state law claims. M&S argued that it had not made any statements likely to cause customer confusion. But NCI countered that M&S stated in advertising that it had used the same system for five years. NCI argued that the statement must be false because M&S switched to its new SVT software during that time. Because of these disputed facts, summary judgment was not appropriate.

Illinois Trade Secret Act

The parties agreed that prior to terminating their relationship, NCI took various information from M&S's offices and computers. But the parties disagreed as to whether M&S took reasonable measures to protect the information's confidentiality. The parties agreed that M&S password protected the information. But NCI argued passwords alone were not enough and suggested other protections that allegedly could and should have been employed. The Court held that password protection alone was not per se insufficient. But the Court required more information regarding M&S's actions and the feasibility of alternative protections before it could rule on summary judgment.

*  Click here to read more about this case in the Blog's archives.

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Dime Group Int’l, Inc. v. Soyuz-Victan USA, LLC, No. 07 C 4178, 2008 WL 450825 (N.D. Ill. Feb. 13, 2008) (Darrah, J.).

Judge Darrah stayed plaintiff’s trademark infringement-related claims pending international arbitration in Russia pursuant to Ukranian law, as required by the parties’ liquor distribution agreement. Plaintiff argued that the arbitration clause was prohibitively expensive, but the Court held plaintiff’s proof was not sufficient. Plaintiff failed to show it was financially incapable of bearing the arbitration costs. All plaintiff offered was that it had a $13,000 operating loss in 2006. But, that was balanced by plaintiff’s $7 million in sales and good credit rating. Additionally, if plaintiff prevails, defendants would bear all arbitration costs.

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U.S. Gypsum Co. v. 3M Innovative Props. Co., No. 07 C 6381, 2008 WL 514976 (N.D. Ill. Feb. 20, 2008) (Darrah, J.).

Judge Darrah granted defendants’ (collectively “3M”) Fed. R. Civ. P. 12(b)(3) motion to dismiss for lack of venue. Plaintiff United States Gypsum (“Gypsum”) filed this action asserting its own patent and seeking declaratory judgments regarding 3M’s patents, all to low dust construction compounds. Shortly thereafter, 3M filed a corresponding suit in the District of Minnesota. Prior to filing their suits, the parties were in extended negotiations regarding cross-licensing of their patents. Pursuant to those negotiations, the parties entered a confidentiality agreement (“Agreement”) requiring that all disputes “arising from the subject matter of this Agreement shall be brought . . . exclusively in [D. Minn.]” Because the express subject matter of the Agreement was the patents in suit and because the Agreement, negotiated by sophisticated parties, set D. Minn. as the exclusive jurisdiction, the Court dismissed the case in favor of 3M’s action filed in the D. Minn.

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Eva’s Bridal Ltd. v. Halanick Enter., Inc., No. 07 C 1668, Slip Op. (N.D. Ill. Jan. 24, 2008) (Darrah, J.).*

Judge Darrah denied plaintiff’s (collectively “Eva’s Bridal”) motion to dismiss defendants’ (collectively “Halanick”) counterclaims, including Halanick’s claim for declaratory judgment that Eva’s Bridal abandoned its Eva’s Bridal mark.** Halanick’s allegations that Eva’s Bridal caused its mark to lose significance by “destroy[ing]” its good name and failing to stop Halanick’s use of the mark after the parties’ business relationship ended were sufficient to state a claim.

* Click here for a copy of the opinion.

** Halanick had non-IP claims related to the business relationship between the parties, but they will not be addressed here.

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WMH Tool Group, Inc. v. Woodstock Int’l, Inc., No. 07 C 3885, Slip Op. (N.D. Ill. Nov. 14, 2007) (Darrah, J.).*

Judge Darrah denied defendants’ Fed. R. Civ. P 12(b)(6) motion to dismiss plaintiff WMH Tool Group’s (“WMH”) Lanham Act dilution claim and its related Illinois Consumer Fraud and Deceptive Business Practices Act (“Consumer Fraud Act”) claim. WMH registered a trade dress for the color white on its woodworking and metal working products, sold under its JET brand. WMH alleged that its white trade dress was both famous and exclusively associated with WHM’s tools. WMH further alleged that defendant Woodstock International (“Woodstock”) diluted WMH’s trade dress by selling woodworking and metal working tools in WMH’s distinctive white color under Woodstock’s Shop Fox brand. Similarly, WMH alleged that defendant Grizzly Industrial (“Grizzly”) diluted WMH’s trade dress by selling woodworking and metal working tools in WMH’s distinctive white color under Grizzly’s Grizzly or Grizzly Industrial brands. 

Defendants argued that WMH did not state a claim for dilution because the complaint did not specify the date when WMH’s trade dress became famous and that defendants’ allegedly infringing sales began after that date. But the Court held that notice pleading did not require that WMH plead specific dates. It was enough that WMH pled that the trade dress had become famous and that defendants' infringement of the trade dress occurred after the fame was acquired.

Defendants also argued that WMH lacked standing to bring a Consumer Fraud Act claim because WMH was not a “person” or a “consumer” pursuant to the Act.  But the Court held that 815 ILCS 505/1(1)(c) defined “persons” to include business entities, and that a plaintiff need not be an actual consumer to bring a claim pursuant to the Consumer Fraud Act.

* Click here for a copy of the opinion.

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Medallion Products, Inc. v. H.C.T.V., Inc., No. 06 C 2597, 2007 WL 3085913 (N.D. Ill. Oct. 18, 2007) (Darrah, J.).

Judge Darrah dismissed defendant Broadcast Arts Group (“BAG”) for lack of personal jurisdiction, but held that the Court had personal jurisdiction over defendant ICC, Woodridge Specialty Products Corp. and an individual defendant (collectively “ICC Defendants”). Plaintiffs argued that BAG’s tortious acts against plaintiffs, all Illinois residents, created personal jurisdiction based upon the effects test doctrine. But the Court held that the alleged tortious acts against were not sufficient for jurisdiction because BAG was a Florida resident and all of its allegedly tortious acts were performed in Florida or Pennsylvania, at the request of non-Illinois residents. 

The alleged tortious acts of the ICC Defendants, however, did create personal jurisdiction pursuant to the effects test doctrine. The ICC Defendants allegedly entered an agreement to develop, market and sell a counterfeit pet-stain removal product that was packaged in bottles using plaintiff’s “Urine Gone” logo. The alleged acts and resulting injury would have occurred in Illinois.

The Court also held that plaintiffs met the Fed. R. Civ. P. 8 pleading standards as clarified in Atlantic Corp. v. Twombly, ____ U.S. ____, 127 S. Ct. 1955 (2007). So, the Court denied defendant’s motion to dismiss plaintiffs’ state law claims.

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Steiner Indus., Inc. v. Auburn Mfg., Inc., No. 07 C 668, 2007 WL 1834176 (N.D. Ill. Jun. 22, 2007) (Darrah, J.).

Judge Darrah denied declaratory judgment defendant Auburn Manufacturing’s (“Auburn”) motion to dismiss. Auburn argued that plaintiff’s (collectively “DJ Plaintiffs”) suit improperly anticipated Auburn’s complaint which alleged Lanham Act claims of false designation and false advertising, as well as related state law claims. Auburn filed its complaint in the District of Maine within a week of DJ Plaintiffs’ filing. Auburn alleged that DJ Plaintiffs’ use of “FM Approved” and “Made in the USA” in their catalogs and website advertising in connection with their welding blankets constituted false designation and false advertising. DJ Plaintiffs were aware of the allegations before they filed suit because, as part of an ongoing negotiation with plaintiffs, Auburn had provided plaintiffs a copy of its complaint. The Court acknowledged its discretion to dismiss the case in favor of Auburn’s later filed complaint, but did not dismiss the case. The two cases mirrored each other, so either could resolve the parties’ dispute. And because both cases were filed in federal courts, there was no concern that the DJ case would cause friction between federal and state courts. The deciding issue was whether the Maine Court could offer a full remedy. DJ Plaintiffs had a motion to transfer or dismiss pending before the Maine Court. In that motion, DJ Plaintiffs argued that the Maine Court lacked personal jurisdiction over two of the three DJ Plaintiffs – Steiner Industries, Inc. and Lab Safety Supply, Inc. DJ Plaintiffs, therefore, asked the Maine Court to transfer the case to the Northern District of Illinois or to dismiss the case.  The Court held that if the Maine Court transferred the case to the Northern District or dismissed Steiner and Lab Safety for lack of jurisdiction, those factors would weigh in favor of maintaining the DJ action. If, however, the Maine Court denied DJ Plaintiffs’ motion and held that it had jurisdiction over all DJ Plaintiffs, then the Main Court could more effectively decide the dispute than the Northern District. The Court, therefore, denied the motion to dismiss with leave to refile if the Maine Court finds it has jurisdiction over all DJ Plaintiffs and does not transfer the case to the Northern District.

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Murphy v. Murphy, No. 04 C 3496, 2007 WL 551576 (N.D. Ill. Feb. 15, 2007) (Darrah, J.).

The Court granted summary judgment for defendants for several reasons. First, after reviewing the evidence, including a comparison of clips from each work, the Court held that no reasonable jury could find that plaintiff’s documentary is substantially similar to The PJs. Plaintiff’s movie is a series of interviews of people, while The PJs is an animated program telling fictional stories using fictional characters. And to the extent that any similarities existed, they were in non-copyrightable elements of the video. For example, the Court noted that plaintiff could not hold a copyright in someone else’s appearance or how a building looks.

Second, plaintiff had not established that defendants had access to plaintiff’s film. Plaintiff only provided his film to Winfrey via Harpo Studios and plaintiff provided no evidence that she or anyone at Harpo had sent the film to any third party. Additionally, Harpo Studios never aired the film and plaintiff could not even provide any evidence proving that Winfrey or Harpo Studios had actually received the film.

Third, defendants presented uncontradicted evidence that they conceived of the characters and concept of The PJs before plaintiff sent his film to Winfrey and Harpo Studios. While The PJs began airing on Fox in 1999, defendants submitted evidence that they had drafted characters and plots for The PJs by December 1997.

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Judge Darrah, after finding each of the eleven patents-in-suit unenforceable for inequitable conduct, held that the suit was exceptional based upon the inequitable conduct, the filing of several frivolous claims which were previously dismissed and misconduct at trial, providing the Court the discretion to award attorney's fees.  The court also did a detailed analysis of defendants' Bill of Costs and awarded defendants some or all of their requested costs for service of process, court reporters, witnesses and experts, among others.  Of note, the Court held that expert fees, including the expert's hourly rates, were recoverable for time spent on expert reports, deposition and related preparation, and other time spent in responding to discovery, but not for time spent attending other expert depositions in the case.

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Nilssen v. Osram Sylvania, Inc., __ F. Supp.2d __, 2006 WL 1891807, (N.D. Ill. July 5, 2006) (Darrah, J.).

After a six-day inequitable conduct bench trial, Judge Darrah held each of the eleven patents-in-suit unenforceable based upon the pro se plaintiff/inventor’s inequitable conduct before the Patent & Trademark Office (“PTO”). Plaintiff’s inequitable conduct included: submitting misleading affidavits to the PTO; improperly claiming small entity status; falsely claiming priority dates to avoid prior art; failing to disclose related litigation during prosecution; and failing to disclose material prior art to the PTO during prosecution. The Court, however, refused to hold that all patents related to the patents-in-suit were unenforceable under the unclean hands doctrine.

This opinion provides a detailed primer on the many types of misconduct that an applicant may commit before the PTO.  It also serves as a cautionary tale for inventors considering prosecuting patent applications pro se.

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