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

Tuthill Corp. v. ArvinMeritor, Inc., No. 07 C 2758, 2008 WL 4200888 (N.D. Ill. Sep. 5, 2008) (Gottschall, J.)

Judge Gottschall denied declaratory judgment (“DJ”) defendant ArvinMeritor’s Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. ArvinMeritor sent DJ plaintiff Tuthill Corp. a letter alleging that Tuthill infringed a group of patents to recreational vehicle suspension systems (the “RV patents”). Tuthill responded that its product did not infringe, that the patents were invalid, and that the accused products were not in production yet. Tuthill alleged that the parties had continuing discussions regarding the RV patents. ArvinMeritor claimed that the discussions went dormant as to the RV patents after it received Tuthill’s letter. Tuthill filed this suit after its accused products were put on the market. The Court held that regardless of whether the discussions went dormant, Tuthill’s claim met the Supreme Court’s MedImmune standard, as defined in the Federal Circuit’s SanDisk opinion. And ArvinMeritor never dissolved the controversy by providing Tuthill a covenant not to sue.

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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.

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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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ExcelStor Tech., Inc. v. Papst Licensing GMBH & Co. KG, No. 07 C 2467, 2007 WL 3145013 (N.D. Ill. Oct. 24, 2007) (Der-Yeghiayan, J.).

Judge Der-Yeghiayan granted defendant Papst Licensing’s (“Papst”) Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. Plaintiffs, various related ExcelStor Technology entities (collectively “ExcelStor”) licensed Papst’s patent portfolio (the “Agreement”) related to hard disk drives (“HDD”). ExcelStor alleged that when the Agreement was signed, Papst had already given third party Hitachi a license covering the same HDDs. Furthermore, ExcelStor alleged that Papst concealed the Hitachi license from ExcelStor. 

Based upon the alleged double royalties, ExcelStor filed this action seeking declaratory judgments that both Papst and the Agreement violated the patent exhaustion doctrine* by extracting two licensing fees for the same product based upon the same patent portfolio. But the Court held that patent exhaustion is a defense to patent infringement, not a cause of action. Because patent exhaustion does not entitle ExcelStor to relief, it does not create federal question jurisdiction. Similarly, ExcelStor’s state law claims for fraud and breach of contract claim do not create federal question jurisdiction because they relate to patent exhaustion – they are questions of state law for which the Court lacked jurisdiction. The Court also noted that it did not consider whether diversity jurisdiction existed because neither party raised it.

* For more on patent exhaustion, specifically the Supreme Court’s patent exhaustion case this term, click here.

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Mullen v. Society of Stage Directors & Choreographers, No. 06 C 6818, 2007 WL 2892654 (N.D. Ill. Sep. 30, 2007) (Coar, J.).

Judge Coar granted in part defendant United Scenic Artists’ (“USA”) Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiffs’ declaratory judgment (“DJ”) claims and denied all defendants’ motions seeking dismissal of plaintiffs’ defamation claim. Plaintiffs are the various production heads of the Chicago production of the musical “Urinetown!” (“Chicago Production”). The Chicago Production was performed pursuant to a license from Blue Dog Entertainment, LLC. But despite that license, plaintiffs each received a cease and desist letter from counsel for defendants (the heads of production of the Broadway Urinetown! production (“Broadway Production”) and their unions USA and the Society of Stage Directors & Choreographers (“SSDC”). The letter warned that plaintiffs willfully copied copyrighted aspects of the Broadway Production and attempted to pass off the Chicago Production as the award-winning Broadway Production. Defendants demanded an accounting of revenues from the Chicago Production in order to calculate damages. Defendants also held a press conference during which they publicly stated that the plaintiffs “plagiarized” the Broadway Production. Plaintiffs responded by filing suit seeking declaratory judgments that the Chicago Production did not infringe any of plaintiffs’ copyrights and that it was not Lanham Act passing off. And based upon the press conference, plaintiffs included a defamation claim.

The Court dismissed plaintiffs’ copyright infringement DJ claim against USA because USA held no copyrights related to Urinetown! or the Broadway Production. So, USA could not have filed a copyright infringement action against plaintiffs. The Court also dismissed plaintiffs’ Lanham Act DJ claim against USA. While USA may have been able to show the generalized harm necessary for prudential standing based upon the alleged harm to its members who produced the Broadway Production, it could not show the specific injury required for Article III standing, because that alleged injury was to its members not USA.

The Court, however, denied the defendants’ Rule 12(b)(6) motion to dismiss and Fed. R. Civ. P. 12(c) motion for judgment on the pleadings regarding plaintiffs’ defamation claim. First, defamation claims do not trigger the Fed. R. Civ. P. 9(b) heightened pleading standards because they do not involve fraud or mistake. Second, defendants’ alleged wrongful accusation that plaintiffs plagiarized the Broadway Production is defamation per se because originality and integrity are core values of theatre:

It is beyond doubt that statements consisting of false accusations of plagiarism against professionals in industries where the measure of the quality of work centers on creativity, originality and integrity (i.e. – authors, journalists, artists, thespians, publishers, producers and directors of fine arts productions, etc.) are capable of imputing such persons lack ability or otherwise prejudice such persons in their professions.

Furthermore, the Court held that it was “absurd” to argue that “plagiarism” had an innocent meaning:

[Plagiarism] is not capable of any meaning that would not impugn Plaintiffs’ ability or not prejudice them in their profession.

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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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Ortho-Tain, Inc. v. Rocky Mountain Orthodontics, Inc., No. 05 C 6656, 2006 WL 3782916 (N.D. Ill. Dec. 20, 2006) (Leinenweber, J.).

Judge Leinenweber dismissed defendant's, Rocky Mountain Orthodontics ("RMO"), patent-related declaratory judgment counterclaims for lack of subject matter jurisdiction.  Plaintiff, Ortho-Tain ("OT"), sued RMO alleging that RMO breached the distributorship agreement between the parties pursuant to which OT manufactured dental appliances (allegedly covered by OT's patents) and RMO sold those appliances in France.  RMO counterclaimed for, among other things, declaratory judgment of noninfringement and unenforceability of OT's relevant United States patents.  RMO argued that OT's breach of contract and tortious interference suit combined with OT's warnings to RMO's customers that RMO was no longer authorized to sell OT products created the requisite reasonable apprehension of suit.  The Court, however, held that there was no reasonable apprehension.  OT's suit had been pending for over a year and OT had not added patent claims.  OT had also repeatedly stated that the suit was only a contract and tortious interference action.  While OT's statements stopped short of an affirmative disavowal of suit, they were sufficient to prevent a reasonable apprehension of suit.

Additionally, there was no present activity by RMO which constituted infringement.  RMO's counterclaims identified only United States patents, but RMO's sales activities were all in France.  Because there was no evidence submitted of infringing activity in the United States, there was no subject matter jurisdiction for a declaratory judgment action.

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