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

Viskase Cos., Inc. v. World Pac Int'l AG, No. 09 C 5022, Slip Op. (N.D. Ill. Feb. 3, 2011) (Bucklo, J.).

Judge Bucklo granted declaratory judgment plaintiff Viskase's motion for summary judgment of invalidity and denied the remaining cross-summary judgment motions as moot in this patent dispute involving food casings that prevent the loss of weight, flavor and taste. The Court previously construed "impermeable" to mean that the casing did not allow any measurable loss of weight, flavor or moisture. Instead of addressing each of Viskase's arguments element-by-element, declaratory judgment defendant World Pac put "all of its eggs in one basket." The Court denied World Pac's earlier summary judgment motion regarding infringement largely because of World Pac's failure to test the alleged impermeability of Viskase's accused products. World Pac, therefore, argued that because Viskase had not tested sausages covered by the prior art patent, it could not succeed.

But the Court explained that "what is good for the goose is not always good for the gander." The Court held that there was no authority requiring that a party test alleged anticipatory prior art patents to prove that they read on the asserted patent. While there was some appeal to World Pac's argument, it was unsuccessful. An accused infringer is not required to test prior art products. Furthermore, World Pac's own expert had conceded that the relevant claim elements of the patent-in-suit were disclosed in the prior art patent.
 

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The Nielsen Co. (US), LLC v. Truck Ads, LLC, No. 08 C 6446, Slip Op. (N.D. Ill. Jan. 24, 2011) (Pallmeyer, J.).

Judge Pallmeyer granted plaintiff Nielsen's: 1) Fed. R. Civ. P. 12(b)(1) motion to dismiss defendant Truck Ads' declaratory judgment claim for lack of copyright infringement; and 2) Fed. R. Civ. P. 56 motion for summary judgment regarding Truck Ads' copyright misuse counterclaim in this copyright case regarding Nielsen's designated marketing area ("DMA") maps.

While the Court held that any copyright claim to raw census data would be "frivolous," that was not Nielsen's claim. Nielsen originally brought claims alleging infringement of its DMA regions and data, as well as the DMA maps. The current claims only accused infringement of the DMA maps. There was therefore, no case or controversy regarding the DMA regions or data. The Court also granted Nielsen summary judgment on Truck Ads' copyright misuse claim. First, the Court held that counts were split on whether copyright misuse was a proper counterclaim, or an affirmative defense. But the Court did not have to decide the issue because Truck Ads could not prove that Nielsen's claims were wholly lacking in merit. The DMA maps are original content that can warrant copyright protection, even though they may have been created based upon uncopyrighted data. And Nielsen's allegation that Truck Ads' alleged copying of the maps was unlawful was not frivolous, unsupported by law or clearly contradicted by record facts. Furthermore, Truck Ads offered no evidence that its alleged harm - a lost contract - was based upon Nielsen's accusations or its merit.
 

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Gordon-Darby Sys., Inc. v. Applus Techs., Inc., No. 10 C 1863, Slip Op. (N.D. Ill. Dec. 23, 2010) (Zagel, J.).

Judge Zagel granted plaintiff's motion to dismiss its patent infringement claims regarding vehicle emissions testing with prejudice and to dismiss defendants' noninfringement, invalidity and unenforceability claims without prejudice. After the parties engaged in some discovery, plaintiff determined that it no longer wanted to pursue its claims and gave defendants a covenant not to sue. Based upon that covenant, the parties agreed that all of their claims should be dismissed, except for defendants' inequitable conduct claims. Defendants argued that those claims were related to its 35 U.S.C. Section § 285 claim to make the case exceptional and award defendants their attorney's fees. Citing the Federal Circuit's decision in Monsanto Co. v. Bayer Bioscience N.V., 514 F.3d 1229 (Fed. Cir. 2008), the Court held that, although the Federal Circuit had not squarely decided the issue, the precedent was clear that the covenant divested the Court of subject matter jurisdiction over the inequitable conduct declamatory judgment claim.

The Court, however, retained independent jurisdiction over defendants' Section § 285 claim to make the case exceptional and award defendants their attorney's fees. And the Court acknowledged that it could consider unenforceability as part of the exceptional case analysis, which could trigger a holding that the patents in suit were unenforceable due to inequitable conduct.
 

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Trading Technologies Int'l, Inc. v. CQG, Inc., No. 10 C 718, Slip Op. (N.D. Ill. Jan. 24, 2011) (Shadur, Sen. J.).*

Judge Shadur sua sponte dismissed defendants' (collectively "CQG") noninfringement and invalidity counterclaims. The Court explained that "mirror image" noninfringement and invalidity patent counterclaims are "seemingly meaningless." And the "amorphous nature" of CQG's counterclaims resulted in them being especially unnecessary. The Court, therefore, dismissed the declaratory judgment counterclaims.

*Click here for much more on this and TT's other cases in the Blog's archives.
 

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Sloan Valve Co. v. Zurn Indus., Inc., No. 10 C 204, Slip Op. (N.D. Ill. May 4, 2010) (St. Eve, J.).

Judge St. Eve granted in part plaintiff/counter-defendant Sloan's Fed. R. Civ. P. 12 motions in the patent infringement case involving a flush valve handle assembly. The Court dismissed defendant/counter-plaintiff's (collectively "Zurn") invalidity and noninfringement counterclaims to the extent they challenged patent claims other than those identified as allegedly infringed in Sloan's complaint. The Court could have exercised jurisdiction over the counterclaims if Zurn had met the MedImmune standard independently for each of Sloan's unasserted claims, but Zurn did not.

The Court denied Sloan's Fed. R. Civ. P. 12(b)(6) motion to dismiss Zurn's inequitable conduct counterclaim. Zurn met the materiality standard by pleading that Sloan should have known that admissions made in a prior, related reexamination proceeding were relevant to the Examiner in the later application. 

The Court dismissed Zurn's estoppel and misuse affirmative defenses. Each were pled in a single sentence and without particularized facts.

The Court also dismissed Zurn's lack of actual notice affirmative defense. Zurn also denied Sloan's actual notice allegation in its answer. Because actual notice was denied in the answer, it was not a proper affirmative defense. Finally, the Court dismissed Zurn's noninfringement and exceptional case affirmative defenses.  Neither was a proper affirmative defense. 

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Chicago Bd. Options Exchange Inc. v. Realtime Data, LLC d/b/a IXO, No. 09 C 4486, Slip. Op. (N.D. Ill. Jan. 8, 2009) (Lindberg, Sen. J.).

Judge Lindberg granted declaratory judgment for defendant Realtime's Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction. The parties agreed that the Court lacked general jurisdiction and focused their arguments on specific jurisdiction. Because plaintiff Chicago Board Options Exchange ("CBOE") brought declaratory judgment claims, the analysis focused upon whether Realtime's patent enforcement activities were directed at the jurisdiction. CBOE argued that specific jurisdiction was created by Realtime's Texas patent infringement suit against, among others, Chicago-based defendants, including eventually CBOE. But the Court held that Realtime's Texas action alone did not create specific jurisdiction, and the Court did not consider the Texas suit against CBOE because CBOE was not added to the Texas action until after the instant suit was filed.

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Loufrani v. Wal-Mart Stores, Inc., No. 09 C 3062, Slip. Op. (N.D. Ill. Nov. 12, 2009) (Kendall, J.).

Judge Kendall denied counterclaim defendants' (collectively "Smiley Company") Fed. R. Civ. P. 12(b)(6) motion to dismiss counterclaim plaintiff Wal-Mart's Lanham Act and related state law declaratory judgment claims related to Smiley Company's potential use of Wal-Mart's Mr. Smiley Mark, from Wal-Mart's well-known roll back campaign, after the Trademark Trial and Appeal Board ("TTAB") held that Smiley Company's mark was not distinctive and that the mark would create a likelihood of confusion with Wal-Mart's Mr. Smiley Mark.

First, the  Court held that Wal-Mart had plead sufficient facts to establish a controversy existed warranting Wal-Mart's declaratory judgment claims.  All of Wal-Mart's claims related to likelihood of confusion.  And the parties had developed "clear positions" on likelihood of confusion through their TTAB proceedings.  Furthermore, Smiley Company had already raised numerous claims against Wal-Mart, evidencing an actual controversy.  The Court also noted that this case was not like Geisha v. Tuccilli, 552 F. Supp. 2d 1002 (N.D. Ill. 2007) (click here and here to read more about the case in the Blog's archives).  In that case, the Court held there was no controversy, but declaratory judgment defendant had never used its mark and if he did use it by opening a restaurant, it would have been easy for declaratory judgment plaintiff to identify the use and alleged infringement.  Smiley Company, however, admitted to using its mark internationally since the 1970s.  Furthermore, Geisha was a summary judgment decision where the parties and the Court had the benefit of discovery.

Smiley Corp. also argued that the Court should only address its appeal of the TTAB decision and not Wal-Mart's broader claims.  The Court, however, held that a district court is free to decide infringement and likelihood of confusion issues as part of reviewing a TTAB decision.  The TTAB review instituted by Smiley Company was both an appeal and a new action which allowed the Court to address new issues and to admit new evidence.

Finally, Wal-Mart's Illinois Consumer Fraud and Deceptive Business Practices Act claim was not insufficient for failing to plead actual damages.  While actual damages were required, they could not exist in a declaratory judgment claim seeking to prevent future acts and, therefore, future damages.
 

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Publications Int'l. Ltd. v. LeapFrog Enters., Inc., No. 08 C 2800, Slip Op. (Dec. 4, 2008) (Guzmán, J.).

Judge Guzmán granted declaratory judgment defendant LeapFrog's Fed. R. Civ. P. 12(b)(1) motion to dismiss plaintiff Publication International's (“PIL”) claim for declaratory relief regarding the POINGO mark used in association with a pen-like electronic reading device. PIL alleged, and LeapFrog admitted, that LeapFrog used the POINGO mark for a pen reader system in one presentation to a retailer, but never marketed or sold a pen reader using the name and never sought to register the mark with the PTO. PIL also alleged that LeapFrog sent PIL cease and desist letters warning that LeapFrog's earlier use of the POINGO mark gave it priority in the mark. The Court held that PIL had not met its burden because it had not alleged that LeapFrog had used the mark on products in commerce or that LeapFrog had sufficient intent to use the mark in commerce. Without a use in commerce or an intent to use, the immediacy required for a declaratory judgment action was not present.

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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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