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

Strom v. Strom Closures, Inc., No. 06 C 7051, 2008 WL 489363 (N.D. Ill. Feb. 20, 2008) (Der-Yeghiayan, J.).

Judge Der-Yeghiayan granted plaintiff Victoria Strom’s (“Strom”) motion to dismiss defendants’ (collectively “SCI”) counterclaims. SCI filed an earlier suit charging Strom with patent infringement. The parties settled that suit pursuant to a Settlement Agreement (“Agreement”). SCI alleged that Strom breached the Agreement and was once again, therefore, infringing SCI’s patents. But the Court held that once a district court dismisses a case with prejudice, it cannot reopen the case for enforcement of a related agreement without independent jurisdiction. SCI’s appropriate claim was for breach of the Agreement, not patent infringement. Because breach of the Agreement was a state law claim and because there was no diversity (SCI pled that all parties were Illinois residents), the Court lacked jurisdiction. Finally, the Court held that there was not supplemental jurisdiction based upon Strom’s federal employment claims. Strom’s claims and the breach of the Agreement were not sufficiently related.

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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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Ganjavi v. Smith, No. 06 C 4189, 2007 WL 2298375 (N.D. Ill. Jul. 31, 2007) (Gettleman, J.).

Judge Gettleman granted defendant’s Fed. R. Civ. P. 12(b)(1) & (6) motion to dismiss. Plaintiff alleged violation of plaintiff’s attribution and integrity right pursuant to section 106A of the Copyright Act and false presentation in violation of the Anti-Cybersquatting Consumer Protection Act, Lanham Act 15 U.S.C. Section 1125, as well as related state law claims. Plaintiff, a classical guitarist, alleged that defendants attacked plaintiff and his business by posting information on an online forum  and by creating websites “mocking” plaintiff’s website. The Court dismissed plaintiff’s attribution and integrity rights claim because Section 106A only applies to “works of visual art” which expressly excludes electronic publications, including websites. The Court dismissed plaintiff’s anti-cybersquatting claim because plaintiff failed to allege a “bad faith intent to profit” from the alleged cybersquatting as required by the act.

Because the only remaining claims were based in state law, the Court turned to diversity jurisdiction.  There was no question that there was diversity, so the only issue was whether the amount in controversy exceeded $75,000 as plaintiff pled. The Court held that plaintiff had not born its burden of proof to show that the amount in controversy exceeded $75,000. Plaintiff claimed that it would prove actual damages in excess of $75,000 at trial, but provided no evidence supporting his assertion. The Court held that plaintiff’s promise without supporting proof was not sufficient to support jurisdiction.  Plaintiff also argued that he might be awarded punitive damages and attorneys fees in excess of $75,000. The Court held that plaintiff attorneys fees could not be counted toward the amount in controversy. And while punitive damages could be counted, plaintiff provided no evidence of his expected punitive damages. Because plaintiff did not meet his burden of proof, the Court dismissed plaintiff’s remaining state law claims pursuant to Fed. R. Civ. P. 12(b)(1).

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