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

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.

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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.

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Ace v. Marn, No. 06 C 5335, 2007 WL 1541747 (N.D. Ill. Apr. 17, 2007) (St. Eve, J.).

Judge St. Eve granted in part and denied in part plaintiff/counterdefendant Ace Hardware Corp.'s ("Ace") Fed. R. Civ. P. 12(b)(6) motion to dismiss defendants/counter-plaintiffs' (collectively "Marn") counterclaims.  The Court denied the motion as to Marn's breach of contract claim and dismissed Marn's fraud and tortious interference claims.  Ace and Marn entered an agreement (the "Agreement") allowing Marn the right to use certain Ace trademarks and to purchase product for resale from Ace.  Marn alleged that Ace and its representatives breached the Agreement, made numerous misrepresentations leading up to the signing of the Agreement and failed to provide promised inventory.  Ace argued that Marn's breach of contract claim should be dismissed because it did not identify a specific provision of the Agreement that was breached, citing several Northern District cases.  But noted that each of Marn's cases came down before the Seventh Circuit's decision in Kolupa v. Roselle Park Dist., 438 F.3d 713, (7th Cir. 2006).  In Kolupa the Seventh Circuit explained the Rule 8(a)(2) requirements:

[i]t is enough to name the plaintiff and the defendant, state the nature of the grievance, and give a few tidbits (such as the date) that will let the defendant investigate. . . .  Any district judge (for that matter, any defendant) tempted to write "this complaint is deficient because it does not contain ..." should stop and think:  What rule of law requires a complaint to contain that allegation?  Any decision declaring "this complaint is deficient because it does not allege X" is a candidate for summary reversal, unless X is on the list in Fed. R. Civ. P. 9(b).

Kolupa at 714-15 (emphasis in original).  Based upon the Kolupa decision the Court held that Marn was not required to cite a specific breached section of the Agreement.

The Court dismissed, with leave to amend, Marn's fraud claim because it failed to identify the specific Ace individuals that allegedly made the material false statements or where the statements were made.  The Court dismissed Marn's tortious interference claim because Ace is a party to the Agreement and, therefore, cannot tortiously interfere with the Agreement.

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Stafford Trading, Inc. v. Lovely, No. 05 C 4868, 2007 WL 1512417 (N.D. Ill. May 21, 2007) (Coar, J.).

Judge Coar granted in part declaratory judgment plaintiffs' (collectively "Stafford") motion to dismiss and denied Stafford's summary judgment motion.  The Court dismissed defendants' fraud and unjust enrichment counterclaims after holding that they were preempted by the Illinois Trade Secret Act.  The Court also dismissed defendants' fraudulent concealment.  The material fact that Stafford allegedly failed to disclose was the opinion that Stafford owned the RIVAS electronic options trading platform outright.  But the Court held that an allegedly withheld opinion could not support a fraudulent concealment claim.

The Court's summary judgment decision turned largely upon whether RIVAS was a computer program protected by copyright or a "methodology" protected as a trade secret.  The Court held that it had insufficient evidence to make the determination.  Furthermore, neither party briefed the issue of what effect the copyright/methodology would have upon defendants' alleged oral contract between the parties which allegedly made the parties co-owners of RIVAS.  The Court denied summary judgment as to defendants' breach of contract counterclaim because the existence of an oral contracts and its terms were both disputed facts.  Finally, the Court denied summary judgment as to defendants' trade secret counterclaim because, whether RIVAS was determined to be protected by copyright or trade secret, the parties disputed whether defendants employed sufficient means to protect RIVAS's secrecy.

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Abbott Labs. v. Mylan Pharms., Inc., No. 05 C 6561, 2007 WL 625496 (N.D. Ill. Feb. 23, 2007) (Kendall, J.).

Judge Kendall denied plaintiff's, Abbott, Fed. R. Civ. P. 12(b)(6) motion to dismiss defendant's, Mylan, antitrust counterclaims.  Mylan alleged that two Abbott employees submitted declarations and/or testimony stating the weight and structure of certain oligomers related to the patented invention, despite their knowledge that the tests they relied upon were known to be incapable of measuring the oligomers at issue.  Mylan further alleged that based upon these fraudulent statements, the USPTO issued certain of the patents-in-suit which then prevented Mylan from entering the market with a generic version of Abbott's pharmaceutical Depakote.  Abbott relied upon a prior Northern District ruling against third party Torpharm which held that Abbott's conduct before the USPTO was not inequitable.  But the Court held that while that ruling prevented a sham litigation claim, it did not estop Mylan's inequitable conduct allegations because Mylan was not a party to the prior case and, therefore, had no opportunity to present its evidence and argument.  Additionally, the Court held that Mylan adequately alleged antitrust injury by stating that it prepared to enter the market with generic Depakote, but was prevented from doing so by Abbott's alleged inequitable conduct.

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Specialized Seating, Inc. v. Greenwich Indus., L.P., 472 F. Supp.2d 999 (N.D. Ill. Feb. 2, 2007) (Holderman, C.J.).

Judge Holderman held declaratory judgment defendant's, Greenwich Industries ("Greenwich"), trademark invalid and held that Greenwich committed fraud on the USPTO while prosecuting its trademarks.  Declaratory judgment plaintiff, Specialized Seating ("Specialized"), and Greenwich are competing manufacturers of folding chairs.*  Greenwich has a trademark to a configuration of a folding chair with certain physical characteristics.  Because Greenwich secured patents for most or all of the features identified in its trademark, the Court held that Greenwich's trademark was functional and, therefore, invalid.  In addition to having held patents on the claimed features, Greenwich had also touted the functional benefits of the features in advertising.

The Court also held that Greenwich committed fraud on the USPTO because it only disclosed one of its four patents which covered functional elements of the claimed mark.  In a first Office Action the Examiner rejected the mark as functional and requested that Greenwich identify any patents that cover elements of the mark.  In response to that request, Greenwich disclosed only one of its four patents and distinguished it.  The Examiner rejected the mark again and posed interrogatories to Greenwich, which Greenwich answered without disclosing its three other patents.  The mark was ultimately issued on a Request for Reconsideration, without disclosure of Greenwich's remaining three patents.  The Court held that Greenwich deliberately misled the USPTO by not disclosing its other three patents during prosecution of its mark.

* Specialized's founder and president was previously the President of the entity that became Greenwich's folding chair business.  Specialized and Greenwich had a long history of litigation prior to this suit, which has all been resolved through various settlements or voluntary dismissals of suit. 

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