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

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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RTC Indus., Inc. v. Haddon, No. 06 C 5734, 2007 WL 2743583 (N.D. Ill. Sep. 10, 2007) (Grady, J.).

Judge Grady denied defendant’s Fed. R. Civ. P. 12(c) motion for judgment on the pleadings. The Court held that plaintiff’s breach of fiduciary duty claim was not preempted by the Illinois Trade Secret Act. Plaintiff alleged that defendant (plaintiff’s employee) violated his fiduciary duty to plaintiff (his employer at the time) by disclosing to third party DCI Marketing (“DCI”) that a DCI employee had accepted an offer to work for plaintiff. The Court held that the alleged acts would breach defendant’s fiduciary duty regardless of whether the hiring decision was confidential. The breach of fiduciary duty claim, therefore, was not preempted.

The Court also held that the non-complete clause defendant signed as a condition of employment was enforceable even though it lacked a geographic restriction. There was a two year time restriction and an “activity” restriction - defendant was only prevented from taking a job with a competitor that would either result in actual or threatened use of plaintiff’s confidential information.

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Johnson v. Wright, No. 05 C 3943, 2007 WL 1079063 (N.D. Ill. Apr. 5, 2007) (Grady, J.).

Judge Grady denied defendants' Fed. R. Civ. P. 12(b)(1) motion to dismiss plaintiff's amended complaint for lack of subject matter jurisdiction.  Defendants, record companies and related individuals, were accused of infringing plaintiff Syl Johnson's copyright in his song "Is It Because I'm Black," as well as related state law claims.  Defendants argued that there was not federal jurisdiction because the co-owners of Johnson's copyright had transferred their rights to one of the defendants.  The transfer, defendants argued, destroyed Johnson's federal copyright claim, leaving only state claims over which the Court lacked independent jurisdiction.  But defendants conceded that Johnson stated a claim for federal copyright infringement.  The Court held that Johnson's and defendants' alleged co-ownership of the copyright was an affirmative defense, not a jurisdictional matter.  Because Johnson had a well-pled claim of federal copyright infringement, the Court denied defendants' Rule 12(b)(1) motion to dismiss.  The Court also noted that defendants' motion was "essentially" a copyright infringement summary judgment motion, but because it was styled as a Rule 12(b)(1) motion on the pleadings, Johnson was not given adequate opportunity to present his response.  Additionally, the Court identified several questions of fact that would have prevented a grant of summary judgment based upon the exhibits attached to the parties' briefs.

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Scholz Design Inc. v. Jaffe, No. 06 C 0075, 2007 WL 896536 (N.D. Ill. Mar. 21, 2007) (Grady, J.).

Judge Grady, after a bench trial, entered judgment on behalf of defendants because they had neither directly or contributorily infringed plaintiff's copyrighted home design.  The Court held that, while plaintiffs approved the design, any actual copying of the copyrighted design was done by defendants' architects.  Additionally, the Court held that plaintiff introduced no evidence at trial to prove that defendants knew that plaintiff's copyright was being infringed by defendants' architect.  The Court held that, at most, defendants knew plaintiff's design was being used, but had no reason to believe the architect was infringing the design.

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Avery Dennison Corp. v. Naimo, No. 06 C 3390, 2006 WL 3343762 (N.D. Ill. Nov. 16, 2006) (Grady, J.).

In this trade secret dispute, Judge Grady dismissed plaintiff's breach of contract claim alleging defendant's breach of the parties' Employment Agreement because the Separation Agreement the parties subsequently signed included an integration clause.  When defendant began his employment with plaintiff he signed an Employment Agreement which required that, among other things, defendant not compete with plaintiff for twelve months after his employment ended and that defendant never use plaintiff's proprietary information for the benefit of anyone besides plaintiff.  When defendant later stopped working for plaintiff, the parties signed a Separation Agreement with a similar proprietary information clause and a strong integration clause, but apparently without a similar non-compete clause. 

The Separation Agreement's integration clause read as follows:

This Agreement is the only and complete agreement between [defendant] and [plaintiff] on or in any way relating to the subject matter hereof, and supersedes all previous agreements, including without limitation, the Employment Agreement, except to the extent such Employment Agreement . . . is specifically referenced in Section 2 of this Agreement.

The Separation Agreement also stated that it was a "full and final settlement of all matters relating to or arising out of [defendant's] employment and separation of employment with [plaintiff]."  Based on the language of the Separation Agreement, the Court held that the Separation Agreement replaced the Employment Agreement "without limitation" except for plaintiff's payment obligations to defendant as set forth in Section 2 of the Employment Agreement.

Practice tip:  When preparing separation agreements, make sure to include all of the provisions from the employment agreement that you might need post-employment, otherwise you stand a good chance of losing those provisions left out of the separation agreement. 

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Kennelsource, Inc. v. Barking Hound Village, LLC, No. 05 C 1788, 2006 WL 2578975 (N.D. Ill. Sept. 5, 2006) (Grady, J.)

Judge Grady dismissed plaintiff's complaint with prejudice for lack of personal jurisdiction.  Plaintiff alleged that defendants, several Georgia and Texas entities and individuals, worked together or at each other's direction to steal plaintiff's pet-care business management software and to infringe plaintiff's copyrights for the software.

Plaintiff claimed that individual defendant McCall received a trial version of plaintiff's software at the direction of the other defendants.  The other defendants then allegedly worked together to copy the software and to sell it.  Defendants countered with affidavits showing that McCall stopped working for defendants the day before McCall received plaintiff's trial software.  Defendants further argued that 1) they never offered the allegedly copied software for sale, and 2) no defendant had any contacts with Illinois except for McCall, who allegedly requested and received plaintiff's trial software. 

The Court held that it lacked personal jurisdiction and dismissed all defendants except McCall. Because plaintiff had not located McCall, and because she neither appeared before the Court nor joined in the motion to dismiss, McCall had not joined in the motion to dismiss or presented any evidence that she lacked sufficient minimum contacts with the state of Illinois.

The Court denied Plaintiff’s subsequent request for leave to amend the Complaint pursuant to Rule 15(a), and dismissed the case with prejudice as to all defendants except McCall.  The Court ruled that plaintiff failed to show how it would amend the complaint if granted leave, and failed to explain why, if such facts existed, plaintiff did not present them in response to defendants' motion to dismiss.

Practice tip: when seeking leave to amend pursuant to Rule 15 explain the basis for your request, attach a proposed amended complaint that includes the new facts, and justify any failure to include that information in the initial papers. And when faced with a credible jurisdictional challenge, consider including an amended complaint with your responsive papers.

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